Datasets:

mallam-ai

/

marx-engels

like 3

Individuals producing in society hence socially determined individual production is, of course, the point of departure. The individual and isolated hunter and fisherman, with whom Smith and Ricardo begin, belongs among the unimaginative conceits of the eighteenth-century Robinsonades, which in no way express merely a reaction against over-sophistication and a return to a misunderstood natural life, as cultural historians imagine. As little as Rousseau s contrat social, which brings naturally independent, autonomous subjects into relation and connection by contract, rests on such naturalism. This is the semblance, the merely aesthetic semblance, of the Robinsonades, great and small. It is, rather, the anticipation of civil society , in preparation since the sixteenth century and making giant strides towards maturity in the eighteenth. In this society of free competition, the individual appears detached from the natural bonds etc. which in earlier historical periods make him the accessory of a definite and limited human conglomerate. Smith and Ricardo still stand with both feet on the shoulders of the eighteenth-century prophets, in whose imaginations this eighteenth-century individual the product on one side of the dissolution of the feudal forms of society, on the other side of the new forces of production developed since the sixteenth century appears as an ideal, whose existence they project into the past. Not as a historic result but as history s point of departure. As the Natural Individual appropriate to their notion of human nature, not arising historically, but posited by nature. This illusion has been common to each new epoch to this day. Steuart avoided this simple-mindedness because as an aristocrat and in antithesis to the eighteenth century, he had in some respects a more historical footing. The more deeply we go back into history, the more does the individual, and hence also the producing individual, appear as dependent, as belonging to a greater whole: in a still quite natural way in the family and in the family expanded into the clan [Stamm]; then later in the various forms of communal society arising out of the antitheses and fusions of the clan. Only in the eighteenth century, in civil society , do the various forms of social connectedness confront the individual as a mere means towards his private purposes, as external necessity. But the epoch which produces this standpoint, that of the isolated individual, is also precisely that of the hitherto most developed social (from this standpoint, general) relations. The human being is in the most literal sense a , not merely a gregarious animal, but an animal which can individuate itself only in the midst of society. Production by an isolated individual outside society a rare exception which may well occur when a civilized person in whom the social forces are already dynamically present is cast by accident into the wilderness is as much of an absurdity as is the development of language without individuals living together and talking to each other. There is no point in dwelling on this any longer. The point could go entirely unmentioned if this twaddle, which had sense and reason for the eighteenth-century characters, had not been earnestly pulled back into the centre of the most modern economics by Bastiat, Carey, Proudhon etc. Of course it is a convenience for Proudhon et al. to be able to give a historico-philosophic account of the source of an economic relation, of whose historic origins he is ignorant, by inventing the myth that Adam or Prometheus stumbled on the idea ready-made, and then it was adopted, etc. Nothing is more dry and boring than the fantasies of a locus communis. If there is no production in general, then there is also no general production. Production is always a particular branch of production e.g. agriculture, cattle-raising, manufactures etc. or it is a totality. But political economy is not technology. The relation of the general characteristics of production at a given stage of social development to the particular forms of production to be developed elsewhere (later). Lastly, production also is not only a particular production. Rather, it is always a certain social body, a social subject, which is active in a greater or sparser totality of branches of production. Nor does the relationship between scientific presentation and the real movement belong here yet. Production in general. Particular branches of production. Totality of production. It is the fashion to preface a work of economics with a general part and precisely this part figures under the title production (see for example J. St. Mill) treating of the general preconditions of all production. This general part consists or is alleged to consist of (1) the conditions without which production is not possible. I.e. in fact, to indicate nothing more than the essential moments of all production. But, as we will see, this reduces itself in fact to a few very simple characteristics, which are hammered out into flat tautologies; (2) the conditions which promote production to a greater or lesser degree, such as e.g. Adam Smith s progressive and stagnant state of society. While this is of value in his work as an insight, to elevate it to scientific significance would require investigations into the periodization of degrees of productivity in the development of individual peoples an investigation which lies outside the proper boundaries of the theme, but, in so far as it does belong there, must be brought in as part of the development of competition, accumulation etc. In the usual formulation, the answer amounts to the general statement that an industrial people reaches the peak of its production at the moment when it arrives at its historical peak generally. In fact. The industrial peak of a people when its main concern is not yet gain, but rather to gain. Thus the Yankees over the English. Or, also, that e.g. certain races, locations, climates, natural conditions such as harbours, soil fertility etc. are more advantageous to production than others. This too amounts to the tautology that wealth is more easily created where its elements are subjectively and objectively present to a greater degree. But none of all this is the economists real concern in this general part. The aim is, rather, to present production see e.g. Mill as distinct from distribution etc., as encased in eternal natural laws independent of history, at which opportunity bourgeois relations are then quietly smuggled in as the inviolable natural laws on which society in the abstract is founded. This is the more or less conscious purpose of the whole proceeding. In distribution, by contrast, humanity has allegedly permitted itself to be considerably more arbitrary. Quite apart from this crude tearing-apart of production and distribution and of their real relationship, it must be apparent from the outset that, no matter how differently distribution may have been arranged in different stages of social development, it must be possible here also, just as with production, to single out common characteristics, and just as possible to confound or to extinguish all historic differences under general human laws. For example, the slave, the serf and the wage labourer all receive a quantity of food which makes it possible for them to exist as slaves, as serfs, as wage labourers. The conqueror who lives from tribute, or the official who lives from taxes, or the landed proprietor and his rent, or the monk and his alms, or the Levite and his tithe, all receive a quota of social production, which is determined by other laws than that of the slave s, etc. The two main points which all economists cite under this rubric are: (1) property; (2) its protection by courts, police, etc. To this a very short answer may be given: to 1. All production is appropriation of nature on the part of an individual within and through a specific form of society. In this sense it is a tautology to say that property (appropriation) is a precondition of production. But it is altogether ridiculous to leap from that to a specific form of property, e.g. private property. (Which further and equally presupposes an antithetical form, non-property.) History rather shows common property (e.g. in India, among the Slavs, the early Celts, etc.) to be the more original form, a form which long continues to play a significant role in the shape of communal property. The question whether wealth develops better in this or another form of property is still quite beside the point here. But that there can be no production and hence no society where some form of property does not exist is a tautology. An appropriation which does not make something into property is a contradictio in subjecto. to 2. Protection of acquisitions etc. When these trivialities are reduced to their real content, they tell more than their preachers know. Namely that every form of production creates its own legal relations, form of government, etc. In bringing things which are organically related into an accidental relation, into a merely reflective connection, they display their crudity and lack of conceptual understanding. All the bourgeois economists are aware of is that production can be carried on better under the modern police than e.g. on the principle of might makes right. They forget only that this principle is also a legal relation, and that the right of the stronger prevails in their constitutional republics as well, only in another form. When the social conditions corresponding to a specific stage of production are only just arising, or when they are already dying out, there are, naturally, disturbances in production, although to different degrees and with different effects. To summarize: There are characteristics which all stages of production have in common, and which are established as general ones by the mind; but the so-called general preconditions of all production are nothing more than these abstract moments with which no real historical stage of production can be grasped. The obvious, trite notion: in production the members of society appropriate (create, shape) the products of nature in accord with human needs; distribution determines the proportion in which the individual shares in the product; exchange delivers the particular products into which the individual desires to convert the portion which distribution has assigned to him; and finally, in consumption, the products become objects of gratification, of individual appropriation. Production creates the objects which correspond to the given needs; distribution divides them up according to social laws; exchange further parcels out the already divided shares in accord with individual needs; and finally, in consumption, the product steps outside this social movement and becomes a direct object and servant of individual need, and satisfies it in being consumed. Thus production appears as the point of departure, consumption as the conclusion, distribution and exchange as the middle, which is however itself twofold, since distribution is determined by society and exchange by individuals. The person objectifies himself in production, the thing subjectifies itself in the person; in distribution, society mediates between production and consumption in the form of general, dominant determinants; in exchange the two are mediated by the chance characteristics of the individual. Distribution determines the relation in which products fall to individuals (the amount); exchange determines the production in which the individual demands the portion allotted to him by distribution. Thus production, distribution, exchange and consumption form a regular syllogism; production is the generality, distribution and exchange the particularity, and consumption the singularity in which the whole is joined together. This is admittedly a coherence, but a shallow one. Production is determined by general natural laws, distribution by social accident, and the latter may therefore promote production to a greater or lesser extent; exchange stands between the two as formal social movement; and the concluding act, consumption, which is conceived not only as a terminal point but also as an end-in-itself, actually belongs outside economics except in so far as it reacts in turn upon the point of departure and initiates the whole process anew. The opponents of the political economists whether inside or outside its realm who accuse them of barbarically tearing apart things which belong together, stand either on the same ground as they, or beneath them. Nothing is more common than the reproach that the political economists view production too much as an end in itself, that distribution is just as important. This accusation is based precisely on the economic notion that the spheres of distribution and of production are independent, autonomous neighbours. Or that these moments were not grasped in their unity. As if this rupture had made its way not from reality into the textbooks, but rather from the textbooks into reality, and as if the task were the dialectic balancing of concepts, and not the grasping of real relations! But this definition of productive consumption is advanced only for the purpose of separating consumption as identical with production from consumption proper, which is conceived rather as the destructive antithesis to production. Let us therefore examine consumption proper. Consumption is also immediately production, just as in nature the consumption of the elements and chemical substances is the production of the plant. It is clear that in taking in food, for example, which is a form of consumption, the human being produces his own body. But this is also true of every kind of consumption which in one way or another produces human beings in some particular aspect. Consumptive production. But, says economics, this production which is identical with consumption is secondary, it is derived from the destruction of the prior product. In the former, the producer objectified himself, in the latter, the object he created personifies itself. Hence this consumptive production even though it is an immediate unity of production and consumption is essentially different from production proper. The immediate unity in which production coincides with consumption and consumption with production leaves their immediate duality intact. Production, then, is also immediately consumption, consumption is also immediately production. Each is immediately its opposite. But at the same time a mediating movement takes place between the two. Production mediates consumption; it creates the latter s material; without it, consumption would lack an object. But consumption also mediates production, in that it alone creates for the products the subject for whom they are products. The product only obtains its last finish in consumption. A railway on which no trains run, hence which is not used up, not consumed, is a railway only , and not in reality. Without production, no consumption; but also, without consumption, no production; since production would then be purposeless. Consumption produces production in a double way, (1) because a product becomes a real product only by being consumed. For example, a garment becomes a real garment only in the act of being worn; a house where no one lives is in fact not a real house; thus the product, unlike a mere natural object, proves itself to be, becomes, a product only through consumption. Only by decomposing the product does consumption give the product the finishing touch; for the product is production not as objectified activity, but rather only as object for the active subject; (2) because consumption creates the need for new production, that is it creates the ideal, internally impelling cause for production, which is its presupposition. Consumption creates the motive for production; it also creates the object which is active in production as its determinant aim. If it is clear that production offers consumption its external object, it is therefore equally clear that consumption ideally posits the object of production as an internal image, as a need, as drive and as purpose. It creates the objects of production in a still subjective form. No production without a need. But consumption reproduces the need. Production, for its part, correspondingly (1) furnishes the material and the object for consumption. Consumption without an object is not consumption; therefore, in this respect, production creates, produces consumption. (2) But the object is not the only thing which production creates for consumption. Production also gives consumption its specificity, its character, its finish. Just as consumption gave the product its finish as product, so does production give finish to consumption. Firstly, the object is not an object in general, but a specific object which must be consumed in a specific manner, to be mediated in its turn by production itself. Hunger is hunger, but the hunger gratified by cooked meat eaten with a knife and fork is a different hunger from that which bolts down raw meat with the aid of hand, nail and tooth. Production thus produces not only the object but also the manner of consumption, not only objectively but also subjectively. Production thus creates the consumer. (3) Production not only supplies a material for the need, but it also supplies a need for the material. As soon as consumption emerges from its initial state of natural crudity and immediacy and, if it remained at that stage, this would be because production itself had been arrested there it becomes itself mediated as a drive by the object. The need which consumption feels for the object is created by the perception of it. The object of art like every other product creates a public which is sensitive to art and enjoys beauty. Production thus not only creates an object for the subject, but also a subject for the object. Thus production produces consumption (1) by creating the material for it; (2) by determining the manner of consumption; and (3) by creating the products, initially posited by it as objects, in the form of a need felt by the consumer. It thus produces the object of consumption, the manner of consumption and the motive of consumption. Consumption likewise produces the producer s inclination by beckoning to him as an aim-determining need. The identities between consumption and production thus appear threefold: (1) Immediate identity: Production is consumption, consumption is production. Consumptive production. Productive consumption. The political economists call both productive consumption. But then make a further distinction. The first figures as reproduction, the second as productive consumption. All investigations into the first concern productive or unproductive labour; investigations into the second concern productive or non-productive consumption. (2) [In the sense] that one appears as a means for the other, is mediated by the other: this is expressed as their mutual dependence; a movement which relates them to one another, makes them appear indispensable to one another, but still leaves them external to each other. Production creates the material, as external object, for consumption; consumption creates the need, as internal object, as aim, for production. Without production no consumption; without consumption no production. [This identity] figures in economics in many different forms. (3) Not only is production immediately consumption and consumption immediately production, not only is production a means for consumption and consumption the aim of production, i.e. each supplies the other with its object (production supplying the external object of consumption, consumption the conceived object of production); but also, each of them, apart from being immediately the other, and apart from mediating the other, in addition to this creates the other in completing itself, and creates itself as the other. Consumption accomplishes the act of production only in completing the product as product by dissolving it, by consuming its independently material form, by raising the inclination developed in the first act of production, through the need for repetition, to its finished form; it is thus not only the concluding act in which the product becomes product, but also that in which the producer becomes producer. On the other side, production produces consumption by creating the specific manner of consumption; and, further, by creating the stimulus of consumption, the ability to consume, as a need. This last identity, as determined under (3), [is] frequently cited in economics in the relation of demand and supply, of objects and needs, of socially created and natural needs. Thereupon, nothing simpler for a Hegelian than to posit production and consumption as identical. And this has been done not only by socialist belletrists but by prosaic economists themselves, e.g. Say; in the form that when one looks at an entire people, its production is its consumption. Or, indeed, at humanity in the abstract. Storch demonstrated Say s error, namely that e.g. a people does not consume its entire product, but also creates means of production, etc., fixed capital, etc. To regard society as one single subject is, in addition, to look at it wrongly; speculatively. With a single subject, production and consumption appear as moments of a single act. The important thing to emphasize here is only that, whether production and consumption are viewed as the activity of one or of many individuals, they appear in any case as moments of one process, in which production is the real point of departure and hence also the predominant moment. Consumption as urgency, as need, is itself an intrinsic moment of productive activity. But the latter is the point of departure for realization and hence also its predominant moment; it is the act through which the whole process again runs its course. The individual produces an object and, by consuming it, returns to himself, but returns as a productive and self-reproducing individual. Consumption thus appears as a moment of production. In society, however, the producer s relation to the product, once the latter is finished, is an external one, and its return to the subject depends on his relations to other individuals. He does not come into possession of it directly. Nor is its immediate appropriation his purpose when he produces in society. Distribution steps between the producers and the products, hence between production and consumption, to determine in accordance with social laws what the producer s share will be in the world of products. Now, does distribution stand at the side of and outside production as an autonomous sphere? The category of wages, similarly, is the same as that which is examined under a different heading as wage labour: the characteristic which labour here possesses as an agent of production appears as a characteristic of distribution. If labour were not specified as wage labour, then the manner in which it shares in the products would not appear as wages; as, for example, under slavery. Finally, to take at once the most developed form of distribution, ground rent, by means of which landed property shares in the product, presupposes large-scale landed property (actually, large-scale agriculture) as agent of production, and not merely land as such, just as wages do not merely presuppose labour as such. The relations and modes of distribution thus appear merely as the obverse of the agents of production. An individual who participates in production in the form of wage labour shares in the products, in the results of production, in the form of wages. The structure [Gliederung] of distribution is completely determined by the structure of production. Distribution is itself a product of production, not only in its object, in that only the results of production can be distributed, but also in its form, in that the specific kind of participation in production determines the specific forms of distribution, i.e. the pattern of participation in distribution. It is altogether an illusion to posit land in production, ground rent in distribution, etc. Thus, economists such as Ricardo, who are the most frequently accused of focusing on production alone, have defined distribution as the exclusive object of economics, because they instinctively conceived the forms of distribution as the most specific expression into which the agents of production of a given society are cast. To the single individual, of course, distribution appears as a social law which determines his position within the system of production within which he produces, and which therefore precedes production. The individual comes into the world possessing neither capital nor land. Social distribution assigns him at birth to wage labour. But this situation of being assigned is itself a consequence of the existence of capital and landed property as independent agents of production. As regards whole societies, distribution seems to precede production and to determine it in yet another respect, almost as if it were a pre-economic fact. A conquering people divides the land among the conquerors, thus imposes a certain distribution and form of property in land, and thus determines production. Or it enslaves the conquered and so makes slave labour the foundation of production. Or a people rises in revolution and smashes the great landed estates into small parcels, and hence, by this new distribution, gives production a new character. Or a system of laws assigns property in land to certain families in perpetuity, or distributes labour [as] a hereditary privilege and thus confines it within certain castes. In all these cases, and they are all historical, it seems that distribution is not structured and determined by production, but rather the opposite, production by distribution. In the shallowest conception, distribution appears as the distribution of products, and hence as further removed from and quasi-independent of production. But before distribution can be the distribution of products, it is: (1) the distribution of the instruments of production, and (2), which is a further specification of the same relation, the distribution of the members of the society among the different kinds of production. (Subsumption of the individuals under specific relations of production.) The distribution of products is evidently only a result of this distribution, which is comprised within the process of production itself and determines the structure of production. To examine production while disregarding this internal distribution within it is obviously an empty abstraction; while conversely, the distribution of products follows by itself from this distribution which forms an original moment of production. Ricardo, whose concern was to grasp the specific social structure of modern production, and who is the economist of production par excellence, declares for precisely that reason that not production but distribution is the proper study of modern economics. This again shows the ineptitude of those economists who portray production as an eternal truth while banishing history to the realm of distribution. The question of the relation between this production-determining distribution, and production, belongs evidently within production itself. If it is said that, since production must begin with a certain distribution of the instruments of production, it follows that distribution at least in this sense precedes and forms the presupposition of production, then the reply must be that production does indeed have its determinants and preconditions which form its moments. At the very beginning these may appear as spontaneous, natural. But by the process of production itself they are transformed from natural into historic determinants, and if they appear to one epoch as natural presuppositions of production, they were its historic product for another. Within production itself they are constantly being changed. The application of machinery, for example, changed the distribution of instruments of production as well as of products. Modern large-scale landed property is itself the product of modern commerce and of modern industry, as well as of the application of the latter to agriculture. The questions raised above all reduce themselves in the last instance to the role played by general-historical relations in production, and their relation to the movement of history generally. The question evidently belongs within the treatment and investigation of production itself. Still, in the trivial form in which they are raised above, they can be dealt with equally briefly. In all cases of conquest, three things are possible. The conquering people subjugates the conquered under its own mode of production (e.g. the English in Ireland in this century, and partly in India); or it leaves the old mode intact and contents itself with a tribute (e.g. Turks and Romans); or a reciprocal interaction takes place whereby something new, a synthesis, arises (the Germanic conquests, in part). In all cases, the mode of production, whether that of the conquering people, that of the conquered, or that emerging from the fusion of both, is decisive for the new distribution which arises. Although the latter appears as a presupposition of the new period of production, it is thus itself in turn a product of production, not only of historical production generally, but of the specific historic mode of production. The Mongols, with their devastations in Russia, e.g., were acting in accordance with their production, cattle-raising, for which vast uninhabited spaces are a chief precondition. The Germanic barbarians, who lived in isolation on the land and for whom agriculture with bondsmen was the traditional production, could impose these conditions on the Roman provinces all the more easily as the concentration of landed property which had taken place there had already entirely overthrown the earlier agricultural relations. It is a received opinion that in certain periods people lived from pillage alone. But, for pillage to be possible, there must be some thing to be pillaged, hence production. And the mode of pillage is itself in turn determined by the mode of production. A stock-jobbing nation, for example, cannot be pillaged in the same manner as a nation of cow-herds. To steal a slave is to steal the instrument of production directly. But then the production of the country for which the slave is stolen must be structured to allow of slave labour, or (as in the southern part of America etc.) a mode of production corresponding to the slave must be created. Laws may perpetuate an instrument of production, e.g. land, in certain families. These laws achieve economic significance only when large-scale landed property is in harmony with the society s production, as e.g. in England. In France, small-scale agriculture survived despite the great landed estates, hence the latter were smashed by the revolution. But can laws perpetuate the small-scale allotment? Despite these laws, ownership is again becoming concentrated. The influence of laws in stabilizing relations of distribution, and hence their effect on production, requires to be determined in each specific instance. In so far as exchange is merely a moment mediating between production with its production-determined distribution on one side and consumption on the other, but in so far as the latter itself appears as a moment of production, to that extent is exchange obviously also included as a moment within the latter. It is clear, firstly, that the exchange of activities and abilities which takes place within production itself belongs directly to production and essentially constitutes it. The same holds, secondly, for the exchange of products, in so far as that exchange is the means of finishing the product and making it fit for direct consumption. To that extent, exchange is an act comprised within production itself. Thirdly, the so-called exchange between dealers and dealers is by its very organization entirely determined by production, as well as being itself a producing activity. Exchange appears as independent of and indifferent to production only in the final phase where the product is exchanged directly for consumption. But (1) there is no exchange without division of labour, whether the latter is spontaneous, natural, or already a product of historic development; (2) private exchange presupposes private production; (3) the intensity of exchange, as well as its extension and its manner, are determined by the development and structure of production. For example. Exchange between town and country; exchange in the country, in the town etc. Exchange in all its moments thus appears as either directly comprised in production or determined by it. The conclusion we reach is not that production, distribution, exchange and consumption are identical, but that they all form the members of a totality, distinctions within a unity. Production predominates not only over itself, in the antithetical definition of production, but over the other moments as well. The process always returns to production to begin anew. That exchange and consumption cannot be predominant is self-evident. Likewise, distribution as distribution of products; while as distribution of the agents of production it is itself a moment of production. A definite production thus determines a definite consumption, distribution and exchange as well as definite relations between these different moments. Admittedly, however, in its one-sided form, production is itself determined by the other moments. For example if the market, i.e. the sphere of exchange, expands, then production grows in quantity and the divisions between its different branches become deeper. A change in distribution changes production, e.g. concentration of capital, different distribution of the population between town and country, etc. Finally, the needs of consumption determine production. Mutual interaction takes place between the different moments. This the case with every organic whole. It seems to be correct to begin with the real and the concrete, with the real precondition, thus to begin, in economics, with e.g. the population, which is the foundation and the subject of the entire social act of production. However, on closer examination this proves false. The population is an abstraction if I leave out, for example, the classes of which it is composed. These classes in turn are an empty phrase if I am not familiar with the elements on which they rest. E.g. wage labour, capital, etc. These latter in turn presuppose exchange, division of labour, prices, etc. For example, capital is nothing without wage labour, without value, money, price etc. Thus, if I were to begin with the population, this would be a chaotic conception [Vorstellung] of the whole, and I would then, by means of further determination, move analytically towards ever more simple concepts [Begriff], from the imagined concrete towards ever thinner abstractions until I had arrived at the simplest determinations. From there the journey would have to be retraced until I had finally arrived at the population again, but this time not as the chaotic conception of a whole, but as a rich totality of many determinations and relations. The former is the path historically followed by economics at the time of its origins. The economists of the seventeenth century, e.g., always begin with the living whole, with population, nation, state, several states, etc.; but they always conclude by discovering through analysis a small number of determinant, abstract, general relations such as division of labour, money, value, etc. As soon as these individual moments had been more or less firmly established and abstracted, there began the economic systems, which ascended from the simple relations, such as labour, division of labour, need, exchange value, to the level of the state, exchange between nations and the world market. The latter is obviously the scientifically correct method. The concrete is concrete because it is the concentration of many determinations, hence unity of the diverse. It appears in the process of thinking, therefore, as a process of concentration, as a result, not as a point of departure, even though it is the point of departure in reality and hence also the point of departure for observation [Anschauung] and conception. Along the first path the full conception was evaporated to yield an abstract determination; along the second, the abstract determinations lead towards a reproduction of the concrete by way of thought. In this way Hegel fell into the illusion of conceiving the real as the product of thought concentrating itself, probing its own depths, and unfolding itself out of itself, by itself, whereas the method of rising from the abstract to the concrete is only the way in which thought appropriates the concrete, reproduces it as the concrete in the mind. But this is by no means the process by which the concrete itself comes into being. For example, the simplest economic category, say e.g. exchange value, presupposes population, moreover a population producing in specific relations; as well as a certain kind of family, or commune, or state, etc. It can never exist other than as an abstract, one-sided relation within an already given, concrete, living whole. As a category, by contrast, exchange value leads an antediluvian existence. Therefore, to the kind of consciousness and this is characteristic of the philosophical consciousness for which conceptual thinking is the real human being, and for which the conceptual world as such is thus the only reality, the movement of the categories appears as the real act of production which only, unfortunately, receives a jolt from the outside whose product is the world; and but this is again a tautology this is correct in so far as the concrete totality is a totality of thoughts, concrete in thought, in fact a product of thinking and comprehending; but not in any way a product of the concept which thinks and generates itself outside or above observation and conception; a product, rather, of the working-up of observation and conception into concepts. The totality as it appears in the head, as a totality of thoughts, is a product of a thinking head, which appropriates the world in the only way it can, a way different from the artistic, religious, practical and mental appropriation of this world. The real subject retains its autonomous existence outside the head just as before; namely as long as the head s conduct is merely speculative, merely theoretical. Hence, in the theoretical method, too, the subject, society, must always be kept in mind as the presupposition. But do not these simpler categories also have an independent historical or natural existence pre-dating the more concrete ones? That depends. Hegel, for example, correctly begins the Philosophy of Right with possession, this being the subject s simplest juridical relation. But there is no possession preceding the family or master-servant relations, which are far more concrete relations. However, it would be correct to say that there are families or clan groups which still merely possess, but have no property. The simple category therefore appears in relation to property as a relation of simple families or clan groups. In the higher society it appears as the simpler relation of a developed organization. But the concrete substratum of which possession is a relation is always presupposed. One can imagine an individual savage as possessing something. But in that case possession is not a juridical relation. It is incorrect that possession develops historically into the family. Possession, rather, always presupposes this more concrete juridical category. There would still always remain this much, however, namely that the simple categories are the expressions of relations within which the less developed concrete may have already realized itself before having posited the more many-sided connection or relation which is mentally expressed in the more concrete category; while the more developed concrete preserves the same category as a subordinate relation. Money may exist, and did exist historically, before capital existed, before banks existed, before wage labour existed, etc. Thus in this respect it may be said that the simpler category can express the dominant relations of a less developed whole, or else those subordinate relations of a more developed whole which already had a historic existence before this whole developed in the direction expressed by a more concrete category. To that extent the path of abstract thought, rising from the simple to the combined, would correspond to the real historical process. It may be said on the other hand that there are very developed but nevertheless historically less mature forms of society, in which the highest forms of economy, e.g. cooperation, a developed division of labour, etc., are found, even though there is no kind of money, e.g. Peru. Among the Slav communities also, money and the exchange which determines it play little or no role within the individual communities, but only on their boundaries, in traffic with others; it is simply wrong to place exchange at the centre of communal society as the original, constituent element. It originally appears, rather, in the connection of the different communities with one another, not in the relations between the different members of a single community. Further, although money everywhere plays a role from very early on, it is nevertheless a predominant element, in antiquity, only within the confines of certain one-sidedly developed nations, trading nations. And even in the most advanced parts of the ancient world, among the Greeks and Romans, the full development of money, which is presupposed in modern bourgeois society, appears only in the period of their dissolution. This very simple category, then, makes a historic appearance in its full intensity only in the most developed conditions of society. By no means does it wade its way through all economic relations. For example, in the Roman Empire, at its highest point of development, the foundation remained taxes and payments in kind. The money system actually completely developed there only in the army. And it never took over the whole of labour. Thus, although the simpler category may have existed historically before the more concrete, it can achieve its full (intensive and extensive) development precisely in a combined form of society, while the more concrete category was more fully developed in a less developed form of society. Labour seems a quite simple category. The conception of labour in this general form as labour as such is also immeasurably old. Nevertheless, when it is economically conceived in this simplicity, labour is as modern a category as are the relations which create this simple abstraction. The Monetary System for example, still locates wealth altogether objectively, as an external thing, in money. Compared with this standpoint, the commercial, or manufacture, system took a great step forward by locating the source of wealth not in the object but in a subjective activity in commercial and manufacturing activity even though it still always conceives this activity within narrow boundaries, as money-making. In contrast to this system, that of the Physiocrats posits a certain kind of labour agriculture as the creator of wealth, and the object itself no longer appears in a monetary disguise, but as the product in general, as the general result of labour. This product, as befits the narrowness of the activity, still always remains a naturally determined product the product of agriculture, the product of the earth par excellence. It was an immense step forward for Adam Smith to throw out every limiting specification of wealth-creating activity not only manufacturing, or commercial or agricultural labour, but one as well as the others, labour in general. With the abstract universality of wealth-creating activity we now have the universality of the object defined as wealth, the product as such or again labour as such, but labour as past, objectified labour. How difficult and great was this transition may be seen from how Adam Smith himself from time to time still falls back into the Physiocratic system. Now, it might seem that all that had been achieved thereby was to discover the abstract expression for the simplest and most ancient relation in which human beings in whatever form of society play the role of producers. This is correct in one respect. Not in another. Indifference towards any specific kind of labour presupposes a very developed totality of real kinds of labour, of which no single one is any longer predominant. As a rule, the most general abstractions arise only in the midst of the richest possible concrete development, where one thing appears as common to many, to all. Then it ceases to be thinkable in a particular form alone. On the other side, this abstraction of labour as such is not merely the mental product of a concrete totality of labours. Indifference towards specific labours corresponds to a form of society in which individuals can with ease transfer from one labour to another, and where the specific kind is a matter of chance for them, hence of indifference. Not only the category, labour, but labour in reality has here become the means of creating wealth in general, and has ceased to be organically linked with particular individuals in any specific form. Such a state of affairs is at its most developed in the most modern form of existence of bourgeois society in the United States. Here, then, for the first time, the point of departure of modern economics, namely the abstraction of the category labour , labour as such , labour pure and simple, becomes true in practice. The simplest abstraction, then, which modern economics places at the head of its discussions, and which expresses an immeasurably ancient relation valid in all forms of society, nevertheless achieves practical truth as an abstraction only as a category of the most modern society. One could say that this indifference towards particular kinds of labour, which is a historic product in the United States, appears e.g. among the Russians as a spontaneous inclination. But there is a devil of a difference between barbarians who are fit by nature to be used for anything, and civilized people who apply themselves to everything. And then in practice the Russian indifference to the specific character of labour corresponds to being embedded by tradition within a very specific kind of labour, from which only external influences can jar them loose. This example of labour shows strikingly how even the most abstract categories, despite their validity precisely because of their abstractness for all epochs, are nevertheless, in the specific character of this abstraction, themselves likewise a product of historic relations, and possess their full validity only for and within these relations. Bourgeois society is the most developed and the most complex historic organization of production. The categories which express its relations, the comprehension of its structure, thereby also allows insights into the structure and the relations of production of all the vanished social formations out of whose ruins and elements it built itself up, whose partly still unconquered remnants are carried along within it, whose mere nuances have developed explicit significance within it, etc. Human anatomy contains a key to the anatomy of the ape. The intimations of higher development among the subordinate animal species, however, can be understood only after the higher development is already known. The bourgeois economy thus supplies the key to the ancient, etc. But not at all in the manner of those economists who smudge over all historical differences and see bourgeois relations in all forms of society. One can understand tribute, tithe, etc., if one is acquainted with ground rent. But one must not identify them. Further, since bourgeois society is itself only a contradictory form of development, relations derived from earlier forms will often be found within it only in an entirely stunted form, or even travestied. For example, communal property. Although it is true, therefore, that the categories of bourgeois economics possess a truth for all other forms of society, this is to be taken only with a grain of salt. They can contain them in a developed, or stunted, or caricatured form etc., but always with an essential difference. The so-called historical presentation of development is founded, as a rule, on the fact that the latest form regards the previous ones as steps leading up to itself, and, since it is only rarely and only under quite specific conditions able to criticize itself leaving aside, of course, the historical periods which appear to themselves as times of decadence it always conceives them one-sidedly. The Christian religion was able to be of assistance in reaching an objective understanding of earlier mythologies only when its own self-criticism had been accomplished to a certain degree, so to speak, . Likewise, bourgeois economics arrived at an understanding of feudal, ancient, oriental economics only after the self-criticism of bourgeois society had begun. In so far as the bourgeois economy did not mythologically identify itself altogether with the past, its critique of the previous economies, notably of feudalism, with which it was still engaged in direct struggle, resembled the critique which Christianity levelled against paganism, or also that of Protestantism against Catholicism. In the succession of the economic categories, as in any other historical, social science, it must not be forgotten that their subject here, modern bourgeois society is always what is given, in the head as well as in reality, and that these categories therefore express the forms of being, the characteristics of existence, and often only individual sides of this specific society, this subject, and that therefore this society by no means begins only at the point where one can speak of it as such; this holds for science as well. This is to be kept in mind because it will shortly be decisive for the order and sequence of the categories. For example, nothing seems more natural than to begin with ground rent, with landed property, since this is bound up with the earth, the source of all production and of all being, and with the first form of production of all more or less settled societies agriculture. But nothing would be more erroneous. In all forms of society there is one specific kind of production which predominates over the rest, whose relations thus assign rank and influence to the others. It is a general illumination which bathes all the other colours and modifies their particularity. It is a particular ether which determines the specific gravity of every being which has materialized within it. For example, with pastoral peoples (mere hunting and fishing peoples lie outside the point where real development begins). Certain forms of tillage occur among them, sporadic ones. Landed property is determined by this. It is held in common, and retains this form to a greater or lesser degree according to the greater or lesser degree of attachment displayed by these peoples to their tradition, e.g. the communal property of the Slavs. Among peoples with a settled agriculture this settling already a great step where this predominates, as in antiquity and in the feudal order, even industry, together with its organization and the forms of property corresponding to it, has a more or less landed-proprietary character; is either completely dependent on it, as among the earlier Romans, or, as in the Middle Ages, imitates, within the city and its relations, the organization of the land. In the Middle Ages, capital itself apart from pure money-capital in the form of the traditional artisans tools etc., has this landed-proprietary character. In bourgeois society it is the opposite. Agriculture more and more becomes merely a branch of industry, and is entirely dominated by capital. Ground rent likewise. In all forms where landed property rules, the natural relation still predominant. In those where capital rules, the social, historically created element. Ground rent cannot be understood without capital. But capital can certainly be understood without ground rent. Capital is the all-dominating economic power of bourgeois society. It must form the starting-point as well as the finishing-point, and must be dealt with before landed property. After both have been examined in particular, their interrelation must be examined. It would therefore be infeasible and wrong to let the economic categories follow one another in the same sequence as that in which they were historically decisive. Their sequence is determined, rather, by their relation to one another in modern bourgeois society, which is precisely the opposite of that which seems to be their natural order or which corresponds to historical development. The point is not the historic position of the economic relations in the succession of different forms of society. Even less is it their sequence in the idea (Proudhon) (a muddy notion of historic movement). Rather, their order within modern bourgeois society. The purity (abstract specificity) in which the trading peoples Phoenicians, Carthaginians appear in the old world is determined precisely by the predominance of the agricultural peoples. Capital, as trading-capital or as money-capital, appears in this abstraction precisely where capital is not yet the predominant element of societies. Lombards, Jews take up the same position towards the agricultural societies of the Middle Ages. As a further example of the divergent positions which the same category can occupy in different social stages: one of the latest forms of bourgeois society, joint-stock companies. These also appear, however, at its beginning, in the great, privileged monopoly trading companies. The concept of national wealth creeps into the work of the economists of the seventeenth century continuing partly with those of the eighteenth in the form of the notion that wealth is created only to enrich the state, and that its power is proportionate to this wealth. This was the still unconsciously hypocritical form in which wealth and the production of wealth proclaimed themselves as the purpose of modern states, and regarded these states henceforth only as means for the production of wealth. The order obviously has to be (1) the general, abstract determinants which obtain in more or less all forms of society, but in the above-explained sense. (2) The categories which make up the inner structure of bourgeois society and on which the fundamental classes rest. Capital, wage labour, landed property. Their interrelation. Town and country. The three great social classes. Exchange between them. Circulation. Credit system (private). (3) Concentration of bourgeois society in the form of the state. Viewed in relation to itself. The unproductive classes. Taxes. State debt. Public credit. The population. The colonies. Emigration. (4) The international relation of production. International division of labour. International exchange. Export and import. Rate of exchange. (5) The world market and crises. (1) War developed earlier than peace; the way in which certain economic relations such as wage labour, machinery etc. develop earlier, owing to war and in the armies etc., than in the interior of bourgeois society. The relation of productive force and relations of exchange also especially vivid in the army. (2) Relation of previous ideal historiography to the real. Namely of the so-called cultural histories, which are only histories of religions and of states. (On that occasion something can also be said about the various kinds of previous historiography. The so-called objective. Subjective (moral among others). The philosophical.) (3) Secondary and tertiary matters; in general, derivative, inherited, not original relations of production. Influence here of international relations. (4) Accusations about the materialism of this conception. Relation to naturalistic materialism. (5) Dialectic of the concepts productive force (means of production) and relation of production, a dialectic whose boundaries are to be determined, and which does not suspend the real difference. (6) The uneven development of material production relative to e.g. artistic development. In general, the concept of progress not to be conceived in the usual abstractness. Modern art etc. This disproportion not as important or so difficult to grasp as within practical-social relations themselves. E.g. the relation of education. Relation of the United States to Europe. But the really difficult point to discuss here is how relations of production develop unevenly as legal relations. Thus e.g. the relation of Roman private law (this less the case with criminal and public law) to modern production. (7) This conception appears as necessary development. But legitimation of chance. How. (Of freedom also, among other things.) (Influence of means of communication. World history has not always existed; history as world history a result.) (8) The point of departure obviously from the natural characteristic; subjectively and objectively. Tribes, races etc. Let us take e.g. the relation of Greek art and then of Shakespeare to the present time. It is well known that Greek mythology is not only the arsenal of Greek art but also its foundation. Is the view of nature and of social relations on which the Greek imagination and hence Greek [mythology] is based possible with self-acting mule spindles and railways and locomotives and electrical telegraphs? What chance has Vulcan against Roberts and Co., Jupiter against the lightning-rod and Hermes against the Cr dit Mobilier? All mythology overcomes and dominates and shapes the forces of nature in the imagination and by the imagination; it therefore vanishes with the advent of real mastery over them. What becomes of Fama alongside Printing House Square? Greek art presupposes Greek mythology, i.e. nature and the social forms already reworked in an unconsciously artistic way by the popular imagination. This is its material. Not any mythology whatever, i.e. not an arbitrarily chosen unconsciously artistic reworking of nature (here meaning everything objective, hence including society). Egyptian mythology could never have been the foundation or the womb of Greek art. But, in any case, a mythology. Hence, in no way a social development which excludes all mythological, all mythologizing relations to nature; which therefore demands of the artist an imagination not dependent on mythology. From another side: is Achilles possible with powder and lead? Or the Iliad with the printing press, not to mention the printing machine? Do not the song and the saga and the muse necessarily come to an end with the printer s bar, hence do not the necessary conditions of epic poetry vanish? But the difficulty lies not in understanding that the Greek arts and epic are bound up with certain forms of social development. The difficulty is that they still afford us artistic pleasure and that in a certain respect they count as a norm and as an unattainable model. A man cannot become a child again, or he becomes childish. But does he not find joy in the child s na vit , and must he himself not strive to reproduce its truth at a higher stage? Does not the true character of each epoch come alive in the nature of its children? Why should not the historic childhood of humanity, its most beautiful unfolding, as a stage never to return, exercise an eternal charm? There are unruly children and precocious children. Many of the old peoples belong in this category. The Greeks were normal children. The charm of their art for us is not in contradiction to the undeveloped stage of society on which it grew. [It] is its result, rather, and is inextricably bound up, rather, with the fact that the unripe social conditions under which it arose, and could alone arise, can never return.

Grundrisse 01

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch01.htm

Begins with the measures which the Banque de France adopted in October 1855 to stem the progressive diminution of its reserves. (p. 2.) Wants to give us a statistical tableau of the condition of this bank during the six months preceding its October measures. To this end, compares its bullion assets during these three months and the fluctuations du portefeuille , i.e. the quantity of discounts extended by the bank (commercial papers, bills of exchange in its portfolio). The figure which expresses the value of the securities held by the bank, represents , according to Darimon, the greater or lesser need felt by the public for its services, or, which amounts to the same thing, the requirements of circulation . (p. 2.) Amounts to the same thing? Not at all. If the mass of bills presented for discount were identical with the requirements of circulation , of monetary turnover in the proper sense, then the turnover of banknotes would have to be determined by the quantity of discounted bills of exchange. But this movement is on the average not only not parallel, but often an inverse one. The quantity of discounted bills and the fluctuations in this quantity express the requirements of credit, whereas the quantity of money in circulation is determined by quite different influences. In order to reach any conclusions about circulation at all, Darimon would above all have had to present a column showing the amount of notes in circulation next to the column on bullion assets and the column on discounted bills. In order to discuss the requirements of circulation, it did not require a very great mental leap to look first of all at the fluctuations in circulation proper. The omission of this necessary link in the equation immediately betrays the bungling of the dilettante, and the intentional muddling together of the requirements of credit with those of monetary circulation a confusion on which rests in fact the whole secret of Proudhonist wisdom. (A mortality chart listing illnesses on one side and deaths on the other, but forgetting births.) The two columns (see p. 3) given by Darimon, i.e. the bank s metallic assets from April to September on the one side, the movement of its portfolio on the other, express nothing but the tautological fact, which requires no display of statistical illustration, that the bank s portfolio filled up with bills of exchange and its vaults emptied of metal in proportion as bills of exchange were presented to it for the purpose of withdrawing metal. And the table which Darimon offers to prove this tautology does not even demonstrate it in a pure form. It shows, rather, that the metallic assets of the bank declined by about 144 million between 12 April and 13 September 1855, while its portfolio holdings increased by about 101 million. The decline in bullion thus exceeded the rise in discounted commercial papers by 43 million. The identity of both movements is wrecked against this net imbalance at the end of six months. A more detailed comparison of the figures shows us additional incongruities. In other words: between 12 April and 10 May, the metal assets decline by 11,700,769, while the amount of securities increases by 12,159,388; i.e. the increase of securities exceeds the decline of metal by about half a million (458,619 fr.). The opposite finding, but on a far more surprising scale, appears when we compare the months of May and June: That is, between 10 May and 14 June the metal assets of the bank declined by 13,144,225 fr. Did its securities increase to the same degree? On the contrary, they fell during the same period by 375,486 fr. Here, in other words, we no longer have a merely quantitative disproportion between the decline on one side and the rise on the other. Even the inverse relation of both movements has disappeared. An enormous decline on one side is accompanied by a relatively weak decline on the other. Comparison of the months June and July shows a decline of metal assets by 93,140,199 and an increase of securities by 71,329,817; i.e. the decline in metal assets is 21,810,382 greater than the increase of the portfolio. Here we see an increase on both sides; metal assets by 24,154,830, and on the portfolio side the much more significant 76,990,349. The decline in metal assets of 50,139,111 fr. is here accompanied by a decline in securities of 27,299,043 fr. (Despite the restrictive measures adopted by the Banque de France, its reserves again declined by 24 million in December 1855.) What s sauce for the gander is sauce for the goose. The conclusions that emerge from a sequential comparison of the six-month period have the same claim to validity as those which emerge from Mr Darimon s comparison of the beginning of the series with its end. And what does the comparison show? Conclusions which reciprocally devour each other. Twice, the portfolio increases more rapidly than the metal assets decrease (April-May, June-July). Twice the metal assets and the portfolio both decline, but the former more rapidly than the latter (May June, August-September). Finally, during one period both metal assets and the portfolio increase, but the latter more rapidly than the former. Decrease on one side, increase on the other; decrease on both sides; increase on both sides; in short, everything except a lawful regularity, above all no inverse correlation, not even an interaction, since a decline in portfolio cannot be the cause of a decline in metal assets, and an increase in portfolio cannot be the cause of an increase in metal assets. An inverse relation and an interaction are not even demonstrated by the isolated comparison which Darimon sets up between the first and last months. Since the increase in portfolio by 101 million does not cover the decrease in metal assets, 144 million, then the possibility remains open that there is no causal link whatever between the increase on one side and the decrease on the other. Instead of providing a solution, the statistical illustration threw up a quantity of intersecting questions; instead of one puzzle, a bushelful. These puzzles, it is true, would disappear the moment Mr Darimon presented columns on circulation of banknotes and on deposits next to his columns on metal assets and portfolio (discounted paper). An increase in portfolio more rapid than a decrease in metal would then be explained by a simultaneous increase in metallic deposits or by the fact that a portion of the banknotes issued in exchange for discounted paper was not converted into metal but remained instead in circulation, or, finally, that the issued banknotes immediately returned in the form of deposits or in repayment of due bills, without entering into circulation. A decrease in metal assets accompanied by a lesser decrease in portfolio could be explained by the withdrawal of deposits from the bank or the presentation of banknotes for conversion into metal, thus adversely affecting the bank s discounts through the agency of the owners of the withdrawn deposits or of the metallized notes. Finally, a lesser decline in metal assets accompanied by a lesser decline in portfolio could be explained on the same grounds (we entirely leave out of consideration the possibility of an outflow of metal to replace silver currency inside the country, since Darimon does not bring it into the field of his observations). But a table whose columns would have explained one another reciprocally in this manner would have proved what was not supposed to be proved, namely that the fulfillment by the bank of increasing commercial needs does not necessarily entail an increase in the turnover of its notes, that the increase or decrease of this turnover does not correspond to the increase or decrease of its metallic assets, that the bank does not control the quantity of the means of circulation, etc. a lot of conclusions which did not fit in with Mr Darimon s intent. In his hasty effort to present in the most lurid colours his preconceived opinion that the metal basis of the bank, represented by its metallic assets, stands in contradiction to the requirements of circulation, which, in his view, are represented by the bank s portfolio, he tears two columns of figures out of their necessary context with the result that this isolation deprives the figures of all meaning or, at the most, leads them to testify against him. We have dwelt on this fact in some detail in order to make clear with one example what the entire worth of the statistical and positive illustrations of the Proudhonists amounts to. Economic facts do not furnish them with the test of their theories; rather, they furnish the proof of their lack of mastery of the facts, in order to be able to play with them. Their manner of playing with the facts shows, rather, the genesis of their theoretical abstractions. Let us pursue Darimon further. When the Bank of France saw its metal assets diminished by 144 million and its portfolio increased by 101 million, it adopted, on 4 and 18 October 1855, a set of measures to defend its vaults against its portfolio. It raised its discount rate successively from 4 to 5 and from 5 to 6% and reduced the time of payment of bills presented for discount from 90 to 75 days. In other words: it raised the terms on which it made its metal available to commerce. What does this demonstrate? That a bank , says Darimon, organized on present principles, i.e. on the rule of gold and silver, withdraws its services from the public precisely at the moment when the public most needs them. Did Mr Darimon require his figures to prove that supply increases the cost of its services to the same degree as demand makes claims upon them (and exceeds them)? And do not the gentlemen who represent the public vis- -vis the bank follow the same agreeable customs of life ? The philanthropic grain merchants who present their bills to the bank in order to receive notes, in order to exchange the notes for the bank s gold, in order to exchange the bank s gold for another country s grain, in order to exchange the grain of another country for the money of the French public were they perhaps motivated by the idea that, since the public then had the greatest need of grain, it was therefore their duty to let them have grain on easier terms, or did they not rather rush to the bank in order to exploit the increase of grain prices, the misery of the public and the disproportion between its supply and its demand? And the bank should be made an exception to these general economic laws? Quelle id e! But perhaps the present organization of the banks has as its consequence that gold must be piled up in great quantity so that the means of purchase, which, in case of insufficient grain, could have the greatest utility for the nation, should be condemned to lie fallow; in short, so that capital, instead of passing through the necessary transformation of production, becomes the unproductive and lazy basis of circulation. In this case the problem would be, then, that the unproductive stock of metal still stands above its necessary minimum within the present system of bank organization, because hoarding of the gold and silver in circulation has not yet been restricted to its economic limits. It is a question of something more or something less, but on the same foundation. But then the question would have been deflated from the socialist heights down to the practical bourgeois plains where we find it promenading among the majority of the English bourgeois opponents of the Bank of England. What a come-down! Or is the issue not a greater or lesser saving of metal by means of banknotes and other bank arrangements, but a departure from the metal basis altogether? But then the statistical fable is worthless again, as is its moral. If, for any reason whatever, the bank must send precious metals to other countries in case of need, then it must first accumulate them, and if the other country is to accept these metals in exchange for its commodities, then the predominance of the metals must first have been secured. The causes of the precious metals flight from the bank, according to Darimon, were crop failures and the consequent need to import grain from abroad. He forgets the failure of the silk harvest and the need to purchase it in vast quantities from China. Darimon further cites the numerous great undertakings coinciding with the last months of the industrial exhibition in Paris. Again he forgets the great speculations and ventures abroad launched by the Cr dit Mobilier and its rivals for the purpose of showing, as Isaac P reire says, that French capital is as distinguished among capitals by its cosmopolitan nature as is the French language among languages. Plus the unproductive expenditures entailed by the Crimean War: borrowings of 750 million. That is, on one side, a great and unexpected collapse in two of the most important branches of French production! On the other, an unusual employment of French capital in foreign markets for undertakings which by no means immediately paid their way and which in part will perhaps never cover their costs of production! In order to balance the decrease of domestic production by means of imports, on the one side, and the increase of industrial undertakings abroad on the other side, what would have been required were not symbols of circulation which facilitate the exchange of equivalents, but these equivalents themselves; not money but capital. The losses in French domestic production, in any case, were not an equivalent for the employment of French capital abroad. Now suppose that the Bank of France did not rest on a metallic base, and that other countries were willing to accept the French currency or its capital in any form, not only in the specific form of the precious metals. Would the bank not have been equally forced to raise the terms of its discounting precisely at the moment when its public clamoured most eagerly for its services? The notes with which it discounts the bills of exchange of this public are at present nothing more than drafts on gold and silver. In our hypothetical case, they would be drafts on the nation s stock of products and on its directly employable labour force: the former is limited, the latter can be increased only within very positive limits and in certain amounts of time. The printing press, on the other hand, is inexhaustible and works like a stroke of magic. At the same time, while the crop failures in grain and silk enormously diminish the directly exchangeable wealth of the nation, the foreign railway and mining enterprises freeze the same exchangeable wealth in a form which creates no direct equivalent and therefore devours it, for the moment, without replacement! Thus, the directly exchangeable wealth of the nation (i.e. the wealth which can be circulated and is acceptable abroad) absolutely diminished! On the other side, an unlimited increase in bank drafts. Direct consequence: increase in the price of products, raw materials and labour. On the other side, decrease in price of bank drafts. The bank would not have increased the wealth of the nation through a stroke of magic, but would merely have undertaken a very ordinary operation to devalue its own paper. With this devaluation, a sudden paralysis of production! But no, says the Proudhonist. Our new organization of the banks would not be satisfied with the negative accomplishment of abolishing the metal basis and leaving everything else the way it was. It would also create entirely new conditions of production and circulation, and hence its intervention would take place under entirely new preconditions. Did not the introduction of our present banks, in its day, revolutionize the conditions of production? Would large-scale modern industry have become possible without this new financial institution, without the concentration of credit which it created, without the state revenues which it created in antithesis to ground rent, without finance in antithesis to landed property, without the moneyed interest in antithesis to the landed interest; without these things could there have been stock companies etc., and the thousand forms of circulating paper which are as much the preconditions as the product of modern commerce and modern industry? We have here reached the fundamental question, which is no longer related to the point of departure. The general question would be this: Can the existing relations of production and the relations of distribution which correspond to them be revolutionized by a change in the instrument of circulation, in the organization of circulation? Further question: Can such a transformation of circulation be undertaken without touching the existing relations of production and the social relations which rest on them? If every such transformation of circulation presupposes changes in other conditions of production and social upheavals, there would naturally follow from this the collapse of the doctrine which proposes tricks of circulation as a way of, on the one hand, avoiding the violent character of these social changes, and, on the other, of making these changes appear to be not a presupposition but a gradual result of the transformations in circulation. An error in this fundamental premise would suffice to prove that a similar misunderstanding has occurred in relation to the inner connections between the relations of production, of distribution and of circulation. The above-mentioned historical case cannot of course decide the matter, because modern credit institutions were as much an effect as a cause of the concentration of capital, since they only form a moment of the latter, and since concentration of wealth is accelerated by a scarcity of circulation (as in ancient Rome) as much as by an increase in the facility of circulation. It should further be examined, or rather it would be part of the general question, whether the different civilized forms of money metallic, paper, credit money, labour money (the last-named as the socialist form) can accomplish what is demanded of them without suspending the very relation of production which is expressed in the category money, and whether it is not a self-contradictory demand to wish to get around essential determinants of a relation by means of formal modifications? Various forms of money may correspond better to social production in various stages; one form may remedy evils against which another is powerless; but none of them, as long as they remain forms of money, and as long as money remains an essential relation of production, is capable of overcoming the contradictions inherent in the money relation, and can instead only hope to reproduce these contradictions in one or another form. One form of wage labour may correct the abuses of another, but no form of wage labour can correct the abuse of wage labour itself. One lever may overcome the inertia of an immobile object better than another. All of them require inertia to act at all as levers. This general question about the relation of circulation to the other relations of production can naturally be raised only at the end. But, from the outset, it is suspect that Proudhon and his associates never even raise the question in its pure form, but merely engage in occasional declamations about it. Whenever it is touched on, we shall pay close attention. This much is evident right at the beginning of Darimon, namely that he completely identifies monetary turnover with credit, which is economically wrong. (The notion of cr dit gratuit, incidentally, is only a hypocritical, philistine and anxiety-ridden form of the saying: property is theft. Instead of the workers taking the capitalists capital, the capitalists are supposed to be compelled to give it to them.) This too we shall have to return to. In the question under discussion now, Darimon got no further than the point that banks, which deal in credit, like merchants who deal in commodities or workers who deal in labour, sell at a higher price when demand rises in relation to supply, i.e. they make their services more difficult for the public to obtain at the very moment the public has the greatest need for them. We saw that the bank has to act in this way whether the notes it issues are convertible or inconvertible. The behaviour of the Bank of France in October 1855 gave rise to an immense clamour (p. 4) and to a great debate between it and the spokesmen of the public. Darimon summarizes, or pretends to summarize, this debate. We will follow him here only occasionally, since his synopsis displays the weak sides of both opponents, revealed in their constant desultory irrelevances. Groping about in extrinsic arguments. Each of the antagonists is at every moment dropping his weapon in order to search for another. Neither gets to the point of striking any actual blows, not only because they are constantly changing the weapons with which they are supposed to hit each other, but also because they hardly meet on one terrain before they take rapid flight to another. (The discount rate in France had not been raised to 6% since 1806: for 50 years the time of payment for commercial bills of exchange had stood firm at 90 days.) The weakness of the bank s defending arguments, as presented by Darimon, and his own misconceptions, emerge for example from the following passage in his fictitious dialogue: Says the bank s opponent: By virtue of your monopoly you are the dispenser and regulator of credit. When you take up an attitude of severity, the discounters not only imitate you but they further exaggerate your rigour Your measures have brought business to a standstill. (p. 5.) The bank replies, and indeed humbly : What would you have me do? the bank humbly said To defend myself against the foreigner, I have to defend myself against our citizens Above all I must prevent the outflow of the currency, without which I am nothing and can do nothing. (p. 5.) The bank s script is ridiculous. It is made to sidetrack the question, to turn it into a rhetorical generality, in order to be able to answer it with a rhetorical generality. In this dialogue the bank is made to share Darimon s illusion that its monopoly really allows it to regulate credit. In fact the power of the bank begins only where the private discounters stop, hence at a moment when its power is already extraordinarily limited. Suppose that during easy conditions on the money market, when everybody else is discounting at 2 1/2%, the bank holds at 5%; instead of imitating it, the discounters will discount all its business away before its very eyes. Nowhere is this more vividly demonstrated than in the history of the Bank of England since the law of 1844, which made it into a real rival of the private bankers in the business of discounting, etc. In order to secure for itself a share, and a growing share, of the discount business during the periods of easiness on the money market, the Bank of England was constantly forced to reduce its rates not only to the level adopted by the private bankers but often below it. Its regulation of credit is thus to be taken with a grain of salt; Darimon, however, makes his superstitious faith in its absolute control of the money market and of credit into his point of departure. Instead of analysing critically the determinants of the bank s real power over the money market, he immediately grabs on to the phrase that cash is everything for the bank and that it has to prevent its outflow from the country. A professor of the Coll ge de France (Chevalier) replies: Gold and silver are commodities like any other The only purpose of the bank s metallic reserves is to make purchases abroad in moments of emergency. The bank rejoins: Metallic money is not a commodity like any other; it is an instrument of exchange, and by virtue of this title it holds the privilege of prescribing laws for all the other commodities. Now Darimon leaps between the combatants: Thus the privilege held by gold and silver, that of being the only authentic instrument of circulation and exchange, is responsible not only for the present crisis, but for the periodic commercial crises as well. In order to control all the undesirable features of crises it would be enough that gold and silver were made commodities like any other, or, precisely expressed, that all commodities were made instruments of exchange on an equal footing (au m me titre) with gold and silver; that products were truly exchanged for products . (pp. 5 7.) Shallowness with which the disputed question is presented here. If the bank issues drafts on money (notes) and promissory notes on capital repayable in gold (or silver) (deposits), then it is self-evident that it can watch and endure the decrease of its metal reserves only up to a certain point without reacting. That has nothing to do with the theory of metallic money. We will return to Darimon s theory of crises later. In the chapter Short History of the Crises of Circulation , Mr Darimon omits the English crisis of 1809 11 and confines himself to noting the appointment of the Bullion Committee in 1810; and for 1811 he again leaves out the crisis itself (which began in 1809), and merely mentions the adoption by the House of Commons of the resolution that the depreciation of notes relative to bullion stems not from a depreciation of paper money but from an increase in the price of bullion , together with Ricardo s pamphlet which maintains the opposite thesis, the conclusion of which is supposed to read: A currency is in its most perfect state when it consists wholly of paper money. (pp. 22, 23.) The crises of 1809 and 1811 were important here because the bank at that time issued inconvertible notes, meaning that the crises did not stem from the convertibility of notes into gold (metal) and hence could not be restrained by the abolition of convertibility. Like a nimble tailor, Darimon skips over these facts which contradict his theory of crises. He clutches on to Ricardo s aphorism, which had nothing to do with the real subject of discussion in the pamphlet, namely the depreciation of banknotes. He is unaware that Ricardo s theory of money is as completely refuted as its false assumptions that the bank controls the quantity of notes in circulation, and that the quantity of means of circulation determines prices, whereas on the contrary prices determine the quantity of means of circulation etc. In Ricardo s time all detailed studies of the phenomena of monetary circulation were still lacking. This by the way. Gold and silver are commodities like the others. Gold and silver are not commodities like the others: as general instruments of exchange they are the privileged commodities and degrade the other commodities by virtue of this privilege. This is the last analysis to which Darimon reduces the antagonism. His final judgement is: abolish the privilege of gold and silver, degrade them to the rank of all other commodities. Then you no longer have the specific evils of gold and silver money, or of notes convertible into gold and silver. You abolish all evils. Or, better, elevate all commodities to the monopoly position now held by gold and silver. Let the pope remain, but make everybody pope. Abolish money by making every commodity money and by equipping it with the specific attributes of money. The question here arises whether this problem does not already pronounce its own nonsensicality, and whether the impossibility of the solution is not already contained in the premises of the question. Frequently the only possible answer is a critique of the question and the only solution is to negate the question. The real question is: does not the bourgeois system of exchange itself necessitate a specific instrument of exchange? Does it not necessarily create a specific equivalent for all values? One form of this instrument of exchange or of this equivalent may be handier, more fitting, may entail fewer inconveniences than another. But the inconveniences which arise from the existence of every specific instrument of exchange, of any specific but general equivalent, must necessarily reproduce themselves in every form, however differently. Darimon naturally skips over this question with enthusiasm. Abolish money and don t abolish money! Abolish the exclusive privilege possessed by gold and silver in virtue of their exclusive monetary role, but turn all commodities to money, i.e. give them all together equally a quality which no longer exists once its exclusiveness is gone. The bullion drains do in fact bring to the surface a contradiction which Darimon formulates superficially and distorts as well. It is evident that gold and silver are not commodities like the others, and that modern economics is horrified to see itself suddenly and temporarily thrown back again and again to the prejudices of the Mercantile System. The English economists attempt to overcome the difficulty by means of a distinction. What is demanded in moments of such monetary crises, they say, is not gold and silver as money, not gold and silver as coin, but gold and silver as capital. They forget to add: yes, capital, but capital in the specific form of gold and silver. Why else is there an outflow of precisely these commodities, while most of the others depreciate owing to lack of outflow, if capital were exportable in every form? Let us take specific examples: drain as a result of domestic harvest failures in a chief food crop (e.g. grain), crop failure abroad and hence increased prices in one of the main imported consumer goods (e.g. tea); drain because of a crop failure in decisive industrial raw materials (cotton, wool, silk, flax etc.); drain because of excessive imports (caused by speculation, war etc.). The replacement of a sudden or chronic shortage (grain, tea, cotton, flax, etc.) in the case of a domestic crop failure deprives the nation doubly. A part of its invested capital or labour is not reproduced real loss of production. A part of that capital which has been reproduced has to be shifted to fill this gap; and this part, moreover, does not stand in a simple arithmetical relation to the loss, because the deficient product rises and must rise on the world market as a result of the decreased supply and the increased demand. It is necessary to analyse precisely how such crises would look if money were disregarded, and what determinants money introduces into the given relations. (Grain crop failures and excess imports the most important cases. The impact of war is self-evident, since economically it is exactly the same as if the nation were to drop a part of its capital into the ocean.) Case of a grain crop failure: Seen in comparison to other nations, it is clear that the nation s capital (not only its real wealth) has diminished, just as clear as that a peasant who burns his loaves and has to buy bread at the baker s is impoverished to the extent of the price of his purchase. In reference to the domestic situation, the rise in grain prices, as far as value enters into the question, seems to leave everything as it was. Except for the fact that the lesser quantity of grain multiplied by the increased price, in real crop failures, never = the normal quantity multiplied by the lesser price. Suppose that the entire English wheat crop were 1 quarter, and that this 1 quarter fetched the same price as 30 million quarters previously. Then, leaving aside the fact that it lacks the means to reproduce either life or wheat, and if we postulate that the working day necessary to produce 1 quarter = A, then the nation would exchange A 30 million working days (cost of production) for 1 A working days (product); the productive force of its capital would have diminished by millions and the sum of all values in the land would have diminished, since every working day would have depreciated by a factor of 30 million. Every unit of capital would then represent only 1/30,000,000 of its earlier value, of its equivalent in production costs, even though in this given case the nominal value of the nation s capital would not have diminished (apart from the depreciation of land and soil), since the decrease in value of all other products would have been exactly compensated by the increase in value of the 1 quarter of wheat. The increase in the wheat price by a factor of A 30 million would be the expression of an equivalent depreciation of all other products. This distinction between domestic and foreign, incidentally, is altogether illusory. The relation between the nation which suffers a crop failure and another nation where the former makes purchases is like that between every individual of the nation and the farmer or grain merchant. The surplus sum which it must expend in purchasing grain is a direct subtraction from its capital, from its disposable means. So as not to obscure the question with unessential influences, it must be postulated that the nation has free trade in grain. Even if the imported grain were as cheap as the domestically produced grain, the nation would still be poorer to the amount of capital not reproduced by the farmers. However, on the above assumption of free trade, the nation always imports as much foreign grain as is possible at the normal price. The increase of imports thus presupposes a rise in the price. The rise in the grain price is = to the fall in the price of all other commodities. The increased cost of production (represented by the price) at which the quarter of wheat is obtained is = to the decreased productivity of capital in all other forms. The surplus used to purchase grain must correspond to a deficit in the purchase of all other products and hence already a decline in their prices. With or without metallic money, or money of any other kind, the nation would find itself in a crisis not confined to grain, but extending to all other branches of production, not only because their productivity would have positively diminished and the price of their production depreciated as compared to their value, which is determined by the normal cost of production, but also because all contracts, obligations etc. rest on the average prices of products. For example, x bushels of grain have to be supplied to service the state s indebtedness, but the cost of producing these x bushels has increased by a given factor. Quite apart from the role of money the nation would thus find itself in a general crisis. If we abstract not only from money but from exchange value as well, then products would have depreciated and the nation s productivity diminished while all its economic relations are based on the average productivity of its labour. A crisis caused by a failure in the grain crop is therefore not at all created by the drain of bullion, although it can be aggravated by obstacles set up to impede this drain. In any case, we cannot agree with Proudhon either when he says that the crisis stems from the fact that the precious metals alone possess an authentic value in contrast to the other commodities; for the rise in the grain price first of all means only that more gold and silver have to be given in exchange for a certain quantity of grain, i.e. that the price of gold and silver has declined relative to the price of grain. Thus gold and silver participate with all other commodities in the depreciation relative to grain, and no privilege protects them from this. The depreciation of gold and silver relative to grain is identical with the rise of the grain price (not quite correct. The quarter of grain rises from 50s. to 100s., i.e. by 100%, but cotton goods fall by 80. Silver has declined by 50 relative to grain; cotton goods (owing to declining demand etc.) have declined by 80% relative to it. That is to say, the prices of other commodities fall to a greater extent than those of grain rise. But the opposite also occurs. For example in recent years, when grain temporarily rose by 100%, it never entered the heads of the industrial products to decline in the same proportion in which gold had declined relative to grain. This circumstance does not immediately affect the general thesis). Neither can it be said that gold possesses a privilege because its quantity is precisely and authentically defined in the coin form. One thaler (silver) remains under all circumstances one thaler. But a bushel of wheat is also always a bushel, and a yard of linen a yard. The depreciation of most commodities (labour included) and the resultant crisis, in the case of an important crop mishap, cannot therefore be crudely ascribed to the export of gold, because depreciation and crisis would equally take place if no gold whatever were exported and no grain imported. The crisis reduces itself simply to the law of supply and demand, which, as is known, acts far more sharply and energetically within the sphere of primary needs seen on a national scale than in all other spheres. Exports of gold are not the cause of the grain crisis, but the grain crisis is the cause of gold exports. Gold and silver in themselves can be said to intervene in the crisis and to aggravate its symptoms in only two ways: (1) When the export of gold is made more difficult by the metal reserve requirements to which the banks are bound; when the measures which the banks therefore undertake against the export of gold react disadvantageously on domestic circulation; (2) When the export of gold becomes necessary because foreign nations will accept capital only in the form of gold and not otherwise. Difficulty No. 2 can remain even if difficulty No. 1 is removed. The Bank of England experienced this precisely during the period when it was legally empowered to issue inconvertible notes. These notes declined in relation to gold bullion, but the mint price of gold likewise declined in relation to its bullion price. In relation to the note, gold had become a special kind of commodity. It can be said that the note still remained dependent on gold only to the extent that it nominally represented a certain quantity of gold for which it could not in fact be exchanged. Gold remained its denomination, although it was no longer legally exchangeable for this quantity of gold at the bank. There can be hardly a doubt (?) (this is to be examined later and does not directly belong with the subject under discussion) that as long as paper money retains its denomination in gold (i.e. so long as a 5 note for example is the paper representative of 5 sovereigns), the convertibility of the note into gold remains its economic law, whether this law also exists politically or not. The Bank of England s notes continued during the years 1799 1819 to state that they represented the value of a given quantity of gold. How can this assertion be put to the test other than by the fact that the note indeed commands so-and-so-much bullion? From the moment when bullion to the value of 5 sovereigns could no longer be had for a 5 note, the note was depreciated even though it was inconvertible. The equivalence of the note with an amount of gold equal to its face-value immediately entered into contradiction with the factual non-equivalence between banknotes and gold. The point in dispute among the English who want to keep gold as the denomination of notes is not in fact the convertibility of the note into gold which is only the practical equivalence of what the face of the note expresses theoretically but rather the question how this convertibility is to be secured, whether through limits imposed by law on the bank or whether the bank is to be left to its own devices. The advocates of the latter course assert that this convertibility is achieved on the average by a bank of issue which lends against bills of exchange and whose notes thus have an assured reflux, and charge that their opponents despite everything never achieved better than this average measure of security. The latter is a fact. The average, by the way, is not to be despised, and calculations on the basis of averages have to form the basis for banks just as well as for all insurance companies etc. In this regard the Scottish banks are above all, and rightly, held up as a model. The strict bullionists say for their part that they take convertibility as a serious matter, that the bank s obligation to convert notes keeps the notes convertible, that the necessity of this convertibility is given by the denomination of the notes themselves, that this forms a barrier against over-issue, and that their opponents are pseudo-defenders of inconvertibility. Between these two sides, various shadings, a mass of little species . The defenders of inconvertibility, finally, the determined anti-bullionists, are, without knowing it, just as much pseudo-defenders of convertibility as their opponents are of inconvertibility, because they retain the denomination of the note and hence make the practical equation between a note of a given denomination and a given quantity of gold the measure of their notes full value. Prussia has paper money of forced currency. (A reflux is secured by the obligation to pay a portion of taxes in paper.) These paper thalers are not drafts on silver; no bank will legally convert them. They are not issued by a commercial bank against bills of exchange but by the government to meet its expenses. But their denomination is that of silver. A paper thaler proclaims that it represents the same value as a silver thaler. If confidence in the government were to be thoroughly shaken, or if this paper money were issued in greater proportions than required by circulation, then the paper thaler would in practice cease to be equal to the silver thaler and would be depreciated because it had fallen beneath the value proclaimed on its face. It would even depreciate if neither of the above conditions obtained but if a special need for silver, e.g. for exports, gave silver a privileged position vis- -vis the paper thaler. Convertibility into gold and silver is therefore the practical measure of the value of every paper currency denominated in gold or silver, whether this paper is legally convertible or not. Nominal value runs alongside its body as a mere shadow; whether the two balance can be shown only by actual convertibility (exchangeability). A fall of real value beneath nominal value is depreciation. Convertibility is when the two really run alongside each other and change places with each other. The convertibility of inconvertible notes shows itself not in the bank s stock of bullion but in the everyday exchange between paper and the metal whose denomination the paper carries. In practice, the convertibility of convertible notes is already endangered when this is no longer confirmed by everyday routine exchange in all parts of the country, but has to be established specifically by large-scale operations on the part of the bank. In the Scottish countryside paper money is even preferred to metal money. Before 1845, when the English law of 1844 was forced upon it, Scotland naturally took part in all English social crises, and experienced some crises to a higher degree because the clearing of the land proceeded more ruthlessly there. Nevertheless, Scotland never experienced a real monetary crisis (the fact that a few banks, exceptions, collapsed because they had made careless loans is irrelevant here); no depreciation of notes, no complaints and no inquiries into the sufficiency or insufficiency of the currency in circulation etc. Scotland is important here because it shows on the one hand how the monetary system can be completely regulated on the present basis all the evils Darimon bewails can be abolished without departing from the present social basis; while at the same time its contradictions, its antagonisms, the class contradiction etc. have reached an even higher degree than in any other country in the world. It is characteristic that both Darimon and the patron who introduces his book mile Girardin, who complements his practical swindles with theoretical utopianism do not find the antithesis of the monopoly banks of France and England in Scotland, but rather look for it in the United States, where the banking system, owing to the need to obtain a charter from the individual State, is only nominally free, where the prevailing system is not free competition among banks but a federation of monopoly banks. The Scottish banking and monetary system was indeed the most perilous reef for the illusions of the circulation artists. Gold or silver money (except where coins of both kinds are legal tender) are not said to depreciate no matter how often their value changes relative to other commodities. Why not? Because they form their own denomination; because their title is not a title to a value, i.e. they are not measured in a third commodity, but merely express fractional parts of their own substance, 1 sovereign = so much gold of a given weight. Gold is therefore nominally undepreciable, not because it alone expresses an authentic value, but because as money it does not express value at all, but merely expresses a given quantity of its own substance, merely carries its own quantitative definition on its forehead. (To be examined more closely later: whether this characteristic mark of gold and silver money is in the last analysis an intrinsic property of all money.) Deceived by this nominal undepreciability of metallic money, Darimon and consorts see only the one aspect which surfaces during crises: the appreciation of gold and silver in relation to nearly all other commodities; they do not see the other side, the depreciation of gold and silver or of money in relation to all other commodities (labour perhaps, not always, excluded) in periods of so-called prosperity, periods of a temporary general rise of prices. Since this depreciation of metallic money (and of all kinds of money which rest on it) always precedes its appreciation, they ought to have formulated the problem the other way round: how to prevent the periodic depreciation of money (in their language, to abolish the privileges of commodities in relation to money). In this last formulation the problem would have reduced itself to: how to overcome the rise and fall of prices. The way to do this: abolish prices. And how? By doing away with exchange value. But this problem arises: exchange corresponds to the bourgeois organization of society. Hence one last problem: to revolutionize bourgeois society economically. It would then have been self-evident from the outset that the evil of bourgeois society is not to be remedied by transforming the banks or by founding a rational money system . Convertibility, therefore legal or not remains a requirement of every kind of money whose title makes it a value-symbol, i.e. which equates it as a quantity with a third commodity. The equation already includes the antithesis, the possibility of nonequivalence; convertibility includes its opposite, inconvertibility; appreciation includes depreciation, , as Aristotle would say. Suppose for example that the sovereign were not only called a sovereign, which is a mere honorific for the xth fraction of an ounce of gold (accounting name), in the same way that a metre is the name for a certain length, but were called, say, x hours of labour time. 1/x ounce of gold is in fact nothing more than 1/x hours of labour time materialized, objectified. But gold is labour time accumulated in the past, labour time defined. Its title would make a given quantity of labour as such into its standard. The pound of gold would have to be convertible into x hours of labour time, would have to be able to purchase it at any given moment: as soon as it could buy a greater or a lesser amount, it would be appreciated or depreciated; in the latter case its convertibility would have ceased. What determines value is not the amount of labour time incorporated in products, but rather the amount of labour time necessary at a given moment. Take the pound of gold itself: let it be the product of 20 hours labour time. Suppose that for some reason it later requires only 10 hours to produce a pound of gold. The pound of gold whose title advises that it = 20 hours labour time would now merely = 10 hours labour time, since 20 hours labour time = 2 pounds of gold. 10 hours of labour are in practice exchanged for 1 pound of gold; hence 1 pound of gold cannot any longer be exchanged for 20 hours of labour time. Gold money with the plebeian title x hours of labour would be exposed to greater fluctuations than any other sort of money and particularly more than the present gold money, because gold cannot rise or fall in relation to gold (it is equal to itself), while the labour time accumulated in a given quantity of gold, in contrast, must constantly rise or fall in relation to present, living labour time. In order to maintain its convertibility, the productivity of labour time would have to be kept stationary. Moreover, in view of the general economic law that the costs of production constantly decline, that living labour becomes constantly more productive, hence that the labour time objectified in products constantly depreciates, the inevitable fate of this golden labour money would be constant depreciation. In order to control this evil, it might be said that the title of labour time should go not to gold but, as Weitling proposed, with Englishmen ahead of him and French after, Proudhon & Co. among them, to paper money, to a mere symbol of value. The labour time incorporated in the paper itself would then have as little relevance as the paper value of banknotes. The former would be merely the representation of hours of labour, as the latter is of gold or silver. If the hour of labour became more productive, then the chit of paper which represents it would rise in buying power, and vice versa, exactly as a 5 note at present buys more or less depending on whether the relative value of gold in comparison to other commodities rises or falls. According to the same law which would subject golden labour money to a constant depreciation, paper labour money would enjoy a constant appreciation. And that is precisely what we are after; the worker would reap the joys of the rising productivity of his labour, instead of creating proportionately more alien wealth and devaluing himself as at present. Thus the socialists. But, unfortunately, there arise some small scruples. First of all: if we once presuppose money, even if it is only time-chits, then we must also presuppose the accumulation of this money, as well as contracts, obligations, fixed burdens etc., which are entered into in the form of this money. The accumulated chits would constantly appreciate together with the newly issued ones, and thus on the one hand the rising productivity of labour would go to the benefit of non-workers, and on the other hand the previously contracted burdens would keep step with the rising yield of labour. The rise and fall in the value of gold or silver would be quite irrelevant if the world could be started afresh at each new moment and if, hence, previous obligations to pay a certain quantity of gold did not survive the fluctuations in the value of gold. The same holds, here, with the time-chit and hourly productivity. The point to be examined here is the convertibility of the time-chit. We reach the same goal if we make a detour. Although it is still too early, a few observations can be made about the delusions on which the time-chit rests, which allow us an insight into the depths of the secret which links Proudhon s theory of circulation with his general theory his theory of the determination of value. We find the same link e.g. in Bray and Gray. Whatever basis in truth it may happen to have will be examined later (but first, incidentally: seen only as drafts on gold, banknotes should not be issued in amounts exceeding the quantity of gold which they pretend to replace, or they depreciate. Three drafts of 15 which I issue to three different creditors on the same 15 in gold are in fact only drafts on 15 / 3 = 5 each. Each of these notes would have depreciated to 33 1/3 per cent from the outset.) The value (the real exchange value) of all commodities (labour included) is determined by their cost of production, in other words by the labour time required to produce them. Their price is this exchange value of theirs, expressed in money. The replacement of metal money (and of paper or fiat money denominated in metal money) by labour money denominated in labour time would therefore equate the real value (exchange value) of commodities with their nominal value, price, money value. Equation of real value and nominal value, of value and price. But such is by no means the case. The value of commodities as determined by labour time is only their average value. This average appears as an external abstraction if it is calculated out as the average figure of an epoch, e.g. 1 lb. of coffee = 1s. if the average price of coffee is taken over 25 years; but it is very real if it is at the same time recognized as the driving force and the moving principle of the oscillations which commodity prices run through during a given epoch. This reality is not merely of theoretical importance: it forms the basis of mercantile speculation, whose calculus of probabilities depends both on the median price averages which figure as the centre of oscillation, and on the average peaks and average troughs of oscillation above or below this centre. The market value is always different, is always below or above this average value of a commodity. Market value equates itself with real value by means of its constant oscillations, never by means of an equation with real value as if the latter were a third party, but rather by means of constant non-equation of itself (as Hegel would say, not by way of abstract identity, but by constant negation of the negation, i.e. of itself as negation of real value). In my pamphlet against Proudhon I showed that real value itself independently of its rule over the oscillations of the market price (seen apart from its role as the law of these oscillations) in turn negates itself and constantly posits the real value of commodities in contradiction with its own character, that it constantly depreciates or appreciates the real value of already produced commodities; this is not the place to discuss it in greater detail. Price therefore is distinguished from value not only as the nominal from the real; not only by way of the denomination in gold and silver, but because the latter appears as the law of the motions which the former runs through. But the two are constantly different and never balance out, or balance only coincidentally and exceptionally. The price of a commodity constantly stands above or below the value of the commodity, and the value of the commodity itself exists only in this up-and-down movement of commodity prices. Supply and demand constantly determine the prices of commodities; never balance, or only coincidentally; but the cost of production, for its part, determines the oscillations of supply and demand. The gold or silver in which the price of a commodity, its market value, is expressed is itself a certain quantity of accumulated labour, a certain measure of materialized labour time. On the assumption that the production costs of a commodity and the production costs of gold and silver remain constant, the rise or fall of its market price means nothing more than that a commodity, = x labour time, constantly commands > or < x labour time on the market, that it stands above or beneath its average value as determined by labour time. The first basic illusion of the time-chitters consists in this, that by annulling the nominal difference between real value and market value, between exchange value and price that is, by expressing value in units of labour time itself instead of in a given objectification of labour time, say gold and silver that in so doing they also remove the real difference and contradiction between price and value. Given this illusory assumption it is self-evident that the mere introduction of the time-chit does away with all crises, all faults of bourgeois production. The money price of commodities = their real value; demand = supply; production = consumption; money is simultaneously abolished and preserved; the labour time of which the commodity is the product, which is materialized in the commodity, would need only to be measured in order to create a corresponding mirror-image in the form of a value-symbol, money, time-chits. In this way every commodity would be directly transformed into money; and gold and silver, for their part, would be demoted to the rank of all other commodities. It is not necessary to elaborate that the contradiction between exchange value and price the average price and the prices of which it is the average that the difference between magnitudes and average magnitudes is not overcome merely by suppressing the difference in name, e.g. by saying, instead of: 1 lb. bread costs 8d., 1 lb. bread = 1/x hours of labour. Inversely, if 8d. = 1/x hours of labour, and if the labour time which is materialized in one pound of bread is greater or less than 1/x hours of labour, then, because the measure of value would be at the same time the element in which the price is expressed, the difference between price and value, which is hidden in the gold price or silver price, would never be glaringly visible. An infinite equation would result. 1/x hours of labour (as contained in 8d. or represented by a chit) > < than 1/x hours of labour (as contained in the pound of bread). The time-chit, representing average labour time, would never correspond to or be convertible into actual labour time; i.e. the amount of labour time objectified in a commodity would never command a quantity of labour time equal to itself, and vice versa, but would command, rather, either more or less, just as at present every oscillation of market values expresses itself in a rise or fall of the gold or silver prices of commodities. The constant depreciation of commodities over longer periods in relation to time-chits, which we mentioned earlier, arises out of the law of the rising productivity of labour time, out of the disturbances within relative value itself which are created by its own inherent principle, namely labour time. This inconvertibility of the time-chits which we are now discussing is nothing more than another expression for the inconvertibility between real value and market value, between exchange value and price. In contrast to all other commodities, the time-chit would represent an ideal labour time which would be exchanged sometimes against more and sometimes against less of the actual variety, and which would achieve a separate existence of its own in the time-chit, an existence corresponding to this non-equivalence. The general equivalent, medium of circulation and measure of commodities would again confront the commodities in an individual form, following its own laws, alienated, i.e. equipped with all the properties of money as it exists at present but unable to perform the same services. The medium with which commodities these objectified quantities of labour time are compared would not be a third commodity but would be rather their own measure of value, labour time itself; as a result, the confusion would reach a new height altogether. Commodity A, the objectification of 3 hours labour time, is = 2 labour-hour-chits; commodity B, the objectification, similarly, of 3 hours labour, is = 4 labour-hour-chits. This contradiction is in practice expressed in money prices, but in a veiled form. The difference between price and value, between the commodity measured by the labour time whose product it is, and the product of the labour time against which it is exchanged, this difference calls for a third commodity to act as a measure in which the real exchange value of commodities is expressed. Because price is not equal to value, therefore the value-determining element labour time cannot be the element in which prices are expressed, because labour time would then have to express itself simultaneously as the determining and the non-determining element, as the equivalent and non-equivalent of itself. Because labour time as the measure of value exists only as an ideal, it cannot serve as the matter of price-comparisons. (Here at the same time it becomes clear how and why the value relation obtains a separate material existence in the form of money. This to be developed further.) The difference between price and value calls for values to be measured as prices on a different standard from their own. Price as distinct from value is necessarily money price. It can here be seen that the nominal difference between price and value is conditioned by their real difference. Commodity A = 1s. (i.e. = 1/x silver); commodity B = 2s. (i.e. 2/x silver). Hence commodity B = double the value of commodity A. The value relation between A and B is expressed by means of the proportion in which they are exchanged for a quantity of a third commodity, namely silver; they are not exchanged for a value-relation. Every commodity (product or instrument of production) is = the objectification of a given amount of labour time. Their value, the relation in which they are exchanged against other commodities, or other commodities against them, is = to the quantity of labour time realized in them. If a commodity e.g. = 1 hour of labour time, then it exchanges with all other commodities which are the product of 1 hour of labour time. (This whole reasoning on the presupposition that exchange value = market value; real value = price.) The value of the commodity is different from the commodity itself. The commodity is a value (exchange value) only within exchange (real or imagined); value is not only the exchangeability of the commodity in general, but its specific exchangeability. Value is at the same time the exponent of the relation in which the commodity is exchanged with other commodities, as well as the exponent of the relation in which it has already been exchanged with other commodities (materialized labour time) in production; it is their quantitatively determined exchangeability. Two commodities, e.g. a yard of cotton and a measure of oil, considered as cotton and as oil, are different by nature, have different properties, are measured by different measures, are incommensurable. Considered as values, all commodities are qualitatively equal and differ only quantitatively, hence can be measured against each other and substituted for one another (are mutually exchangeable, mutually convertible) in certain quantitative relations. Value is their social relation, their economic quality. A book which possesses a certain value and a loaf of bread possessing the same value are exchanged for one another, are the same value but in a different material. As a value, a commodity is an equivalent for all other commodities in a given relation. As a value, the commodity is an equivalent; as an equivalent, all its natural properties are extinguished; it no longer takes up a special, qualitative relationship towards the other commodities; but is rather the general measure as well as the general representative, the general medium of exchange of all other commodities. As value, it is money. But because the commodity, or rather the product or the instrument of production, is different from its value, its existence as value is different from its existence as product. Its property of being a value not only can but must achieve an existence different from its natural one. Why? Because commodities as values are different from one another only quantitatively; therefore each commodity must be qualitatively different from its own value. Its value must therefore have an existence which is qualitatively distinguishable from it, and in actual exchange this separability must become a real separation, because the natural distinctness of commodities must come into contradiction with their economic equivalence, and because both can exist together only if the commodity achieves a double existence, not only a natural but also a purely economic existence, in which latter it is a mere symbol, a cipher for a relation of production, a mere symbol for its own value. As a value, every commodity is equally divisible; in its natural existence this is not the case. As a value it remains the same no matter how many metamorphoses and forms of existence it goes through; in reality, commodities are exchanged only because they are not the same and correspond to different systems of needs. As a value, the commodity is general; as a real commodity it is particular. As a value it is always exchangeable; in real exchange it is exchangeable only if it fulfills particular conditions. As a value, the measure of its exchangeability is determined by itself; exchange value expresses precisely the relation in which it replaces other commodities; in real exchange it is exchangeable only in quantities which are linked with its natural properties and which correspond to the needs of the participants in exchange. (In short, all properties which may be cited as the special qualities of money are properties of the commodity as exchange value, of the product as value as distinct from the value as product.) (The exchange value of a commodity, as a separate form of existence accompanying the commodity itself, is money; the form in which all commodities equate, compare, measure themselves; into which all commodities dissolve themselves; that which dissolves itself into all commodities; the universal equivalent.) Every moment, in calculating, accounting etc., that we transform commodities into value symbols, we fix them as mere exchange values, making abstraction from the matter they are composed of and all their natural qualities. On paper, in the head, this metamorphosis proceeds by means of mere abstraction; but in the real exchange process a real mediation is required, a means to accomplish this abstraction. In its natural existence, with its natural properties, in natural identity with itself, the commodity is neither constantly exchangeable nor exchangeable against every other commodity; this it is only as something different from itself, something distinct from itself, as exchange value. We must first transpose the commodity into itself as exchange value in order then to be able to compare this exchange value with other exchange values and to exchange it. In the crudest barter, when two commodities are exchanged for one another, each is first equated with a symbol which expresses their exchange value, e.g. among certain Negroes on the West African coast, = x bars. One commodity is = 1 bar; the other = 2 bars. They are exchanged in this relation. The commodities are first transformed into bars in the head and in speech before they are exchanged for one another. They are appraised before being exchanged, and in order to appraise them they must be brought into a given numerical relation to one another. In order to bring them into such a numerical relation, in order to make them commensurable, they must obtain the same denomination (unit). (The bar has a merely imaginary existence, just as, in general, a relation can obtain a particular embodiment and become individualized only by means of abstraction.) In order to cover the excess of one value over another in exchange, in order to liquidate the balance, the crudest barter, just as with international trade today, requires payment in money. Products (or activities) are exchanged only as commodities; commodities in exchange exist only as values; only as values are they comparable. In order to determine what amount of bread I need in order to exchange it for a yard of linen, I first equate the yard of linen with its exchange value, i.e. = 1/x hours of labour time. Similarly, I equate the pound of bread with its exchange value, = 1/x or 2/x hours of labour time. I equate each of the commodities with a third; i.e. not with themselves. This third, which differs from them both, exists initially only in the head, as a conception, since it expresses a relation; just as, in general, relations can be established as existing only by being thought, as distinct from the subjects which are in these relations with each other. In becoming an exchange value, a product (or activity) is not only transformed into a definite quantitative relation, a relative number that is, a number which expresses the quantity of other commodities which equal it, which are its equivalent, or the relation in which it is their equivalent but it must also at the same time be transformed qualitatively, be transposed into another element, so that both commodities become magnitudes of the same kind, of the same unit, i.e. commensurable. The commodity first has to be transposed into labour time, into something qualitatively different from itself (qualitatively different (1) because it is not labour time as labour time, but materialized labour time; labour time not in the form of motion, but at rest; not in the form of the process, but of the result; (2) because it is not the objectification of labour time in general, which exists only as a conception (it is only a conception of labour separated from its quality, subject merely to quantitative variations), but rather the specific result of a specific, of a naturally specified, kind of labour which differs qualitatively from other kinds), in order then to be compared as a specific amount of labour time, as a certain magnitude of labour, with other amounts of labour time, other magnitudes of labour. For the purpose of merely making a comparison an appraisal of products of determining their value ideally, it suffices to make this transformation in the head (a transformation in which the product exists merely as the expression of quantitative relations of production). This abstraction will do for comparing commodities; but in actual exchange this abstraction in turn must be objectified, must be symbolized, realized in a symbol. This necessity enters into force for the following reasons: (1) As we have already said, both the commodities to be exchanged are transformed in the head into common relations of magnitude, into exchange values, and are thus reciprocally compared. But if they are then to be exchanged in reality, their natural properties enter into contradiction with their character as exchange values and as mere denominated numbers. They are not divisible at will etc. (2) In the real exchange process, particular commodities are always exchanged against particular commodities, and the exchangeability of commodities, as well as the relation in which they are exchangeable, depends on conditions of place and time, etc. But the transformation of the commodity into exchange value does not equate it to any other particular commodity, but expresses it as equivalent, expresses its exchangeability relation, vis- -vis all other commodities. This comparison, which the head accomplishes in one stroke, can be achieved in reality only in a delimited sphere determined by needs, and only in successive steps. (For example, I exchange an income of 100 thalers as my needs would have it one after another against a whole range of commodities whose sum = the exchange value of 100 thalers.) Thus, in order to realize the commodity as exchange value in one stroke, and in order to give it the general influence of an exchange value, it is not enough to exchange it for one particular commodity. It must be exchanged against a third thing which is not in turn itself a particular commodity, but is the symbol of the commodity as commodity, of the commodity s exchange value itself; which thus represents, say, labour time as such, say a piece of paper or of leather, which represents a fractional part of labour time. (Such a symbol presupposes general recognition; it can only be a social symbol; it expresses, indeed, nothing more than a social relation.) This symbol represents the fractional parts of labour time; it represents exchange value in such fractional parts as are capable of expressing all relations between exchange values by means of simple arithmetical combination; this symbol, this material sign of exchange value, is a product of exchange itself, and not the execution of an idea conceived a priori. (In fact the commodity which is required as medium of exchange becomes transformed into money, into a symbol, only little by little; as soon as this has happened, it can in turn be replaced by a symbol of itself. It then becomes the conscious sign of exchange value.) The process, then, is simply this: The product becomes a commodity, i.e. a mere moment of exchange. The commodity is transformed into exchange value. In order to equate it with itself as an exchange value, it is exchanged for a symbol which represents it as exchange value as such. As such a symbolized exchange value, it can then in turn be exchanged in definite relations for every other commodity. Because the product becomes a commodity, and the commodity becomes an exchange value, it obtains, at first only in the head, a double existence. This doubling in the idea proceeds (and must proceed) to the point where the commodity appears double in real exchange: as a natural product on one side, as exchange value on the other. I.e. the commodity s exchange value obtains a material existence separate from the commodity. The definition of a product as exchange value thus necessarily implies that exchange value obtains a separate existence, in isolation from the product. The exchange value which is separated from commodities and exists alongside them as itself a commodity, this is money. In the form of money all properties of the commodity as exchange value appear as an object distinct from it, as a form of social existence separated from the natural existence of the commodity. (This to be further shown by enumerating the usual properties of money.) (The material in which this symbol is expressed is by no means a matter of indifference, even though it manifests itself in many different historical forms. In the development of society, not only the symbol but likewise the material corresponding to the symbol are worked out a material from which society later tries to disentangle itself; if a symbol is not to be arbitrary, certain conditions are demanded of the material in which it is represented. The symbols for words, for example the alphabet etc., have an analogous history.) Thus, the exchange value of a product creates money alongside the product. Now, just as it is impossible to suspend the complications and contradictions which arise from the existence of money alongside the particular commodities merely by altering the form of money (although difficulties characteristic of a lower form of money may be avoided by moving to a higher form), so also is it impossible to abolish money itself as long as exchange value remains the social form of products. It is necessary to see this clearly in order to avoid setting impossible tasks, and in order to know the limits within which monetary reforms and transformations of circulation are able to give a new shape to the relations of production and to the social relations which rest on the latter. The properties of money as (1) measure of commodity exchange; (2) medium of exchange; (3) representative of commodities (hence object of contracts); (4) general commodity alongside the particular commodities, all simply follow from its character as exchange value separated from commodities themselves and objectified. (By virtue of its property as the general commodity in relation to all others, as the embodiment of the exchange value of the other commodities, money at the same time becomes the realized and always realizable form of capital; the form of capital s appearance which is always valid a property which emerges in bullion drains; hence capital appears in history initially only in the money form; this explains, finally, the link between money and the rate of interest, and its influence on the latter.) To the degree that production is shaped in such a way that every producer becomes dependent on the exchange value of his commodity, i.e. as the product increasingly becomes an exchange value in reality, and exchange value becomes the immediate object of production to the same degree must money relations develop, together with the contradictions immanent in the money relation, in the relation of the product to itself as money. The need for exchange and for the transformation of the product into a pure exchange value progresses in step with the division of labour, i.e. with the increasingly social character of production. But as the latter grows, so grows the power of money, i.e. the exchange relation establishes itself as a power external to and independent of the producers. What originally appeared as a means to promote production becomes a relation alien to the producers. As the producers become more dependent on exchange, exchange appears to become more independent of them, and the gap between the product as product and the product as exchange value appears to widen. Money does not create these antitheses and contradictions; it is, rather, the development of these contradictions and antitheses which creates the seemingly transcendental power of money. (To be further developed, the influence of the transformation of all relations into money relations: taxes in kind into money taxes, rent in kind into money rent, military service into mercenary troops, all personal services in general into money services, of patriarchal, slave, serf and guild labour into pure wage labour.) The product becomes a commodity; the commodity becomes exchange value; the exchange value of the commodity is its immanent money-property; this, its money-property, separates itself from it in the form of money, and achieves a general social existence separated from all particular commodities and their natural mode of existence; the relation of the product to itself as exchange value becomes its relation to money, existing alongside it; or, becomes the relation of all products to money, external to them all. Just as the real exchange of products creates their exchange value, so does their exchange value create money. The next question to confront us is this: are there not contradictions, inherent in this relation itself, which are wrapped up in the existence of money alongside commodities? Firstly: The simple fact that the commodity exists doubly, in one aspect as a specific product whose natural form of existence ideally contains (latently contains) its exchange value, and in the other aspect as manifest exchange value (money), in which all connection with the natural form of the product is stripped away again this double, differentiated existence must develop into a difference, and the difference into antithesis and contradiction. The same contradiction between the particular nature of the commodity as product and its general nature as exchange value, which created the necessity of positing it doubly, as this particular commodity on one side and as money on the other this contradiction between the commodity s particular natural qualities and its general social qualities contains from the beginning the possibility that these two separated forms in which the commodity exists are not convertible into one another. The exchangeability of the commodity exists as a thing beside it, as money, as something different from the commodity, something no longer directly identical with it. As soon as money has become an external thing alongside the commodity, the exchangeability of the commodity for money becomes bound up with external conditions which may or may not be present; it is abandoned to the mercy of external conditions. The commodity is demanded in exchange because of its natural properties, because of the needs for which it is the desired object. Money, by contrast, is demanded only because of its exchange value, as exchange value. Hence, whether or not the commodity is transposable into money, whether or not it can be exchanged for money, whether its exchange value can be posited for it this depends on circumstances which initially have nothing to do with it as exchange value and are independent of that. The transposability of the commodity depends on the natural properties of the product; that of money coincides with its existence as symbolized exchange value. There thus arises the possibility that the commodity, in its specific form as product, can no longer be exchanged for, equated with, its general form as money. By existing outside the commodity as money, the exchangeability of the commodity has become something different from and alien to the commodity, with which it first has to be brought into equation, to which it is therefore at the beginning unequal; while the equation itself becomes dependent on external conditions, hence a matter of chance. Secondly: Just as the exchange value of the commodity leads a double existence, as the particular commodity and as money, so does the act of exchange split into two mutually independent acts: exchange of commodities for money, exchange of money for commodities; purchase and sale. Since these have now achieved a spatially and temporally separate and mutually indifferent form of existence, their immediate identity ceases. They may correspond or not; they may balance or not; they may enter into disproportion with one another. They will of course always attempt to equalize one another; but in the place of the earlier immediate equality there now stands the constant movement of equalization, which evidently presupposes constant non-equivalence. It is now entirely possible that consonance may be reached only by passing through the most extreme dissonance. Thirdly: With the separation of purchase and sale, with the splitting of exchange into two spatially and temporally independent acts, there further emerges another, new relation. Just as exchange itself splits apart into two mutually independent acts, so does the overall movement of exchange itself become separate from the exchangers, the producers of commodities. Exchange for the sake of exchange separates off from exchange for the sake of commodities. A mercantile estate steps between the producers; an estate which only buys in order to sell and only sells so as to buy again, and whose aim in this operation is not the possession of commodities as products but merely the obtaining of exchange values as such, of money. (A mercantile estate can take shape even with mere barter. But since only the overflow of production on both sides is at its disposal, its influence on production, and its importance as a whole, remain completely secondary.) The rise of exchange (commerce) as an independent function torn away from the exchangers corresponds to the rise of exchange value as an independent entity, as money, torn away from products. Exchange value was the measure of commodity exchange; but its aim was the direct possession of the exchanged commodity, its consumption (regardless of whether this consumption consists of serving to satisfy needs directly, i.e. serving as product, or of serving in turn as a tool of production). The purpose of commerce is not consumption, directly, but the gaining of money, of exchange values. This doubling of exchange exchange for the sake of consumption and exchange for exchange gives rise to a new disproportion. In his exchange, the merchant is guided merely by the difference between the purchase and sale of commodities; but the consumer who buys a commodity must replace its exchange value once and for all. Circulation, i.e. exchange within the mercantile estate, and the point at which circulation ends, i.e. exchange between the mercantile estate and the consumers as much as they must ultimately condition one another are determined by quite different laws and motives, and can enter into the most acute contradiction with one another. The possibility of commercial crises is already contained in this separation. But since production works directly for commerce and only indirectly for consumption, it must not only create but also and equally be seized by this incongruency between commerce and exchange for consumption. (The relations of demand and supply become entirely inverted.) (The money business then in turn separates from commerce proper.)

Grundrisse 02

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch02.htm

We see, then, how it is an inherent property of money to fulfil its purposes by simultaneously negating them; to achieve independence from commodities; to be a means which becomes an end; to realize the exchange value of commodities by separating them from it; to facilitate exchange by splitting it; to overcome the difficulties of the direct exchange of commodities by generalizing them; to make exchange independent of the producers in the same measure as the producers become dependent on exchange. (It will be necessary later, before this question is dropped, to correct the idealist manner of the presentation, which makes it seem as if it were merely a matter of conceptual determinations and of the dialectic of these concepts. Above all in the case of the phrase: product (or activity) becomes commodity; commodity, exchange value; exchange value, money.) (Economist. 24 January 1857. The following passage to be borne in mind on the subject of banks: So far as the mercantile classes share, which they now do very generally, in the profits of banks and may to a still greater extent by the wider diffusion of joint-stock banks, the abolition of all corporate privileges, and the extension of perfect freedom to the business of banking they have been enriched by the increased rates of money. In truth, the mercantile classes by the extent of their deposits, are virtually their own bankers; and so far as that is the case, the rate of discount must be to them of little importance. All banking and other reserves must of course be the results of continual industry, and of savings laid by out of profits; and consequently, taking the mercantile and industrious classes as a whole, they must be their own bankers, and it requires only that the principles of free trade should be extended to all businesses, to equalize or naturalize for them the advantages and disadvantages of all the fluctuations in the money market. ) All contradictions of the monetary system and of the exchange of products under the monetary system are the development of the relation of products as exchange values, of their definition as exchange value or as value pure and simple. (Morning Star. 12 February 1857. The pressure of money during last year, and the high rate of discount which was adopted in consequence, has been very beneficial to the profit account of the Bank of France. Its dividend has gone on increasing: 118 fr. in 1852, 154 fr. in 1853, 194 fr. in 1854, 200 fr. in 1855, 272 fr. in 1856. ) Also to be noted, the following passage: The English silver coins issued at a price higher than the value of the silver they contain. A pound silver of an intrinsic value of 60 62s. ( 3 on an average in gold) was coined into 66s. The Mint pays the market price of the day, from 5s. to 5s. 2d. the ounce, and issues at the rate of 5s. 6d. the ounce. There are two reasons which prevent any practical inconvenience resulting from this arrangement: (of silver tokens, not of intrinsic value) first, the coin can only be procured at the Mint, and at that price; as home circulation, then, it cannot be depreciated, and it cannot be sent abroad because it circulates here for more than its intrinsic value; and secondly, as it is a legal tender only up to 40s., it never interferes with the gold coins, nor affects their value. Gives France the advice to do the same: to issue subordinate coins of silver tokens, not of intrinsic value, and limit[ing] the amount to which they should be a legal tender. But at the same time: in fixing the quality of the coin, to take a larger margin between the intrinsic and the nominal value than we have in England, because the increasing value of silver in relation to gold may very probably, before long, rise up to our present Mint price, when we may be obliged again to alter it. Our silver coin is now little more than 5% below the intrinsic value: a short time since it was 10%. (Economist. 24 January 1857.) The bank (any bank) issues the time-chits. A commodity, A = the exchange value x, i.e. = x hours of labour time, is exchanged for a quantity of money representing x labour time. The bank would at the same time have to purchase the commodity, i.e. exchange it for its representative in monetary form, just as e.g. the Bank of England today has to give notes for gold. The commodity, the substantial and therefore accidental existence of exchange value, is exchanged for the symbolic existence of exchange value as exchange value. There is then no difficulty in transposing it from the form of the commodity into the form of money. The labour time contained in it only needs to be authentically verified (which, by the way, is not as easy as assaying the purity and weight of gold and silver) and thereby immediately creates its counter-value, its monetary existence. No matter how we may turn and twist the matter, in the last instance it amounts to this: the bank which issues the time-chits buys commodities at their costs of production, buys all commodities, and moreover this purchase costs the bank nothing more than the production of snippets of paper, and the bank gives the seller, in place of the exchange value which he possesses in a definite and substantial form, the symbolic exchange value of the commodity, in other words a draft on all other commodities to the amount of the same exchange value. Exchange value as such can of course exist only symbolically, although in order for it to be employed as a thing and not merely as a formal notion, this symbol must possess an objective existence; it is not merely an ideal notion, but is actually presented to the mind in an objective mode. (A measure can be held in the hand; exchange value measures, but it exchanges only when the measure passes from one hand to the other.) So the bank gives money for the commodity; money which is an exact draft on the exchange value of the commodity, i.e. of all commodities of the same value; the bank buys. The bank is the general buyer, the buyer of not only this or that commodity, but all commodities. For its purpose is to bring about the transposition of every commodity into its symbolic existence as exchange value. But if it is the general buyer, then it also has to be the general seller; not only the dock where all wares are deposited, not only the general warehouse, but also the owner of the commodities, in the same sense as every merchant. I have exchanged my commodity A for the time-chit B, which represents the commodity s exchange value; but I have done this only so that I can then further metamorphose this B into any real commodity C, D, E etc., as it suits me. Now, can this money circulate outside the bank? Can it take any other route than that between the owner of the chit and the bank? How is the convertibility of this chit secured? Only two cases are possible. Either all owners of commodities (be these products or labour) desire to sell their commodities at their exchange value, or some want to and some do not. If they all want to sell at their exchange value, then they will not await the chance arrival or non-arrival of a buyer, but go immediately to the bank, unload their commodities on to it, and obtain their exchange value symbol, money, for them: they redeem them for its money. In this case the bank is simultaneously the general buyer and the general seller in one person. Or the opposite takes place. In this case, the bank chit is mere paper which claims to be the generally recognized symbol of exchange value, but has in fact no value. For this symbol has to have the property of not merely representing, but being, exchange value in actual exchange. In the latter case the bank chit would not be money, or it would be money only by convention between the bank and its clients, but not on the open market. It would be the same as a meal ticket good for a dozen meals which I obtain from a restaurant, or a theatre pass good for a dozen evenings, both of which represent money, but only in this particular restaurant or this particular theatre. The bank chit would have ceased to meet the qualifications of money, since it would not circulate among the general public, but only between the bank and its clients. We thus have to drop the latter supposition. The bank would thus be the general buyer and seller. Instead of notes it could also issue cheques, and instead of that it could also keep simple bank accounts. Depending on the sum of commodity values which X had deposited with the bank, X would have that sum in the form of other commodities to his credit. A second attribute of the bank would be necessary: it would need the power to establish the exchange value of all commodities, i.e. the labour time materialized in them, in an authentic manner. But its functions could not end there. It would have to determine the labour time in which commodities could be produced, with the average means of production available in a given industry, i.e. the time in which they would have to be produced. But that also would not be sufficient. It would not only have to determine the time in which a certain quantity of products had to be produced, and place the producers in conditions which made their labour equally productive (i.e. it would have to balance and to arrange the distribution of the means of labour), but it would also have to determine the amounts of labour time to be employed in the different branches of production. The latter would be necessary because, in order to realize exchange value and make the bank s currency really convertible, social production in general would have to be stabilized and arranged so that the needs of the partners in exchange were always satisfied. Nor is this all. The biggest exchange process is not that between commodities, but that between commodities and labour. (More on this presently.) The workers would not be selling their labour to the bank, but they would receive the exchange value for the entire product of their labour, etc. Precisely seen, then, the bank would be not only the general buyer and seller, but also the general producer. In fact either it would be a despotic ruler of production and trustee of distribution, or it would indeed be nothing more than a board which keeps the books and accounts for a society producing in common. The common ownership of the means of production is presupposed, etc., etc. The Saint-Simonians made their bank into the papacy of production. The dissolution of all products and activities into exchange values presupposes the dissolution of all fixed personal (historic) relations of dependence in production, as well as the all-sided dependence of the producers on one another. Each individual s production is dependent on the production of all others; and the transformation of his product into the necessaries of his own life is [similarly] dependent on the consumption of all others. Prices are old; exchange also; but the increasing determination of the former by costs of production, as well as the increasing dominance of the latter over all relations of production, only develop fully, and continue to develop ever more completely, in bourgeois society, the society of free competition. What Adam Smith, in the true eighteenth-century manner, puts in the prehistoric period, the period preceding history, is rather a product of history. This reciprocal dependence is expressed in the constant necessity for exchange, and in exchange value as the all-sided mediation. The economists express this as follows: Each pursues his private interest and only his private interest; and thereby serves the private interests of all, the general interest, without willing or knowing it. The real point is not that each individual s pursuit of his private interest promotes the totality of private interests, the general interest. One could just as well deduce from this abstract phrase that each individual reciprocally blocks the assertion of the others interests, so that, instead of a general affirmation, this war of all against all produces a general negation. The point is rather that private interest is itself already a socially determined interest, which can be achieved only within the conditions laid down by society and with the means provided by society; hence it is bound to the reproduction of these conditions and means. It is the interest of private persons; but its content, as well as the form and means of its realization, is given by social conditions independent of all. The reciprocal and all-sided dependence of individuals who are indifferent to one another forms their social connection. This social bond is expressed in exchange value, by means of which alone each individual s own activity or his product becomes an activity and a product for him; he must produce a general product exchange value, or, the latter isolated for itself and individualized, money. On the other side, the power which each individual exercises over the activity of others or over social wealth exists in him as the owner of exchange values, of money. The individual carries his social power, as well as his bond with society, in his pocket. Activity, regardless of its individual manifestation, and the product of activity, regardless of its particular make-up, are always exchange value, and exchange value is a generality, in which all individuality and peculiarity are negated and extinguished. This indeed is a condition very different from that in which the individual or the individual member of a family or clan (later, community) directly and naturally reproduces himself, or in which his productive activity and his share in production are bound to a specific form of labour and of product, which determine his relation to others in just that specific way. The social character of activity, as well as the social form of the product, and the share of individuals in production here appear as something alien and objective, confronting the individuals, not as their relation to one another, but as their subordination to relations which subsist independently of them and which arise out of collisions between mutually indifferent individuals. The general exchange of activities and products, which has become a vital condition for each individual their mutual interconnection here appears as something alien to them, autonomous, as a thing. In exchange value, the social connection between persons is transformed into a social relation between things; personal capacity into objective wealth. The less social power the medium of exchange possesses (and at this stage it is still closely bound to the nature of the direct product of labour and the direct needs of the partners in exchange) the greater must be the power of the community which binds the individuals together, the patriarchal relation, the community of antiquity, feudalism and the guild system. (See my Notebook XII, 34 B.) Each individual possesses social power in the form of a thing. Rob the thing of this social power and you must give it to persons to exercise over persons. Relations of personal dependence (entirely spontaneous at the outset) are the first social forms, in which human productive capacity develops only to a slight extent and at isolated points. Personal independence founded on objective [sachlicher] dependence is the second great form, in which a system of general social metabolism, of universal relations, of all-round needs and universal capacities is formed for the first time. Free individuality, based on the universal development of individuals and on their subordination of their communal, social productivity as their social wealth, is the third stage. The second stage creates the conditions for the third. Patriarchal as well as ancient conditions (feudal, also) thus disintegrate with the development of commerce, of luxury, of money, of exchange value, while modern society arises and grows in the same measure. Exchange and division of labour reciprocally condition one another. Since everyone works for himself but his product is nothing for him, each must of course exchange, not only in order to take part in the general productive capacity but also in order to transform his own product into his own subsistence. (See my Remarks on Economics , p. V (13,20).) Exchange, when mediated by exchange value and money, presupposes the all-round dependence of the producers on one another, together with the total isolation of their private interests from one another, as well as a division of social labour whose unity and mutual complementarity exist in the form of a natural relation, as it were, external to the individuals and independent of them. The pressure of general demand and supply on one another mediates the connection of mutually indifferent persons. The very necessity of first transforming individual products or activities into exchange value, into money, so that they obtain and demonstrate their social power in this objective [sachlichen] form, proves two things: (1) That individuals now produce only for society and in society; (2) that production is not directly social, is not the offspring of association , which distributes labour internally. Individuals are subsumed under social production; social production exists outside them as their fate; but social production is not subsumed under individuals, manageable by them as their common wealth. There can therefore be nothing more erroneous and absurd than to postulate the control by the united individuals of their total production, on the basis of exchange value, of money, as was done above in the case of the time-chit bank. The private exchange of all products of labour, all activities and all wealth stands in antithesis not only to a distribution based on a natural or political super- and subordination of individuals to one another (to which exchange proper only runs parallel or, by and large, does not so much take a grip on the life of entire communities as, rather, insert itself between different communities; it by no means exercises general domination over all relations of production and distribution) (regardless of the character of this super- and subordination: patriarchal, ancient or feudal) but also to free exchange among individuals who are associated on the basis of common appropriation and control of the means of production. (The latter form of association is not arbitrary; it presupposes the development of material and cultural conditions which are not to be examined any further at this point.) Just as the division of labour creates agglomeration, combination, cooperation, the antithesis of private interests, class interests, competition, concentration of capital, monopoly, stock companies so many antithetical forms of the unity which itself brings the antithesis to the fore so does private exchange create world trade, private independence creates complete dependence on the so-called world market, and the fragmented acts of exchange create a banking and credit system whose books, at least keep a record of the balance between debit and credit in private exchange. Although the private interests within each nation divide it into as many nations as it has full-grown individuals , and although the interests of exporters and of importers are antithetical here, etc, etc., national trade does obtain the semblance of existence in the form of the rate of exchange. Nobody will take this as a ground for believing that a reform of the money market can abolish the foundations of internal or external private trade. But within bourgeois society, the society that rests on exchange value, there arise relations of circulation as well as of production which are so many mines to explode it. (A mass of antithetical forms of the social unity, whose antithetical character can never be abolished through quiet metamorphosis. On the other hand, if we did not find concealed in society as it is the material conditions of production and the corresponding relations of exchange prerequisite for a classless society, then all attempts to explode it would be quixotic.) We have seen that, although exchange value is = to the relative labour time materialized in products, money, for its part, is = to the exchange value of commodities, separated from their substance; and that in this exchange value or money relation are contained the contradictions between commodities and their exchange value, between commodities as exchange values and money. We saw that a bank which directly creates the mirror image of the commodity in the form of labour-money is a utopia. Thus, although money owes its existence only to the tendency of exchange value to separate itself from the substance of commodities and to take on a pure form, nevertheless commodities cannot be directly transformed into money; i.e. the authentic certificate of the amount of labour time realized in the commodity cannot serve the commodity as its price in the world of exchange values. How is this? (In one of the forms of money in so far as it is medium of exchange (not measure of exchange value) it is clear to the economists that the existence of money presupposes the objectification [Versachlichung] of the social bond; in so far, that is, as money appears in the form of collateral which one individual must leave with another in order to obtain a commodity from him. Here the economists themselves say that people place in a thing (money) the faith which they do not place in each other. But why do they have faith in the thing? Obviously only because that thing is an objectified relation between persons; because it is objectified exchange value, and exchange value is nothing more than a mutual relation between people s productive activities. Every other collateral may serve the holder directly in that function: money serves him only as the dead pledge of society , but it serves as such only because of its social (symbolic) property; and it can have a social property only because individuals have alienated their own social relationship from themselves so that it takes the form of a thing.) In the lists of current prices, where all values are measured in money, it seems as though this independence from persons of the social character of things is, by the activity of commerce, on this basis of alienation where the relations of production and distribution stand opposed to the individual, to all individuals, at the same time subordinated to the individual again. Since, if you please , the autonomization of the world market (in which the activity of each individual is included), increases with the development of monetary relations (exchange value) and vice versa, since the general bond and all-round interdependence in production and consumption increase together with the independence and indifference of the consumers and producers to one another; since this contradiction leads to crises, etc., hence, together with the development of this alienation, and on the same basis, efforts are made to overcome it: institutions emerge whereby each individual can acquire information about the activity of all others and attempt to adjust his own accordingly, e.g. lists of current prices, rates of exchange, interconnections between those active in commerce through the mails, telegraphs etc. (the means of communication of course grow at the same time). (This means that, although the total supply and demand are independent of the actions of each individual, everyone attempts to inform himself about them, and this knowledge then reacts back in practice on the total supply and demand. Although on the given standpoint, alienation is not overcome by these means, nevertheless relations and connections are introduced thereby which include the possibility of suspending the old standpoint.) (The possibility of general statistics, etc.) (This is to be developed, incidentally, under the categories Prices, Demand and Supply . To be further noted here only that a comprehensive view over the whole of commerce and production in so far as lists of current prices in fact provide it, furnishes indeed the best proof of the way in which their own exchange and their own production confront individuals as an objective relation which is independent of them. In the case of the world market, the connection of the individual with all, but at the same time also the independence of this connection from the individual, have developed to such a high level that the formation of the world market already at the same time contains the conditions for going beyond it.) Comparison in place of real communality and generality. (It has been said and may be said that this is precisely the beauty and the greatness of it: this spontaneous interconnection, this material and mental metabolism which is independent of the knowing and willing of individuals, and which presupposes their reciprocal independence and indifference. And, certainly, this objective connection is preferable to the lack of any connection, or to a merely local connection resting on blood ties, or on primeval, natural or master-servant relations. Equally certain is it that individuals cannot gain mastery over their own social interconnections before they have created them. But it is an insipid notion to conceive of this merely objective bond as a spontaneous, natural attribute inherent in individuals and inseparable from their nature (in antithesis to their conscious knowing and willing). This bond is their product. It is a historic product. It belongs to a specific phase of their development. The alien and independent character in which it presently exists vis- -vis individuals proves only that the latter are still engaged in the creation of the conditions of their social life, and that they have not yet begun, on the basis of these conditions, to live it. It is the bond natural to individuals within specific and limited relations of production. Universally developed individuals, whose social relations, as their own communal [gemeinschaftlich] relations, are hence also subordinated to their own communal control, are no product of nature, but of history. The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities. In earlier stages of development the single individual seems to be developed more fully, because he has not yet worked out his relationships in their fullness, or erected them as independent social powers and relations opposite himself. It is as ridiculous to yearn for a return to that original fullness as it is to believe that with this complete emptiness history has come to a standstill. The bourgeois viewpoint has never advanced beyond this antithesis between itself and this romantic viewpoint, and therefore the latter will accompany it as legitimate antithesis up to its blessed end.) (The relation of the individual to science may be taken as an example here.) (To compare money with blood the term circulation gave occasion for this is about as correct as Menenius Agrippa s comparison between the patricians and the stomach.) (To compare money with language is not less erroneous. Language does not transform ideas, so that the peculiarity of ideas is dissolved and their social character runs alongside them as a separate entity, like prices alongside commodities. Ideas do not exist separately from language. Ideas which have first to be translated out of their mother tongue into a foreign language in order to circulate, in order to become exchangeable, offer a somewhat better analogy; but the analogy then lies not in language, but in the foreignness of language.) (The exchangeability of all products, activities and relations with a third, objective entity which can be re-exchanged for everything without distinction that is, the development of exchange values (and of money relations) is identical with universal venality, corruption. Universal prostitution appears as a necessary phase in the development of the social character of personal talents, capacities, abilities, activities. More politely expressed: the universal relation of utility and use. The equation of the incompatible, as Shakespeare nicely defined money. Greed as such impossible without money; all other kinds of accumulation and of mania for accumulation appear as primitive, restricted by needs on the one hand and by the restricted nature of products on the other (sacra auri fames ).) (The development of the money system obviously presupposes other, prior developments.) When we look at social relations which create an undeveloped system of exchange, of exchange values and of money, or which correspond to an undeveloped degree of these, then it is clear from the outset that the individuals in such a society, although their relations appear to be more personal, enter into connection with one another only as individuals imprisoned within a certain definition, as feudal lord and vassal, landlord and serf, etc., or as members of a caste etc. or as members of an estate etc. In the money relation, in the developed system of exchange (and this semblance seduces the democrats), the ties of personal dependence, of distinctions of blood, education, etc, are in fact exploded, ripped up (at least, personal ties all appear as personal relations); and individuals seem independent (this is an independence which is at bottom merely an illusion and it is more correctly called indifference), free to collide with one another and to engage in exchange within this freedom; but they appear thus only for someone who abstracts from the conditions, the conditions of existence within which these individuals enter into contact (and these conditions, in turn, are independent of the individuals and, although created by society, appear as if they were natural conditions, not controllable by individuals). The definedness of individuals, which in the former case appears as a personal restriction of the individual by another, appears in the latter case as developed into an objective restriction of the individual by relations independent of him and sufficient unto themselves. (Since the single individual cannot strip away his personal definition, but may very well overcome and master external relations, his freedom seems to be greater in case 2. A closer examination of these external relations, these conditions, shows, however, that it is impossible for the individuals of a class etc. to overcome them en masse without destroying them. A particular individual may by chance get on top of these relations, but the mass of those under their rule cannot, since their mere existence expresses subordination, the necessary subordination of the mass of individuals.) These external relations are very far from being an abolition of relations of dependence ; they are rather the dissolution of these relations into a general form; they are merely the elaboration and emergence of the general foundation of the relations of personal dependence. Here also individuals come into connection with one another only in determined ways. These objective dependency relations also appear, in antithesis to those of personal dependence (the objective dependency relation is nothing more than social relations which have become independent and now enter into opposition to the seemingly independent individuals; i.e. the reciprocal relations of production separated from and autonomous of individuals) in such a way that individuals are now ruled by abstractions, whereas earlier they depended on one another. The abstraction, or idea, however, is nothing more than the theoretical expression of those material relations which are their lord and master. Relations can be expressed, of course, only in ideas, and thus philosophers have determined the reign of ideas to be the peculiarity of the new age, and have identified the creation of free individuality with the overthrow of this reign. This error was all the more easily committed, from the ideological stand-point, as this reign exercised by the relations (this objective dependency, which, incidentally, turns into certain definite relations of personal dependency, but stripped of all illusions) appears within the consciousness of individuals as the reign of ideas, and because the belief in the permanence of these ideas, i.e. of these objective relations of dependency, is of course consolidated, nourished and inculcated by the ruling classes by all means available. (As regards the illusion of the purely personal relations in feudal times, etc., it is of course not to be forgotten for a moment (1) that these relations, in a certain phase, also took on an objective character within their own sphere, as for example the development of landed proprietorship out of purely military relations of subordination; but (2) the objective relation on which they founder has still a limited, primitive character and therefore seems personal, while, in the modern world, personal relations flow purely out of relations of production and exchange.) The product becomes a commodity. The commodity becomes exchange value. The exchange value of the commodity acquires an existence of its own alongside the commodity; i.e. the commodity in the form in which (1) it is exchangeable with all other commodities, (2) it has hence become a commodity in general, and its natural specificity is extinguished, and (3) the measure of its exchangeability (i.e. the given relation within which it is equivalent to other commodities) has been determined this commodity is the commodity as money, and, to be precise, not as money in general, but as a certain definite sum of money, for, in order to represent exchange value in all its variety, money has to be countable, quantitatively divisible. Money the common form into which all commodities as exchange values are transformed, i.e. the universal commodity must itself exist as a particular commodity alongside the others, since what is required is not only that they can be measured against it in the head, but that they can be changed and exchanged for it in the actual exchange process. The contradiction which thereby enters, to be developed elsewhere. Money does not arise by convention, any more than the state does. It arises out of exchange, and arises naturally out of exchange; it is a product of the same. At the beginning, that commodity will serve as money i.e. it will be exchanged not for the purpose of satisfying a need, not for consumption, but in order to be re-exchanged for other commodities which is most frequently exchanged and circulated as an object of consumption, and which is therefore most certain to be exchangeable again for other commodities, i.e. which represents within the given social organization wealth , which is the object of the most general demand and supply, and which possesses a particular use value. Thus salt, hides, cattle, slaves. In practice such a commodity corresponds more closely to itself as exchange value than do other commodities (a pity that the difference between denr e and marchandise cannot be neatly reproduced in German). It is the particular usefulness of the commodity whether as a particular object of consumption (hides), or as a direct instrument of production (slaves), which stamps it as money in these cases. In the course of further development precisely the opposite will occur, i.e. that commodity which has the least utility as an object of consumption or instrument of production will best serve the needs of exchange as such. In the former case, the commodity becomes money because of its particular use value; in the latter case it acquires its particular use value from its serviceability as money. The precious metals last, they do not alter, they can be divided and then combined together again, they can be transported relatively easily owing to the compression of great exchange value in little space for all these reasons they are especially suitable in the latter stage. At the same time, they form the natural transition from the first form of money. At somewhat higher levels of production and exchange, the instrument of production takes precedence over products; and the metals (prior to that, stones) are the first and most indispensable instruments of production. Both are still combined in the case of copper, which played so large a role as money in antiquity; here is the particular use value as an instrument of production together with other attributes which do not flow out of the use value of the commodity but correspond to its function as exchange value (including medium of exchange). The precious metals then split off from the remainder by virtue of being inoxidizable, of standard quality etc., and they correspond better, then, to the higher stage, in that their direct utility for consumption and production recedes while, because of their rarity, they better represent value purely based on exchange. From the outset they represent superfluity, the form in which wealth originates. Also, metals preferably exchanged for metals rather than for other commodities. The first form of money corresponds to a low stage of exchange and of barter, in which money still appears more in its quality of measure rather than as a real instrument of exchange. At this stage, the measure can still be purely imaginary (although the bar in use among Negroes includes iron) (sea shells etc., however, correspond more to the series of which gold and silver form the culmination). From the fact that the commodity develops into general exchange value, it follows that exchange value becomes a specific commodity: it can do so only because a specific commodity obtains the privilege of representing, symbolizing, the exchange value of all other commodities, i.e. of becoming money. It arises from the essence of exchange value itself that a specific commodity appears as the money-subject, despite the monetary properties possessed by every commodity. In the course of development, the exchange value of money can again exist separately from its matter, its substance, as in the case of paper money, without therefore giving up the privilege of this specific commodity, because the separated form of existence of exchange value must necessarily continue to take its denomination from the specific commodity. It is because the commodity is exchange value that it is exchangeable for money, is posited = to money. The proportion of its equivalence with money, i.e. the specificity of its exchange value, is presupposed before its transposition into money. The proportion in which a particular commodity is exchanged for money, i.e. the quantity of money into which a given quantity of a commodity is transposable, is determined by the amount of labour time objectified in the commodity. The commodity is an exchange value because it is the realization of a specific amount of labour time; money not only measures the amount of labour time which the commodity represents, but also contains its general, conceptually adequate, exchangeable form. Money is the physical medium into which exchange values are dipped, and in which they obtain the form corresponding to their general character. Adam Smith says that labour (labour time) is the original money with which all commodities are purchased. As regards the act of production, this always remains true (as well as in the determination of relative values). In production, every commodity is continuously exchanged for labour time. The necessity of a money other than labour time arises precisely because the quantity of labour time must not be expressed in its immediate, particular product, but in a mediated, general product; in its particular product, as a product equal to and convertible into all other products of an equal labour time; of the labour time not in a particular commodity, but in all commodities at once, and hence in a particular commodity which represents all the others. Labour time cannot directly be money (a demand which is the same, in other words, as demanding that every commodity should simply be its own money), precisely because in fact labour time always exists only in the form of particular commodities (as an object): being a general object, it can exist only symbolically, and hence only as a particular commodity which plays the role of money. Labour time does not exist in the form of a general object of exchange which is independent of and separate (in isolation) from the particular natural characteristics of commodities. But it would have to exist in that form if it were directly to fulfil the demands placed on money. The objectification of the general, social character of labour (and hence of the labour time contained in exchange value) is precisely what makes the product of labour time into exchange value; this is what gives the commodity the attributes of money, which however, in turn imply the existence of an independent and external money-subject. A particular expenditure of labour time becomes objectified in a definite particular commodity with particular properties and a particular relationship to needs; but, in the form of exchange value, labour time is required to become objectified in a commodity which expresses no more than its quota or quantity, which is indifferent to its own natural properties, and which can therefore be metamorphosed into i.e. exchanged for every other commodity which objectifies the same labour time. The object should have this character of generality, which contradicts its natural particularity. This contradiction can be overcome only by objectifying it: i.e. by positing the commodity in a double form, first in its natural, immediate form, then in its mediated form, as money. The latter is possible only because a particular commodity becomes, as it were, the general substance of exchange values, or because the exchange values of commodities become identified with a particular commodity different from all others. That is, because the commodity first has to be exchanged for this general commodity, this symbolic general product or general objectification of labour time, before it can function as exchange value and be exchanged for, metamorphosed into, any other commodities at will and regardless of their material properties. Money is labour time in the form of a general object, or the objectification of general labour time, labour time as a general commodity. Thus, it may seem a very simple matter that labour time should be able to serve directly as money (i.e. be able to furnish the element in which exchange values are realized as such), because it regulates exchange values and indeed is not only the inherent measure of exchange values but their substance as well (for, as exchange values, commodities have no other substance, no natural attributes). However, this appearance of simplicity is deceptive. The truth is that the exchange-value relation of commodities as mutually equal and equivalent objectifications of labour time comprises contradictions which find their objective expression in a money which is distinct from labour time. In Adam Smith this contradiction still appears as a set of parallels. Along with the particular product of labour (labour time as a particular object), the worker also has to produce a quantity of the general commodity (of labour time as general object). The two determinants of exchange value appear to Smith as existing externally, alongside one another. The interior of the commodity as a whole does not yet appear as having been seized and penetrated by contradiction. This corresponds to the stage of production which Smith found in existence at that time, in which the worker still directly owned a portion of his subsistence in the form of the product; where neither his entire activity nor his entire product had become dependent on exchange; i.e. where subsistence agriculture (or something similar, as Steuart calls it) still predominated to a great extent, together with patriarchal industry (hand weaving, domestic spinning, linked closely with agriculture). Still it was only the excess which was exchanged within a large area of the nation. Exchange value and determination by labour time not yet fully developed on a national scale. (Incidental remark: It is less true of gold and silver than of any other commodities that their consumption can grow only in inverse proportion to their costs of production. Their consumption grows, rather, in proportion with the growth of general wealth, since their use specifically represents wealth, excess, luxury, because they themselves represent wealth in general. Apart from their use as money, silver and gold are consumed more in proportion as wealth in general increases. When, therefore, their supply suddenly increases, even if their costs of production or their value does not proportionately decrease, they find a rapidly expanding market which retards their depreciation. A number of problems which appear inexplicable to the economists who generally make consumption of gold and silver dependent solely on the decrease in their costs of production in regard to the California-Australia case, where they go around in circles, are thereby clarified. This is precisely linked with their property as money, as representation of wealth.) (The contrast between gold and silver, as eternal commodities, and the others, which are not, is to be found in Petty, but is already present in Xenophon, On Revenues, in reference to marble and silver. , . , etc. (namely marble) , , . ) (Important to note that exchange between different tribes or peoples and this, not private exchange, is its first form begins when an uncivilized tribe sells (or is cheated out of) an excess product which is not the product of its labour, but the natural product of the ground and of the area which it occupies.) (Develop the ordinary economic contradictions arising from the fact that money has to be symbolized in a particular commodity, and then develop those that arise from this commodity itself (gold, etc.) This No. II. Then determine the relation between the quantity of gold and silver and commodity prices, and whether the exchange takes place in reality or only in the mind, since all commodities have to be exchanged for money in order to be determined as prices. This No. III. It is clear that, merely measured in gold or silver, the quantity of these metals has no influence on the prices of commodities; the difficulty enters with actual exchange, where the metals actually serve as instruments of exchange; the relations of demand and supply etc. But it is obviously as a measure that its value as an instrument of circulation is affected.) Labour time itself exists as such only subjectively, only in the form of activity. In so far as it is exchangeable (itself a commodity) as such, it is defined and differentiated not only quantitatively but also qualitatively, and is by no means general, self-equivalent labour time; rather, labour time as subject corresponds as little to the general labour time which determines exchange values as the particular commodities and products correspond to it as object. A. Smith s thesis, that the worker has to produce a general commodity alongside his particular commodity, in other words that he has to give a part of his products the form of money, more generally that he has to convert into money all that part of his commodity which is to serve not as use value for himself but as exchange value this statement means, subjectively expressed, nothing more than that the worker s particular labour time cannot be directly exchanged for every other particular labour time, but rather that this, its general exchangeability, has first to be mediated, that it has first to take on an objective form, a form different from itself, in order to attain this general exchangeability. The labour of the individual looked at in the act of production itself, is the money with which he directly buys the product, the object of his particular activity; but it is a particular money, which buys precisely only this specific product. In order to be general money directly, it would have to be not a particular, but general labour from the outset; i.e. it would have to be posited from the outset as a link in general production. But on this presupposition it would not be exchange which gave labour its general character; but rather its presupposed communal character would determine the distribution of products. The communal character of production would make the product into a communal, general product from the outset. The exchange which originally takes place in production which would not be an exchange of exchange values but of activities, determined by communal needs and communal purposes would from the outset include the participation of the individual in the communal world of products. On the basis of exchange values, labour is posited as general only through exchange. But on this foundation it would be posited as such before exchange; i.e. the exchange of products would in no way be the medium by which the participation of the individual in general production is mediated. Mediation must, of course, take place. In the first case, which proceeds from the independent production of individuals no matter how much these independent productions determine and modify each other post festum through their interrelations mediation takes place through the exchange of commodities, through exchange value and through money; all these are expressions of one and the same relation. In the second case, the presupposition is itself mediated; i.e. a communal production, communality, is presupposed as the basis of production. The labour of the individual is posited from the outset as social labour. Thus, whatever the particular material form of the product he creates or helps to create, what he has bought with his labour is not a specific and particular product, but rather a specific share of the communal production. He therefore has no particular product to exchange. His product is not an exchange value. The product does not first have to be transposed into a particular form in order to attain a general character for the individual. Instead of a division of labour, such as is necessarily created with the exchange of exchange values, there would take place an organization of labour whose consequence would be the participation of the individual in communal consumption. In the first case the social character of production is posited only post festum with the elevation of products to exchange values and the exchange of these exchange values. In the second case the social character of production is presupposed, and participation in the world of products, in consumption, is not mediated by the exchange of mutually independent labours or products of labour. It is mediated, rather, by the social conditions of production within which the individual is active. Those who want to make the labour of the individual directly into money (i.e. his product as well), into realized exchange value, want therefore to determine that labour directly as general labour, i.e. to negate precisely the conditions under which it must be made into money and exchange values, and under which it depends on private exchange. This demand can be satisfied only under conditions where it can no longer be raised. Labour on the basis of exchange values presupposes, precisely, that neither the labour of the individual nor his product are directly general; that the product attains this form only by passing through an objective mediation by means of a form of money distinct from itself. On the basis of communal production, the determination of time remains, of course, essential. The less time the society requires to produce wheat, cattle etc., the more time it wins for other production, material or mental. Just as in the case of an individual, the multiplicity of its development, its enjoyment and its activity depends on economization of time. Economy of time, to this all economy ultimately reduces itself. Society likewise has to distribute its time in a purposeful way, in order to achieve a production adequate to its overall needs; just as the individual has to distribute his time correctly in order to achieve knowledge in proper proportions or in order to satisfy the various demands on his activity. Thus, economy of time, along with the planned distribution of labour time among the various branches of production, remains the first economic law on the basis of communal production. It becomes law, there, to an even higher degree. However, this is essentially different from a measurement of exchange values (labour or products) by labour time. The labour of individuals in the same branch of work, and the various kinds of work, are different from one another not only quantitatively but also qualitatively. What does a solely quantitative difference between things presuppose? The identity of their qualities. Hence, the quantitative measure of labours presupposes the equivalence, the identity of their quality. (Strabo, Book XI. On the Albanians of the Caucasus: , , , . It says there further: . ) Money appears as measure (in Homer, e.g. oxen) earlier than as medium of exchange, because in barter each commodity is still its own medium of exchange. But it cannot be its own measure or its own standard of comparison. (2) This much proceeds from what has been developed so far: A particular product (commodity) (material) must become the subject of money, which exists as the attribute of every exchange value. The subject in which this symbol is represented is not a matter of indifference, since the demands placed on the representing subject are contained in the conditions conceptual determinations, characteristic relations of that which is to be represented. The study of the precious metals as subjects of the money relations, as incarnations of the latter, is therefore by no means a matter lying outside the realm of political economy, as Proudhon believes, any more than the physical composition of paint, and of marble, lie outside the realm of painting and sculpture. The attributes possessed by the commodity as exchange value, attributes for which its natural qualities are not adequate, express the demands made upon those commodities which are the material of money. These demands, at the level to which we have up to now confined ourselves, are most completely satisfied by the precious metals. Metals as such [enjoy] preference over other commodities as instruments of production, and among the metals the one which is first found in its physical fullness and purity gold; then copper, then silver and iron. The precious metals take preference over others in realizing metal, as Hegel would say. The precious metals uniform in their physical qualities, so that equal quantities of them should be so far identical as to present no ground for preferring this one to the others. Not the case, for example, with equal numbers of cattle and equal quantities of grain. Aurum (Au). Specific gravity = 19.5; melting point: 1,200 C, Glittering gold is the most magnificent of all metals, and was therefore referred to in antiquity as the sun or the king of metals. Widely distributed, never in great quantities, and is hence also more precious than the other metals. Found generally in pure metallic state, partly in larger pieces, partly in the form of smaller granules fused with other minerals. As the latter decompose, there arises gold-bearing sand, carried by many rivers, from which gold, owing to its greater specific gravity, can be washed out. Enormous malleability of gold; one grain can be drawn to make a 500-foot long wire, and can be hammered into leaves barely 1/200,000 of an inch thick. Gold resists all acids, only chlorine in a free state dissolves it (aqua regia, a mixture of nitric and hydrochloric acids). To gild. Argentum (Ag). Specific gravity = 10. Melting point = 1,000 C. Bright appearance; the friendliest of metals, very white and malleable; can be beautifully worked up and drawn in very thin wires. Silver found as unalloyed solid; frequently also combined with lead in silvery lead ores. So much for chemical properties of gold and silver. (Divisibility and fusibility, uniformity of pure gold and silver etc. well known.) Mineralogical: Gold. It is surely noteworthy that the more precious the metals are, the more isolated is their occurrence; they are found separately from the more commonly prevalent bodies, they are higher natures far from the common herd. Thus we find gold, as a rule, in unalloyed metallic state, as a crystal in various die-shaped forms, or in the greatest variety of shapes; irregular pieces and nuggets, sand and dust, in which form it is found fused into many kinds of stone, e.g. granite: and it finds its way into the sand of rivers and the gravel of floodlands as a result of the disintegration of this stone. Since the specific gravity of gold in this state goes up to 19.4, even the tiniest pieces can be extracted by stirring gold-bearing sand in water. The heavier, metallic elements settle first and can thus, as the saying goes, be washed out. Most frequently found in the company of gold is silver, and one encounters natural combinations of both metals, containing from 0.16 to 38.7 per cent silver; which naturally entails differences in colour and weight. Silver. With the great variety of its minerals, appears as one of the more prevalent metals, both as unalloyed metal and combined with other metals or with arsenic and sulphur. (Silver chloride, silver bromide, carbonic silver oxide, bismuth-silver ore, Sternbergite, polybasite, etc.) The chief chemical properties are: all precious metals: do not oxidize on contact with air; of gold (and platinum): are not dissolved by acids, except in chlorine. Do not oxidize, thus remain pure, free of rust; they present themselves as that which they are. Resistance to oxygen imperishability (so highly lauded by the gold and silver fanatics of antiquity). Physical properties: Specific gravity, i.e. a great deal of weight in a small space, especially important for means of circulation. Gold 19.5, silver 10. Brilliance. Gleam of gold, whiteness of silver, magnificence, malleability; hence so serviceable for jewellery, ornamentation, and for the addition of splendour to other objects. The white shade of silver (which reflects all light rays in their original composition); red-yellow of gold (which absorbs all colours of a mixed beam and reflects back only the red). Difficult to melt. Geological properties: Found (gold especially) as an unalloyed solid, separate from other bodies; isolated, individualized. Individual presentation, independent of the elemental. About the two other precious metals: (1) Platinum lacks the colour: grey on grey (soot of metals); too rare; unknown in antiquity; discovered only after the discovery of America; also discovered in the Urals in the nineteenth century; soluble only in chlorine; always solid; specific gravity = 21; the strongest fire does not melt it; more of scientific value. (2) Mercury: found in liquid form; evaporates; vapours poisonous; can be combined with other liquids (amalgams). (Specific gravity = 13.5, boiling point = 360 C.) Thus neither platinum, nor much less mercury, are suitable as money. One of the geological properties is common to all the precious metals: rarity. Rarity (apart from supply and demand) is an element of value only in so far as its opposite, the non-rare as such, the negation of rarity, the elemental, has no value because it does not appear as the result of production. In the original definition of value, that which is most independent of conscious, voluntary production is the most valuable, assuming the existence of demand. Common pebbles have no value, relatively speaking, because they are to be had without production (even if the latter consists only of searching). For something to become an object of exchange, to have exchange value, it must not be available to everyone without the mediation of exchange; it must not appear in such an elemental form as to be common property. To this extent, rarity is an element of exchange value and hence this property of the precious metal is of importance, even apart from its further relation to supply and demand. When we look at the advantages of the metals as such as instruments of production, then gold has to its credit that it is at bottom the first metal to be discovered as metal. For a double reason. First, because more than the others, it presents itself in nature as the most metallic, the most distinct and distinguishable metal; second, because in its preparation nature has done the work otherwise left to artifice, and for its first discovery only rough labour is necessary, but neither science nor developed instruments of production. Certain it is that gold must take its place as the earliest metal known, and in the first record of man s progress it is indicated as a standard of man s position (because in the form of excess, the first form in which wealth appears. The first form of value is use value, the everyday quality that expresses the relation of the individual to nature; the second, exchange value ALONGSIDE use value, its command over other people s use values, its social connectedness: exchange value is itself originally a value for use on Sundays only, going beyond immediate physical necessity.) Very early discovery of gold by man: Gold differs remarkably from the other metals, with a very few exceptions, in the fact that it is found in nature in its metallic state. Iron and copper, tin, lead and silver are ordinarily discovered in chemical combinations with oxygen, sulphur, arsenic, or carbon; and the few exceptional occurrences of these metals in an uncombined, or, as it was formerly called, virgin state, are to be cited rather as mineralogical curiosities than as common productions. Gold is, however, always found native or metallic Therefore, as a metallic mass, curious by its yellow colour, it would attract the eye of the most uneducated man, whereas the other substances likely to lie in his path would offer no features of attraction to his scarcely awakened powers of observation. Again gold, from the circumstance of its having been formed in those rocks which are most exposed to atmospheric action, is found in the d bris of the mountains. By the disintegrating influences of the atmosphere, of changes of temperature, of the action of water, and particularly by the effects of ice, fragments of rock are continually broken off. These are borne by floods into the valleys and rolled into pebbles by the constant action of flowing water. Amongst these, pebbles, or particles, of gold are discovered. The summer heats, by drying up the waters, rendered those beds which had formed river channels and the courses of winter torrents paths for the journeys of migratory man; and here we can imagine the early discovery of gold. Gold most frequently occurs pure, or, at all events, so nearly so that its metallic nature can be at once recognized, in rivers as well as in quartz veins. The specific gravity of quartz, and of most other heavy compact rocks is about 2 1/2, whilst the specific gravity of gold is 18 or 19. Gold, therefore, is somewhere about seven times as heavy as any rock or stone with which it is likely to be associated. A current of water accordingly having sufficient strength to bear along sand or pebbles of quartz or any other rock, might not be able to move the fragments of gold associated with them. Moving water, therefore, has done for the auriferous rocks formerly, just what the miner would do now, break it, namely, up, into fragments, sweep away the lighter particles, and leave the gold behind it. Rivers are, indeed, great natural cradles, sweeping off all the lighter and finer particles at once, the heavier ones either sticking against natural impediments, or being left whenever the current slackens its force or velocity. (See Gold (Lectures on). London, 1852.) (pp. 12 and 13.) In all probability, from tradition and early history, the discovery of gold in the sand and gravel of streams would appear to have been the first step in the recognition of metals, and in almost all, perhaps in all, the countries of Europe, Africa and Asia, greater or smaller quantities of gold have from very early times been washed by simple contrivances from auriferous deposits. Occasionally, the success of gold-streams has been great enough to produce a pulse of excitement which has vibrated for a while through a district, but has been hushed down again. In 760 the poor people turned out in numbers to wash gold from the river sands south of Prague, and three men were able in the day to extract a mark (1/2 lb.) of gold; and so great was the consequent rush to the diggings that in the next year the country was visited by famine. We read of a recurrence of similar events several times within the next few centuries, although here, as elsewhere, the general attraction to surface-spread riches has subsided into regular and systematic mining. Two classes of deposits in which gold is found, the lodes or veins, which intersect the solid rock in a direction more or less perpendicular to the horizon; and the drift beds or streams , in which the gold mingled with gravel, sand, or clay, has been deposited by the mechanical action of water, upon the surface of those rocks, which are penetrated to unknown depths by the lodes. To the former class belongs more specially the art of mining; to the latter the simple operations of digging. Gold mining, properly so called, is, like other mining, an art requiring the employment of capital, and of a skill only to be acquired by years of experience. There is no art practised by civilized men which requires for its full development the application of so many sciences and collateral arts. But although so essential to the miner, scarcely any of these are necessary to the gold-washer or streamer, who must trust chiefly to the strength of his arm, or the buoyancy of his health. The apparatus which he employs must necessarily be simple, so as to be conveyed from place to place, to be easily repaired if injured, and not to require any of those niceties of manipulation which would cause him to lose time in the acquiring of small quantities. Difference between the drift-deposits of gold, best exemplified at the present day in Siberia, California and Australia; and the fine sands annually brought down by rivers, some of which are also found to contain gold in workable quantities. The latter are of course found literally at the surface, the former may be met with under a cover of from 1 to 70 feet in thickness, consisting of soil, peat, sand, gravel, etc. The modes of working the two must be identical in principle. For the stream-worker nature has pulled down the highest, proudest and richest parts of the lodes, and so triturated and washed up the materials, that the streamer has the heaviest part of the work already done for him: whilst the miner, who attacks the poorer, but more lasting, deep-going lodes, must aid himself with all the resources of the nicest art. Gold has justly been considered the noblest of metals from various physical and chemical properties. It is unchangeable in air and does not rust. (Its unchangeability consists precisely in its resistance against the oxygen in the atmosphere.) Of a bright reddish yellow colour when in a coherent state, and very dense. Highly malleable. Requires a strong heat to melt it. Specific gravity. Thus three modes of its production: (1) In the river sand. Simple finding on the surface. Washing. (2) In river beds and floodlands. Digging. (3) Mining. Its production requires, hence, no development of the productive forces. Nature does most of the work in that regard. (The roots of the words for gold, silver etc. (see Grimm); here we find a number of general concepts of brilliance, soon to be transferred to the words, proximate to colour. Silver white; gold yellow; brass and gold, brass and iron exchange names. Among the Germans bronze in use before iron. Direct affinity between aes (bronze) and aurum (gold).) Copper (brass, bronze: tin and copper) and gold in use before silver and iron. Gold in use long before silver, because it is found pure or only lightly admixed with silver; obtained by simple washing. Silver is found in general in veins threaded through the hardest rocks in primitive terrain: its extraction requires complicated labour and machines. In southern America, veins of gold are not exploited, only gold in the form of dust and nuggets in alluvial terrain. In Herodotus s time, similarly. The most ancient monuments of Greece, Asia, Northern Europe and the New World prove that the use of gold for utensils and for ornamentation is possible in a semi-barbarian condition; while the use of silver for the same purposes by itself already denotes a fairly advanced state of society. See Dureau de la Malle, Notebook. (2.) Copper as main instrument of war and peace (ibid. 2) (as money in Italy ibid.). The successive fluctuations between gold, silver and copper in various epochs had to depend first of all on the nature of the sites where they are found, and on their greater or lesser purity. Then, on political changes, such as the invasion of Asia and of a part of Africa by the Persians and the Macedonians; later the conquest of parts of three continents by the Romans (orbis Romanus, etc.). Dependent, therefore, on their relative purity and their location. The value relation between the different metals can be determined without recourse to prices by means of the simple quantitative ratio in which one exchanges for the other. We can employ this form, in general, when we are comparing only a few commodities which have the same measure; e.g. so many quarters of rye, barley, oats for so many quarters of wheat. This method employed in barter, where little of anything is exchanged and where even fewer commodities enter the traffic, and where, hence, no money is required. Among an Arab people neighbouring on Sabaea, according to Strabo, pure gold was so abundant that 10 lb. of it were given for 1 lb. of iron, and 2 lb. were given for 1 lb. silver. A wealth of gold in the Bactrian region (Bactara, etc., in short, Turkestan) and in the part of Asia situated between the Paropamisus (Hindu-kush) and the Imaus (Mustagh Mountains), i.e. in the Desertum arenosum auro abondans (Desert of Cobi): according to Dureau de la Malle it is probable, therefore, that from the fifteenth to the sixth century B.C. the ratio of gold to silver was 6:1 or 8:1, the same which existed in China and Japan until the beginning of the nineteenth century; Herodotus puts it at 13:1 for Persia under Darius Hystaspes. According to the code of Manou, written between 1300 and 600 B.C., gold to silver = 2 1/2:1. Silver mines must nearly always be established in primitive terrain; that is where the deposits lie, and only lesser veins are found in easier ground. Instead of in alluvial sand and gravel, silver is ordinarily embedded in the most compact and hard rocks, such as quartz, etc. This metal is more common in regions which are cold, either from latitude or from elevation, while gold generally frequents warm countries. In contrast to gold, silver is only very rarely found in a pure state (usually combined with arsenic or sulphur) (muriatic acid, nitric saltpetre). As far as the quantity of deposits is concerned (prior to the discovery of Australia and California), Humboldt in 1811 estimates the proportion of gold to silver in America at 1:46, and in Europe (including Asiatic Russia) at 1:40. The mineralogists of the Acad mie des Sciences estimate in our time (1842) that the ratio is 1:52; despite that, the lb. of gold is only worth 15 lb. of silver; thus their value relation = 15:1. Copper. Specific gravity = 8.9. Beautiful dawn-red colour; fairly hard; requires very high temperatures to melt. Not infrequently encountered pure; frequently combined with oxygen or sulphur. Deposits found in primordial, ancient terrain. However, found more frequently close to the surface, at no great depth, agglomerated in masses of pure metal, sometimes of a considerable weight. Used in peace and war before iron. (Gold relates to silver as the substance of money in the same way as copper to iron as instrument of labour in historical development.) Circulates in great quantity in Italy under the Romans during the first to the fifth centuries. One can determine a priori a people s degree of civilization if one knows no more than the metal, gold, copper, silver or iron, which it uses for weapons, tools or ornamentation. Hesiod, in his poem on agriculture: . Lucretius: Et prior aeris erat quam ferri cognitus usus. Jacob cites ancient copper mines in Nubia and Siberia (see Dureau I, 58); Herodotus says that the Massagetians had only bronze, but no iron. To judge by the collection known as the Oxford Marbles, iron unknown before 1431 B.C. In Homer, iron rare; however, very common use of bronze (an alloy of copper, zinc and tin) which Greek and Roman society used for a very long period, even for the fabrication of axes and razors. Italy fairly wealthy in native copper; thus copper money formed, if not the only currency, at least the normal currency, the monetary unit of central Italy, up to 247 B.C. The Greek colonies in southern Italy received silver directly from Greece and Asia, or via Tyre and Carthage; and used it for money starting in the fifth and sixth centuries. The Romans, it seems, possessed silver money prior to the expulsion of the Kings, but, Pliny says, interdictum id vetere consulto patrum, Italiae parci (i.e. the silver mines) jubentium , They feared the consequences of a convenient means of circulation opulence, increase of slaves, accumulation, concentration of land ownership. Among the Etruscans, too, copper money before gold. Garnier is wrong when he says (see Notebook III, p. 28), The material destined for accumulation was naturally sought for and selected from the realm of the minerals. On the contrary, accumulation began after metal money was found (whether as money proper or only as preferred medium of exchange by weight). This point to be discussed especially in regard to gold. Reitemeier is right (see Notebook III, p. 34): Gold, silver and copper were used by the ancients as implements for hacking and breaking, despite their relative softness, before the advent of iron and before they were used as money. (Improvement of implements when men learned to temper copper and thus make it hard enough to defy solid rock. A very much hardened copper was used to make the chisels and hammers used for mastering rock. Finally, iron was discovered.) Jacob says: In patriarchal times (see Notebook IV, p. 3), when the metals used for making weapons, such as (1) brass and (2) iron, were rare and enormously expensive compared with the common food and clothing then used, then, although coined money made of the precious metals was still unknown, yet gold and silver had acquired the faculty of being more easily and conveniently exchanged for the other metals than corn and cattle. Besides, in order to obtain the pure or nearly pure gold found in the immense alluvial lands situated between the Hindu-kush chains and the Himalaya, only a simple washing operation was required. In those times the population in these countries of Asia was abundant, and hence labour was cheap. Silver was relatively more expensive owing to the (technical) difficulties of obtaining it. The opposite tendency set in in Asia and in Greece after the death of Alexander. The gold-bearing sands became exhausted; the price of slaves and of manpower rose; and, since mechanics and geometry had made immense progress from Euclid to Archimedes, it was possible to exploit with profit the rich veins of silver mined in Asia, in Thrace and in Spain; and, silver being 52 times more abundant than gold, the value ratio between them necessarily changed, so that the livre of gold, which at the time of Xenophon, 350 B.C., was exchanged for 10 livres of silver, came to be worth 18 livres of the latter metal in the year A.D. 422. Thus, it rose from 10:1 to 18:1. At the end of the fifth century A.D. an extraordinary diminution in the quantity of precious metals; a halt in mining. In the Middle Ages up to the end of the fifteenth century a relatively significant portion of money in gold coins. (The diminution affected, most of all, silver, which had previously circulated most widely.) Ratio in the fifteenth century = 10:1, in the eighteenth century 14:1 on the continent, in England = 15:1. In most of Asia, silver more as a commodity in trade; especially in China, where copper money (Tehen, a composition of copper, zinc and lead) coin of the realm; in China, gold (and silver) by weight as a commodity to balance foreign trade. Large fluctuations in Rome between the value of copper and silver (in coins). Up to Servius, metal in bullion form, aes rude, for trade. The monetary unit, the copper as = 1 pound of copper. In the time of Servius, silver to copper = 279:1; until the beginning of the Punic war = 400:1 ; during the First Punic War = 140:1; Second Punic War = 112:1. Gold very expensive in Rome at first, whereas silver from Carthage (and Spain); gold used only in ingots until 547. Gold to silver in trade = 13.71:1, in coins = 17.4:1, under Caesar = 12:1 (at the outbreak of the civil war, after the plunder of the aerarium by Caesar, only 8:1); under Honorius and Arcadius (397) fixed at = 14.4:1; under Honorius and Theodosius the Younger (422)= 18:1. First silver coin in Rome minted 485; first gold coin: 547. As soon as, after the Second Punic War, the as was reduced to 1 ounce, it became small change; the sesterce (silver) the monetary unit, and all large payments made in silver. (In everyday commerce copper (later iron) remained the chief metal. Under the Emperors of the Orient and Occident, the solidus (aureus), i.e. gold, was the monetary standard.) Thus, in antiquity, taking the average: First: Relative increase in value of silver as compared with gold. Apart from special phenomena (Arabs) where gold cheaper than silver and still cheaper than iron, in Asia from the fifteenth to the sixth centuries B.C., gold to silver = 6:1 or 8:1 (the latter ratio in China and Japan until the beginning of the nineteenth century). In the Manou Code itself = 2 1/2:1. This lower ratio arises from the same causes which promote the discovery of gold as the first metal. Gold in those days chiefly from Asia and Egypt. This period corresponds to that of copper money in Italian history. In general, copper as main instrument of peace and war corresponds to the pre-eminence of gold among the precious metals. Even in Xenophon s time, gold to silver = 10:1. Secondly: after the death of Alexander, relative rise in the value of gold compared to silver, with the exhaustion of the gold-bearing sand, progress in technology and civilization; and hence establishment of silver mines; now the influence of the quantitatively greater prevalence of silver over gold in the earth s crust. But especially the Carthaginians, the exploitation of Spain, which necessarily had to revolutionize the relation of silver to gold in somewhat the same way as the discovery of American silver at the end of the fifteenth century. Ratio in Caesar s time = 17:1; later 14: 1; finally, after A.D. 422 = 18: l. (The decline of gold under Caesar for accidental reasons.) The decline of silver relative to gold corresponds to iron being the chief instrument of production in war and peace. While in the first period, influx of gold from the East, in the second, influx of silver from the cooler West. Thirdly in the Middle Ages: Again the ratio as in the time of Xenophon, 10:1. (In some places = 12:1?) Fourthly, after the discovery of America: Again about the ratio as in the time of Honorius and Arcadius (397); 14 to 15:1. Although since about 1815 44 an increase in the production of gold, gold was at a premium (e.g. in France). It is probable that the discovery of California and Australia fifthly, will reintroduce the ratio of the Roman Imperium, 18: 1, if not greater. The relative depreciation of silver due to progress in the production of precious metals, in antiquity as well as after, [proceeds] from East to West, until California and Australia reverse this. In the short run, great fluctuations; but when one looks at the main differences, these repeat themselves in a remarkable fashion. In antiquity, copper three or four times as expensive as today. (Garnier.) Circulation, or the turnover of money, corresponds to an opposite circulation, or turnover, of commodities. A commodity possessed by A passes into the hands of B, while B s money passes into the hands of A, etc. The circulation of money, like that of commodities, begins at an infinity of different points, and to an infinity of different points it returns. Departures from a single centre to the different points on the periphery and the return from all points of the periphery to a single centre do not take place in the circulatory process at the stage here being examined, i.e. its direct stage; they belong, rather, in a circulatory system mediated by a banking system. This first, spontaneous and natural circulation does consist, however, of a mass of turnovers. Circulation proper, nevertheless, begins only where gold and silver cease to be commodities; between countries which export precious metals and those which import them, no circulation in this sense takes place, but mere simple exchange, since gold and silver function here not as money but as commodities. Where money plays the role of mediating the exchange of commodities (that means here their circulation) and is hence a means of exchange, it is an instrument of circulation, a vehicle of circulation; but wherever, in this process, it is itself circulated, where it changes hands along its own lines of motion, there it itself has a circulation, monetary circulation, monetary turnover. The aim is to find out to what extent this circulation is determined by particular laws. This much is clear from the outset: if money is a vehicle of circulation for the commodity, then the commodity is likewise a vehicle for the circulation of money. If money circulates commodities, then commodities circulate money. The circulation of commodities and the circulation of money thus determine one another. As regards monetary turnover, three things merit attention: (1) the form of the movement itself; the line which it describes (its concept); (2) the quantity of money circulating; (3) the rate at which it completes its motion, its velocity of circulation. This can happen only in connection with the circulation of commodities. This much is clear from the outset, that there are moments in the circulation of commodities which are entirely independent of the circulation of money, and which either directly determine the latter, or which are determined along with monetary circulation by a third factor, as in the case of, e.g., the velocity. The overall character of the mode of production will determine them both, and will determine the circulation of commodities more directly. The mass of persons engaged in exchange (population): their distribution between the town and the country; the absolute quantity of commodities, of products and agencies of production; the relative mass of commodities which enter into circulation; the development of the means of communication and transport, in the double sense of determining not only the sphere of those who are in exchange, in contact, but also the speed with which the raw material reaches the producer and the product the consumer; finally the development of industry, which concentrates different branches of production, e.g. spinning, weaving, dyeing, etc., and hence makes superfluous a series of intermediate exchanges. The circulation of commodities is the original precondition of the circulation of money. To what extent the latter then reacts back on the circulation of commodities remains to be seen. The first task is firmly to establish the general concept of circulation or of turnover. But first let us note that what is circulated by money is exchange value, hence prices. Hence, as regards the circulation of commodities, it is not only their mass but, equally, their prices which must be considered. A large quantity of commodities at a low exchange value (price) obviously requires less money for its circulation than a smaller quantity at double the price. Thus, actually, the concept of price has to be developed before that of circulation. Circulation is the positing of prices, it is the process in which commodities are transformed into prices: their realization as prices. Money has a dual character: it is (1) measure, or element in which the commodity is realized as exchange value, and (2) means of exchange, instrument of circulation, and in each of these aspects it acts in quite opposite directions. Money only circulates commodities which have already been ideally transformed into money, not only in the head of the individual but in the conception held by society (directly, the conception held by the participants in the process of buying and selling). This ideal transformation into money is by no means determined by the same laws as the real transformation. Their interrelation is to be examined. (a) An essential characteristic of circulation is that it circulates exchange values (products or labour), and, in particular, exchange values in the form of prices. Thus, not every form of commodity exchange, e.g. barter, payment in kind, feudal services, etc., constitutes circulation. To get circulation, two things are required above all: Firstly: the precondition that commodities are prices; Secondly: not isolated acts of exchange, but a circle of exchange, a totality of the same, in constant flux, proceeding more or less over the entire surface of society; a system of acts of exchange. The commodity is specified as an exchange value. As an exchange value, it functions in a given proportion (relative to the labour time contained in it) as equivalent for all other values (commodities); but it does not directly correspond to this, its function. As an exchange value it differs from itself as a natural, material thing. A mediation is required to posit it as an exchange value. Money presents the exchange value of the commodity to the commodity as something different from itself. The commodity which is posited as money is, at the outset, the commodity as pure exchange value, or, the commodity as pure exchange value is money. But at the same time, money now exists outside and alongside the commodity; its exchange value, the exchange value of all commodities, has achieved an existence independent of the commodity, an existence based in an autonomous material of its own, in a particular commodity. The exchange value of the commodity expresses the totality of the quantitative relations in which all other commodities can be exchanged for it, determined by the unequal quantities of the same which can be produced in the same labour time. Money then exists as the exchange value of all commodities alongside and outside them. It is the universal material into which they must be dipped, in which they become gilded and silver-plated, in order to win their independent existence as exchange values. They must be translated into money, expressed in money. Money becomes the general denomination of exchange values, of commodities as exchange values. Exchange value expressed as money, i.e. equated with money, is price. After money has been posited as independent in relation to exchange values, then the exchange values are posited in their particularity in relation to their subject, money. But every exchange value is a particular quantity; a quantitatively specific exchange value. As such, it is = a particular quantity of money. This particularity is given, in the general law, by the amount of labour time contained in a given exchange value. Thus an exchange value which is the product of, say, one day is expressed in a quantity of gold or silver which = one day of labour time, which is the product of one day of labour. The general measure of exchange values now becomes the measure which exists between each exchange value and the money to which it is equated. (Gold and silver are determined, in the first place, by their cost of production in the country of production. In the mining countries all prices ultimately depend on the costs of production of the precious metals; the remuneration paid to the miner, affords the scale, on which the remuneration of all other producers is calculated. The gold value and silver value of all commodities exempt from monopoly depends in a country without mines on the gold and silver which can be obtained by exporting the result of a given quantity of labour, the current rate of profit, and, in each individual case, the amount of wages, which have been paid, and the time for which they have been advanced. (Senior.) In other words: on the quantity of gold and silver which is directly or indirectly obtained from the mining countries in exchange for a given quantity of labour (exportable products). Money is in the first instance that which expresses the relation of equality between all exchange values: in money, they all have the same name.) Exchange value, posited in the character of money, is price. Exchange value is expressed in price as a specific quantity of money. Money as price shows first of all the identity of all exchange values; secondly, it shows the unit of which they all contain a given number, so that the equation with money expresses the quantitative specificity of exchange values, their quantitative relation to one another. Money is here posited, thus, as the measure of exchange values; and prices as exchange values measured in money. The fact that money is the measure of prices, and hence that exchange values are compared with one another on this standard, is an aspect of the situation which is self-evident. But what is more important for the analysis is that in price, exchange value is compared with money. After money has been posited as independent exchange value, separated from commodities, then the individual commodity, the particular exchange value, is again equated to money, i.e. it is posited as equal to a given quantity of money, expressed as money, translated into money. By being equated to money, they again become related to one another as they were, conceptually, as exchange values: they balance and equate themselves with one another in given proportions. The particular exchange value, the commodity, becomes expressed as, subsumed under, posited in the character of the independent exchange value, of money. How this happens (i.e. how the quantitative relation between the quantitatively defined exchange value and a given quantity of money is found), above. But, since money has an independent existence apart from commodities, the price of the commodity appears as an external relation of exchange values or commodities to money; the commodity is not price, in the way in which its social substance stamped it as exchange value; this quality is not immediately coextensive with it; but is mediated by the commodity s comparison with money; the commodity is exchange value, but it has a price. Exchange value was in immediate identity with it, it was its immediate quality, from which it just as immediately split, so that on one side we found the commodity, on the other (as money) its exchange value; but now, as price, the commodity relates to money on one side as something existing outside itself, and secondly, it is ideally posited as money itself, since money has a reality different from it. The price is a property of the commodity, a quality in which it is presented as money. It is no longer an immediate but a reflected quality of it. Alongside real money, there now exists the commodity as ideally posited money. This next characteristic, a characteristic of money as measure as well as of the commodity as price, is most easily shown by means of the distinction between real money and accounting money. As measure, money always serves as accounting money, and, as price, the commodity is always transformed only ideally into money. The appraisal of the commodity by the seller, the offer made by the buyer, the calculations, obligations, rents, inventories, etc., in short, everything which leads up to and precedes the material act of payment, must be expressed in accounting money. Real money intervenes only in order to realize payments and to balance (liquidate) the accounts. If I must pay 24 livres 12 sous, then accounting money presents 24 units of one sort and 12 of another, while in reality I shall pay in the form of two material pieces: a gold coin worth 24 livres and a silver coin worth 12 sous. The total mass of real money has necessary limits in the requirements of circulation. Accounting money is an ideal measure, which has no limits other than those of the imagination. Employed to express every sort of wealth if considered from the aspect of its exchange value alone; thus, national wealth, the income of the state and of individuals; the accounting values, regardless of the form in which these values may exist, regulated in one and the same form; so that there is not a single article in the mass of consumable objects which is not several times transformed into money by the mind, while, compared to this mass, the total sum of effective money is, at the most = 1:10. (Garnier.) (This last ratio is poor. 1: many millions is more correct. But this entirely unmeasurable.) Thus, just as originally money expressed exchange value, so does the commodity as price, as ideally posited, mentally realized exchange value, now express a sum of money: money in a definite proportion. As prices, all commodities in their different forms are representatives of money, whereas earlier it was money, as the independent form of exchange value, which was the representative of all commodities. After money is posited as a commodity in reality, the commodity is posited as money in the mind. It is clear so far, then, that in this ideal transformation of commodities into money, or in the positing of commodities as prices, the quantity of really available money is altogether a matter of indifference, for two reasons: Firstly: the ideal transformation of commodities into money is prima facie independent of and unrestricted by the mass of real money. Not a single piece of money is required in this process, just as little as a measuring rod (say, a yardstick) really needs to be employed before, for example, the ideal quantity of yards can be expressed. If, for example, the entire national wealth of England is appraised in terms of money, i.e. expressed as a price, everyone knows that there is not enough money in the world to realize this price. Money is needed here only as a category, as a mental relation. Secondly: because money functions as a unit, that is, the commodity is expressed in such a way that it contains a definite sum of equal parts of money, is measured by it, it follows that the measure between both [is] the general measure of exchange values costs of production or labour time. Thus if 1/3 of an ounce of gold is the product of 1 working day, and the commodity x is the product of 3 working days, then the commodity x = 1 oz. or 3 17s. 4d. With the measurement of money and of the commodity, the original measure of exchange values enters again. Instead of being expressed in 3 working days, the commodity is expressed in the quantity of gold or silver which is the product of 3 working days. The quantity of really available money obviously has no bearing on this proportion. (Error by James Mill: overlooks that their cost of production and not their quantity determines the value of the precious metals, as well as the prices of commodities measured in metallic value.) ( Commodities in exchange are their own reciprocal measure But this process would require as many reference points as there are commodities in circulation. If a commodity were exchanged only for one, and not for two commodities, then it would not serve as term of comparison Hence the necessity of a common term of comparison This term can be purely ideal The determination of measure is fundamental, more important than that of wages In the trade between Russia and China silver is used to evaluate all commodities, but nevertheless this commerce is done by means of barter. (Storch.) The operation of measuring with money is similar to the employment of weights in the comparison of material quantities. The same name for the two units whose function is to count the weight as well as the value of each thing. Measures of weight and measures of value the same names. An talon of invariable weight was easily found. In the case of money, the question was again the value of a pound of silver, which = its cost of production. (Sismondi.) Not only the same names. Gold and silver were originally measured by weight. Thus, the as = 1 pound of copper among the Romans.) Sheep and oxen, not gold and silver, money in Homer and Hesiod, as measure of value. Barter on the Trojan battlefield. (Jacob.) (Similarly, slaves in the Middle Ages. ibid.) Money can be posited in the character of measure and in that of the general element of exchange values, without being realized in its further qualities; hence also before it has taken on the form of metal money. In simple barter. However, presupposed in that case that little exchange of any kind takes place; that commodities are not developed as exchange values and hence not as prices. ( A common standard in the price of anything presupposes its frequent and familiar alienation. This not the case in simple states of society. In non-industrial countries many things without definite price Sale alone can determine prices, and frequent sale alone can fix a standard. The frequent sale of articles of first necessity depends on the relation between town and country etc.) A developed determination of prices presupposes that the individual does not directly produce his means of subsistence, but that his direct product is an exchange value, and hence must first be mediated by a social process, in order to become the means of life for the individual. Between the full development of this foundation of industrial society and the patriarchal condition, many intermediate stages, endless nuances. This much appears from (a). If the cost of production of the precious metals rises, then all commodity prices fall; if the cost of production of the precious metals falls, then all commodity prices rise. This is the general law, which, as we shall see, is modified in particular cases. (b) If exchange values are ideally transformed into money by means of prices, then, in the act of exchange, in purchase and sale, they are really transformed into money, exchanged for money, in order then to be again exchanged as money for a commodity. A particular exchange value must first be exchanged for exchange value in general before it can then be in turn exchanged for particulars. The commodity is realized as an exchange value only through this mediating movement, in which money plays the part of middleman. Money thus circulates in the opposite direction from commodities. It appears as the middleman in commodity exchange, as the medium of exchange. It is the wheel of circulation, the instrument of circulation for the turnover of commodities; but, as such, it also has a circulation of its own monetary turnover, monetary circulation. The price of the commodity is realized only when it is exchanged for real money, or in its real exchange for money. This is what emerges from the foregoing. Commodities are really exchanged for money, transformed into real money, after they have been ideally transformed into money beforehand i.e. have obtained the attribute of price as prices. Prices, therefore, are the precondition of monetary circulation, regardless of how much their realization appears to be a result of the latter. The circumstances which make the prices of commodities rise above or fall below their average value because their exchange value does so are to be developed in the section on exchange value, and precede the process of the actual realization of the prices of commodities through money; they thus appear, at first, as completely independent of it. The relations of numbers to one another obviously remain the same when I change them into decimal fractions. This is only giving them another name. In order really to circulate commodities, what is required is instruments of transport, and transport cannot be performed by money. If I have bought 1,000 lb. of iron for the amount of x, then the ownership of the iron has passed into my hand. My x have done their duty as means of exchange and have circulated, along with the title of ownership. The seller, inversely, has realized the price of iron, iron as exchange value. But in order then to bring the iron from him to me, money itself is useless; that requires wagons, horses, roads, etc. The real circulation of commodities through time and space is not accomplished by money. Money only realizes their price and thereby transfers the title to the commodity into the hands of the buyer, to him who has proffered means of exchange. What money circulates is not commodities but their titles of ownership; and what is realized in the opposite direction in this circulation, whether by purchase or sale, is again not the commodities, but their prices. The quantity of money which is, then, required for circulation is determined initially by the level of the prices of the commodities thrown into circulation. The sum total of these prices, however, is determined firstly: by the prices of the individual commodities; secondly: by the quantity of commodities at given prices which enter into circulation. For example, in order to circulate a quarter of wheat at 60s., twice as many s. are required as would be to circulate it at 30s. And if 5,000 of these quarters at 60s. are to be circulated, then 300,000 s. are required, while in order to circulate 200 such quarters only 12,000s. are needed. Thus, the amount of money required is dependent on the level of commodity prices and on the quantity of commodities at specified prices. Thirdly, however, the quantity of money required for circulation depends not only on the sum total of prices to be realized, but on the rapidity with which money circulates, completes the task of this realization. If 1 thaler in one hour makes 10 purchases at 1 thaler each, if it is exchanged 10 times, then it performs quite the same task that 10 thalers would do if they made only 1 purchase per hour. Velocity is the negative moment; it substitutes for quantity; by its means, a single coin is multiplied. The circumstances which determine the mass of commodity prices to be realized, on the one hand, and the velocity of circulation of money, on the other hand, are to be examined later. This much is clear, that prices are not high or low because much or little money circulates, but that much or little money circulates because prices are high or low; and, further, that the velocity of the circulating money does not depend on its quantity, but that the quantity of the circulating medium depends on its velocity (heavy payments are not counted but weighed; through this the time necessary is shortened). Still, as already mentioned, the circulation of money does not begin from a single centre, nor does it return to a single centre from all points of the periphery (as with the banks of issue and partly with state issues); but from an infinite number of points, and returns to an infinite number (this return itself, and the time required to achieve it, a matter of chance). The velocity of the circulating medium can therefore substitute for the quantity of the circulating medium only up to a certain point. (Manufacturers and farmers pay, for example, the worker; he pays the grocer, etc.; from there the money returns to the manufacturers and farmers.) The same quantity of money can effectuate a series of payments only successively, regardless of the speed. But a certain mass of payments must be made simultaneously. Circulation takes its point of departure at one and the same time from many points. A definite quantity of money is therefore necessary for circulation, a sum which will always be engaged in circulation, and which is determined by the sum total which starts from the simultaneous points of departure in circulation, and by the velocity with which it runs its course (returns). No matter how many ebbs and floods this quantity of the circulating medium is exposed to, an average level nevertheless comes into existence; since the permanent changes are always very gradual, take place only over longer periods, and are constantly paralysed by a mass of secondary circumstances, as we shall see. (To (a). Measure, used as attribute of money, means indicator of value Ridiculous, that prices must fall, because commodities are judged as being worth so many ounces of gold, and the amount of gold is diminished in this country The efficiency of gold as an indicator of value is unaffected by its quantity being greater or smaller in any particular country. If the employment of banking expedients were to succeed in reducing the paper and metal circulation in this country by half, the relative value of money and commodities would remain the same. Example of Peru in the sixteenth century and transmission from France to England. Hubbard, VIII, 45.) ( On the African coast neither gold nor silver the measure of value; instead of them, an ideal standard, an imaginary bar. ) (Jacob, V, 15.) In its quality of being a measure, money is indifferent to its quantity, or, the existing quantity of money makes no difference. Its quantity is measured in its quality as medium of exchange, as instrument of circulation. Whether these two qualities of money can enter into contradiction with one another to be looked at later. (The concept of forced, involuntary circulation (see Steuart) does not belong here yet.) To have circulation, what is essential is that exchange appear as a process, a fluid whole of purchases and sales. Its first presupposition is the circulation of commodities themselves, as a natural, many-sided circulation of those commodities. The precondition of commodity circulation is that they be produced as exchange values, not as immediate use values, but as mediated through exchange value. Appropriation through and by means of divestiture [Ent usserung] and alienation [Ver usserung] is the fundamental condition. Circulation as the realization of exchange values implies: (1) that my product is a product only in so far as it is for others; hence suspended singularity, generality; (2) that it is a product for me only in so far as it has been alienated, become for others; (3) that it is for the other only in so far as he himself alienates his product; which already implies (4) that production is not an end in itself for me, but a means. Circulation is the movement in which the general alienation appears as general appropriation and general appropriation as general alienation. As much, then, as the whole of this movement appears as a social process, and as much as the individual moments of this movement arise from the conscious will and particular purposes of individuals, so much does the totality of the process appear as an objective interrelation, which arises spontaneously from nature; arising, it is true, from the mutual influence of conscious individuals on one another, but neither located in their consciousness, nor subsumed under them as a whole. Their own collisions with one another produce an alien social power standing above them, produce their mutual interaction as a process and power independent of them. Circulation, because a totality of the social process, is also the first form in which the social relation appears as something independent of the individuals, but not only as, say, in a coin or in exchange value, but extending to the whole of the social movement itself. The social relation of individuals to one another as a power over the individuals which has become autonomous, whether conceived as a natural force, as chance or in whatever other form, is a necessary result of the fact that the point of departure is not the free social individual. Circulation as the first totality among the economic categories is well suited to bring this to light. At first sight, circulation appears as a simply infinite process. The commodity is exchanged for money, money is exchanged for the commodity, and this is repeated endlessly. This constant renewal of the same process does indeed form an important moment of circulation. But, viewed more precisely, it reveals other phenomena as well; the phenomena of completion, or, the return of the point of departure into itself. The commodity is exchanged for money; money is exchanged for the commodity. In this way, commodity is exchanged for commodity, except that this exchange is a mediated one. The purchaser becomes a seller again and the seller becomes purchaser again. In this way, each is posited in the double and the antithetical aspect, and hence in the living unity of both aspects. It is entirely wrong, therefore, to do as the economists do, namely, as soon as the contradictions in the monetary system emerge into view, to focus only on the end results without the process which mediates them; only on the unity without the distinction, the affirmation without the negation. The commodity is exchanged in circulation for a commodity: at the same time, and equally, it is not exchanged for a commodity, in as much as it is exchanged for money. The acts of purchase and sale, in other words, appear as two mutually indifferent acts, separated in time and place. When it is said that he who sells also buys in as much as he buys money, and that he who buys also sells in as much as he sells money, then it is precisely the distinction which is overlooked, the specific distinction between commodity and money. After the economists have most splendidly shown that barter, in which both acts coincide, does not suffice for a more developed form of society and mode of production, they then suddenly look at the kind of barter which is mediated by money as if it were not so mediated, and overlook the specific character of this transaction. After they have shown us that money is necessary in addition to and distinct from commodities, they assert all at once that there is no distinction between money and commodities. They take refuge in this abstraction because in the real development of money there are contradictions which are unpleasant for the apologetics of bourgeois common sense, and must hence be covered up. In so far as purchase and sale, the two essential moments of circulation, are indifferent to one another and separated in place and time, they by no means need to coincide. Their indifference can develop into the fortification and apparent independence of the one against the other. But in so far as they are both essential moments of a single whole, there must come a moment when the independent form is violently broken and when the inner unity is established externally through a violent explosion. Thus already in the quality of money as a medium, in the splitting of exchange into two acts, there lies the germ of crises, or at least their possibility, which cannot be realized, except where the fundamental preconditions of classically developed, conceptually adequate circulation are present. It has further been seen that, in circulation, money only realizes prices. The price appears at first as an ideal aspect of the commodity; but the sum of money exchanged for a commodity is its realized price, its real price. The price appears therefore as external to and independent of the commodity, as well as existing in it ideally. If the commodity cannot be realized in money, it ceases to be capable of circulating, and its price becomes merely imaginary; just as originally the product which has become transformed into exchange value, if it is not really exchanged, ceases to be a product. (The rise and fall of prices not the question here.) From viewpoint (a) price appeared as an aspect of the commodity; but from (b) money appears as the price outside the commodity. The commodity requires not simply demand, but demand which can pay in money. Thus, if its price cannot be realized, if it cannot be transformed into money, the commodity appears as devalued, depriced. The exchange value expressed in its price must be sacrificed as soon as this specific transformation into money is necessary. Hence the complaints by Boisguillebert, e.g. that money is the hangman of all things, the moloch to whom everything must be sacrificed, the despot of commodities. In the period of the rising absolute monarchy with its transformation of all taxes into money taxes, money indeed appears as the moloch to whom real wealth is sacrificed. Thus it appears also in every monetary panic. From having been a servant of commerce, says Boisguillebert, money became its despot. But, in fact, already the determination of prices in themselves contains what is counterposed to money in exchange; that money no longer represents the commodity, but the commodity, money. Lamentations about commerce in money as illegitimate commerce are to be found among several writers, who form the transition from the feudal to the modern period; the same later among socialists. ( ) The further the division of labour develops, the more does the product cease to be a medium of exchange. The necessity of a general medium of exchange arises, a medium independent of the specific production of each and every one. When production is oriented towards immediate subsistence, not every article can be exchanged for every other one, and a specific activity can be exchanged only for specific products. The more specialized, manifold and interdependent the products become, the greater the necessity for a general medium of exchange. At the beginning, the product of labour, or labour itself, is the general medium of exchange. But this ceases more and more to be general medium of exchange as it becomes more specialized. A fairly developed division of labour presupposes that the needs of each person have become very many-sided and his product has become very one-sided. The need for exchange and the unmediated medium of exchange develop in inverse proportion. Hence the necessity for a general medium of exchange, where the specific product and the specific labour must be exchanged for exchangeability. The exchange value of a thing is nothing other than the quantitatively specific expression of its capacity for serving as medium of exchange. In money the medium of exchange becomes a thing, or, the exchange value of the thing achieves an independent existence apart from the thing. Since the commodity is a medium of exchange of limited potency compared with money, it can cease to be a medium of exchange as against money. ( ) The splitting of exchange into purchase and sale makes it possible for me to buy without selling (stockpiling of commodities) or to sell without buying (accumulation of money). It makes speculation possible. It turns exchange into a special business; i.e. it founds the merchant estate. This separation of the two elements has made possible a mass of transactions in between the definitive exchange of commodities, and it enables a mass of persons to exploit this divorce. It has made possible a mass of pseudo-transactions. Sometimes it becomes evident that what appeared to be an essentially divided act is in reality an essentially unified one; then again, sometimes, that what was thought to be an essentially unified act is in reality essentially divided. At moments when purchasing and selling assert themselves as essentially different acts, a general depreciation of all commodities takes place. At moments where it turns out that money is only a medium of exchange, a depreciation of money comes about. General fall or rise of prices. Money provides the possibility of an absolute division of labour, because of independence of labour from its specific product, from the immediate use value of its product for it. The general rise of prices in times of speculation cannot be ascribed to a general rise in its exchange value or its cost of production; for if the exchange value or the cost of production of gold were to rise in step with that of all other commodities, then their exchange values expressed in money, i.e. their prices, would remain the same. Nor can it be ascribed to a decline in the production price of gold. (Credit is not yet on the agenda here.) But since money is not only a general commodity, but also a particular, and since, as a particular, it comes under the laws of supply and demand, it follows that the general demand for particular commodities as against money must bring it down. We see that it is in the nature of money to solve the contradictions of direct barter as well as of exchange value only by positing them as general contradictions. Whether or not a particular medium of exchange was exchanged for another particular was a matter of coincidence; now, however, the commodity must be exchanged for the general medium of exchange, against which its particularity stands in a still greater contradiction. In order to secure the exchangeability of the commodity, exchangeability itself is set up in opposition to it as an independent commodity. (It was a means, becomes an end.) The question was, whether a particular commodity encounters another particular one. But money suspends the act of exchange itself in two mutually indifferent acts. (Before the questions regarding circulation, its strength, weakness, etc., and notably the disputed point regarding the quantity of money in circulation and prices, are further developed, money should be looked at from the point of view of its third characteristic. ) One moment of circulation is that the commodity exchanges itself through money for another commodity. But there is, equally, the other moment, not only that commodity exchanges for money and money for commodity, but equally that money exchanges for commodity and commodity for money; hence that money is mediated with itself by the commodity, and appears as the unity which joins itself with itself in its circular course. Then it appears no longer as the medium, but as the aim of circulation (as e.g. with the merchant estate) (in commerce generally). If circulation is looked at not as a constant alternation, but as a series of circular motions which it describes within itself, then this circular path appears as a double one: Commodity Money Money Commodity; and in the other direction Money Commodity Commodity Money; i.e. if I sell in order to buy, then I can also buy in order to sell. In the former case money only a means to obtain the commodity, and the commodity the aim; in the second case the commodity only a means to obtain money, and money the aim. This is the simple result when the moments of circulation are brought together. Looking at it as mere circulation, the point at which I intervene in order to declare it the point of departure has to be a matter of indifference. Now, a specific distinction does enter between a commodity in circulation and money in circulation. The commodity is thrown out of circulation at a certain point and fulfils its definitive function only when it is definitively withdrawn from circulation, consumed, whether in the act of production or in consumption proper. The function of money, by contrast, is to remain in circulation as its vehicle, to resume its circular course always anew like a perpetuum mobile. Nevertheless, this second function is also a part of circulation, equally with the first. Now one can say: to exchange commodity for commodity makes sense, since commodities, although they are equivalent as prices, are qualitatively different, and their exchange ultimately satisfies qualitatively different needs. By contrast, exchanging money for money makes no sense, unless, that is, a quantitative difference arises, less money is exchanged for more, sold at a higher price than purchased, and with the category of profit we have as yet nothing to do. The circle Money Commodity Commodity Money, which we drew from the analysis of circulation, would then appear to be merely an arbitrary and senseless abstraction, roughly as if one wanted to describe the life cycle as Death Life Death; although even in the latter case it could not be denied that the constant decomposition of what has been individualized back into the elemental is just as much a moment of the process of nature as the constant individualization of the elemental. Similarly in the act of circulation, the constant monetarization of commodities, just as much as the constant transformation of money into commodities. In the real process of buying in order to sell, admittedly, the motive is the profit made thereby, and the ultimate aim is to exchange less money, by way of the commodity, for more money, since there is no qualitative difference (here we disregard special kinds of metal money as well as special kinds of coins) between money and money. All that given, it cannot be denied that the operation may come to grief and that hence the exchange of money for money without quantitative difference frequently takes place in reality and, hence, can take place. But before this process, on which commerce rests and which therefore, owing to its extension, forms a chief phenomenon of circulation, is possible at all, the circular path Money Commodity Commodity Money must be recognized as a particular form of circulation. This form is specifically different from that in which money appears as a mere medium of exchange for commodities; as the middle term; as a minor premise of the syllogism. Along with its quantitative aspect, visible in commerce, it must be separated out in its purely qualitative form, in its specific movement. Secondly: it already implies that money functions neither only as measure, nor only as medium of exchange, nor only as both; but has yet a third quality. It appears here firstly as an end in itself, whose sole realization is served by commodity trade and exchange. Secondly, since the cycle concludes with it at that point, it steps outside it, just as the commodity, having been exchanged for its equivalent through money, is thrown out of circulation. It is very true that money, in so far as it serves only as an agent of circulation, constantly remains enclosed in its cycle. But it appears here, also, that it is still something more than this instrument of circulation, that it also has an independent existence outside circulation, and that in this new character it can be withdrawn from circulation just as the commodity must constantly be definitively withdrawn. We must then observe money in its third quality, in which both of the former are included, i.e. that of serving as measure as well as the general medium of exchange and hence the realization of commodity prices.

Grundrisse 03

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch03.htm

But when we now go over to the second quality of money, money as medium of exchange and realizer of prices, then we have found that in this case it must be present in a certain quantity; that the given weight of gold and silver which has been posited as a unit is required in a given quantity in order to be adequate to this function. If the sum of prices to be realized, which depends on the price of a particular commodity multiplied by its quantity, is given on one side, and the velocity of monetary circulation on the other, then a certain quantity of the circulating medium is required. When we now examine the original form more closely, the direct form in which circulation presents itself, C M M C, then we see that money appears here as a pure medium of exchange. The commodity is exchanged for a commodity, and money appears merely as the medium of this exchange. The price of the first commodity is realized with money, in order to realize the price of the second commodity with the money, and thus to obtain it in exchange for the first. After the price of the first commodity is realized, the aim of the person who now has its price in money is not to obtain the price of the second commodity, but rather to pay its price in order to obtain the commodity. At bottom, therefore, money served him to exchange the first commodity for the second. As mere medium of exchange, money has no other purpose. The man who has sold his commodity and got money wants to buy another commodity, and the man from whom he buys it needs the money in order to buy another commodity etc. Now, in this function, as pure medium of circulation, the specific role of money consists only of this circulation, which it brings about owing to the fact that its quantity, its amount, was fixed beforehand. The number of times in which it is itself contained in the commodities as a unit is determined beforehand by their prices, and as medium of circulation it appears merely as a multiple of this predetermined unit. In so far as it realizes the price of commodities, the commodity is exchanged for its real equivalent in gold and silver; its exchange value is really exchanged for another commodity, money; but in so far as this process takes place only in order to transform this money back into a commodity, i.e. in order to exchange the first commodity for the second, then money appears only fleetingly, or, its substance consists only in this constant appearance as disappearance, as this vehicle of mediation. Money as medium of circulation is only medium of circulation. The only attribute which is essential to it in order to serve in this capacity is the attribute of quantity, of amount, in which it circulates. (Since the amount is co-determined by the velocity, the latter does not require special mention here.) In so far as it realizes the price, its material existence as gold and silver is essential; but in so far as this realization is only fleeting and destined to suspend itself, this is irrelevant. It is only a semblance, as if the point were to exchange the commodity for gold or silver as particular commodities: a semblance which disappears as soon as the process is ended, as soon as gold and silver have again been exchanged for a commodity, and the commodity, hence, exchanged for another. The character of gold and silver as mere media of circulation, or the character of the medium of circulation as gold and silver is therefore irrelevant to their make-up as particular natural commodities. Suppose the total price of circulating commodities = 1,200 thalers. Their measure is then 1 thaler = x weight of silver. Now let 100 thalers be necessary to circulate these commodities in 6 hours; i.e. every thaler pays the price of 100 thalers in 6 hours. Now, what is essential is that 100 thalers be present, the amount of 100 of the metallic unit which measures the sum total of commodity prices; 100 of these units. That these units consist of silver is irrelevant to the process itself. This is already visible in the fact that a single thaler represents in the cycle of circulation a mass of silver 100 times greater than is contained in it in reality, even though in each particular transaction it only represents the silver weight of 1 thaler. In circulation as a whole, the 1 thaler thus represents 100 thalers, a weight of silver a hundred times greater than it really contains. It is in truth only a symbol for the weight of silver contained in 100 thalers. It realizes a price which is 100 times greater than it realizes in reality as a quantity of silver. Let the pound sterling be = 1/3 ounce of gold (it is not as much as that). In so far as the price of a commodity at 1 is paid, i.e. its price of 1 is realized, it is exchanged for 1, to that extent it is of decisive importance that the 1 really contain 1/3 ounce of gold. If it were a counterfeit , alloyed with non-precious metals, a only in appearance, then indeed the price of the commodity would not be realized; in order to realize it, it would have to be paid for in as great a quantity of the non-precious metal as equals 1/3 of an ounce of gold. Looking at this moment of circulation in isolation, it is thus essential that the unit of money should really represent a given quantity of gold or silver. But when we take circulation as a totality, as a self-enclosed process, C M M C, then the matter stands differently. In the first case the realization of price would be only apparent: in reality only a part of its price would be realized. The price posited in it ideally would not be posited in reality. The commodity which is ideally equated to a given weight of gold would in actual exchange not bring in as much gold as that. But if a fake were to circulate in the place of a real one, it would render absolutely the same service in circulation as a whole as if it were genuine. If a commodity, A, with the price of 1, is exchanged for 1 fake , and if this fake pound is again exchanged for commodity B, price 1, then the fake pound has done absolutely the same service as if it had been genuine. The genuine pound is, therefore, in this process, nothing more than a symbol, in so far as the moment in which it realizes prices is left out, and we look only at the totality of the process, in which it serves only as medium of exchange and in which the realization of prices is only a semblance, a fleeting mediation. Here the gold pound serves only to allow commodity A to be exchanged for commodity B, both having the same price. The real realization of the price of commodity A is, here, the commodity B, and the real realization of the price of B is the commodity A or C or D, which amounts to the same as far as the form of the relation is concerned, for which the particular content of the commodity is entirely irrelevant. Commodities with identical prices are exchanged. Instead of exchanging commodity A directly for commodity B, the price of commodity A is exchanged for the price of commodity B and the price of commodity B for commodity A. Money thus represents to the commodity only the latter s price. Commodities are exchanged for one another at their prices. The price of the commodity expresses about it, ideally, that it is an amount of a certain natural unit (weight units) of gold or silver, of the material in which money is embodied. In the form of money, or its realized price, the commodity now confronts a real amount of this unit. But in so far as the realization of the price is not the final act, and the point is not to possess the price of commodities as price, but as the price of another commodity, to that extent the material of money is irrelevant, e.g. gold and silver. Money becomes a subject as instrument of circulation, as medium of exchange, and the natural material in which it presents itself appears as an accident whose significance disappears in the act of exchange itself; because it is not in this material that the commodity exchanged for money is supposed to be realized, but rather in the material of another commodity. For now, apart from the moments that, in circulation, (1) money realizes prices, (2) money circulates titles of ownership; we have (3), additionally, that by means of it something takes place which could not happen otherwise, namely that the exchange value of the commodity is expressed in every other commodity. If 1 yard of linen costs 2s. and 1 lb. of sugar 1s., then the yard of linen is realized, by means of the 2s., in 2 lb. of sugar, while the sugar is converted into the material of its exchange value, into the material in which its exchange value is realized. As a mere medium of circulation, in its role in the constant flow of the circulatory process, money is neither the measure of prices, because it is already posited as such in the prices themselves; nor is it the means for the realization of prices, for it exists as such in one single moment of circulation, but disappears as such in the totality of its moments; but is, rather, the mere representative of the price in relation to all other commodities, and serves only as a means to the end that all commodities are to be exchanged at equivalent prices. It is exchanged for one commodity because it is the general representative of its exchange value; and, as such, as the representative of every other commodity of equal exchange value, it is the general representative; and that is, as such, what it is in circulation itself. It represents the price of the one commodity as against all other commodities, or the price of all commodities as against the one commodity. In this relation it is not only the representative of commodity prices, but the symbol of itself; i.e. in the act of circulation itself, its material, gold and silver, is irrelevant. It is the price; it is a given quantity of gold or silver; but in so far as this reality of the price is here only fleeting, a reality destined constantly to disappear, to be suspended, not to count as a definitive realization, but always only as an intermediate, mediating realization; in so far as the point here is not the realization of the price at all, but rather the realization of the exchange value of one particular commodity in the material of another commodity, to that extent its own material is irrelevant; it is ephemeral as a realization of the price, since this itself disappears; it exists, therefore, in so far as it remains in this constant movement, only as a representative of exchange value, which becomes real only if the real exchange value constantly steps into the place of its representative, constantly changes places with it, constantly exchanges itself for it. Hence, in this process, its reality is not that it is the price, but that it represents it, is its representative the materially present representative of the price, thus of itself, and, as such, of the exchange value of commodities. As medium of exchange, it realizes the prices of commodities only in order to posit the exchange value of the one commodity in the other, as its unit; i.e. in order to realize its exchange value in the other commodity; i.e. to posit the other commodity as the material of its exchange value. Only within circulation, then, is it such a material symbol; taken out of circulation, it again becomes a realized price; but within the process, as we have seen, the quantity, the amount of these material symbols of the monetary unit is the essential attribute. Hence, while the material substance of money, its material substratum of a given quantity of gold or silver, is irrelevant within circulation, where money appears as something existing in opposition to commodities, and where, by contrast, its amount is the essential aspect, since it is there only a symbol for a given amount of this unit; in its role as measure, however, where it was introduced only ideally, its material substratum was essential, but its quantity and even its existence as such were irrelevant. From this it follows that money as gold and silver, in so far as only its role as means of exchange and circulation is concerned, can be replaced by any other symbol which expresses a given quantity of its unit, and that in this way symbolic money can replace the real, because material money as mere medium of exchange is itself symbolic. It is these contradictory functions of money, as measure, as realization of prices and as mere medium of exchange, which explain the otherwise inexplicable phenomenon that the debasement of metallic money, of gold, silver, through admixture of inferior metals, causes a depreciation of money and a rise in prices; because in this case the measure of prices [is] no longer the cost of production of the ounce of gold, say, but rather of an ounce consisting of 2/3 copper etc. (The debasement of the coinage, in so far as it consists merely of falsifying or changing the names of the fractional weight units of the precious metal, e.g. if the eighth part of an ounce were to be called a sovereign, makes absolutely no difference in the measure and changes only its name. If, earlier, 1/4 of the ounce was called 1 sovereign, and now it is 1/8, then the price of 1 sovereign now expresses merely 1/8 of an ounce of gold; thus (about) 2 sovereigns are necessary to express the same price which was earlier expressed by 1 sovereign); or in the case of a mere falsification of the name of the fractional parts of the precious metal, the measure remains the same, but the fractional part [is] expressed in twice as many francs etc. as before; on the other hand, if the substratum of money, gold, silver, is entirely suspended and replaced by paper bearing the symbol of given quantities of real money, in the quantity required by circulation, then the paper circulates at the full gold and silver value. In the first case, because the medium of circulation is at the same time the material of money as measure, and the material in which prices are definitively realized; in the second case, because money only in its role as medium of circulation. Example of the clumsy confusion between the contradictory functions of money: Price is exactly determined by the quantity of money there is to buy it with. All the commodities in the world can fetch no more than all the money in the world. First, the determination of prices has nothing to do with actual sale; money, in sale, serves only as measure. Secondly, all commodities (in circulation) can fetch a thousand times more money as is in the world, if every piece of money were to circulate a thousand times. (The passage is quoted from the London Weekly Dispatch, 8 November 1857.) Since the total sum of prices to be realized in circulation changes with the prices of the commodities and with the quantity of them thrown into circulation; and since, on the other side, the velocity of the medium of circulation is determined by circumstances independent of itself, it follows from this that the quantity of media of circulation must be capable of changing, or expanding and contracting contraction and expansion of circulation. In its role as mere medium of circulation, it can be said about money that it ceases to be a commodity (particular commodity), when its material is irrelevant and it meets only the needs of circulation itself, and no other direct need: gold and silver cease to be commodities as soon as they circulate as money. It can be said about it, on the other hand, that it is now merely a commodity (general commodity), the commodity in its pure form, indifferent to its natural particularity and hence indifferent to all direct needs, without natural relation to a particular need as such. The followers of the Monetary System, even partly of the protectionist system (see e.g. Ferrier, p. 2), have clung only to the first aspect, while the modern economists cling to the second; e.g. Say, who says that money should be treated like a particular commodity, a commodity like any other. As medium of exchange, money appears in the role of necessary mediator between production and consumption. In the developed money system, one produces only in order to exchange, or, one produces only by exchanging. Strike out money, and one would thereby either be thrown back to a lower stage of production (corresponding to that of auxiliary barter), or one would proceed to a higher stage, in which exchange value would no longer be the principal aspect of the commodity, because social labour, whose representative it is, would no longer appear merely as socially mediated private labour. The question whether money as medium of exchange is productive or not productive is solved just as easily. According to Adam Smith, money not productive. Of course, Ferrier says e.g.: It creates values, because they would not exist without it. One has to look not only at its value as metal, but equally its property as money . A. Smith is correct, in so far as it is not the instrument of any particular branch of production; Ferrier is right too because it is an essential aspect of the mode of production resting on exchange value that product and agency of production should be posited in the character of money, and because this characteristic presupposes a money distinct from products; and because the money relation is itself a relation of production if production is looked at in its totality. When C M M C is dissected into its two moments, although the prices of the commodities are presupposed (and this makes the major difference), circulation splits into two acts of direct barter. C M: the exchange value of the commodity is expressed in another particular commodity, in the material of money, like that of money in the commodity; similarly with M C. To this extent, A. Smith is right when he says that money as medium of exchange is only a more complicated kind of barter. But when we look at the whole of the process, and not at both as equivalent acts, realization of the commodity in money and of money in the commodity, then A. Smith s opponents are correct when they say that he misunderstood the nature of money and that monetary circulation suppresses barter; that money serves only to balance the accounts of the arithmetical division arising from the division of labour. These arithmetical figures no more need to be of gold and silver than do the measures of length. (See Solly, p. 20.) Commodities change from being marchandises to being denr es, they enter consumption; money as medium of circulation does not; at no point does it cease to be commodity, as long as it remains within the role of medium of circulation. We now pass on to the third function of money; which initially results from the second form of circulation: M C C M; in which money appears not only as medium, nor as measure, but as end-in-itself, and hence steps outside circulation just like a particular commodity which ceases to circulate for the time being and changes from marchandise to denr e. But first it must be noted that, once the quality of money as an intrinsic relation of production generally founded on exchange value is presupposed, it is possible to demonstrate that in some particular cases it does service as an instrument of production. The utility of gold and silver rests on this, that they replace labour. (Lauderdale, p. 11.) Without money, a mass of swaps would be necessary before one obtained the desired article in exchange. Furthermore, in each particular exchange one would have to undertake an investigation into the relative value of commodities. Money spares us the first task in its role as instrument of exchange (instrument of commerce); the second task, as measure of value and representative of all commodities (idem, loc. cit.). The opposite assertion, that money is not productive, amounts only to saying that, apart from the functions in which it is productive, as measure, instrument of circulation and representative of value, it is unproductive; that its quantity is productive only in so far as it is necessary to fulfil these preconditions. That it becomes not only unproductive, but faux frais de production, the moment when more of it is employed than necessary for its productive aspect this is a truth which holds for every other instrument of production or exchange; for the machine as well as the means of transportation. But if by this it is meant that money exchanges only real wealth which already exists, then this is false, since labour, as well, is exchanged for it and bought with it, i.e. productive activity itself, potential wealth. The third attribute of money, in its complete development, presupposes the first two and constitutes their unity. Money, then, has an independent existence outside circulation; it has stepped outside it. As a particular commodity it can be transformed out of its form of money into that of luxury articles, gold and silver jewellery (as long as craftsmanship is still very simple, as e.g. in the old English period, a constant transformation of silver money into plate and vice versa. See Taylor) ; or, as money, it can be accumulated to form a treasure. When money in its independent existence is derived from circulation, it appears in itself as a result of circulation; by way of circulation, it closes the circle with itself. This aspect already latently contains its quality as capital. It is negated only as medium of exchange. Still, since it can be historically posited as measure before it appears as medium of exchange, and can appear as medium of exchange before it is posited as measure in the latter case it would exist merely as preferred commodity it can therefore also appear historically in the third function before it is posited in the two prior ones. But gold and silver can be accumulated as money only if they are already present in one of the other two roles, and it can appear in a developed form of the third role only if the two earlier ones are already developed. Otherwise, accumulating it is nothing more than the accumulation of gold and silver, not of money. (As an especially interesting example, go into the accumulation of copper money in the earlier periods of the Roman republic.) Since money as universal material representative of wealth emerges from circulation, and is as such itself a product of circulation, both of exchange at a higher potentiality, and a particular form of exchange, it stands therefore in the third function, as well, in connection with circulation; it stands independent of circulation, but this independence is only its own process. It derives from it just as it returns to it again. Cut off from all relation to it, it would not be money, but merely a simple natural object, gold or silver. In this character it is just as much its precondition as its result. Its independence is not the end of all relatedness to circulation, but rather a negative relation to it. This comes from its independence as a result of M C C M. In the case of money as capital, money itself is posited (1) as precondition of circulation as well as its result; (2) as having independence only in the form of a negative relation, but always a relation to circulation; (3) as itself an instrument of production, since circulation no longer appears in its primitive simplicity, as quantitative exchange, but as a process of production, as a real metabolism. And thus money is itself stamped as a particular moment of this process of production. Production is not only concerned with simple determination of prices, i.e. with translation of the exchange values of commodities into a common unit, but with the creation of exchange values, hence also with the creation of the particularity of prices. Not merely with positing the form, but also the content. Therefore, while in simple circulation, money appears generally as productive, since circulation in general is itself a moment of the system of production, nevertheless this quality still only exists for us, and is not yet posited in money. (4) As capital, money thus also appears posited as a relation to itself mediated by circulation in the relation of interest and capital. But here we are not as yet concerned with these aspects; rather, we have to look simply at money in the third role, in the form in which it emerged as something independent from circulation, more properly, from both its earlier aspects. ( An increase of money only an increase in the means of counting. Sismondi. This correct only in so far as defined as mere medium of exchange. In the other property it is also an increase in the means of paying.) Commerce separated the shadow from the body, and introduced the possibility of owning them separately. (Sismondi.) Thus, money is now exchange value become independent (it never puts in more than a fleeting appearance as such, as medium of exchange) in its general form. It possesses, it is true, a particular body or substance, gold and silver, and precisely this gives it its independence; for what only exists as an aspect or relation of something else is not independent. On the other side, with this bodily independence, as gold and silver, it represents not only the exchange value of one commodity as against another, but rather exchange value as against all commodities; and although it possesses a substance of its own, it appears at the same time, in its particular existence as gold and silver, as the general exchange value of all commodities. On one side, it is possessed as their exchange value; they stand on the other side as only so many particular substances of exchange value, so that it can either transform itself into every one of these substances through exchange, or it can remain indifferent to them, aloof from their particularity and peculiarity. They are therefore merely accidental existences. It is the pr cis de toutes les choses , in which their particular character is erased; it is general wealth in the form of a concise compendium, as opposed to its diffusion and fragmentation in the world of commodities. While wealth in the form of the particular commodity appears as one of the moments of the same, or the commodity as one of the moments of wealth; in the form of gold and silver general wealth itself appears as concentrated in a particular substance. Every particular commodity, in so far as it is exchange value, has a price, expresses a certain quantity of money in a merely imperfect form, since it has to be thrown into circulation in order to be realized, and since it remains a matter of chance, due to its particularity, whether or not it is realized. However, in so far as it is realized not as price, but in its natural property, it is a moment of wealth by way of its relation to a particular need which it satisfies; and, in this relation, [it] expresses (1) only the wealth of uses [Gebrauchsreichtum], (2) only a quite particular facet of this wealth. Money, by contrast, apart from its particular usefulness as a valuable commodity, is (1) the realized price; (2) satisfies every need, in so far as it can be exchanged for the desired object of every need, regardless of any particularity. The commodity possesses this property only through the mediation of money. Money possesses it directly in relation to all commodities, hence in relation to the whole world of wealth, to wealth as such. With money, general wealth is not only a form, but at the same time the content itself. The concept of wealth, so to speak, is realized, individualized in a particular object. Since it is an individuated, tangible object, money may be randomly searched for, found, stolen, discovered; and thus general wealth may be tangibly brought into the possession of a particular individual. From its servile role, in which it appears as mere medium of circulation it suddenly changes into the lord and god of the world of commodities. It represents the divine existence of commodities, while they represent its earthly form. Before it is replaced by exchange value, every form of natural wealth presupposes an essential relation between the individual and the objects, in which the individual in one of his aspects objectifies [vergegenst ndlicht] himself in the thing, so that his possession of the thing appears at the same time as a certain development of his individuality: wealth in sheep, the development of the individual as shepherd, wealth in grain his development as agriculturist, etc. Money, however, as the individual of general wealth, as something emerging from circulation and representing a general quality, as a merely social result, does not at all presuppose an individual relation to its owner; possession of it is not the development of any particular essential aspect of his individuality; but rather possession of what lacks individuality, since this social [relation] exists at the same time as a sensuous, external object which can be mechanically seized, and lost in the same manner. Its relation to the individual thus appears as a purely accidental one; while this relation to a thing having no connection with his individuality gives him, at the same time, by virtue of the thing s character, a general power over society, over the whole world of gratifications, labours, etc. It is exactly as if, for example, the chance discovery of a stone gave me mastery over all the sciences, regardless of my individuality. The possession of money places me in exactly the same relationship towards wealth (social) as the philosophers stone would towards the sciences. Money is therefore not only an object, but is the object of greed [Bereicherungssucht]. It is essentially auri sacra fames. Greed as such, as a particular form of the drive, i.e. as distinct from the craving for a particular kind of wealth, e.g. for clothes, weapons, jewels, women, wine etc., is possible only when general wealth, wealth as such, has become individualized in a particular thing, i.e. as soon as money is posited in its third quality. Money is therefore not only the object but also the fountainhead of greed. The mania for possessions is possible without money; but greed itself is the product of a definite social development, not natural, as opposed to historical. Hence the wailing of the ancients about money as the source of all evil. Hedonism [Genusssucht] in its general form and miserliness [Geiz] are the two particular forms of monetary greed. Hedonism in the abstract presupposes an object which possesses all pleasures in potentiality. Abstract hedonism realizes that function of money in which it is the material representative of wealth; miserliness, in so far as it is only the general form of wealth as against its particular substances, the commodities. In order to maintain it as such, it must sacrifice all relationship to the objects of particular needs, must abstain, in order to satisfy the need of greed for money as such. Monetary greed, or mania for wealth, necessarily brings with it the decline and fall of the ancient communities [Gemeinwesen]. Hence it is the antithesis to them. It is itself the community [Gemeinwesen], and can tolerate none other standing above it. But this presupposes the full development of exchange values, hence a corresponding organization of society. In antiquity, exchange value was not the nexus rerum; it appears as such only among the mercantile peoples, who had, however, no more than a carrying trade and did not, themselves, produce. At least this was the case with the Phoenicians, Carthaginians, etc. But this is a peripheral matter. They could live just as well in the interstices of the ancient world, as the Jews in Poland or in the Middle Ages. Rather, this world itself was the precondition for such trading peoples. That is why they fall apart every time they come into serious conflict with the ancient communities. Only with the Romans, Greeks etc. does money appear unhampered in both of its first two functions, as measure and as medium of circulation, and not very far developed in either. But as soon as either their trade etc. develops, or, as in the case of the Romans, conquest brings them money in vast quantities in short, suddenly, and at a certain stage of their economic development, money necessarily appears in its third role, and the further it develops in that role, the more the decay of their community advances. In order to function productively, money in its third role, as we have seen, must be not only the precondition but equally the result of circulation, and, as its precondition, also a moment of it, something posited by it. Among the Romans, who amassed money by stealing it from the whole world, this was not the case. It is inherent in the simple character of money itself that it can exist as a developed moment of production only where and when wage labour exists; that in this case, far from subverting the social formation, it is rather a condition for its development and a driving-wheel for the development of all forces of production, material and mental. A particular individual may even today come into money by chance, and the possession of this money can undermine him just as it undermined the communities of antiquity. But the dissolution of this individual within modern society is in itself only the enrichment of the productive section of society. The owner of money, in the ancient sense, is dissolved by the industrial process, which he serves whether he wants and knows it or not. It is a dissolution which affects only his person. As material representative of general wealth, as individualized exchange value, money must be the direct object, aim and product of general labour, the labour of all individuals. Labour must directly produce exchange value, i.e. money. It must therefore be wage labour. Greed, as the urge of all, in so far as everyone wants to make money, is only created by general wealth. Only in this way can the general mania for money become the wellspring of general, self-reproducing wealth. When labour is wage labour, and its direct aim is money, then general wealth is posited as its aim and object. (In this regard, talk about the context of the military system of antiquity when it became a mercenary system.) Money as aim here becomes the means of general industriousness. General wealth is produced in order to seize hold of its representative. In this way the real sources of wealth are opened up. When the aim of labour is not a particular product standing in a particular relation to the particular needs of the individual, but money, wealth in its general form, then, firstly the individual s industriousness knows no bounds; it is indifferent to its particularity, and takes on every form which serves the purpose; it is ingenious in the creation of new objects for a social need, etc. It is clear, therefore, that when wage labour is the foundation, money does not have a dissolving effect, but acts productively; whereas the ancient community as such is already in contradiction with wage labour as the general foundation. General industriousness is possible only where every act of labour produces general wealth, not a particular form of it; where therefore the individual s reward, too, is money. Otherwise, only particular forms of industry are possible. Exchange value as direct product of labour is money as direct product of labour. Direct labour which produces exchange value as such is therefore wage labour. Where money is not itself the community [Gemeinwesen], it must dissolve the community. In antiquity, one could buy labour, a slave, directly; but the slave could not buy money with his labour. The increase of money could make slaves more expensive, but could not make their labour more productive. Negro slavery a purely industrial slavery which is, besides, incompatible with the development of bourgeois society and disappears with it, presupposes wage labour, and if other, free states with wage labour did not exist alongside it, if, instead, the Negro states were isolated, then all social conditions there would immediately turn into pre-civilized forms. Money as individualized exchange value and hence as wealth incarnate was what the alchemists sought; it figures in this role within the Monetary (Mercantilist) System. The period which precedes the development of modern industrial society opens with general greed for money on the part of individuals as well as of states. The real development of the sources of wealth takes place as it were behind their backs, as a means of gaining possession of the representatives of wealth. Wherever it does not arise out of circulation as in Spain but has to be discovered physically, the nation is impoverished, whereas the nations which have to work in order to get it from the Spaniards develop the sources of wealth and really become rich. This is why the search for and discovery of gold in new continents, countries, plays so great a role in the history of revaluation, because by its means colonization is improvised and made to flourish as if in a hothouse. The hunt for gold in all countries leads to its discovery; to the formation of new states; initially to the spread of commodities, which produce new needs, and draw distant continents into the metabolism of circulation, i.e. exchange. Thus, in this respect, as the general representative of wealth and as individualized exchange value, it was doubly a means for expanding the universality of wealth, and for drawing the dimensions of exchange over the whole world; for creating the true generality [Allgemeinheit] of exchange value in substance and in extension. But it is inherent in the attribute in which it here becomes developed that the illusion about its nature, i.e. the fixed insistence on one of its aspects, in the abstract, and the blindness towards the contradictions contained within it, gives it a really magical significance behind the backs of individuals. In fact, it is because of this self-contradictory and hence illusory aspect, because of this abstraction, that it becomes such an enormous instrument in the real development of the forces of social production. It is the elementary precondition of bourgeois society that labour should directly produce exchange value, i.e. money; and, similarly, that money should directly purchase labour, and therefore the labourer, but only in so far as he alienates [ver ussert] his activity in the exchange. Wage labour on one side, capital on the other, are therefore only other forms of developed exchange value and of money (as the incarnation of exchange value). Money thereby directly and simultaneously becomes the real community [Gemeinwesen], since it is the general substance of survival for all, and at the same time the social product of all. But as we have seen, in money the community [Gemeinwesen] is at the same time a mere abstraction, a mere external, accidental thing for the individual, and at the same time merely a means for his satisfaction as an isolated individual. The community of antiquity presupposes a quite different relation to, and on the part of, the individual. The development of money in its third role therefore smashes this community. All production is an objectification [Vergegenst ndlichung] of the individual. In money (exchange value), however, the individual is not objectified in his natural quality, but in a social quality (relation) which is, at the same time, external to him. Money posited in the form of the medium of circulation is coin [M nze]. As coin, it has lost its use value as such; its use value is identical with its quality as medium of circulation. For example, it has to be melted down before it can serve as money as such. It has to be demonetized. That is why the coin is also only a symbol whose material is irrelevant. But, as coin, it also loses its universal character, and adopts a national, local one. It decomposes into coin of different kinds, according to the material of which it consists, gold, copper, silver, etc. It acquires a political title, and talks, as it were, a different language in different countries. Finally, within a single country it acquires different denominations, etc. Money in its third quality, as something which autonomously arises out of and stands against circulation, therefore still negates its character as coin. It reappears as gold and silver, whether it is melted down or whether it is valued only according to its gold and silver weight-content. It also loses its national character again, and serves as medium of exchange between the nations, as universal medium of exchange, no longer as a symbol, but rather as a definite amount of gold and silver. In the most developed international system of exchange, therefore, gold and silver reappear in exactly the same form in which they already played a role in primitive barter. Gold and silver, like exchange itself originally, appear, as already noted, not within the sphere of a social community, but where it ends, on its boundary; on the few points of its contact with alien communities. Gold (or silver) now appears posited as the commodity as such, the universal commodity, which obtains its character as commodity in all places. Only in this way is it the material representative of general wealth. In the Mercantilist System, therefore, gold and silver count as the measure of the power of the different communities. As soon as the precious metals become objects of commerce, an universal equivalent for everything, they also become the measure of power between nations. Hence the Mercantilist System. (Steuart.) No matter how much the modern economists imagine themselves beyond Mercantilism, in periods of general crisis gold and silver still appear in precisely this role, in 1857 as much as in 1600. In this character, gold and silver play an important role in the creation of the world market. Thus the circulation of American silver from the West to the East; the metallic band between America and Europe on one side, with Asia on the other side, since the beginning of the modern epoch. With the original communities this trade in gold and silver was only a peripheral concern, connected with excess production, like exchange as a whole. But in developed trade it is posited as a moment essentially interconnected with production etc. as a whole. It no longer appears for the purpose of exchanging the excess production but to balance it out as part of the total process of international commodity exchange. It is coin, now, only as world coin. But, as such, its formal character as medium of circulation is essentially irrelevant, while its material is everything. As a form, in this function, gold and silver remain the universally acceptable commodity, the commodity as such. (In this first section, where exchange values, money, prices are looked at, commodities always appear as already present. The determination of forms is simple. We know that they express aspects of social production, but the latter itself is the precondition. However, they are not posited in this character [of being aspects of social production]. And thus, in fact, the first exchange appears as exchange of the superfluous only, and it does not seize hold of and determine the whole of production. It is the available overflow of an overall production which lies outside the world of exchange values. This still presents itself even on the surface of developed society as the directly available world of commodities. But by itself, it points beyond itself towards the economic relations which are posited as relations of production. The internal structure of production therefore forms the second section; the concentration of the whole in the state the third; the international relation the fourth; the world market the conclusion, in which production is posited as a totality together with all its moments, but within which, at the same time, all contradictions come into play. The world market then, again, forms the presupposition of the whole as well as its substratum. Crises are then the general intimation which points beyond the presupposition, and the urge which drives towards the adoption of a new historic form.) The quantity of goods and the quantity of money may remain the same, and price may rise or fall notwithstanding (namely through greater expenditure, e.g. by the moneyed capitalists, landowners, state officials etc. Malthus, X, 43). Money, as we have seen, in the form in which it independently steps outside of and against circulation, is the negation (negative unity) of its character as medium of circulation and measure. * We have developed, so far: Secondly: Money is the negation of itself as mere realization of the prices of commodities, where the particular commodity always remains what is essential. It becomes, rather, the price realized in itself and, as such, the material representative of wealth as well as the general form of wealth in relation to all commodities, as merely particular substances of it; but Thirdly: Money is also negated in the aspect in which it is merely the measure of exchange values. As the general form of wealth and as its material representative, it is no longer the ideal measure of other things, of exchange values. For it is itself the adequate [ad quat] reality of exchange value, and this it is in its metallic being. Here the character of measure has to be posited in it. It is its own unit; and the measure of its value, the measure of itself as wealth, as exchange value, is the quantity of itself which it represents. The multiple of an amount of itself which serves as unit. As measure, its amount was irrelevant; as medium of circulation, its materiality, the matter of the unit, was irrelevant: as money in this third role, the amount of itself as of a definite quantity of material is essential. If its quality as general wealth is given, then there is no difference within it, other than the quantitative. It represents a greater or lesser amount of general wealth according to whether its given unit is possessed in a greater or lesser quantity. If it is general wealth, then one is the richer the more of it one possesses, and the only important process, for the individual as well as the nation, is to pile it up [Anh ufen]. In keeping with this role, it was seen as that which steps outside circulation. Now this withdrawing of money from circulation, and storing it up, appears as the essential object [Gegenstand] of the drive to wealth and as the essential process of becoming wealthy. In gold and silver, I possess general wealth in its tangible form, and the more of it I pile up, the more general wealth do I appropriate. If gold and silver represent general wealth, then, as specific quantities, they represent it only to a degree which is definite, but which is capable of indefinite expansion. This accumulation of gold and silver, which presents itself as their repeated withdrawal from circulation, is at the same time the act of bringing general wealth into safety and away from circulation, in which it is constantly lost in exchange for some particular wealth which ultimately disappears in consumption. Among all the peoples of antiquity, the piling-up of gold and silver appears at first as a priestly and royal privilege, since the god and king of commodities pertains only to gods and kings. Only they deserve to possess wealth as such. This accumulation, then, occurs on one side merely to display overabundance, i.e. wealth as an extraordinary thing, for use on Sundays only; to provide gifts for temples and their gods; to finance public works of art; finally as security in case of extreme necessity, to buy arms etc. Later in antiquity, this accumulation becomes political. The state treasury, as reserve fund, and the temple are the original banks in which this holy of holies is preserved. Heaping-up and accumulating attain their ultimate development in the modern banks, but here with a further-developed character. On the other side, among private individuals, accumulation takes place for the purpose of bringing wealth into safety from the caprices of the external world in a tangible form in which it can be buried etc., in short, in which it enters into a wholly secret relation to the individual. This, still on a large historical scale, in Asia. Repeats itself in every panic, war etc. in bourgeois society, which then falls back into barbaric conditions. Like the accumulation of gold etc. as ornament and ostentation among semi-barbarians. But a very large and constantly growing part of it withdrawn from circulation as an object of luxury in the most developed bourgeois society. (See Jacob etc.) As representative of general wealth, it is precisely its retention without abandoning it to circulation and employing it for particular needs, which is proof of the wealth of individuals; and to the degree that money develops in its various roles, i.e. that wealth as such becomes the general measure of the worth of individuals, [there develops] the drive to display it, hence the display of gold and silver as representatives of wealth; in the same way, Herr v. Rothschild displays as his proper emblem, I think, two banknotes of 100,000 each, mounted in a frame. The barbarian display of gold etc. is only a more na ve form of this modern one, since it takes place with less regard to gold as money. Here still the simple glitter. There a premeditated point. The point being that it is not used as money; here the form antithetical to circulation is what is important. The accumulation of all other commodities is less ancient than that of gold and silver: (1) because of their perishability. Metals as such represent the enduring, relative to the other commodities; they are also accumulated by preference because of their greater rarity and their exceptional character as the instruments of production par excellence. The precious metals, because not oxidized by the air, are again more durable than the other metals. What other commodities lose is their form; but this form is what gives them their exchange value, while their use value consists in overcoming this form, in consuming it. With money, on the other hand, its substance, its materiality, is itself its form, in which it represents wealth. If money appears as the general commodity in all places, so also does it in all times. It maintains itself as wealth at all times. Its specific durability. It is the treasure which neither rust nor moths eat up. All commodities are only transitory money; money is the permanent commodity. Money is the omnipresent commodity; the commodity is only local money. But accumulation is essentially a process which takes place in time. In this connection, Petty says: The great and ultimate effect of trade is not wealth as such, but preferably an overabundance of silver, gold and jewels, which are not perishable, nor as fickle as other commodities, but are wealth in all times and all places. A superfluity of wine, grain, poultry, meat etc. is wealth, but hic et nunc Therefore the production of those commodities and the effects of that trade which endow a land with gold and silver are advantageous above others. (p. 3.) If taxes take money from one who eats or drinks it up, and give it to one who employs it in improving the land, in fisheries, in the working of mines, in manufactures or even in clothing, then for the community there is always an advantage; for even clothes are not as perishable as meals; if in the furnishing of houses, even more; in the building of houses yet more; in the improvement of land, working of mines, fisheries, more again; the most of all, when employed so as to bring gold and silver into the country, for these things alone do not pass away, but are prized at all times and in all places as wealth. (p. 5.) Thus a writer of the seventeenth century. One sees how the piling-up of gold and silver gained its true stimulus with the conception of it as the material representative and general form of wealth. The cult of money has its asceticism, its self-denial, its self-sacrifice economy and frugality, contempt for mundane, temporal and fleeting pleasures; the chase after the eternal treasure. Hence the connection between English Puritanism, or also Dutch Protestantism, and money-making. A writer of the beginning of the seventeenth century (Misselden) expresses the matter quite unselfconsciously as follows: The natural material of commerce is the commodity, the artificial is money. Although money by nature and in time comes after the commodity, it has become, in present custom, the most important thing. He compares this to the two sons of old Jacob: Jacob placed his right hand on the younger and his left on the older son. (p. 24.) We consume among us too great an excess of wines from Spain, France, the Rhine, the Levant, the Islands: raisins from Spain, currants from the Levant, cambrics from Hainault and the Netherlands, the silkenware of Italy, the sugar and tobacco of the West Indies, the spices of East India; all this is not necessary for us, but is paid for in hard money If less of the foreign and more of the domestic product were sold, then the difference would have to come to us in the form of gold and silver, as treasure. (loc. cit.) The modern economists naturally make merry at the expense of this sort of notion in the general section of books on economics. But when one considers the anxiety involved in the doctrine of money in particular, and the feverish fear with which, in practice, the inflow and outflow of gold and silver are watched in times of crisis, then it is evident that the aspect of money which the followers of the Monetary and Mercantilist System conceived in an artless one-sidedness is still to be taken seriously, not only in the mind, but as a real economic category. The antithesis between the real needs of production and this supremacy of money is presented most forcibly in Boisguillebert. (See the striking passages in my Notebook.) (2) The accumulation of other commodities, their perishability apart, essentially different in two ways from the accumulation of gold and silver, which are here identical with money. First, the accumulation of other commodities does not have the character of accumulating wealth in general, but of accumulating particular wealth, and it is therefore itself a particular act of production; here simple accumulation will not do. To accumulate grain requires special stores etc. Accumulating sheep does not make one into a shepherd; to accumulate slaves or land requires relations of domination and subordination etc. All this, then, requires acts and relations distinct from simple accumulation, from increase of wealth as such. On the other hand, in order then to realize the accumulated commodity in the form of general wealth, to appropriate wealth in all its particular forms, I have to engage in trade with the particular commodity I have accumulated, I have to be a grain merchant, cattle merchant, etc. Money as the general representative of wealth absolves me of this. The accumulation of gold and silver, of money, is the first historic appearance of the gathering-together of capital and the first great means thereto; but, as such, it is not yet accumulation of capital. For that, the re-entry of what has been accumulated into circulation would itself have to be posited as the moment and the means of accumulation. Money in its final, completed character now appears in all directions as a contradiction, a contradiction which dissolves itself, drives towards its own dissolution. As the general form of wealth, the whole world of real riches stands opposite it. It is their pure abstraction hence, fixated as such, a mere conceit. Where wealth as such seems to appear in an entirely material, tangible form, its existence is only in my head, it is a pure fantasy. Midas. On the other side, as material representative of general wealth, it is realized only by being thrown back into circulation, to disappear in exchange for the singular, particular modes of wealth. It remains in circulation, as medium of circulation; but for the accumulating individual, it is lost, and this disappearance is the only possible way to secure it as wealth. To dissolve the things accumulated in individual gratifications is to realize them. The money may then be again stored up by other individuals, but then the same process begins anew. I can really posit its being for myself only by giving it up as mere being for others. If I want to cling to it, it evaporates in my hand to become a mere phantom of real wealth. Further: [the notion that] to accumulate it is to increase it, [since] its own quantity is the measure of its value, turns out again to be false. If the other riches do not [also] accumulate, then it loses its value in the measure in which it is accumulated. What appears as its increase is in fact its decrease. Its independence is a mere semblance; its independence of circulation exists only in view of circulation, exists as dependence on it. It pretends to be the general commodity, but because of its natural particularity it is again a particular commodity, whose value depends both on demand and supply, and on variations in its specific costs of production. And since it is incarnated in gold and silver, it becomes one-sided in every real form; so that when the one appears as money, the other appears as particular commodity, and vice versa, and in this way each appears in both aspects. As absolutely secure wealth, entirely independent of my individuality, it is at the same time, because it is something completely external to me, the absolutely insecure, which can be separated from me by any accident. Similarly, it has entirely contradictory qualities as measure, as medium of circulation, and as money as such. Finally, in the last-mentioned character, it also contradicts itself because it must represent value as such; but represents in fact only a constant amount of fluctuating value. It therefore suspends itself as completed exchange value. As mere measure it already contains its own negation as medium of circulation; as medium of circulation and measure, as money. To negate it in the last quality is therefore at the same time to negate it in the two earlier ones. If negated as the mere general form of wealth, it must then realize itself in the particular substances of real wealth; but in the process of proving itself really to be the material representative of the totality of wealth, it must at the same time preserve itself as the general form. Its very entry into circulation must be a moment of its staying at home [Beisichbleiben], and its staying at home must be an entry into circulation. That is to say that as realized exchange value it must be simultaneously posited as the process in which exchange value is realized. This is at the same time the negation of itself as a purely objective form, as a form of wealth external and accidental to individuals. It must appear, rather, as the production of wealth; and wealth must appear as the result of the mutual relations among individuals in production. Exchange value is now characterized, therefore, no longer simply as a thing for which circulation is only an external movement, or which appears individually in a particular material: [but rather] as relation to itself through the process of circulation. On the other side, circulation itself is no longer [qualified] merely as the simple process of exchanging commodities for money and money for commodities, merely as the mediating movement by which the prices of the various commodities are realized, are equated as exchange values, with both [commodities and money] appearing as external to circulation: the presupposed exchange value, the ultimate withdrawal of the commodity into consumption, hence the destruction of exchange value, on one side, and the withdrawal of the money, its achievement of independence vis- -vis its substance, which is again another form of its destruction [on the other]. [Rather,] exchange value itself, and now no longer exchange value in general, but measured exchange value, has to appear as a presupposition posited by circulation itself, and, as posited by it, its presupposition. The process of circulation must also and equally appear as the process of the production of exchange values. It is thus, on one side, the regression of exchange value into labour, on the other side, that of money into exchange value, which is now posited, however, in a more profound character. With circulation, the determined price is presupposed, and circulation as money posits it only formally. The determinateness of exchange value itself, or the measure of price, must now itself appear as an act of circulation. Posited in this way, exchange value is capital, and circulation is posited at the same time as an act of production. To be brought forward: In circulation, as it appears as money circulation, the simultaneity of both poles of exchange is always presupposed. But a difference of time may appear between the existence of the commodities to be exchanged. It may lie in the nature of reciprocal services that a service is performed today, but the service required in return can be performed only after a year etc. In the majority of contracts, says Senior, only one of the contracting parties has the thing available and lends it; and if exchange is to take place, one party has to cede it immediately on the condition of receiving the equivalent only in a later period. Since, however, the value of all things changes in a given space of time, the means of payment employed is that thing whose value varies least, and which maintains a given average capacity to buy things for the longest time. Thus money becomes the expression or the representative of value. According to this there would be no connection at all between the latter quality of money and the former. But this is wrong. Only when money is posited as the autonomous representative of value do contracts cease to be valued e.g. in quantities of grain or in services to be performed. (The latter was current e.g. in feudalism.) It is merely a notion held by Mr Senior that money has a longer average capacity to maintain its value. The fact is that it is employed as the general material of contracts (general commodity of contracts, says Bailey) because it is the general commodity, the representative of general wealth (says Storch), because it is exchange value become independent. Money has to be already very developed in its two earlier functions before it can appear generally in this role. Now it turns out in fact that, although the quantity of money remains uniformly the same, its value changes: that, in general, as a specific amount, it is subject to the mutability of all values. Here its nature as a particular commodity comes to the fore against its general character. To money as measure, this change is irrelevant, for in a changing medium, two different relations to the same thing can always be expressed, just as well as in a constant medium . As medium of circulation it is also irrelevant, since its quantity as such is set by the measure. But as money in the form in which it appears in contracts, this is essential, just as, in general, its contradictions come to the fore in this role. In separate sections, to be brought forward: (1) Money as coin. This very summarily about coinage. (2) Historically the sources of gold and silver. Discoveries etc. The history of their production. (3) Causes of the variations in the value of the precious metals and hence of metallic money; effects of this variation on industry and the different classes. (4) Above all: quantity of circulation in relation to rise and fall of prices. (Sixteenth century. Nineteenth century.) Along the way, to be seen also how it is affected as measure by rising quantity etc. (5) About circulation: velocity, necessary amount, effect of circulation; more, less developed etc. (6) Solvent effect of money. (This to be brought forward.) (Herein the specific economic investigations.) (The specific gravity of gold and silver, to contain much weight in a relatively small volume, as compared with other metals, repeats itself in the world of values so that it contains much value (labour time) in relatively small volume. The labour time, exchange value realized in it, is the specific weight of the commodity. This makes the precious metals particularly suited for service in circulation (since one can carry a significant amount of value in the pocket) and for accumulation, since one can secure and stockpile a great amount of value in a small space. Gold does not turn into something else in the process, like iron, lead etc. Remains what it is.) If Spain had never owned the mines of Mexico and Peru, it would never have had need of the grain of Poland. (Ravenstone.) Illi unum consilium habent et virtutem et potestatem suam bestiae tradent Et ne quis posset emere aut vendere, nisi qui habet characterem aut nomen bestiae, aut numerum nominis ejus. (Apocalypse. Vulgate.) The correlative quantities of commodities which are given for one another, constitute the price of the commodity. (Storch.) Price is the degree of exchangeable value. (loc cit.) As we have seen, in simple circulation as such (exchange value in its movement), the action of the individuals on one another is, in its content, only a reciprocal, self-interested satisfaction of their needs; in its form, [it is] exchange among equals (equivalents). Property, too, is still posited here only as the appropriation of the product of labour by labour, and of the product of alien labour by one s own labour, in so far as the product of one s own labour is bought by alien labour. Property in alien labour is mediated by the equivalent of one s own labour. This form of property quite like freedom and equality is posited in this simple relation. In the further development of exchange value this will be transformed, and it will ultimately be shown that private property in the product of one s own labour is identical with the separation of labour and property, so that labour will create alien property and property will command alien labour.

Grundrisse 04

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch04.htm

On the other hand, it is in the character of the money relation as far as it is developed in its purity to this point, and without regard to more highly developed relations of production that all inherent contradictions of bourgeois society appear extinguished in money relations as conceived in a simple form; and bourgeois democracy even more than the bourgeois economists takes refuge in this aspect (the latter are at least consistent enough to regress to even simpler aspects of exchange value and exchange) in order to construct apologetics for the existing economic relations. Indeed, in so far as the commodity or labour is conceived of only as exchange value, and the relation in which the various commodities are brought into connection with one another is conceived as the exchange of these exchange values with one another, as their equation, then the individuals, the subjects between whom this process goes on, are simply and only conceived of as exchangers. As far as the formal character is concerned, there is absolutely no distinction between them, and this is the economic character, the aspect in which they stand towards one another in the exchange relation; it is the indicator of their social function or social relation towards one another. Each of the subjects is an exchanger; i.e. each has the same social relation towards the other that the other has towards him. As subjects of exchange, their relation is therefore that of equality. It is impossible to find any trace of distinction, not to speak of contradiction, between them; not even a difference. Furthermore, the commodities which they exchange are, as exchange values, equivalent, or at least count as such (the most that could happen would be a subjective error in the reciprocal appraisal of values, and if one individual, say, cheated the other, this would happen not because of the nature of the social function in which they confront one another, for this is the same, in this they are equal; but only because of natural cleverness, persuasiveness etc., in short only the purely individual superiority of one individual over another. The difference would be one of natural origin, irrelevant to the nature of the relation as such, and it may be said in anticipation of further development, the difference is even lessened and robbed of its original force by competition etc.). As regards the pure form, the economic side of this relation the content, outside this form, here still falls entirely outside economics, or is posited as a natural content distinct from the economic, a content about which it may be said that it is still entirely separated from the economic relation because it still directly coincides with it then only three moments emerge as formally distinct: the subjects of the relation, the exchangers (posited in the same character); the objects of their exchange, exchange values, equivalents, which not only are equal but are expressly supposed to be equal, and are posited as equal; and finally the act of exchange itself, the mediation by which the subjects are posited as exchangers, equals, and their objects as equivalents, equal. The equivalents are the objectification [Vergegenst ndlichung] of one subject for another; i.e. they themselves are of equal worth, and assert themselves in the act of exchange as equally worthy, and at the same time as mutually indifferent. The subjects in exchange exist for one another only through these equivalents, as of equal worth, and prove themselves to be such through the exchange of the objectivity in which the one exists for the other. Since they only exist for one another in exchange in this way, as equally worthy persons, possessors of equivalent things, who thereby prove their equivalence, they are, as equals, at the same time also indifferent to one another; whatever other individual distinction there may be does not concern them; they are indifferent to all their other individual peculiarities. Now, as regards the content outside the act of exchange (an act which constitutes the positing as well as the proving of the exchange values and of the subjects as exchangers), this content, which falls outside the specifically economic form, can only be: (1) The natural particularity of the commodity being exchanged. (2) The particular natural need of the exchangers, or, both together, the different use values of the commodities being exchanged. The content of the exchange, which lies altogether outside its economic character, far from endangering the social equality of individuals, rather makes their natural difference into the basis of their social equality. If individual A had the same need as individual B, and if both had realized their labour in the same object, then no relation whatever would be present between them; considering only their production, they would not be different individuals at all. Both have the need to breathe; for both the air exists as atmosphere; this brings them into no social contact; as breathing individuals they relate to one another only as natural bodies, not as persons. Only the differences between their needs and between their production gives rise to exchange and to their social equation in exchange; these natural differences are therefore the precondition of their social equality in the act of exchange, and of this relation in general, in which they relate to one another as productive. Regarded from the standpoint of the natural difference between them, individual A exists as the owner of a use value for B, and B as owner of a use value for A. In this respect, their natural difference again puts them reciprocally into the relation of equality. In this respect, however, they are not indifferent to one another, but integrate with one another, have need of one another; so that individual B, as objectified in the commodity, is a need of individual A, and vice versa; so that they stand not only in an equal, but also in a social, relation to one another. This is not all. The fact that this need on the part of one can be satisfied by the product of the other, and vice versa, and that the one is capable of producing the object of the need of the other, and that each confronts the other as owner of the object of the other s need, this proves that each of them reaches beyond his own particular need etc., as a human being, and that they relate to one another as human beings; that their common species-being [Gattungswesen] is acknowledged by all. It does not happen elsewhere that elephants produce for tigers, or animals for other animals. For example. A hive of bees comprises at bottom only one bee, and they all produce the same thing. Further. In so far as these natural differences among individuals and among their commodities (products, labour etc. are not as yet different here, but exist only in the form of commodities, or, as Mr Bastiat prefers, following Say, services ; Bastiat fancies that, by reducing the economic character of exchange value to its natural content, commodity or service, and thereby showing himself incapable of grasping the economic relation of exchange value as such, he has progressed a great step beyond the classical economists of the English school, who are capable of grasping the relations of production in their specificity, as such, in their pure form) form the motive for the integration of these individuals, for their social interrelation as exchangers, in which they are stipulated for each other as, and prove themselves to be, equals, there enters, in addition to the quality of equality, that of freedom. Although individual A feels a need for the commodity of individual B, he does not appropriate it by force, nor vice versa, but rather they recognize one another reciprocally as proprietors, as persons whose will penetrates their commodities. Accordingly, the juridical moment of the Person enters here, as well as that of freedom, in so far as it is contained in the former. No one seizes hold of another s property by force. Each divests himself of his property voluntarily. But this is not all: individual A serves the need of individual B by means of the commodity a only in so far as and because individual B serves the need of individual A by means of the commodity b, and vice versa. Each serves the other in order to serve himself; each makes use of the other, reciprocally, as his means. Now both things are contained in the consciousness of the two individuals: (1) that each arrives at his end only in so far as he serves the other as means; (2) that each becomes means for the other (being for another) [Sein f r andres] only as end in himself (being for self) [Sein f r sich] ; (3) that the reciprocity in which each is at the same time means and end, and attains his end only in so far as he becomes a means, and becomes a means only in so far as he posits himself as end, that each thus posits himself as being for another, in so far as he is being for self, and the other as being for him, in so far as he is being for himself that this reciprocity is a necessary fact, presupposed as natural precondition of exchange, but that, as such, it is irrelevant to each of the two subjects in exchange, and that this reciprocity interests him only in so far as it satisfies his interest to the exclusion of, without reference to, that of the other. That is, the common interest which appears as the motive of the act as a whole is recognized as a fact by both sides; but, as such, it is not the motive, but rather proceeds, as it were, behind the back of these self-reflected particular interests, behind the back of one individual s interest in opposition to that of the other. In this last respect, the individual can at most have the consoling awareness that the satisfaction of his antithetical individual interest is precisely the realization of the suspended antithesis, of the social, general interest. Out of the act of exchange itself, the individual, each one of them, is reflected in himself as its exclusive and dominant (determinant) subject. With that, then, the complete freedom of the individual is posited: voluntary transaction; no force on either side; positing of the self as means, or as serving, only as means, in order to posit the self as end in itself, as dominant and primary [ bergreifend]; finally, the self-seeking interest which brings nothing of a higher order to realization; the other is also recognized and acknowledged as one who likewise realizes his self-seeking interest, so that both know that the common interest exists only in the duality, many-sidedness, and autonomous development of the exchanges between self-seeking interests. The general interest is precisely the generality of self-seeking interests. Therefore, when the economic form, exchange, posits the all-sided equality of its subjects, then the content, the individual as well as the objective material which drives towards the exchange, is freedom. Equality and freedom are thus not only respected in exchange based on exchange values but, also, the exchange of exchange values is the productive, real basis of all equality and freedom. As pure ideas they are merely the idealized expressions of this basis; as developed in juridical, political, social relations, they are merely this basis to a higher power. And so it has been in history. Equality and freedom as developed to this extent are exactly the opposite of the freedom and equality in the world of antiquity, where developed exchange value was not their basis, but where, rather, the development of that basis destroyed them. Equality and freedom presuppose relations of production as yet unrealized in the ancient world and in the Middle Ages. Direct forced labour is the foundation of the ancient world; the community rests on this as its foundation; labour itself as a privilege , as still particularized, not yet generally producing exchange values, is the basis of the world of the Middle Ages. Labour is neither forced labour; nor, as in the second case, does it take place with respect to a common, higher unit (the guild). Now, it is admittedly correct that the [relation between those] engaged in exchange, in so far as their motives are concerned, i.e. as regards natural motives falling outside the economic process, does also rest on a certain compulsion; but this is, on one side, itself only the other s indifference to my need as such, to my natural individuality, hence his equality with me and his freedom, which are at the same time the precondition of my own; on the other side, if I am determined, forced, by my needs, it is only my own nature, this totality of needs and drives, which exerts a force upon me; it is nothing alien (or, my interest posited in a general, reflected form). But it is, after all, precisely in this way that I exercise compulsion ever the other and drive him into the exchange system. In Roman law, the servus is therefore correctly defined as one who may not enter into exchange for the purpose of acquiring anything for himself (see the Institutes). It is, consequently, equally clear that although this legal system corresponds to a social state in which exchange was by no means developed, nevertheless, in so far as it was developed in a limited sphere, it was able to develop the attributes of the juridical person, precisely of the individual engaged in exchange, and thus anticipate (in its basic aspects) the legal relations of industrial society, and in particular the right which rising bourgeois society had necessarily to assert against medieval society. But the development of this right itself coincides completely with the dissolution of the Roman community. Since money is only the realization of exchange value, and since the system of exchange values has realized itself only in a developed money system, or inversely, the money system can indeed only be the realization of this system of freedom and equality. As measure, money only gives the equivalent its specific expression, makes it into an equivalent in form, as well. A distinction of form does, it is true, arise within circulation: the two exchangers appear in the different roles of buyer and seller; exchange value appears once in its general form, in the form of money, then again in its particular form, in the natural commodity, now with a price; but, first of all, these forms alternate; circulation itself creates not a disequation, but only an equation, a suspension of the merely negated difference. The inequality is only a purely formal one. Finally, even equality now posits itself tangibly, in money as medium of circulation, where it appears now in one hand, now in another, and is indifferent to this appearance. Each appears towards the other as an owner of money, and, as regards the process of exchange, as money itself. Thus indifference and equal worthiness are expressly contained in the form of the thing. The particular natural difference which was contained in the commodity is extinguished, and constantly becomes extinguished by circulation. A worker who buys commodities for 3s. appears to the seller in the same function, in the same equality in the form of 3s. as the king who does the same. All distinction between them is extinguished. The seller qua seller appears only as owner of a commodity of the price of 3s., so that both are completely equal; only that the 3s. exist here in the form of silver, there again in the form of sugar, etc. In the third form of money, a distinguishing quality might seem to enter between the subjects of the process. But in so far as money here appears as the material, as the general commodity of contracts, all distinction between the contracting parties is, rather, extinguished. In so far as money, the general form of wealth, becomes the object of accumulation, the subject here appears to withdraw it from circulation only to the extent that he does not withdraw commodities of an equal price from circulation. Thus, if one individual accumulates and the other does not, then none does it at the expense of the other. One enjoys real wealth, the other takes possession of wealth in its general form. If one grows impoverished and the other grows wealthier, then this is of their own free will and does not in any way arise from the economic relation, the economic connection as such, in which they are placed in relation to one another. Even inheritance and similar legal relations, which perpetuate such inequalities, do not prejudice this natural freedom and equality. If individual A s relation is not in contradiction to this system originally, then such a contradiction can surely not arise from the fact that individual B steps into the place of individual A, thus perpetuating him. This is, rather, the perpetuation of the social relation beyond one man s natural lifespan: its reinforcement against the chance influences of nature, whose effects as such would in fact be a suspension of individual freedom. Moreover, since the individual in this relation is merely the individuation of money, therefore he is, as such, just as immortal as money, and his representation by heirs is the logical extension of this role. If this way of conceiving the matter is not advanced in its historic context, but is instead raised as a refutation of the more developed economic relations in which individuals relate to one another no longer merely as exchangers or as buyers and sellers, but in specific relations, no longer all of the same character; then it is the same as if it were asserted that there is no difference, to say nothing of antithesis and contradiction, between natural bodies, because all of them, when looked at from e.g. the point of view of their weight, have weight, and are therefore equal; or are equal because all of them occupy three dimensions. Exchange value itself is here similarly seized upon in its simple character, as the antithesis to its more developed, contradictory forms. In the course of science, it is just these abstract attributes which appear as the earliest and sparsest; they appear in part historically in this fashion, too; the more developed as the more recent. In present bourgeois society as a whole, this positing of prices and their circulation etc. appears as the surface process, beneath which, however, in the depths, entirely different processes go on, in which this apparent individual equality and liberty disappear. It is forgotten, on one side, that the presupposition of exchange value, as the objective basis of the whole of the system of production, already in itself implies compulsion over the individual, since his immediate product is not a product for him, but only becomes such in the social process, and since it must take on this general but nevertheless external form; and that the individual has an existence only as a producer of exchange value, hence that the whole negation of his natural existence is already implied; that he is therefore entirely determined by society; that this further presupposes a division of labour etc., in which the individual is already posited in relations other than that of mere exchanger, etc. That therefore this presupposition by no means arises either out of the individual s will or out of the immediate nature of the individual, but that it is, rather, historical, and posits the individual as already determined by society. It is forgotten, on the other side, that these higher forms, in which exchange, or the relations of production which realize themselves in it, are now posited, do not by any means stand still in this simple form where the highest distinction which occurs is a formal and hence irrelevant one. What is overlooked, finally, is that already the simple forms of exchange value and of money latently contain the opposition between labour and capital etc. Thus, what all this wisdom comes down to is the attempt to stick fast at the simplest economic relations, which, conceived by themselves, are pure abstractions; but these relations are, in reality, mediated by the deepest antithesis, and represent only one side, in which the full expression of the antitheses is obscured. What this reveals, on the other side, is the foolishness of those socialists (namely the French, who want to depict socialism as the realization of the ideals of bourgeois society articulated by the French revolution) who demonstrate that exchange and exchange value etc. are originally (in time) or essentially (in their adequate form) a system of universal freedom and equality, but that they have been perverted by money, capital, etc. Or, also, that history has so far failed in every attempt to implement them in their true manner, but that they have now, like Proudhon, discovered e.g. the real Jacob, and intend now to supply the genuine history of these relations in place of the fake. The proper reply to them is: that exchange value or, more precisely, the money system is in fact the system of equality and freedom, and that the disturbances which they encounter in the further development of the system are disturbances inherent in it, are merely the realization of equality and freedom, which prove to be inequality and unfreedom. It is just as pious as it is stupid to wish that exchange value would not develop into capital, nor labour which produces exchange value into wage labour. What divides these gentlemen from the bourgeois apologists is, on one side, their sensitivity to the contradictions included in the system; on the other, the utopian inability to grasp the necessary difference between the real and the ideal form of bourgeois society, which is the cause of their desire to undertake the superfluous business of realizing the ideal expression again, which is in fact only the inverted projection [Lichtbild] of this reality. And now, indeed, in opposition to these socialists there is the stale argumentation of the degenerate economics of most recent times (whose classical representative as regards insipidness, affectation of dialectics, puffy arrogance, effete, complacent platitudinousness and complete inability to grasp historic processes is Frederick Bastiat, because the American, Carey, at least brings out the specific American relations as against the European), which demonstrates that economic relations everywhere express the same simple determinants, and hence that they everywhere express the equality and freedom of the simple exchange of exchange values; this point entirely reduces itself to an infantile abstraction. For example, the relation between capital and interest is reduced to the exchange of exchange values. Thus, after first taking from the empirical world the fact that exchange value exists not only in this simple form but also in the essentially different form of capital, capital is then in turn reduced again to the simple concept of exchange value; and interest, which, to crown all, expresses a specific relation of capital as such, is similarly torn out of this specificity and equated with exchange value; the whole relation in its specific character is reduced to an abstraction and everything reduced to the undeveloped relation of commodity exchange. In so far as I abstract from what distinguishes a concrete from its abstract, it is of course the abstract, and does not differ from it at all. According to this, all economic categories are only so many names for what is always the same relation, and this crude inability to grasp the real distinctions is then supposed to represent pure common sense as such. The economic harmonies of Mr Bastiat amount au fond to the assertion that there exists only one single economic relation which takes on different names, or that any differences which occur, occur only in name. The reduction is not even formally scientific to the minimal extent that everything is reduced to a real economic relation by dropping the difference that development makes; rather, sometimes one and sometimes another side is dropped in order to bring out now one, now another side of the identity. For example, the wage for labour is payment for a service done by one individual for another. (The economic form as such is dropped here, as noted above.) Profit is also payment for a service done by one individual for another. Hence wages and profit are identical, and it is, in the first place, an error of language to call one payment wages, the other profit. But let us now look at profit and interest. With profit, the payment of the service is exposed to chance fluctuations; with interest, it is fixed. Thus, since, with wages, payment is relatively speaking exposed to chance fluctuations, while with profit, in contrast to labour, it is fixed, it follows that the relation between interest and profit is the same as that between wages and profit, which, as we have seen, is the exchange of equivalents for one another. The opponents then take this twaddle (which goes back from the economic relations where the contradiction is expressed to those where it is only latent and obscured) literally, and demonstrate that e.g. with capital and interest there is not a simple exchange, since capital is not replaced by an equivalent, but that the owner of capital, rather, having consumed the equivalent 20 times over in the form of interest, still has it in the form of capital and can exchange it for 20 more equivalents. Hence the unedifying debate in which one side asserts that there is no difference between developed and undeveloped exchange value, and the other asserts that there is, unfortunately, a difference, but, by rights, there ought not to be. If I state, like for example Say, that capital is a sum of values, then I state nothing more than that capital = exchange value. Every sum of values is an exchange value, and every exchange value is a sum of values. I cannot get from exchange value to capital by means of mere addition. In the pure accumulation of money, as we have seen, the relation of capitalizing [Kapitalisieren] is not yet posited. In so-called retail trade, in the daily traffic of bourgeois life as it proceeds directly between producers and consumers, in petty commerce, where the aim on one side is to exchange the commodity for money and on the other to exchange money for commodity, for the satisfaction of individual needs in this movement, which proceeds on the surface of the bourgeois world, there and there alone does the motion of exchange values, their circulation, proceed in its pure form. A worker who buys a loaf of bread and a millionaire who does the same appear in this act only as simple buyers, just as, in respect to them, the grocer appears only as seller. All other aspects are here extinguished. The content of these purchases, like their extent, here appears as completely irrelevant compared with the formal aspect. As in the theory the concept of value precedes that of capital, but requires for its pure development a mode of production founded on capital, so the same thing takes place in practice. The economists therefore necessarily sometimes consider capital as the creator of values, as their source, while at other times they presuppose values for the formation of capital, and portray it as itself only a sum of values in a particular function. The existence of value in its purity and generality presupposes a mode of production in which the individual product has ceased to exist for the producer in general and even more for the individual worker, and where nothing exists unless it is realized through circulation. For the person who creates an infinitesimal part of a yard of cotton, the fact that this is value, exchange value, is not a formal matter. If he had not created an exchange value, money, he would have created nothing at all. This determination of value, then, presupposes a given historic stage of the mode of social production and is itself something given with that mode, hence a historic relation. At the same time, individual moments of value-determination develop in earlier stages of the historic process of social production and appear as its result. Hence, within the system of bourgeois society, capital follows immediately after money. In history, other systems come before, and they form the material basis of a less complete development of value. Just as exchange value here plays only an accompanying role to use value, it is not capital but the relation of landed property which appears as its real basis. Modern landed property, on the other hand, cannot be understood at all, because it cannot exist, without capital as its presupposition, and it indeed appears historically as a transformation of the preceding historic shape of landed property by capital so as to correspond to capital. It is, therefore, precisely in the development of landed property that the gradual victory and formation of capital can be studied, which is why Ricardo, the economist of the modern age, with great historical insight, examined the relations of capital, wage labour and ground rent within the sphere of landed property, so as to establish their specific form. The relation between the industrial capitalist and the proprietor of land appears to be a relation lying outside that of landed property. But, as a relation between the modern farmer and the landowner, it appears posited as an immanent relation of landed property itself; and the [latter], as now existing merely in its relation to capital. The history of landed property, which would demonstrate the gradual transformation of the feudal landlord into the landowner, of the hereditary, semi-tributary and often unfree tenant for life into the modern farmer, and of the resident serfs, bondsmen and villeins who belonged to the property into agricultural day-labourers, would indeed be the history of the formation of modern capital. It would include within it the connection with urban capital, trade, etc. But we are dealing here with developed bourgeois society, which is already moving on its own foundation. Capital comes initially from circulation, and, moreover, its point of departure is money. We have seen that money which enters into circulation and at the same time returns from it to itself is the last requirement, in which money suspends itself. It is at the same time the first concept of capital, and the first form in which it appears. Money has negated itself as something which merely dissolves in circulation; but it has also equally negated itself as something which takes up an independent attitude towards circulation. This negation, as a single whole, in its positive aspects, contains the first elements of capital. Money is the first form in which capital as such appears. M C C M; that money is exchanged for commodity and the commodity for money; this movement of buying in order to sell, which makes up the formal aspect of commerce, of capital as merchant capital, is found in the earliest conditions of economic development; it is the first movement in which exchange value as such forms the content is not only the form but also its own content. This motion can take place within peoples, or between peoples for whose production exchange value has by no means yet become the presupposition. The movement only seizes upon the surplus of their directly useful production, and proceeds only on its margin. Like the Jews within old Polish society or within medieval society in general, entire trading peoples, as in antiquity (and, later on, the Lombards), can take up this position between peoples whose mode of production is not yet determined by exchange value as the fundamental presupposition. Commercial capital is only circulating capital, and circulating capital is the first form of capital; in which it has as yet by no means become the foundation of production. A more developed form is money capital and money interest, usury, whose independent appearance belongs in the same way to an earlier stage. Finally, the form C M M C, in which money and circulation in general appear as mere means for the circulating commodity, which for its part again steps outside circulation and directly satisfies a need, this is itself the presupposition of that original appearance of merchant capital. The presuppositions appear distributed among different peoples; or, within society, commercial capital as such appears only as determined by this purely consumption-directed circulation. On the other side, the circulating commodity, the commodity which realizes itself only by taking on the form of another commodity, which steps outside circulation and serves immediate needs, is similarly [the] first form of capital, which is essentially commodity capital. On the other side it is equally clear that the simple movement of exchange values, such as is present in pure circulation, can never realize capital. It can lead to the withdrawal and stockpiling of money, but as soon as money steps back into circulation, it dissolves itself in a series of exchange processes with commodities which are consumed, hence it is lost as soon as its purchasing power is exhausted. Similarly, the commodity which has exchanged itself for another commodity through the medium of money steps outside circulation in order to be consumed, destroyed. But if it is given independence from circulation, as money, it then merely represents the non-substantial general form of wealth. Since equivalents are exchanged for one another, the form of wealth which is fixed as money disappears as soon as it is exchanged for the commodity; and the use value present in the commodity, as soon as it is exchanged for money. All that can happen in the simple act of exchange is that each can be lost in its role for the other as soon as it realizes itself in it. None can maintain itself in its role by going over into the other. For this reason the sophistry of the bourgeois economists, who embellish capital by reducing it in argument to pure exchange, has been countered by its inversion, the equally sophistical, but, in relation to them, legitimate demand that capital be really reduced to pure exchange, whereby it would disappear as a power and be destroyed, whether in the form of money or of the commodity. * The repetition of the process from either of the points, money or commodity, is not posited within the conditions of exchange itself. The act can be repeated only until it is completed, i.e. until the amount of the exchange value is exchanged away. It cannot ignite itself anew through its own resources. Circulation therefore does not carry within itself the principle of self-renewal. The moments of the latter are presupposed to it, not posited by it. Commodities constantly have to be thrown into it anew from the outside, like fuel into a fire. Otherwise it flickers out in indifference. It would die out with money, as the indifferent result which, in so far as it no longer stood in any connection with commodities, prices or circulation, would have ceased to be money, to express a relation of production; only its metallic existence would be left over, while its economic existence would be destroyed. Circulation, therefore, which appears as that which is immediately present on the surface of bourgeois society, exists only in so far as it is constantly mediated. Looked at in itself, it is the mediation of presupposed extremes. But it does not posit these extremes. Thus, it has to be mediated not only in each of its moments, but as a whole of mediation, as a total process itself. Its immediate being is therefore pure semblance. It is the phenomenon of a process taking place behind it. It is now negated in every one of its moments: as a commodity as money and as a relation of the two, as simple exchange and circulation of both. While, originally, the act of social production appeared as the positing of exchange values and this, in its later development, as circulation as completely developed reciprocal movement of exchange values now, circulation itself returns back into the activity which posits or produces exchange values. It returns into it as into its ground. It is commodities (whether in their particular form, or in the general form of money) which form the presupposition of circulation; they are the realization of a definite labour time and, as such, values; their presupposition, therefore, is both the production of commodities by labour and their production as exchange values. This is their point of departure, and through its own motion it goes back into exchange-value-creating production as its result. We have therefore reached the point of departure again, production which posits, creates exchange values; but this time, production which presupposes circulation as a developed moment and which appears as a constant process, which posits circulation and constantly returns from it into itself in order to posit it anew. The movement which creates exchange value thus appears here in a much more complex form, since it is no longer only the movement of presupposed exchange values, or the movement which posits them formally as prices, but which creates, brings them forth at the same time as presuppositions. Production itself is here no longer present in advance of its products, i.e. presupposed; it rather appears as simultaneously bringing forth these results; but it does not bring them forth, as in the first stage, as merely leading into circulation, but as simultaneously presupposing circulation, the developed process of circulation. (Circulation consists at bottom only of the formal process of positing exchange value, sometimes in the role of the commodity, at other times in the role of money.) On the other hand, in modern production, where exchange value and developed circulation are presupposed, it is prices which determine production on one side, and production which determines prices on the other. When it is said that capital is accumulated (realized) labour (properly, objectified [vergegenst ndlichte] labour), which serves as the means for new labour (production) , then this refers to the simple material of capital, without regard to the formal character without which it is not capital. This means nothing more than that capital is an instrument of production, for, in the broadest sense, every object, including those furnished purely by nature, e.g. a stone, must first be appropriated by some sort of activity before it can function as an instrument, as means of production. According to this, capital would have existed in all forms of society, and is something altogether unhistorical. Hence every limb of the body is capital, since each of them not only has to be developed through activity, labour, but also nourished, reproduced, in order to be active as an organ. The arm, and especially the hand, are then capital. Capital would be only a new name for a thing as old as the human race, since every form of labour, including the least developed, hunting, fishing, etc., presupposes that the product of prior labour is used as means for direct, living labour. A further characteristic contained in the above definition is that the material stuff of products is entirely abstracted away, and that antecedent labour itself is regarded as its only content (matter); in the same way, abstraction is made from the particular, special purpose for which the making of this product is in its turn intended to serve as means, and merely production in general is posited as purpose. All these things only seemed a work of abstraction, which is equally valid in all social conditions and which merely leads the analysis further and formulates it more abstractly (generally) than is the usual custom. If, then, the specific form of capital is abstracted away, and only the content is emphasized, as which it is a necessary moment of all labour, then of course nothing is easier than to demonstrate that capital is a necessary condition for all human production. The proof of this proceeds precisely by abstraction from the specific aspects which make it the moment of a specifically developed historic stage of human production. The catch is that if all capital is objectified labour which serves as means for new production, it is not the case that all objectified labour which serves as means for new production is capital. Capital is conceived as a thing, not as a relation. If it is said on the other hand that capital is a sum of values used for the production of values, then this means: capital is self-reproducing exchange value. But, formally, exchange value reproduces itself even in simple circulation. This explanation, it is true, does contain the form wherein exchange value is the point of departure, but the connection with the content (which, with capital, is not, as in the case of simple exchange value, irrelevant) is dropped. If it is said that capital is exchange value which produces profit, or at least has the intention of producing a profit, then capital is already presupposed in its explanation, for profit is a specific relation of capital to itself. Capital is not a simple relation, but a process, in whose various moments it is always capital. This process therefore to be developed. Already in accumulated labour, something has sneaked in, because, in its essential characteristic, it should be merely objectified labour, in which, however, a certain amount of labour is accumulated. But accumulated labour already comprises a quantity of objects in which labour is realized. At the beginning everyone was content, since exchange extended only to objects which had no value for each exchanger: no significance was assigned to objects other than those which were without value for each exchanger; no significance was assigned to them, and each was satisfied to receive a useful thing in exchange for a thing without utility. But after the division of labour had made everyone into a merchant and society into a commercial society, no one wanted to give up his products except in return for their equivalents; it thus became necessary, in order to determine this equivalent, to know the value of the thing received. (Ganilh, 12, b.) This means in other words that exchange did not stand still with the formal positing of exchange values, but necessarily advanced towards the subjection of production itself to exchange value. Capital values are self-perpetuating. (Say, 14.) Capital permanent ( self-multiplying does not belong here as yet) value which no longer decayed; this value tears itself loose from the commodity which created it; like a metaphysical, insubstantial quality, it always remained in the possession of the same cultivateur (here irrelevant; say owner) for whom it cloaked itself in different forms. (Sismondi, VI.) The immortality which money strove to achieve by setting itself negatively against circulation, by withdrawing from it, is achieved by capital, which preserves itself precisely by abandoning itself to circulation. Capital, as exchange value existing prior to circulation, or as presupposing and preserving itself in circulation, not only is in every moment ideally both of the two moments contained in simple circulation, but alternately takes the form of the one and of the other, though no longer merely by passing out of the one into the other, as in simple circulation, but rather by being in each of these roles at the same time a relation to its opposite, i.e. containing it ideally within itself. Capital becomes commodity and money alternately; but (1) it is itself the alternation of both these roles; (2) it becomes commodity; but not this or the other commodity, rather a totality of commodities. It is not indifferent to the substance, but to the particular form; appears in this respect as a constant metamorphosis of this substance; in so far as it is then posited as a particular content of exchange value, this particularity itself is a totality of particularity; hence indifferent not to particularity as such, but to the single or individuated particularity. The identity, the form of generality [Allgemeinheit], which it obtains is that of being exchange value and, as such, money. It is still therefore posited as money, in fact it exchanges itself as commodity for money. But posited as money, i.e. as this contradictory form of the generality of exchange value, there is posited in it at the same time that it must not, as in simple exchange, lose this generality, but must rather lose the attribute antithetical to generality, or adopt it only fleetingly; therefore it exchanges itself again for the commodity, but as a commodity which itself, in its particularity, expresses the generality of exchange value, and hence constantly changes its particular form. If we speak here of capital, this is still merely a word. The only aspect in which capital is here posited as distinct from direct exchange value and from money is that of exchange value which preserves and perpetuates itself in and through circulation. We have so far examined only one side, that of its self-preservation in and through circulation. The other equally important side is that exchange value is presupposed, but no longer as simple exchange value, such as it exists as a merely ideal quality of the commodity before it enters into circulation, or as, rather, a merely intended quality, since it becomes exchange value only for a vanishing moment in circulation; nor as exchange value as it exists as a moment in circulation, as money; it exists here, rather, as money, as objectified exchange value, but with the addition of the relation just described. What distinguishes the second from the first is that it (1) exists in the form of objectivity; (2) arises out of circulation, hence presupposes it, but at the same time proceeds from itself as presupposition of circulation. There are two sides in which the result of simple circulation can be expressed: The simply negative: The commodities thrown into circulation have achieved their purpose; they are exchanged for one another; each becomes an object of a need and is consumed. With that, circulation comes to an end. Nothing remains other than money as simple residue. As such a residue, however, it has ceased to be money, loses its characteristic form. It collapses into its material, which is left over as the inorganic ashes of the process as a whole. The positively negative: Money is negated not as objectified, independent exchange value not only as vanishing in circulation but rather the antithetical independence, the merely abstract generality in which it has firmly settled, is negated; but thirdly: Exchange value as the presupposition and simultaneously the result of circulation, just as it is assumed as having emerged from circulation, must emerge from it again. If this happens in a merely formal manner, it would simply become money again; if it emerges as a real commodity, as in simple circulation, then it would become a simple object of need, consumed as such, and again lose its quality as form. For this emergence to become real, it must likewise become the object of a need and, as such, be consumed, but it must be consumed by labour, and thereby reproduce itself anew. Differently expressed: Exchange value, as regards its content, was originally an objectified amount of labour or labour time; as such it passed through circulation, in its objectification, until it became money, tangible money. It must now again posit the point of departure of circulation, which lay outside circulation, was presupposed to it, and for which circulation appeared as an external, penetrating and internally transforming movement; this point was labour; but [it must do so] now no longer as a simple equivalent or as a simple objectification of labour, but rather as objectified exchange value, now become independent, which yields itself to labour, becomes its material, only so as to renew itself and to begin circulating again by itself. And with that it is no longer a simple positing of equivalents, a preservation of its identity, as in circulation; but rather multiplication of itself. Exchange value posits itself as exchange value only by realizing itself; i.e. increasing its value. Money (as returned to itself from circulation), as capital, has lost its rigidity, and from a tangible thing has become a process. But at the same time, labour has changed its relation to its objectivity; it, too, has returned to itself. But the nature of the return is this, that the labour objectified in the exchange value posits living labour as a means of reproducing it, whereas, originally, exchange value appeared merely as a product of labour. (For Proudhon in his polemic against Bastiat, Gratuit du cr dit , everything comes down to his own wish to reduce the exchange between capital and labour to the simple exchange of commodities as exchange values, to the moments of simple circulation, i.e. he abstracts from just the specific difference on which everything depends. He says: At a given moment, every product becomes capital, because everything which is consumed is at a given moment consumed reproductively. This very false, but never mind. What is it that makes the motion of the product suddenly transform itself into that of capital? It is the idea of value. That means that the product, in order to become capital, needs to have passed through an authentic evaluation, to have been bought or sold, its price debated and fixed by a sort of legal convention. E.g. leather, coming from the slaughterhouse, is the product of the butcher. Is this leather bought by the tanner? The latter then immediately carries it or carries its value into his exploitation fund [fonds d exploitation]. By means of the tanner s labour, this capital becomes product again etc. Every capital is here a constituted value . Money is the most perfect value , constituted value to the highest power. This means, then: (1) Product becomes capital by becoming value. Or capital is just nothing more than simple value. There is no difference between them. Thus he says commodity (the natural side of the same, expressed as product) at one time, value another time, alternatively, or rather, since he presupposes the act of buying and selling, price. (2) Since money appears as the perfected form of value such as it is in simple circulation, therefore money is also the true constituted value.) Let us analyse first the simple aspects contained in the relation of capital and labour, in order by this means to arrive at the inner connection not only of these aspects, but also of their further development from the earlier ones. The first presupposition is that capital stands on one side and labour on the other, both as independent forms relative to each other; both hence also alien to one another. The labour which stands opposite capital is alien [fremde] labour, and the capital which stands opposite labour is alien capital. The extremes which stand opposite one another are specifically different. In the first positing of simple exchange value, labour was structured in such a way that the product was not a direct use value for the labourer, not a direct means of subsistence. This was the general condition for the creation of an exchange value and of exchange in general. Otherwise the worker would have produced only a product a direct use value for himself but not an exchange value. This exchange value, however, was materialized in a product which had, as such, a use value for others, and, as such, was the object of their needs. The use value which the worker has to offer to the capitalist, which he has to offer to others in general, is not materialized in a product, does not exist apart from him at all, thus exists not really, but only in potentiality, as his capacity. It becomes a reality only when it has been solicited by capital, is set in motion, since activity without object is nothing, or, at the most, mental activity, which is not the question at issue here. As soon as it has obtained motion from capital, this use value exists as the worker s specific, productive activity; it is his vitality itself, directed toward a specific purpose and hence expressing itself in a specific form. In the relation of capital and labour, exchange value and use value are brought into relation; the one side (capital) initially stands opposite the other side as exchange value, * and the other (labour), stands opposite capital, as use value. In simple circulation, each of the commodities can alternately be regarded in one or the other role. In both cases, when it counts as commodity as such, it steps outside circulation as object of a need and falls entirely outside the economic relation. In so far as the commodity becomes fixed as exchange value money it tends towards the same formlessness, but as falling within the economic relation. In any case, the commodities are of interest in the exchange-value relation (simple circulation) only in so far as they have exchange value; on the other side their exchange value is of only passing interest, in that it suspends the one-sidedness the usefulness, use value, existing only for the specific individual, hence existing directly for him but not this use value itself; rather, it posits and mediates it as use value for others etc. But to the degree that exchange value as such becomes fixed in money, use value no longer confronts it as anything but abstract chaos; and, through just this separation from its substance, it collapses into itself and tends away from the sphere of simple exchange value, whose highest movement is simple circulation, and whose highest perfection is money. But within the sphere itself, the distinctness exists in fact only as a superficial difference, a purely formal distinction. Money itself in its highest fixedness is itself a commodity again, and distinguishes itself from the others only in that it expresses exchange value more perfectly; but, as currency, and precisely for that reason, it loses its exchange value as intrinsic quality, and becomes mere use value, although admittedly use value for determining the prices etc. of commodities. The aspects still immediately coincide and just as immediately they separate. Where they relate to one another independently, positively, as in the case of the commodity which becomes an object of consumption, it ceases to be a moment of the economic process; where negatively, as in the case of money, it becomes madness; madness, however, as a moment of economics and as a determinant of the practical life of peoples. We have seen earlier that it cannot be said that exchange value is realized in simple circulation. This is so, however, because use value does not stand as such opposite exchange value, as something defined as use value by exchange value; while inversely use value as such does not stand in a connection with exchange value, but becomes a specific exchange value only because the common element of use values labour time is applied to it as an external yardstick. Their unity still immediately splits, and their difference still immediately coincides. It must now be posited that use value as such becomes what it becomes through exchange value, and that exchange value mediates itself through use value. In money circulation, all we had was the different forms of exchange value (price of the commodity money) or only different use values (commodity C), for which money, exchange value, is merely a vanishing mediation. A real connection of exchange value and use value did not take place. The commodity as such its particularity is for that reason an irrelevant, merely accidental, and in general imaginary content, which falls outside the relation of economic forms; or, the latter is a merely superficial form, a formal quality: the real substance lies outside its realm and stands in no relation at all to the substance as such; therefore if this formal quality as such becomes fixed in money, then it transforms itself on the sly into an irrelevant natural product, a metal, in which every trace of a connection, whether with the individual or with intercourse between individuals, is extinguished. Metal as such of course expresses no social relations; the coin form is extinguished in it as well; the last sign of life of its social significance. Posited as a side of the relation, exchange value, which stands opposite use value itself, confronts it as money, but the money which confronts it in this way is no longer money in its character as such, but money as capital. The use value or commodity which confronts capital or the posited exchange value is no longer the commodity such as it appeared in opposition to money, where its specific form was as irrelevant as its content, and which appeared only as a completely undefined substance. First, as use value for capital, i.e. therefore as an object in exchange with which capital does not lose its value-quality, as for example does money when it is exchanged for a particular commodity. The only utility whatsoever which an object can have for capital can be to preserve or increase it. We have already seen, in the case of money, how value, having become independent as such or the general form of wealth is capable of no other motion than a quantitative one; to increase itself. It is according to its concept the quintessence of all use values; but since it is always only a definite amount of money (here, capital), its quantitative limit is in contradiction with its quality. It is therefore inherent in its nature constantly to drive beyond its own barrier. (As consumption-oriented wealth, e.g. in imperial Rome, it therefore appears as limitless waste, which logically attempts to raise consumption to an imaginary boundlessness, by gulping down salad of pearls etc.) Already for that reason, value which insists on itself as value preserves itself through increase; and it preserves itself precisely only by constantly driving beyond its quantitative barrier, which contradicts its character as form, its inner generality. Thus, growing wealthy is an end in itself. The goal-determining activity of capital can only be that of growing wealthier, i.e. of magnification, of increasing itself. A specific sum of money (and money always exists for its owner in a specific quantity, always as a specific sum of money) (this is to be developed as early as in the money chapter) can entirely suffice for a specific consumption, in which it ceases to be money. But as a representative of general wealth, it cannot do so. As a quantitatively specific sum, a limited sum, it is only a limited representative of general wealth, or representative of a limited wealth, which goes as far, and no further than, its exchange value, and is precisely measured in it. It thus does not by any means have the capacity which according to its general concept it ought to have, namely the capacity of buying all pleasures, all commodities, the totality of the material substances of wealth; it is not a pr cis de toutes les choses etc. Fixed as wealth, as the general form of wealth, as value which counts as value, it is therefore the constant drive to go beyond its quantitative limit: an endless process. Its own animation consists exclusively in that; it preserves itself as a self-validated exchange value distinct from a use value only by constantly multiplying itself. (It is damned difficult for Messrs the economists to make the theoretical transition from the self-preservation of value in capital to its multiplication; and this in its fundamental character, not only as an accident or result. See e.g. Storch, how he brings this fundamental character in with an adverb, properly . Admittedly, the economists try to introduce this into the relation of capital as an essential aspect, but if this is not done in the brutal form of defining capital as that which brings profit, where the increase of capital itself is already posited as a special economic form, profit, then it happens only surreptitiously, and very feebly, as we shall later show in a brief review of all that the economists have contributed towards determining the concept of capital. Drivel to the effect that nobody would employ his capital without drawing a gain from it amounts either to the absurdity that the good capitalists will remain capitalists even without employing their capital; or to a very banal form of saying that gainful investment is inherent in the concept of capital. Very well. In that case it would just have to be demonstrated.) Money as a sum of money is measured by its quantity. This measuredness contradicts its character, which must be oriented towards the measureless. Everything which has been said here about money holds even more for capital, in which money actually develops in its completed character for the first time. The only use value, i.e. usefulness, which can stand opposite capital as such is that which increases, multiplies and hence preserves it as capital. Secondly. Capital is by definition money, but not merely money in the simple form of gold and silver, nor merely as money in opposition to circulation, but in the form of all substances commodities. To that degree, therefore, it does not, as capital, stand in opposition to use value, but exists apart from money precisely only in use values. These, its substances themselves, are thus now transitory ones, which would have no exchange value if they had no use value; but which lose their value as use values and are dissolved by the simple metabolism of nature if they are not actually used, and which disappear even more certainly if they are actually used. In this regard, the opposite of capital cannot itself be a particular commodity, for as such it would form no opposition to capital, since the substance of capital is itself use value; it is not this commodity or that commodity, but all commodities. The communal substance of all commodities, i.e. their substance not as material stuff, as physical character, but their communal substance as commodities and hence exchange values, is this, that they are objectified labour. * The only thing distinct from objectified labour is non-objectified labour, labour which is still objectifying itself, labour as subjectivity. Or, objectified labour, i.e. labour which is present in space, can also be opposed, as past labour, to labour which is present in time. If it is to be present in time, alive, then it can be present only as the living subject, in which it exists as capacity, as possibility; hence as worker. The only use value, therefore, which can form the opposite pole to capital is labour (to be exact, value-creating, productive labour. This marginal remark is an anticipation; must first be developed, by and by. Labour as mere performance of services for the satisfaction of immediate needs has nothing whatever to do with capital, since that is not capital s concern. If a capitalist hires a woodcutter to chop wood to roast his mutton over, then not only does the wood-cutter relate to the capitalist, but also the capitalist to the wood-cutter, in the relation of simple exchange. The woodcutter gives him his service, a use value, which does not increase capital; rather, capital consumes itself in it; and the capitalist gives him another commodity for it in the form of money. The same relation holds for all services which workers exchange directly for the money of other persons, and which are consumed by these persons. This is consumption of revenue, which, as such, always falls within simple circulation; it is not consumption of capital. Since one of the contracting parties does not confront the other as a capitalist, this performance of a service cannot fall under the category of productive labour. From whore to pope, there is a mass of such rabble. But the honest and working lumpenproletariat belongs here as well; e.g. the great mob of porters etc. who render service in seaport cities etc. He who represents money in this relation demands the service only for its use value, which immediately vanishes for him; but the porter demands money, and since the party with money is concerned with the commodity and the party with the commodity, with money, it follows that they represent to one another no more than the two sides of simple circulation; goes without saying that the porter, as the party concerned with money, hence directly with the general form of wealth, tries to enrich himself at the expense of his improvised friend, thus injuring the latter s self-esteem, all the more so because he, a hard calculator, has need of the service not qua capitalist but as a result of his ordinary human frailty. A. Smith was essentially correct with his productive and unproductive labour, correct from the standpoint of bourgeois economy. What the other economists advance against it is either horse-piss (for instance Storch, Senior even lousier etc.), namely that every action after all acts upon something, thus confusion of the product in its natural and in its economic sense; so that the pickpocket becomes a productive worker too, since he indirectly produces books on criminal law (this reasoning at least as correct as calling a judge a productive worker because he protects from theft). Or the modern economists have turned themselves into such sycophants of the bourgeois that they want to demonstrate to the latter that it is productive labour when somebody picks the lice out of his hair, or strokes his tail, because for example the latter activity will make his fat head blockhead clearer the next day in the office. It is therefore quite correct but also characteristic that for the consistent economists the workers in e.g. luxury shops are productive, although the characters who consume such objects are expressly castigated as unproductive wastrels. The fact is that these workers, indeed, are productive, as far as they increase the capital of their master; unproductive as to the material result of their labour. In fact, of course, this productive worker cares as much about the crappy shit he has to make as does the capitalist himself who employs him, and who also couldn t give a damn for the junk. But, looked at more precisely, it turns out in fact that the true definition of a productive worker consists in this: A person who needs and demands exactly as much as, and no more than, is required to enable him to gain the greatest possible benefit for his capitalist. All this nonsense. Digression. But return in more detail to the productive and unproductive). If we consider the exchange between capital and labour, then we find that it splits into two processes which are not only formally but also qualitatively different, and even contradictory: (1) The worker sells his commodity, labour, which has a use value, and, as commodity, also a price, like all other commodities, for a specific sum of exchange values, specific sum of money, which capital concedes to him. (2) The capitalist obtains labour itself, labour as value-positing activity, as productive labour; i.e. he obtains the productive force which maintains and multiplies capital, and which thereby becomes the productive force, the reproductive force of capital, a force belonging to capital itself. The separation of these two processes is so obvious that they can take place at different times, and need by no means coincide. The first process can be and usually, to a certain extent, is completed before the second even begins. The completion of the second act presupposes the completion of the product. The payment of wages cannot wait for that. We will even find it an essential aspect of the relation, that it does not wait for that. In simple exchange, circulation, this double process does not take place. If commodity A is exchanged for money B, and the latter then for the commodity C, which is destined to be consumed the original object of the exchange, for A then the using-up of commodity C, its consumption, falls entirely outside circulation; is irrelevant to the form of the relation; lies beyond circulation itself, and is of purely physical interest, expressing no more than the relation of the individual A in his natural quality to an object of his individual need. What he does with commodity C is a question which belongs outside the economic relation. Here, by contrast, the use value of that which is exchanged for money appears as a particular economic relation, and the specific utilization of that which is exchanged for money forms the ultimate aim of both processes. Therefore, this is already a distinction of form between the exchange of capital and labour, and simple exchange two different processes. If we now further inquire how the exchange between capital and labour is different in content from simple exchange (circulation), then we find that this difference does not arise out of an external connection or equation; but rather that, in the totality of the latter process, the second form distinguishes itself from the first, in that this equation is itself comprised within it. The difference between the second act and the first note that the particular process of the appropriation of labour by capital is the second act is exactly the difference between the exchange of capital and labour, and exchange between commodities as it is mediated by money. In the exchange between capital and labour, the first act is an exchange, falls entirely within ordinary circulation; the second is a process qualitatively different from exchange, and only by misuse could it have been called any sort of exchange at all. It stands directly opposite exchange; essentially different category. <The market, which appears as an abstract quality at the beginning of economics, takes on total shapes. First, the money market. This includes the discount market; in general, the loan market; hence money trade, bullion market. As money-lending market it appears in the banks, for instance the discount at which they discount: loan market, billbrokers etc.; but then also as the market in all interest-bearing bills: state funds and the share market. The latter separate off into larger groups (first the shares of money institutions themselves; bank shares; joint-stock bank shares; shares in the means of communication (railway shares the most important; canal shares; steam navigation shares, telegraph shares, omnibus shares); shares of general industrial enterprises (mining shares the chief ones). Then in the supply of common elements (gas shares, water-supply shares). Miscellaneous shares of a thousand kinds. For the storage of commodities (dock shares etc.). Miscellaneous in infinite variety, such as enterprises in industry or trading companies founded on shares. Finally, as security for the whole, insurance shares of all kinds.) Now, just as the market by and large is divided into home market and foreign market, so the internal market itself again divides into the market of home shares, national funds etc. and foreign funds, foreign shares etc. This development actually belongs properly under the world market, which is not only the internal market in relation to all foreign markets existing outside it, but at the same time the internal market of all foreign markets as, in turn, components of the home market. The concentration of the money market in a chief location within a country, while the other markets are more distributed according to the division of labour; although here, too, great concentration in the capital city, if the latter is at the same time a port of export. The various markets other than the money market are, firstly, as different as are products and branches of production themselves. The chief markets in these various products arise in centres which are such either in respect of import or export, or because they are either themselves centres of a given production, or are the direct supply points of such centres. But these markets proceed from this simple difference to a more or less organic separation into large groups, which themselves necessarily divide up according to the basic elements of capital itself: product market and raw-material market. The instrument of production as such does not form a separate market; it exists as such chiefly, first, in the raw materials themselves which are sold as means of production; then, however, in particular in the metals, since these exclude all thought of direct consumption, and then the products, such as coal, oil, chemicals, which are destined to disappear as auxiliary means of production. Likewise dyes, wood, drugs etc. Hence: I. Products. (1) Grain market with its various subdivisions. E.g. seed market: rice, sage, potatoes etc. This very important economically; at the same time market for production and for direct consumption. (2) Colonial-produce market. Coffee, tea, cocoa, sugar; spices (pepper, tobacco, pimento, cinnamon, cassia lignea, cloves, ginger, mace, nutmegs, etc.). (3) Fruits. Almonds, currants, figs, plums, prunes, raisins, oranges, lemons etc. Molasses (for production etc.). (4) Provisions. Butter; cheese; bacon; hams; lard; pork; beef (smoked), fish etc. (5) Spirits. Wine, rum, beer etc. II. Raw Materials. (1) Raw materials for mechanical industry. Flax; hemp; cotton; silk; wool; hides; leather; gutta-percha etc. (2) Raw materials for chemical industry. Potash, saltpetre; turpentine; nitrate of soda etc. III. Raw materials which at the same time instruments of production. Metals (copper, iron, tin, zinc, lead, steel etc.), wood. Lumber. Timber. Dye-woods. Specialized wood for shipbuilding etc. Accessory means of production and raw materials. Drugs and dyes. (Cochineal, indigo etc. Tar. Tallow. Oil. Coals etc.) Of course, every product must go to market, but really great markets, as distinct from retail trade, are formed only by the great consumption goods (economically important are only the grain market, the tea, the sugar, the coffee market (wine market to some extent, and market in spirits generally), or those which are raw materials of industry: wool, silk, wood, metal market etc.) To be seen at what point the abstract category of the market has to be brought in.> What the capitalist does with his labour is completely irrelevant, although of course he can use it only in accord with its specific characteristics, and his disposition is restricted to a specific labour and is restricted in time (so much labour time). The piece-work system of payment, it is true, introduces the semblance that the worker obtains a specified share of the product. But this is only another form of measuring time (instead of saying, you will work for 12 hours, what is said is, you get so much per piece; i.e. we measure the time you have worked by the number of products); it is here, in the examination of the general relation, altogether beside the point. If the capitalist were to content himself with merely the capacity of disposing, without actually making the worker work, e.g. in order to have his labour as a reserve, or to deprive his competitor of this capacity of disposing (like e.g. theatre directors who buy singers for a season not in order to have them sing, but so that they do not sing in a competitor s theatre), then the exchange has taken place in full. True, the worker receives money, hence exchange value, the general form of wealth, in one or another quantity; and the more or less he receives, the greater or the lesser is the share in the general wealth he thus obtains. How this more or less is determined, how the quantity of money he receives is measured, is of so little relevance to the general relation that it cannot be developed out of the latter. In general terms, the exchange value of his commodity cannot be determined by the manner in which its buyer uses it, but only by the amount of objectified labour contained in it; hence, here, by the amount of labour required to reproduce the worker himself. For the use value which he offers exists only as an ability, a capacity [Verm gen] of his bodily existence; has no existence apart from that. The labour objectified in that use value is the objectified labour necessary bodily to maintain not only the general substance in which his labour power exists, i.e. the worker himself, but also that required to modify this general substance so as to develop its particular capacity. This, in general terms, is the measure of the amount of value, the sum of money, which he obtains in exchange. The further development, where wages are measured, like all other commodities, by the labour time necessary to produce the worker as such, is not yet to the point here. Within circulation, if I exchange a commodity for money, buy a commodity for it and satisfy my need, then the act is at an end. Thus it is with the worker. But he has the possibility of beginning it again from the beginning because his life is the source in which his own use value constantly rekindles itself up to a certain time, when it is worn out, and constantly confronts capital again in order to begin the same exchange anew. Like every individual subject within circulation, the worker is the owner of a use value; he exchanges this for money, for the general form of wealth, but only in order to exchange this again for commodities, considered as the objects of his immediate consumption, as the means of satisfying his needs. Since he exchanges his use value for the general form of wealth, he becomes co-participant in general wealth up to the limit of his equivalent a quantitative limit which, of course, turns into a qualitative one, as in every exchange. But he is neither bound to particular objects, nor to a particular manner of satisfaction. The sphere of his consumption is not qualitatively restricted, only quantitatively. This distinguishes him from the slave, serf etc. Consumption certainly reacts on production itself; but this reaction concerns the worker in his exchange as little as it does any other seller of a commodity; rather, as regards mere circulation and we have as yet no other developed relation before us it falls outside the economic relation. This much, however, can even now be mentioned in passing, namely that the relative restriction on the sphere of the workers consumption (which is only quantitative, not qualitative, or rather, only qualitative as posited through the quantitative) gives them as consumers (in the further development of capital the relation between consumption and production must, in general, be more closely examined) an entirely different importance as agents of production from that which they possessed e.g. in antiquity or in the Middle Ages, or now possess in Asia. But, as noted, this does not belong here yet. Similarly, because the worker receives the equivalent in the form of money, the form of general wealth, he is in this exchange an equal vis- -vis the capitalist, like every other party in exchange; at least, so he seems. In fact this equality is already disturbed because the worker s relation to the capitalist as a use value, in the form specifically distinct from exchange value, in opposition to value posited as value, is a presupposition of this seemingly simple exchange; because, thus, he already stands in an economically different relation outside that of exchange, in which the nature of the use value, the particular use value of the commodity is, as such, irrelevant. This semblance exists, nevertheless, as an illusion on his part and to a certain degree on the other side, and thus essentially modifies his relation by comparison to that of workers in other social modes of production. But what is essential is that the purpose of the exchange for him is the satisfaction of his need. The object of his exchange is a direct object of need, not exchange value as such. He does obtain money, it is true, but only in its role as coin; i.e. only as a self-suspending and vanishing mediation. What he obtains from the exchange is therefore not exchange value, not wealth, but a means of subsistence, objects for the preservation of his life, the satisfaction of his needs in general, physical, social etc. It is a specific equivalent in means of subsistence, in objectified labour, measured by the cost of production of his labour. What he gives up is his power to dispose of the latter. On the other side, it is true that even within simple circulation the coin may grow into money, and that in so far as he receives coin in exchange, he can therefore transform it into money by stockpiling it, etc., withdrawing it from circulation; fixes it as general form of wealth, instead of as vanishing medium of exchange. In this respect it could thus be said that, in the exchange between capital and labour, the worker s object hence, for him, the product of the exchange is not the means of subsistence, but wealth; not a particular use value, but rather exchange value as such. Accordingly the worker could make exchange value into his own product only in the same way in which wealth in general can appear solely as product of simple circulation in which equivalents are exchanged, namely by sacrificing substantial satisfaction to obtain the form of wealth, i.e. through self-denial, saving, cutting corners in his consumption so as to withdraw less from circulation than he puts goods into it. This is the only possible form of enriching oneself which is posited by circulation itself. Self-denial could then also appear in the more active form, which is not posited in simple circulation, of denying himself more and more rest, and in general denying himself any existence other than his existence as worker, and being as far as possible a worker only; hence more frequently renewing the act of exchange, or extending it quantitatively, hence through industriousness. Hence still today the demand for industriousness and also for saving, self-denial, is made not upon the capitalists but on the workers, and namely by the capitalists. Society today makes the paradoxical demand that he for whom the object of exchange is subsistence should deny himself, not he for whom it is wealth. The illusion that the capitalists in fact practised self-denial and became capitalists thereby a demand and a notion which only made any sense at all in the early period when capital was emerging from feudal etc. relations has been abandoned by all modern economists of sound judgement. The workers are supposed to save, and much bustle is made with savings banks etc. (As regards the latter, even the economists admit that their proper purpose is not wealth, either, but merely a more purposeful distribution of expenditure, so that in their old age, or in case of illness, crises etc., they do not become a burden on the poorhouses, on the state, or on the proceeds of begging (in a word, so that they become a burden on the working class itself and not on the capitalists, vegetating out of the latter s pockets), i.e. so that they save for the capitalists; and reduce the costs of production for them.) Still, no economist will deny that if the workers generally, that is, as workers (what the individual worker does or can do, as distinct from his genus, can only exist just as exception, not as rule, because it is not inherent in the character of the relation itself), that is, if they acted according to this demand as a rule (apart from the damage they would do to general consumption the loss would be enormous and hence also to production, thus also to the amount and volume of the exchanges which they could make with capital, hence to themselves as workers) then the worker would be employing means which absolutely contradict their purpose, and which would directly degrade him to the level of the Irish, the level of wage labour where the most animal minimum of needs and subsistence appears to him as the sole object and purpose of his exchange with capital. If he adopted wealth as his purpose, instead of making his purpose use value, he would then, therefore, not only come to no riches, but would moreover lose use value in the bargain. For, as a rule, the maximum of industriousness, of labour, and the minimum of consumption and this is the maximum of his self-denial and of his moneymaking could lead to nothing else than that he would receive for his maximum of labour a minimum of wages. By his exertions he would only have diminished the general level of the production costs of his own labour and therefore its general price. Only as an exception does the worker succeed through will power, physical strength and endurance, greed etc., in transforming his coin into money, as an exception from his class and from the general conditions of his existence. If all or the majority are too industrious (to the degree that industriousness in modern industry is in fact left to their own personal choice, which is not the case in the most important and most developed branches of production), then they increase not the value of their commodity, but only its quantity; that is, the demands which would be placed on it as use value. If they all save, then a general reduction of wages will bring them back to earth again; for general savings would show the capitalist that their wages are in general too high, that they receive more than its equivalent for their commodity, the capacity of disposing of their own labour; since it is precisely the essence of simple exchange and they stand in this relation towards him that no one throws more into circulation than he withdraws; but also that no one can withdraw more than he has thrown in. An individual worker can be industrious above the average, more than he has to be in order to live as a worker, only because another lies below the average, is lazier; he can save only because and if another wastes. The most he can achieve on the average with his self-denial is to be able better to endure the fluctuations of prices high and low, their cycle that is, he can only distribute his consumption better, but never attain wealth. And that is actually what the capitalists demand. The workers should save enough at the times when business is good to be able more or less to live in the bad times, to endure short time or the lowering of wages. (The wage would then fall even lower.) That is, the demand that they should always hold to a minimum of life s pleasures and make crises easier to bear for the capitalists etc. Maintain themselves as pure labouring machines and as far as possible pay their own wear and tear. Quite apart from the sheer brutalization to which this would lead and such a brutalization itself would make it impossible even to strive for wealth in general form, as money, stockpiled money (and the worker s participation in the higher, even cultural satisfactions, the agitation for his own interests, newspaper subscriptions, attending lectures, educating his children, developing his taste etc., his only share of civilization which distinguishes him from the slave, is economically only possible by widening the sphere of his pleasures at the times when business is good, where saving is to a certain degree possible), [apart from this,] he would, if he saved his money in a properly ascetic manner and thus heaped up premiums for the lumpenproletariat, pickpockets etc., who would increase in proportion with the demand, he could conserve savings if they surpass the piggy-bank amounts of the official savings banks, which pay him a minimum of interest, so that the capitalists can strike high interest rates out of his savings, or the state eats them up, thereby merely increasing the power of his enemies and his own dependence conserve his savings and make them fruitful only by putting them into banks etc., so that, afterwards, in times of crisis he loses his deposits, after having in times of prosperity foregone all life s pleasures in order to increase the power of capital; thus has saved in every way for capital, not for himself. Incidentally in so far as the whole thing is not a hypocritical phrase of bourgeois philanthropy , which consists in fobbing the worker off with pious wishes each capitalist does demand that his workers should save, but only his own, because they stand towards him as workers; but by no means the remaining world of workers, for these stand towards him as consumers. In spite of all pious speeches he therefore searches for means to spur them on to consumption, to give his wares new charms, to inspire them with new needs by constant chatter etc. It is precisely this side of the relation of capital and labour which is an essential civilizing moment, and on which the historic justification, but also the contemporary power of capital rests. (This relation between production and consumption to be developed only under capital and profit etc.) (Or, then again, under accumulation and competition of capitals.) These are nevertheless all exoteric observations, relevant here only in so far as they show the demands of hypocritical bourgeois philanthropy to be self-contradictory and thus to prove precisely what they were supposed to refute, namely that in the exchange between the worker and capital, the worker finds himself in the relation of simple circulation, hence obtains not wealth but only subsistence, use values for immediate consumption. That this demand contradicts the relation itself emerges from the simple reflection (the recently and complacently advanced demand that the workers should be given a certain share in profits is to be dealt with in the section wage labour; other than as a special bonus which can achieve its purpose only as an exception from the rule, and which is in fact, in noteworthy practice, restricted to the buying-up of individual overlookers etc. in the interests of the employer against the interests of their class; or to travelling salesmen etc., in short, no longer simple workers, hence also not to the simple relation; or else it is a special way of cheating the workers and of deducting a part of their wages in the more precarious form of a profit depending on the state of the business) that, if the worker s savings are not to remain merely the product of circulation saved up money, which can be realized only by being converted sooner or later into the substantial content of wealth, pleasures etc. then the saved-up money would itself have to become capital, i.e. buy labour, relate to labour as use value. It thus presupposes labour which is not capital, and presupposes that labour has become its opposite not-labour. In order to become capital, it itself presupposes labour as not-capital as against capital; hence it presupposes the establishment at another point of the contradiction it is supposed to overcome. if, then, in the original relation itself, the object and the product of the worker s exchange as product of mere exchange, it can be no other were not use value, subsistence, satisfaction of direct needs, withdrawal from circulation of the equivalent put into it in order to be destroyed by consumption then labour would confront capital not as labour, not as not-capital, but as capital. But capital, too, cannot confront capital if capital does not confront labour, since capital is only capital as not-labour; in this contradictory relation. Thus the concept and the relation of capital itself would be destroyed. That there are situations in which property-owners who themselves work engage in exchange with one another is certainly not denied. But such conditions are not those of the society in which capital as such exists in developed form; they are destroyed at all points, therefore, by its development. As capital it can posit itself only by positing labour as not-capital, as pure use value. (As a slave, the worker has exchange value, a value; as a free wage-worker he has no value; it is rather his power of disposing of his labour, effected by exchange with him, which has value. It is not he who stands toward the capitalist as exchange value, but the capitalist toward him. His valuelessness and devaluation is the presupposition of capital and the precondition of free labour in general. Linguet regards it as a step backwards; he forgets that the worker is thereby formally posited as a person who is something for himself apart from his labour, and who alienates his life-expression only as a means towards his own life. So long as the worker as such has exchange value, industrial capital as such cannot exist, hence nor can developed capital in general. Towards the latter, labour must exist as pure use value, which is offered as a commodity by its possessor himself in exchange for it, for its exchange value, which of course becomes real in the worker s hand only in its role as general medium of exchange; otherwise vanishes.) Well. The worker, then, finds himself only in the relation of simple circulation, of simple exchange, and obtains only coin for his use value; subsistence; but mediated. This form of mediation is, as we saw, essential to and characteristic of the relation. That it can proceed to the transformation of the coin into money savings proves precisely only that his relation is that of simple circulation; he can save more or less; but beyond that he cannot get; he can realize what he has saved only by momentarily expanding the sphere of his pleasures. It is of importance and penetrates into the character of the relation itself that, because money is the product of his exchange, general wealth drives him forward as an illusion; makes him industrious. At the same time, this not only formally opens up a field of arbitrariness in the realiz

Grundrisse 05

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch05.htm

Separation of property from labour appears as the necessary law of this exchange between capital and labour. Labour posited as not-capital as such is: (1) not-objectified labour [nicht-vergegenst ndlichte Arbeit], conceived negatively (itself still objective; the not-objective itself in objective form). As such it is not-raw-material, not-instrument of labour, not-raw-product: labour separated from all means and objects of labour, from its entire objectivity. This living labour, existing as an abstraction from these moments of its actual reality (also, not-value); this complete denudation, purely subjective existence of labour, stripped of all objectivity. Labour as absolute poverty: poverty not as shortage, but as total exclusion of objective wealth. Or also as the existing not-value, and hence purely objective use value, existing without mediation, this objectivity can only be an objectivity not separated from the person: only an objectivity coinciding with his immediate bodily existence. Since the objectivity is purely immediate, it is just as much direct not-objectivity. In other words, not an objectivity which falls outside the immediate presence [Dasein] of the individual himself. (2) Not-objectified labour, not-value, conceived positively, or as a negativity in relation to itself, is the not-objectified, hence non-objective, i.e. subjective existence of labour itself. Labour not as an object, but as activity; not as itself value, but as the living source of value. [Namely, it is] general wealth (in contrast to capital in which it exists objectively, as reality) as the general possibility of the same, which proves itself as such in action. Thus, it is not at all contradictory, or, rather, the in-every-way mutually contradictory statements that labour is absolute poverty as object, on one side, and is, on the other side, the general possibility of wealth as subject and as activity, are reciprocally determined and follow from the essence of labour, such as it is presupposed by capital as its contradiction and as its contradictory being, and such as it, in turn, presupposes capital. The last point to which attention is still to be drawn in the relation of labour to capital is this, that as the use value which confronts money posited as capital, labour is not this or another labour, but labour pure and simple, abstract labour; absolutely indifferent to its particular specificity [Bestimmtheit], but capable of all specificities. Of course, the particularity of labour must correspond to the particular substance of which a given capital consists; but since capital as such is indifferent to every particularity of its substance, and exists not only as the totality of the same but also as the abstraction from all its particularities, the labour which confronts it likewise subjectively has the same totality and abstraction in itself. For example, in guild and craft labour, where capital itself still has a limited form, and is still entirely immersed in a particular substance, hence is not yet capital as such, labour, too, appears as still immersed in its particular specificity: not in the totality and abstraction of labour as such, in which it confronts capital. That is to say that labour is of course in each single case a specific labour, but capital can come into relation with every specific labour; it confronts the totality of all labours , and the particular one it confronts at a given time is an accidental matter. On the other side, the worker himself is absolutely indifferent to the specificity of his labour; it has no interest for him as such, but only in as much as it is in fact labour and, as such, a use value for capital. It is therefore his economic character that he is the carrier of labour as such i.e. of labour as use value for capital; he is a worker, in opposition to the capitalist. This is not the character of the craftsmen and guild-members etc., whose economic character lies precisely in the specificity of their labour and in their relation to a specific master, etc. This economic relation the character which capitalist and worker have as the extremes of a single relation of production therefore develops more purely and adequately in proportion as labour loses all the characteristics of art; as its particular skill becomes something more and more abstract and irrelevant, and as it becomes more and more a purely abstract activity, a purely mechanical activity, hence indifferent to its particular form; a merely formal activity, or, what is the same, a merely material [stofflich] activity, activity pure and simple, regardless of its form. Here it can be seen once again that the particular specificity of the relation of production, of the category here, capital and labour becomes real only with the development of a particular material mode of production and of a particular stage in the development of the industrial productive forces. (This point in general to be particularly developed in connection with this relation, later; since it is here already posited in the relation itself, while, in the case of the abstract concepts, exchange value, circulation, money, it still lies more in our subjective reflection.) Thus: the raw material is consumed by being changed, formed by labour, and the instrument of labour is consumed by being used up in this process, worn out. On the other hand, labour also is consumed by being employed, set into motion, and a certain amount of the worker s muscular force etc. is thus expended, so that he exhausts himself. But labour is not only consumed, but also at the same time fixed, converted from the form of activity into the form of the object; materialized; as a modification of the object, it modifies its own form and changes from activity to being. The end of the process is the product, in which the raw material appears as bound up with labour, and in which the instrument of labour has, likewise, transposed itself from a mere possibility into a reality, by having become a real conductor of labour, but thereby also having been consumed in its static form through its mechanical or chemical relation to the material of labour. All three moments of the process, the material, the instrument, and labour, coincide in the neutral result the product. The moments of the process of production which have been consumed to form the product are simultaneously reproduced in it. The whole process therefore appears as productive consumption, i.e. as consumption which terminates neither in a void, nor in the mere subjectification of the objective, but which is, rather, again posited as an object. This consumption is not simply a consumption of the material, but rather consumption of consumption itself; in the suspension of the material it is the suspension of this suspension and hence the positing of the same. This form-giving activity consumes the object and consumes itself, but it consumes the given form of the object only in order to posit it in a new objective form, and it consumes itself only in its subjective form as activity. It consumes the objective character of the object the indifference towards the form and the subjective character of activity; forms the one, materializes the other. But as product, the result of the production process is use value. If we now regard the result so far obtained, we find: Firstly: The appropriation, absorption of labour by capital money, i.e. the act of buying the capacity of disposing over the worker, here appears only as a means to bring this process about, not as one of its moments brings capital into ferment, and makes it into a process, process of production, in whose totality it relates to itself not only as objectified by living labour, but also, because objectified, [as] mere object of labour. Secondly: Within simple circulation, the substance of the commodity and of money was itself indifferent to the formal character, i.e. to the extent that commodity and money remained moments of circulation. As for the substance of the commodity, it fell outside the economic relation as an object of consumption (of need); money, in so far as its form achieved independence, was still related to circulation, but only negatively, and was only this negative relation. Fixed for itself, it similarly became extinguished in dead materiality, and ceased to be money. Both commodity and money were expressions of exchange value, and differed only as general and particular exchange value. This difference itself was again merely a nominal one, since not only were the two roles switched in real circulation, but also, if we consider each of them by itself, money itself was a particular commodity, and the commodity as price was itself general money. The difference was only formal. Each of them was posited in the one role only in so far as and because it was not posited in the other. Now however, in the process of production, capital distinguishes itself as form from itself as substance. It is both aspects at once, and at the same time the relation of both to one another. But: Thirdly: It still only appeared as this relation in itself. The relation is not posited yet, or it is posited initially only in the character of one of its two moments, the material moment, which divides internally into material (raw material and instrument) and form (labour), and which, as a relation between both of them, as a real process, is itself only a material relation again a relation of the two material elements which form the content of capital as distinct from its formal relation as capital. If we now consider the aspect of capital in which it originally appears in distinction from labour, then it is merely a passive presence in the process, a merely objective being, in which the formal character which makes it capital i.e. a social relation existing as being-for-itself [f r sich seiendes] is completely extinguished. It enters the process only as content as objectified labour in general; but the fact that it is objectified labour is completely irrelevant to labour and the relation of labour to it forms the process; it enters into the process, is worked on, rather, only as object, not as objectified labour. Cotton which becomes cotton yarn, or cotton yarn which becomes cloth, or cloth which becomes the material for printing and dyeing, exist for labour only as available cotton, yarn, cloth. They themselves do not enter into any process as products of labour, as objectified labour, but only as material existences with certain natural properties. How these were posited in them makes no difference to the relation of living labour towards them; they exist for it only in so far as they exist as distinct from it, i.e. as material for labour. This [is the case], in so far as the point of departure is capital in its objective form, presupposed to labour. On another side, in so far as labour itself has become one of capital s objective elements through the exchange with the worker, labour s distinction from the objective elements of capital is itself a merely objective one; the latter in the form of rest, the former in the form of activity. The relation is the material relation between one of capital s elements and the other; but not its own relation to both. It therefore appears on one side as a merely passive object, in which all formal character is extinguished; it appears on the other side only as a simple production process into which capital as such, as distinct from its substance, does not enter. It does not even appear in the substance appropriate to itself as objectified labour, for this is the substance of exchange value but rather only in the natural form-of-being [Daseinsform] of this substance, in which all relation to exchange value, to objectified labour, and to labour itself as the use value of capital and hence all relation to capital itself is extinguished. Regarded from this side, the process of capital coincides with the simple process of production as such, in which its character as capital is quite as extinguished in the form of the process, as money was extinguished as money in the form of value. To the extent to which we have examined the process so far, capital in its being-for-itself, i.e. the capitalist, does not enter at all. It is not the capitalist who is consumed by labour as raw material and instrument of labour. And it is not the capitalist who does this consuming but rather labour. Thus the process of the production of capital does not appear as the process of the production of capital, but as the process of production in general, and capital s distinction from labour appears only in the material character of raw material and instrument of labour. It is this aspect which is not only an arbitrary abstraction, but rather an abstraction which takes place within the process itself on which the economists seize in order to represent capital as a necessary element of every production process. Of course, they do this only by forgetting to pay attention to its conduct as capital during this process. This is the occasion to draw attention to a moment which here, for the first time, not only arises from the standpoint of the observer, but is posited in the economic relation itself. In the first act, in the exchange between capital and labour, labour as such, existing for itself, necessarily appeared as the worker. Similarly here in the second process: capital as such is posited as a value existing for itself, as egotistic value, so to speak (something to which money could only aspire). But capital in its being-for-itself is the capitalist. Of course, socialists sometimes say, we need capital, but not the capitalist. Then capital appears as a pure thing, not as a relation of production which, reflected in itself, is precisely the capitalist. I may well separate capital from a given individual capitalist, and it can be transferred to another. But, in losing capital, he loses the quality of being a capitalist. Thus capital is indeed separable from an individual capitalist, but not from the capitalist, who, as such, confronts the worker. Thus also the individual worker can cease to be the being-for-itself [F rsichsein] of labour; he may inherit or steal money etc. But then he ceases to be a worker. As a worker he is nothing more than labour in its being-for-itself. (This to be further developed later.) The first result, then, is this: ( ) Capital becomes the process of production through the incorporation of labour into capital; initially, however, it becomes the material process of production; the process of production in general, so that the process of the production of capital is not distinct from the material process of production as such. Its formal character is completely extinguished. Because capital has exchanged a part of its objective being for labour, its objective being is itself internally divided into object and labour; the connection between them forms the production process, or, more precisely, the labour process. With that, the labour process posited prior to value, as point of departure which, owing to its abstractness, its pure materiality, is common to all forms of production here reappears again within capital, as a process which proceeds within its substance and forms its content. (It will be seen that even within the production process itself this extinguishing of the formal character is merely a semblance.) In so far as capital is value, but appears as a process initially in the form of the simple production process, the production process posited in no particular economic form, but rather, the production process pure and simple, to that extent depending on which particular aspect of the simple production process (which, as such, as we saw, by no means presupposes capital, but is common to all modes of production) is fixed on it can be said that capital becomes product, or that it is instrument of labour or raw material for labour. Further, if it is conceived in one of the aspects which confronts labour as material or as mere means, then it is correct to say that capital is not productive, * because it is then regarded merely as the object, the material which confronts labour; as merely passive. The correct thing, however, is that it appears not as one of these aspects, nor as a difference within one of these aspects, nor as mere result (product), but rather as the simple production process itself; that this latter now appears as the self-propelling content of capital. ( ) Now to look at the side of the form-character, such as it preserves and modifies itself in the production process. As use value, labour exists only for capital, and is itself the use value of capital, i.e. the mediating activity by means of which it realizes [verwertet] itself. Capital, as that which reproduces and increases its value, is autonomous exchange value (money), as a process, as the process of realization. Therefore, labour does not exist as a use value for the worker; for him it is therefore not a power productive of wealth, [and] not a means or the activity of gaining wealth. He brings it as a use value into the exchange with capital, which then confronts him not as capital but rather as money. In relation to the worker, it is capital as capital only in the consumption of labour, which initially falls outside this exchange and is independent of it. A use value for capital, labour is a mere exchange value for the worker; available exchange value. It is posited as such in the act of exchange with capital, through its sale for money. The use value of a thing does not concern its seller as such, but only its buyer. The property of saltpetre, that it can be used to make gunpowder, does not determine the price of saltpetre; rather, this price is determined by the cost of production of saltpetre, by the amount of labour objectified in it. The value of use values which enter circulation as prices is not the product of circulation, although it realizes itself only in circulation; rather, it is presupposed to it, and is realized only through exchange for money. Similarly, the labour which the worker sells as a use value to capital is, for the worker, his exchange value, which he wants to realize, but which is already determined prior to this act of exchange and presupposed to it as a condition, and is determined like the value of every other commodity by supply and demand; or, in general, which is our only concern here, by the cost of production, the amount of objectified labour, by means of which the labouring capacity of the worker has been produced and which he therefore obtains for it, as its equivalent. The exchange value of labour, the realization of which takes place in the process of exchange with the capitalist, is therefore presupposed, predetermined, and only undergoes the formal modification which every only ideally posited price takes on when it is realized. It is not determined by the use value of labour. It has a use value for the worker himself only in so far as it is exchange value, not in so far as it produces exchange values. It has exchange value for capital only in so far as it is use value. It is a use value, as distinct from exchange value, not for the worker himself, but only for capital. The worker therefore sells labour as a simple, predetermined exchange value, determined by a previous process he sells labour itself as objectified labour; i.e. he sells labour only in so far as it already objectifies a definite amount of labour, hence in so far as its equivalent is already measured, given; capital buys it as living labour, as the general productive force of wealth; activity which increases wealth. It is clear, therefore, that the worker cannot become rich in this exchange, since, in exchange for his labour capacity as a fixed, available magnitude, he surrenders its creative power, like Esau his birthright for a mess of pottage. Rather, he necessarily impoverishes himself, as we shall see further on, because the creative power of his labour establishes itself as the power of capital, as an alien power confronting him. He divests himself [ent ussert sich] of labour as the force productive of wealth; capital appropriates it, as such. The separation between labour and property in the product of labour, between labour and wealth, is thus posited in this act of exchange itself. What appears paradoxical as result is already contained in the presupposition. The economists have expressed this more or less empirically. Thus the productivity of his labour, his labour in general, in so far as it is not a capacity but a motion, real labour, comes to confront the worker as an alien power; capital, inversely, realizes itself through the appropriation of alien labour. (At least the possibility of realization is thereby posited; as result of the exchange between labour and capital. The relation is realized only in the act of production itself, where capital really consumes the alien labour.) Just as labour, as a presupposed exchange value, is exchanged for an equivalent in money, so the latter is again exchanged for an equivalent in commodities, which are consumed. In this process of exchange, labour is not productive; it becomes so only for capital; it can take out of circulation only what it has thrown into it, a predetermined amount of commodities, which is as little its own product as it is its own value. Sismondi says that the workers exchange their labour for grain, which they consume, while their labour has become capital for its master . (Sismondi, VI.) Giving their labour in exchange, the workers transform it into capital. (id., VIII.) By selling his labour to the capitalist, the worker obtains a right only to the price of labour, not to the product of his labour, nor to the value which his labour has added to it. (Cherbuliez XXVIII.) Sale of labour = renunciation of all fruits of labour. (loc.cit.) Thus all the progress of civilization, or in other words every increase in the powers of social production [gesellschaftliche Produktivkr fte], if you like, in the productive powers of labour itself such as results from science, inventions, division and combination of labour, improved means of communication, creation of the world market, machinery etc. enriches not the worker but rather capital; hence it only magnifies again the power dominating over labour; increases only the productive power of capital. Since capital is the antithesis of the worker, this merely increases the objective power standing over labour. The transformation of labour (as living, purposive activity) into capital is, in itself, the result of the exchange between capital and labour, in so far as it gives the capitalist the title of ownership to the product of labour (and command over the same). This transformation is posited only in the production process itself. Thus, the question whether capital is productive or not is absurd. Labour itself is productive only if absorbed into capital, where capital forms the basis of production, and where the capitalist is therefore in command of production. The productivity of labour becomes the productive force of capital just as the general exchange value of commodities fixes itself in money. Labour, such as it exists for itself in the worker in opposition to capital, that is, labour in its immediate being, separated from capital, is not productive. Nor does it ever become productive as an activity of the worker so long as it merely enters the simple, only formally transforming process of circulation. Therefore, those who demonstrate that the productive force ascribed to capital is a displacement, a transposition of the productive force of labour, forget precisely that capital itself is essentially this displacement, this transposition, and that wage labour as such presupposes capital, so that, from its standpoint as well, capital is this transubstantiation; the necessary process of positing its own powers as alien to the worker. Therefore, the demand that wage labour be continued but capital suspended is self-contradictory, self-dissolving. Others say, even economists, e.g. Ricardo, Sismondi etc., that only labour is productive, not capital. But then they do not conceive capital in its specific character as form, as a relation of production reflected into itself, but think only about its material substance, raw material etc. But these material elements do not make capital into capital. Then, however, they recall that capital is also in another respect a value, that is, something immaterial, something indifferent to its material consistency. Thus, Say: Capital is always an immaterial essence, because it is not material which makes capital, but the value of this material, a value which has nothing corporeal about it. (Say, 21.) Or: Sismondi: Capital is a commercial idea. (Sismondi, LX.) But then they recall that capital is a different economic quality as well, other than value, since otherwise it would not be possible to speak of capital as distinct from value at all, and, if all capitals were value, all values as such would still not be capital. Then they take refuge again in its material form within the production process, e.g. when Ricardo explains that capital is accumulated labour employed in the production of new labour , i.e. merely as instrument of labour or material for labour. In this sense Say even speaks of the productive service of capital , on which remuneration is supposed to be based, as if the instrument of labour as such were entitled to thanks from the worker, and as if it were not precisely because of him that it is posited as instrument of labour, as productive. This presupposes the autonomy of the instrument of labour, i.e. of its social character, i.e. its character as capital, in order to derive the privileges of capital from it. Proudhon s phrase le capital vaut, le travail produit means absolutely nothing more than: capital is value, and, since nothing further is here said about capital other than that it is value, that value is value (the subject of the judgement is here only another name for the predicate); and labour produces, is productive labour, i.e. labour is labour, since it is precisely nothing apart from produire . It must be obvious that these identical judgements do not contain any particularly deep wisdom, and that above all, they cannot express a relation in which value and labour enter into connection, in which they connect and divide in relation to one another, and where they do not lie side by side in mutual indifference. Already the fact that it is labour which confronts capital as subject, i.e. the worker only in his character as labour, and not he himself, should open the eyes. This alone, disregarding capital, already contains a relation, a relation of the worker to his own activity, which is by no means the natural one, but which itself already contains a specific economic character. To the extent that we are considering it here, as a relation distinct from that of value and money, capital is capital in general, i.e. the incarnation of the qualities which distinguish value as capital from value as pure value or as money. Value, money, circulation etc., prices etc. are presupposed, as is labour etc. But we are still concerned neither with a particular form of capital, nor with an individual capital as distinct from other individual capitals etc. We are present at the process of its becoming. This dialectical process of its becoming is only the ideal expression of the real movement through which capital comes into being. The later relations are to be regarded as developments coming out of this germ. But it is necessary to establish the specific form in which it is posited at a certain point. Otherwise confusion arises. Value enters as subject. Labour is purposeful activity, and the material side therefore presupposes that the instrument of labour has really been used as means to an end in the production process, and that the raw material has obtained a higher use value as product than it had before, whether this is due to chemical alteration or mechanical modification. However, this side alone, as impinging merely on the use value, still belongs in the simple production process. It is not the point here this is, rather, understood, presupposed that a higher use value has been created (this in itself is very relative; when grain is transformed into spirits, the higher use value is itself already posited in respect of circulation); no higher use value has yet been created for the individual, the producer. This, in any case, is accidental, and does not affect the relation as such; rather, a higher use value for others. The point is, [rather,] that a higher exchange value be created. In the case of simple circulation, the process ended for the individual commodity by its being consumed as use value. With that, it left circulation; lost its exchange value, its economic form-character [Formbestimmung] in general. Capital has consumed its material with labour and its labour with material; it has consumed itself as use value, but only as use value for itself, as capital. Its consumption as use value therefore in this case falls within circulation itself, or rather it itself posits the beginning of circulation or its end, as one prefers. The consumption of the use value itself here falls within the economic process, because the use value here is itself determined by exchange value. In no moment of the production process does capital cease to be capital or value to be value, and, as such, exchange value. Nothing is more ridiculous than to say, as does Mr Proudhon, that capital changes from a product into an exchange value by means of the act of exchange, i.e. by re-entering simple circulation. We would then be thrown back to the beginning, to direct barter even, where we observe the origin of exchange value out of the product. Already its presupposition as self-preserving exchange value comprises the possibility that capital can and does re-enter into circulation as a commodity at the end of the production process, after its consumption as use value. However, in so far as the product now again becomes commodity, and as commodity, exchange value, and obtains a price and is realized as such in money, to that extent it is a simple commodity, exchange value as such, and, as such, its fate within circulation may be to be realized in money, or it may equally be that it does not realize itself in money; i.e. that its exchange value becomes money or not. Thus its exchange value has become much more problematic before, it was posited ideally than the fact that it came into existence. What is more, its being really posited as a higher exchange value in circulation cannot originate out of circulation itself, in which, in its simple character, only equivalents are exchanged. Therefore, if it comes out of circulation as a higher exchange value, it must have entered into it as such. Capital as a form consists not of objects of labour and labour, but rather of values, and, still more precisely, of prices. The fact that its value-elements have various substances in common during the production process does not affect their character as values; they are not changed thereby. If, out of the form of unrest of the process at the end of the process, they again condense themselves into a resting, objective form, in the product, then this, too, is merely a change of the material [Stoffwechsel] in relation to value, and does not alter the latter. True, the substances as such have been destroyed, but they have not been made into nothing, but rather into a substance with another form. Earlier, they appeared as elemental, indifferent preconditions of the product. Now they are the product. The value of the product can therefore only = the sum of the values which were materialized in the specific material elements of the process, i.e. raw material, instrument of labour (including the merely instrumental commodities), and labour itself. The raw material has been entirely used up, labour has been entirely used up, the instrument has been only partly used up, hence continues to possess a part of the value of the capital in its specific mode of existence as present prior to the process. This part therefore does not come under view here at all, since it has suffered no modification. The different modes in which the values existed were a pure semblance; value itself formed the constantly self-identical essence within their disappearance. Regarded as a value, the product has in this respect not become product, but rather remained identical, unchanged value, which merely exists in a different mode, which is, however, irrelevant to it and which can be exchanged for money. The value of the product is = to the value of the raw material + the value of the part of the instrument of labour which has been destroyed, i.e. transferred to the product, and which is suspended in its original form, + the value of labour. Or, the price of the product is equal to these costs of production, i.e. = to the sum of the prices of the commodities consumed in the production process. That means, in other words, nothing more than that the production process in its material aspect has been irrelevant to value; that value therefore has remained identical with itself and has merely taken on another mode of existence, become materialized in another substance and form. (The form of the substance is irrelevant to the economic form, to value as such.) If capital was originally = to 100 thalers, then afterwards, as before, it remains equal to 100 thalers, although the 100 thalers existed in the production price as 50 thalers of cotton, 40 thalers of wages + 10 thalers of spinning machine, and now exist as cotton yarn to the price of 100 thalers. This reproduction of the 100 thalers is a simple retention of self-equivalence [Sichselbstgleichbleiben], except that it is mediated through the material production process. The latter must therefore proceed to the product, for otherwise cotton loses its value, instrument of labour used up for nothing, wages paid in vain. The only stipulation for the self-preservation of value is that the production process really be a total process, i.e. continue to the point where a product exists. The completeness [Totalit t] of the production process, i.e. the fact that it proceeds to the product, is here in fact the precondition of the self-preservation, the self-equivalent retention of value; but this is already contained in the first precondition, that capital really becomes use value, a real production process; is therefore presupposed at this point. On the other hand, the production process is a production process for capital only to the extent that it preserves itself in this process as value, i.e. as product. The statement that the necessary price = the sum of the prices of the costs of production is therefore purely analytical. It is the presupposition of the production of capital itself. First capital is posited as 100 thalers, as simple value; then it is posited in this process as a sum of prices of specific value-elements of itself, elements specified by the price of production itself. The price of capital, its value expressed in money, = the price of its product. That means the value of capital as the result of the production process is the same as it was as the presupposition of the process. However, during the process it does not retain the simplicity it had at the beginning, and which it takes on once again at the end, as the result; rather, it decomposes into the initially quite irrelevant quantitative elements of value of labour (wage), value of the instrument of labour, and value of the raw material. No further relation has been posited, other than that the simple value decomposes quantitatively to form the price of production, as a number of values which recombine in their simplicity in the product, but which exists now as a sum. But the sum is = to the original unity. Otherwise, as regards value, and apart from the quantitative subdivision, there is not the least difference in the relation between the distinct amounts of value. The original capital was 100 thalers; the product is 100 thalers, but now 100 thalers as the sum of 50 + 40 + 10 thalers. I could just as well have regarded the original 100 thalers as a sum of 50 + 40 + 10 thalers, but equally as a sum of 60 + 30 + 10 thalers, etc. The fact that they now appear as the sum of specific amounts of units is posited because each of the different material elements into which capital decomposed in the production process represents a part of its value, but a specific part. It will be seen later that these amounts into which the original unity is decomposed themselves have certain relations with one another, but this does not concern us here yet. In so far as any movement in the value itself is posited during the production process, it is the purely formal one which consists of the following simple act: that value exists first as a unity, a specific amount of units, which are themselves regarded as a unity, a whole: capital in the amount of 100 thalers; secondly, that this unity is divided during the production process into 50 thalers, 40 thalers and 10 thalers, a division which is essential to the extent that material, instrument and labour are required in specific quantities, but which here appears, in regard to the 100 thalers themselves, merely as an irrelevant decomposition of the same unity into different amounts; finally, that the 100 thalers reappear as a sum in the product. The only process, as regards value, [is] that it sometimes appears as a whole, unity; then as a division of this unity into certain amounts; finally, as sum. The 100 thalers which appear at the end as a sum are just as much a sum and in fact exactly the same sum as that which appeared at the outset as a unity. The character of being a sum, of being added up, arose only out of the subdivision which took place in the act of production; but does not exist in the product as such. The statement thus says nothing more than that the price of the product = the price of the costs of production, or that the value of capital = the value of the product, that the value of the capital has preserved itself in the act of production, and now appears as a sum. With this mere identity of capital, or, reproduction of its value throughout the production process, we would have come no further than we were at the beginning. What was there at the outset as presupposition is now there as result, and in unchanged form. It is clear that it is not in fact this to which the economists refer when they speak of the determination of price by the cost of production. Otherwise, a value greater than that originally present could never be created; no greater exchange value, although perhaps a greater use value, which is quite beside the point here. We are dealing with the use value of capital as such, not with the use of value of a commodity. When one says that the cost of production or the necessary price of a commodity is = to 110, then one is calculating in the following way: Original capital = 100 (e.g. raw material = 50; labour = 40; instrument = 10) + 5% interest + 5% profit. Thus the production cost = 110, not = 100; the production cost is thus greater than the cost of production. Now, it is no help at all to flee from exchange value to the use value of the commodity, as some economists love to do. Whether the use value is greater or lesser is not, as such, determined by the exchange value. Commodities often fall beneath their prices of production, although they indisputably have obtained a higher use value than they had in the period prior to production. It is equally useless to seek refuge in circulation. I produce at 100, but I sell at 110. Profit is not made by exchanging. Had it not existed before, neither could it after that transaction. (Ramsay, IX, 88.) This signifies the attempt to explain the augmentation of value with the aid of simple circulation, despite the fact that the latter expressly posits value as an equivalent only. It is clear even empirically that if everyone sold for 10% too much, this is the same as if they all sold at the cost of production. The surplus value [Mehrwert] would then be purely nominal, artificial, a convention, an empty phrase. And, since money is itself a commodity, a product, it also would be sold for 10% too much, i.e. the seller who received 110 thalers would in fact receive only 100. (Consult Ricardo on foreign trade, which he conceives as simple circulation, and says, therefore: foreign trade can never increase the amount of exchange value in a country . (Ricardo, 39, 40.) The grounds he cites for this conclusion are absolutely the same as those which prove that exchange as such, simple circulation, i.e. commerce in general, in so far as it is conceived as such, can never increase exchange values, never create exchange value.) The statement that the price = the cost of production would otherwise have to read, also: the price of a commodity is always greater than its cost of production. In addition to the simple division and re-addition, the production process also adds the formal element to value, namely that its elements now appear as production costs, i.e. precisely that the elements of the production process are not preserved in their material character, but rather as values, while the mode of existence which these had before the production process is consumed. It is clear, on another side, that if the act of production is merely the reproduction of the value of capital, then it would have undergone a merely material but not an economic change, and such a simple preservation of its value contradicts its concept [Begriff]. True, it would not remain outside circulation, as in the case of autonomous money, but would, rather, take on the form of different commodities; however, it would do so for nothing; this would be a purposeless process, since it would ultimately represent only the same sum of money, and would only have run the risk of suffering some damage in the act of production [moreover, it is a process] which can fail, and in which money surrenders its immortal form. Well then. The production process is now at an end. The product, too, is realized in money again, and has again taken on the original form of the 100 thalers. But the capitalist has to eat and drink, too; he cannot live from this change into the form of money. Thus, a part of the 100 thalers would have to be exchanged not as capital, but as coin for commodities as use values, and be consumed in this form. The 100 thalers would have become 90, and since he always ultimately reproduces capital in the form of money, more precisely, in the quantity of money with which he began production, at the end the 100 thalers would be eaten up and the capital would have disappeared. But the capitalist is paid for the labour of throwing the 100 thalers into the production process as capital, instead of eating them up. But with what is he to be paid? And does not his labour appear as absolutely useless, since capital includes the wage; so that the workers could live from the simple reproduction of the cost of production, which the capitalist cannot do? He would thus appear among the faux frais de production. But, whatever his merits may be, reproduction would be possible without him, since, in the production process, the workers only transfer the value which they take out, hence have no need for the entire relation of capital in order to begin it always anew; and secondly, there would then be no fund out of which to pay him what he deserves, since the price of the commodity = the cost of production. But, if his labour were defined as a particular labour alongside and apart from that of the workers, e.g. that of the labour of superintendence etc., then he would, like them, receive a certain wage, would thus fall into the same category as they, and would by no means relate to labour as a capitalist; and he would never get rich, but receive merely an exchange value which he would have to consume via circulation. The existence of capital vis- -vis labour requires that capital in its being-for-itself, the capitalist, should exist and be able to live as not-worker. It is equally clear, on the other side, that capital, even as conventionally defined, would not retain its value if it could retain nothing but its value. The risks of production have to be compensated. Capital has to preserve itself through the fluctuations of prices. The constantly ongoing devaluation of capital, resulting from the increase in the force of production, has to be compensated, etc. The economists therefore state flatly that if no gain, no profit were to be made, everyone would eat up his money instead of throwing it into production and employing it as capital. In short, if this not-realization [Nichtverwerten], i.e. the non-multiplication of the value of capital, is presupposed, then what is presupposed is that capital is not a real element of production, that it is not a specific relation of production; then a condition is presupposed in which the production costs do not have the form of capital and where capital is not posited as the condition of production. It is easy to understand how labour can increase use value; the difficulty is, how it can create exchange values greater than those with which it began. Suppose that the exchange value which capital pays the worker were an exact equivalent for the value which labour creates in the production process. In that case, an increase in the exchange value of the product would be impossible. Everything which labour as such had brought into the production process, in addition to the already present value of the raw material and of the instrument of labour, would have been paid to the worker. In so far as the value of the product is a surplus over and above the value of raw material and instrument, that value would go to the worker; except that the capitalist would pay him this value in his wages, and that the worker pays it back to the capitalist in the product. <The third moment to be developed in the formation of the concept of capital is original accumulation [urspr ngliche Akkumulation] as against labour, hence the still objectless labour vis- -vis accumulation. The first moment took its point of departure from value, as it arose out of and presupposed circulation. This was the simple concept of capital; money on the direct path to becoming capital; the second moment proceeded from capital as the presupposition and result of production; the third moment posits capital as a specific unity of circulation and production. (Relation between capital and labour, capitalist and worker itself [posited] as a result of the production process.) A distinction is to be drawn between the accumulation of capitals, which presupposes capitals, the relation of capital as present [daseiend], which also presupposes its relations to labour, prices (fixed capital and circulating capital), interest and profit. But in order to come into being, capital presupposes a certain accumulation; which is already contained in the independent antithesis between objectified and living labour; in the independent survival of this antithesis. This accumulation, necessary for capital to come into being, which is therefore already included in its concept as presupposition as a moment is to be distinguished essentially from the accumulation of capital which has already become capital, where there must already be capitals.> <We have already seen so far that capital presupposes: (1) the production process in general, such as is common to all social conditions, that is, without historic character, human, if you like; (2) circulation which is already a specific historic product in each of its moments, and even more so in its totality; (3) capital as a specific unity of the two. Now, the extent to which the production process in general comes to be modified historically as soon as it becomes merely an element of capital has to be found out in the course of developing it; just as the simple conception of the specific characteristics of capital must yield its general historic presuppositions.> <Everything else is empty chatter. Only at the end, and as a result of the whole development, can it become clear which aspects belong in the first section, Production in General , and which into the first section of the second section, Exchange Value in General . We already saw, for example, that the distinction between use value and exchange value belongs within economics itself, and that use value does not lie dead as a simple presupposition, which is what Ricardo makes it do. The chapter on production objectively ends with the product as result; that on circulation begins with the commodity, which is itself again a use value and an exchange value (hence, also, distinct from both, a value), circulation as the unity of both which is, however, merely formal and hence collapses into the commodity as mere object of consumption, extra-economic, and exchange value as independent money.> What the worker exchanges with capital is his labour itself (the capacity of disposing over it); he divests himself of it [ent ussert sie]. What he obtains as price is the value of this divestiture [Ent usserung]. He exchanges value-positing activity for a predetermined value, regardless of the result of his activity. * Now how is its value determined? By the objectified labour contained in his commodity. This commodity exists in his vitality. In order to maintain this from one day to the next we are not yet dealing with the working class, i.e. the replacement for wear and tear so that it can maintain itself as a class, since the worker here confronts capital as a worker, i.e. as a presupposed perennial subject [Subjekt], and not yet as a mortal individual of the working species he has to consume a certain quantity of food, to replace his used-up blood etc. He receives no more than an equivalent. Thus tomorrow, after the completed exchange and only after he has formally completed the exchange does he execute it in the process of production his labouring capacity exists in the same mode as before: he has received an exact equivalent, because the price which he has obtained leaves him in possession of the same exchange value he had before. Capital has paid him the amount of objectified labour contained in his vital forces. Capital has consumed it, and because it did not exist as a thing, but as the capacity of a living being, the worker can, owing to the specific nature of his commodity the specific nature of the life process resume the exchange anew. Since we are dealing here not with any particularly qualified labour but with labour in general, simple labour, we are here not yet concerned with the fact that there is more labour objectified in his immediate existence than is contained in his mere vitality i.e. the labour time necessary to pay for the products necessary to maintain his vitality namely the values he has consumed in order to produce a specific labouring capacity, a special skill and the value of these shows itself in the costs necessary to produce a similar labouring skill. If one day s work were necessary in order to keep one worker alive for one day, then capital would not exist, because the working day would then exchange for its own product, so that capital could not realize itself and hence could not maintain itself as capital. The self-preservation of capital is its self-realization. If capital also had to work in order to live, then it would not maintain itself as capital but as labour. Property in raw materials and instruments of labour would be merely nominal; economically they would belong to the worker as much as to the capitalist, since they would create value for the capitalist only in so far as he himself were a worker. He would relate to them therefore not as capital, but as simple material and means of labour, like the worker himself does in the production process. If, however, only half a working day is necessary in order to keep one worker alive one whole day, then the surplus value of the product is self-evident, because the capitalist has paid the price of only half a working day but has obtained a whole day objectified in the product; thus has exchanged nothing for the second half of the work day. The only thing which can make him into a capitalist is not exchange, but rather a process through which he obtains objectified labour time, i.e. value, without exchange. Half the working day costs capital nothing; it thus obtains a value for which it has given no equivalent. And the multiplication of values can take place only if a value in excess of the equivalent has been obtained, hence created. Surplus value in general is value in excess of the equivalent. The equivalent, by definition, is only the identity of value with itself. Hence surplus value can never sprout out of the equivalent; nor can it do so originally out of circulation; it has to arise from the production process of capital itself. The matter can also be expressed in this way: if the worker needs only half a working day in order to live a whole day, then, in order to keep alive as a worker, he needs to work only half a day. The second half of the labour day is forced labour; surplus-labour. What appears as surplus value on capital s side appears identically on the worker s side as surplus labour in excess of his requirements as worker, hence in excess of his immediate requirements for keeping himself alive. The great historic quality of capital is to create this surplus labour, superfluous labour from the standpoint of mere use value, mere subsistence; and its historic destiny [Bestimmung] is fulfilled as soon as, on one side, there has been such a development of needs that surplus labour above and beyond necessity has itself become a general need arising out of individual needs themselves and, on the other side, when the severe discipline of capital, acting on succeeding generations [Geschlechter], has developed general industriousness as the general property of the new species [Geschlecht] and, finally, when the development of the productive powers of labour, which capital incessantly whips onward with its unlimited mania for wealth, and of the sole conditions in which this mania can be realized, have flourished to the stage where the possession and preservation of general wealth require a lesser labour time of society as a whole, and where the labouring society relates scientifically to the process of its progressive reproduction, its reproduction in a constantly greater abundance; hence where labour in which a human being does what a thing could do has ceased. Accordingly, capital and labour relate to each other here like money and commodity; the former is the general form of wealth, the other only the substance destined for immediate consumption. Capital s ceaseless striving towards the general form of wealth drives labour beyond the limits of its natural paltriness [Naturbed rftigkeit], and thus creates the material elements for the development of the rich individuality which is as all-sided in its production as in its consumption, and whose labour also therefore appears no longer as labour, but as the full development of activity itself, in which natural necessity in its direct form has disappeared; because a historically created need has taken the place of the natural one. This is why capital is productive; i.e. an essential relation for the development of the social productive forces. It ceases to exist as such only where the development of these productive forces themselves encounters its barrier in capital itself. The Times of November 1857 contains an utterly delightful cry of outrage on the part of a West-Indian plantation owner. This advocate analyses with great moral indignation as a plea for the re-introduction of Negro slavery how the Quashees (the free blacks of Jamaica) content themselves with producing only what is strictly necessary for their own consumption, and, alongside this use value , regard loafing (indulgence and idleness) as the real luxury good; how they do not care a damn for the sugar and the fixed capital invested in the plantations, but rather observe the planters impending bankruptcy with an ironic grin of malicious pleasure, and even exploit their acquired Christianity as an embellishment for this mood of malicious glee and indolence. They have ceased to be slaves, but not in order to become wage labourers, but, instead, self-sustaining peasants working for their own consumption. As far as they are concerned, capital does not exist as capital, because autonomous wealth as such can exist only either on the basis of direct forced labour, slavery, or indirect forced labour, wage labour. Wealth confronts direct forced labour not as capital, but rather as relation of domination [Herrschaftsverh ltnis]; thus, the relation of domination is the only thing which is reproduced on this basis, for which wealth itself has value only as gratification, not as wealth itself, and which can therefore never create general industriousness. (We shall return to this relation of slavery and wage labour.) (2) The Physiocrats. Here the difficulty of grasping capital, the self-realization of value, hence the surplus value created by capital in the act of production, presents itself in tangible form, and this was necessarily so among the fathers of modern economics, just as was the case with the creation of surplus value in Ricardo, which he conceives in the form of rent, during the final classical conclusion of this economics. It is at bottom the question of the concept of capital and of wage labour, and therefore the fundamental question which presents itself at the threshold of the system of modern society. The Monetary System had understood the autonomy of value only in the form in which it arose from simple circulation money; it therefore made this abstract form of wealth into the exclusive object [Objekt] of nations which were just then entering into the period in which the gaining of wealth as such appeared as the aim of society itself. Then came the Mercantile System, an epoch where industrial capital and hence wage labour arose in manufactures, and developed in antithesis to and at the expense of non-industrial wealth, of feudal landed property. [The Mercantilists] already have faint notions of money as capital, but actually again only in the form of money, of the circulation of mercantile capital, of capital which transforms itself into money. Industrial capital has value for them, even the highest value as a means, not as wealth itself in its productive process because it creates mercantile capital and the latter, via circulation, becomes money. Labour in manufactures i.e. at bottom industrial labour, but agricultural labour was and appeared to them, in antithesis, as chiefly productive of use values; raw products, processed, are more valuable, because in a clearer form, likewise more suitable for circulation, commerce; creating more money for the mercantile form (in this regard the historic view of wealth of non-agricultural peoples such as Holland, for example, in antithesis to that of the agricultural, feudal; agriculture did not appear at all in industrial form, but in feudal, hence as source of feudal, not of bourgeois wealth). Thus one form of wage labour, the industrial, and one form of capital, the industrial, were recognized as sources of wealth, but only in so far as they produced money. Exchange value itself therefore not yet conceived in the form of capital. Now the Physiocrats. They distinguish between capital and money, and conceive it in its general form as autonomous exchange value which preserves and increases itself in and through production. They also therefore examine the relation for itself, not merely as a moment of simple circulation, but rather as its presupposition which constantly rises out of it to become its presupposition again. They are therefore the fathers of modern economics. They also understand that the creation of surplus value by wage labour is the self-realization [Selbstverwertung], i.e. the realization [Verwirklichung] of capital. But how does labour act as a means to produce a surplus value out of capital, i.e. already-present value? Here they let the form drop altogether and only look at the simple production process. Hence only that labour can be productive which takes place in the kind of field where the natural force of the instrument of labour tangibly permits the labourer to produce more value than he consumes. Surplus value therefore does not arise from labour as such, but rather from the natural forces which labour uses and conducts agriculture. This is therefore the only productive labour, for they have come so far that [they consider that] only labour which creates surplus value is productive (that surplus value has to express itself in a material product is a crude view which still occurs in A. Smith. Actors are productive workers, not in so far as they produce a play, but in so far as they increase their employer s wealth. But what sort of labour takes place, hence in what form labour materializes itself, is absolutely irrelevant for this relation. It is not irrelevant, again, from later points of view); but this surplus value surreptitiously transforms itself into a quantity of use value coming out of production, larger than that which is consumed in it. This multiplication of use values, the excess of the product above that which has to serve as a means for new production of which a part can therefore be consumed unproductively appears tangibly only in the relation between the natural seed and its product. Only a part of the harvest has to be directly returned to the soil as seed; products found in nature, the elements air, water, earth, light, and added substances such as fertilizer, then recreate the seed again in multiplied quantity as grain etc. In short, human labour has only to conduct the chemical processes (in agriculture), and in part also to promote them mechanically, or promote the reproduction of life itself (cattle-raising) in order to obtain the surplus, i.e. to transform the identical natural substances from a useless into a valuable form. An over-abundance of agricultural products (grain, cattle, raw materials) is therefore the true form of general wealth. From the economic viewpoint, therefore, rent is the only form of wealth. Thus it is that the first prophets of capital conceive only the not-capitalists, the feudal landed proprietors, as the representatives of bourgeois wealth. The consequence, the levy of all taxes on rent, is then, however, entirely to the advantage of bourgeois capital. The bourgeois glorify feudalism in theory many a feudal figure, like the elder Mirabeau has been duped by this only in order to ruin it in actual practice. All other values merely represent raw material + labour; labour itself represents grain or other products of the soil, which labour consumes; hence the factory worker etc. adds no more to the raw material than he consumes in raw materials. Therefore, his labour as well as his employer create no additional wealth wealth being the surplus above the commodities consumed in production but merely give it forms more pleasant and useful for consumption. At that time the utilization of natural energy in industry had not developed, nor the division of labour etc. which increases the natural force of labour itself. This was the case, however, in A. Smith s time. With him, therefore, labour in principle the source of value, likewise of wealth, but actually labour too posits surplus value only in so far as in the division of labour the surplus appears as just as much a gift of nature, a natural force of society, as the soil with the Physiocrats. Hence the weight A. Smith lays on the division of labour. Capital, on the other hand, appears to him because, although he defines labour as productive of value, he conceives it as use value, as productivity for-itself [f r sich seiend], as human natural force in general (this distinguishes him from the Physiocrats), but not as wage labour, not in its specific character as form in antithesis to capital not as that which contains wage labour as its internal contradiction from its origin, but rather in the form in which it emerges from circulation, as money, and is therefore created out of circulation, by saving. Thus capital does not originally realize itself precisely because the appropriation of alien labour [fremde Arbeit] is not itself included in its concept. Capital appears only afterwards, after already having been presupposed as capital a vicious circle as command over alien labour. Thus, according to A. Smith, labour should actually have its own product for wages, wages should be = to the product, hence labour should not be wage labour and capital not capital. Therefore, in order to introduce profit and rent as original elements of the cost of production, i.e. in order to get a surplus value out of the capitalist production process, he presupposes them, in the clumsiest fashion. The capitalist does not want to give the use of his capital for nothing; the landowner, similarly, does not want to give land and soil over to production for nothing. They want something in return. This is the way in which they are introduced, with their demands, as historical facts, but not explained. Wages are actually the only economically justifiable, because necessary, element of production costs. Profit and rent are only deductions from wages, arbitrarily wrested by force in the historical process by capital and landed property, and justified by law, not economically. But on the other side, since he [Adam Smith] then confronts labour with the means and materials of production in the form of landed property and capital, as independent entities, he has essentially posited labour as wage labour. Therefore contradictions. Hence his vacillation in the determination of value; the placing of profit and ground rent on the same level; erroneous views about the influence of wages on prices etc. Now Ricardo (see 1). With him, however, wage labour and capital are again conceived as a natural, not as a historically specific social form [Gesellschaftsform] for the creation of wealth as use value; i.e. their form as such, precisely because it is natural, is irrelevant, and is not conceived in its specific relation to the form of wealth, just as wealth itself, in its exchange-value form, appears as a merely formal mediation of its material composition; thus the specific character of bourgeois wealth is not grasped precisely because it appears there as the adequate form of wealth as such, and thus, although exchange value is the point of departure, the specific economic forms of exchange themselves play no role at all in his economics. Instead, he always speaks about distribution of the general product of labour and of the soil among the three classes, as if the form of wealth based on exchange value were concerned only with use value, and as if exchange value were merely a ceremonial form, which vanishes in Ricardo just as money as medium of circulation vanishes in exchange. Therefore, in order to bring out the true laws of economics, he likes to refer to this relation of money as a merely formal one. Hence also his weakness in the doctrine of money proper. The exact development of the concept of capital [is] necessary, since it [is] the fundamental concept of modern economics, just as capital itself, whose abstract, reflected image [is] its concept [dessen abstraktes Gegenbild sein Begriff], [is] the foundation of bourgeois society. The sharp formulation of the basic presuppositions of the relation must bring out all the contradictions of bourgeois production, as well as the boundary where it drives beyond itself. <It is important to note that wealth as such, i.e. bourgeois wealth, is always expressed to the highest power as exchange value, where it is posited as mediator, as the mediation of the extremes of exchange value and use value themselves. This intermediary situation [Mitte] always appears as the economic relation in its completeness, because it comprises the opposed poles, and ultimately always appears as a one-sidedly higher power vis- -vis the extremes themselves; because the movement, or the relation, which originally appears as mediatory between the extremes necessarily develops dialectically to where it appears as mediation with itself, as the subject [Subjekt] for whom the extremes are merely its moments, whose autonomous presupposition it suspends in order to posit itself, through their suspension, as that which alone is autonomous. Thus, in the religious sphere, Christ, the mediator between God and humanity a mere instrument of circulation between the two becomes their unity, God-man, and, as such, becomes more important than God; the saints more important than Christ; the popes more important than the saints. Where it is posited as middle link, exchange value is always the total economic expression, itself one-sided against the extremes; e.g. money in simple circulation; capital itself as mediator between production and circulation. Within capital itself, one form of it in turn takes up the position of use value against the other as exchange value. Thus e.g. does industrial capital appear as producer as against the merchant, who appears as circulation. Thus the former represents the material [stofflich], the latter the formal side, i.e. wealth as wealth. At the same time, mercantile capital is itself in turn the mediator between production (industrial capital) and circulation (the consuming public) or between exchange value and use value, where both sides are posited alternately, production as money and circulation as use value (consuming public) or the former as use value (product) and the latter as exchange value (money). Similarly within commerce itself: the wholesaler as mediator between manufacturer and retailer, or between manufacturer and agriculturalist, or between different manufacturers; he is the same mediator at a higher level. And in turn, in the same way, the commodity brokers as against the wholesalers. Then the banker as against the industrialists and merchants; the joint-stock company as against simple production; the financier as mediator between the state and bourgeois society, on the highest level. Wealth as such presents itself more distinctly and broadly the further it is removed from direct production and is itself mediated between poles, each of which, considered for itself, is already posited as economic form. Money becomes an end rather than a means; and the higher form of mediation, as capital, everywhere posits the lower as itself, in turn, labour, as merely a source of surplus value. For example, the bill-broker, banker etc. as against the manufacturers and farmers, which are posited in relation to him in the role of labour (of use value); while he posits himself toward them as capital, extraction of surplus value; the wildest form of this, the financier.> Capital is direct unity of product and money or, better, of production and circulation. Thus it itself is again something immediate, and its development consists of positing and suspending itself as this unity which is posited as a specific and therefore simple relation. The unity at first appears in capital as something simple. <Ricardo s reasoning is simply this: products are exchanged for one another hence capital for capital according to the amounts of objectified labour contained in them. A day s work is always exchanged for a day s work. This is presupposition. Exchange itself can therefore be entirely left out. The product capital posited as product is exchange value in itself, to which exchange merely adds form; formal form with him. The only question is now in what proportions this product is divided up and distributed. Whether these proportions are regarded as specific quotas of the presupposed exchange value, or of its content, material wealth, [is] the same thing. Moreover, since exchange as such is merely circulation money as circulation it is better to abstract from it altogether, and to examine only the proportions of material wealth which have been distributed within the production process or because of it to the various factors. In the exchange form, all value etc. is merely nominal; it is real only in the form of the proportion. Exchange as a whole, to the extent that it creates no greater material variety, is nominal. Since a full day s work is always exchanged for a full day s work, the sum of values remains the same the growth in the forces of production affects only the content of wealth, not its form. An increase of values can arise, therefore, only out of an increasing difficulty in production and this can take place only where the forces of nature no longer afford an equal service to equal quantities of human labour, i.e. where the fertility of the natural elements decreases in agriculture. The decline of profits is therefore caused by rent. Firstly the false presupposition that a full day s work is always worked in all social conditions; etc. etc. (see above ).>

Grundrisse 06

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch06.htm

Let necessary labour be 1/16, then total surplus value = 15/16; which was 5/8 = 10/16 in the previous relation; thus the total surplus value presupposed is by 5/16 higher than in the previous case. Now let the productive force double, then necessary labour = 1/32; which was previously = 2/32 (1/16); hence surplus time has risen by 1/32, surplus value by the same proportion. As regards the total surplus value, which was 15/16 or 30/32, this is now 31/32. Compared to the earlier relation (where necessary labour was 1/4 or 8/32), the total surplus value is now 31/32, whereas it was only 30/32 earlier, hence grew by 1/32. But regarded relatively, the doubling of production increased it in the first case by 1/8 or 4/32, while it has now increased by only 1/32, i.e. by 3/32 less. If necessary labour had already been reduced to 1/1,000, then the total surplus value would be = 999/1,000. Now if the productive force increased a thousandfold, then necessary labour would decline to 1/1,000,000 working day and the total surplus value would amount to 999,999/1,000,000 of a working day; whereas before this increase in productive force it amounted to only 999/1,000 or 999,000/1,000,000; it would thus have grown by 999/1,000,000 = 1/11 (with the addition of 1/(11 + 1/999), i.e. the thousandfold increase in productive force would have increased the total surplus by not even 1/11, i.e. not even by 3/33, whereas in the previous case it rose by 1/32 owing to a mere doubling of the productive force. If necessary labour falls from 1/1,000 to 1/1,000,000, then it falls by exactly 999/1,000,000 (for 1/1,000 = 1,000/1,000,000), i.e. by the surplus value. If we summarize this, we find: Firstly: The increase in the productive force of living labour increases the value of capital (or diminishes the value of the worker) not because it increases the quantity of products or use values created by the same labour the productive force of labour is its natural force but rather because it diminishes necessary labour, hence, in the same relation as it diminishes the former, it creates surplus labour or, what amounts to the same thing, surplus value; because the surplus value which capital obtains through the production process consists only of the excess of surplus labour over necessary labour. The increase in productive force can increase surplus labour i.e. the excess of labour objectified in capital as product over the labour objectified in the exchange value of the working day only to the extent that it diminishes the relation of necessary labour to surplus labour, and only in the proportion in which it diminishes this relation. Surplus value is exactly equal to surplus labour; the increase of the one [is] exactly measured by the diminution of necessary labour. Secondly: The surplus value of capital does not increase as does the multiplier of the productive force, i.e. the amount to which the productive force (posited as unity, as multiplicand) increases; but by the surplus of the fraction of the living work day which originally represents necessary labour, in excess over this same fraction divided by the multiplier of the productive force. Thus if necessary labour = 1/4 of the living work day and the productive force doubles, then the value of capital does not double, but grows by 1/8; which is equal to 1/4 or 2/8 (the original fraction of the work day which represents necessary labour) 1/4 divided by 2, or = 2/8 minus 1/8 = 1/8. (That value doubles itself can also be expressed, it grows 4/2 [-fold] or 16/8 [-fold]. Its growth would relate to that of the productive force by 1:16. (That is it!) If the fraction was 1/1,000 and the productive force increases a thousandfold, then the value of capital does not grow a thousandfold, but rather by far less than 1/11; it grows by 1/1,000 1/1,000,000, i.e. by 1,000/1,000,000 1/1,000,000 = 999/1,000,000.) Thus the absolute sum by which capital increases its value through a given increase of the productive force depends on the given fractional part of the working day, on the fractional part of the working day which represents necessary labour, and which therefore expresses the original relation of necessary labour to the living work day. The increase in productive force in a given relation can therefore increase the value of capital differently e.g. in the different countries. A general increase of productive force in a given relation can increase the value of capital differently in the different branches of industry, and will do so, depending on the different relation of necessary labour to the living work day in these branches. This relation would naturally be the same in all branches of business in a system of free competition, if labour were simple labour everywhere, hence necessary labour the same. (If it represented the same amount of objectified labour.) Thirdly: The larger the surplus value of capital before the increase of productive force, the larger the amount of presupposed surplus labour or surplus value of capital; or, the smaller the fractional part of the working day which forms the equivalent of the worker, which expresses necessary labour, the smaller is the increase in surplus value which capital obtains from the increase of productive force. Its surplus value rises, but in an ever smaller relation to the development of the productive force. Thus the more developed capital already is, the more surplus labour it has created, the more terribly must it develop the productive force in order to realize itself in only smaller proportion, i.e. to add surplus value because its barrier always remains the relation between the fractional part of the day which expresses necessary labour, and the entire working day. It can move only within these boundaries. The smaller already the fractional part falling to necessary labour, the greater the surplus labour, the less can any increase in productive force perceptibly diminish necessary labour; since the denominator has grown enormously. The self-realization of capital becomes more difficult to the extent that it has already been realized. The increase of productive force would become irrelevant to capital; realization itself would become irrelevant, because its proportions have become minimal, and it would have ceased to be capital. If necessary labour were 1/1,000 and the productive force tripled, then it would fall to only 1/3,000 or surplus labour would have increased by only 2/3,000. But this happens not because wages have increased or the share of labour in the product, but because it has already fallen so low, regarded in its relation to the product of labour or to the living work day. * (All these statements correct only in this abstraction for the relation from the present standpoint. Additional relations will enter which modify them significantly. The whole, to the extent that it proceeds entirely in generalities, actually already belongs in the doctrine of profit.) So much in general for the time being: the development of the productive force of labour first the positing of surplus labour is a necessary condition for the growth of value or the realization of capital. As the infinite urge to wealth, it strives consistently towards infinite increase of the productive forces of labour and calls them into being. But on the other hand, every increase in the productive force of labour leaving aside the fact that it increases the use values for the capitalist is an increase in the productive force of capital and, from the present standpoint, is a productive force of labour only in so far as it is a productive force of capital. Well. First of all it is clear that if capital has already raised surplus labour to the point where the entire living work day is consumed in the production process (and we here assume the working day to be the natural amount of labour time which the worker is able to put at the disposal of capital; this is always only for a specific time, i.e. specific labour time), then an increase in the productive force cannot increase labour time, nor, therefore, objectified labour time. The product objectifies one working day, whether the necessary time of labour is represented by 6 or 3 hours, by 1/2 or 1/4 of the working day. The surplus value of capital has grown; i.e. its value relative to the worker for if it was only = 2/4 before, it is now = to 3/4 of objectified labour time; but its value increased not because the absolute but because the relative amount of labour grew; i.e. the total amount of labour did not grow; the working day is as long before as after; hence no absolute increase in surplus time (surplus labour time); rather the amount of necessary labour decreased, and that is how relative surplus labour increased. The worker in fact worked a whole day before, but only 1/2 day of surplus time; afterwards, as before, he works the whole day, but 3/4 of a day of surplus time. To that extent, therefore, the price (presupposing this as its gold and silver value), or the exchange value of capital, has not increased with the doubling of the productive force. This therefore concerns the rate of profit, not the price of the product or the value of the capital, which became a commodity again in the product. But in fact the absolute values also increase in this manner, because that part of wealth which is posited as capital as self-realizing value also increases. (Accumulation of capitals.) Take our earlier example. Let capital = 100 thalers, and let it decompose in the production process into the following parts: 50 thalers cotton, 40 thalers wages, 10 thalers instrument. Assume at the same time, in order to simplify the arithmetic, that the entire instrument of labour is consumed in one act of production (and this is quite beside the point here, so far), so that its entire value would reappear in the form of the product. Suppose in this case that the 40 thalers which go to labour express a labour time objectified in living labouring capacity of, say, 4 hours, giving capital 8 hours. Presupposing the instrument and the raw material, the total product would amount to 100 thalers, if the worker works only 4 hours, i.e. if the raw material and the instrument were his property and he worked for 4 hours only. He would increase the 60 thalers by 40, which he could consume, since firstly he replaces the 60 thalers in raw material and instrument required for production, and then adds a surplus value of 40 thalers as reproduction of his own living labour capacity or of the time objectified in him. He could repeat the work again and again, since he would have reproduced the value of the raw material and of the instrument as well as of the labouring capacity; the latter by constantly increasing the value of the former by 4 hours of objectified labour. But now let him receive the 40 thalers in wages only by working 8 hours, so that he would add to the material and instrument of labour, which now confront him as capital, a surplus value of 80 thalers; while the former surplus value of 40 thalers, which he added, is only exactly the value of his labour. He would thus add a surplus value exactly = to the surplus labour or surplus time. * The value of capital would thus have increased from 100 thalers to 140. Now, capital regarded as simple exchange value would be absolutely greater, 140 thalers instead of 100; but in fact, a new value would merely have been created, i.e. a value which is not merely necessary to replace the 60 thalers in advances for the materials and the instrument of labour and the 40 thalers for labour, a new value of 40 thalers. The values in circulation would have been increased by 80 thalers, by 40 thalers of additional objectified labour time. Now assume the same presupposition. 100 thalers capital; specifically, 50 for cotton, 40 for labour, 10 for instrument of production; let the surplus labour time remain as before, i.e. 4 hours, and the total labour time 8 hours. Thus in all cases the product only = 8 hours labour time = 140 thalers. Now suppose the productive force of labour doubles; i.e. 2 hours would be enough for the worker to realize raw materials and instrument to the extent required to maintain his labouring capacity. If 40 thalers were an objectified labour time of 4 hours, then 20 thalers would be the objectified labour time of 2 hours. These 20 thalers now express the same use value as the 40 thalers before. The exchange value of labouring capacity has diminished by half, because half of the original labour time creates the same use value, while the exchange value of the use value is measured purely by the labour time objectified in it. But the capitalist makes the workers work 8 hours now as before, and his product therefore represents now as before a labour time of 8 hours = 80 thalers of labour time, while the value of raw material and material remain the same, namely 60 thalers; altogether, as before, 140 thalers. (In order to live, the worker himself would have had to add to the 60 thalers of raw material and instrument a value of no more than 20 thalers, he would thus have created a value of only 80 thalers. The total value of his product would have diminished, by the doubling of production, from 100 to 80, by 20 thalers, i.e. by 1/5 of 100 = 20%.) But the surplus time or surplus value for capital is now 6 hours instead of 4, or 60 thalers instead of 40. Its increment is 2 hours, 20 thalers. His accounts would now show the following: for raw material, 50; for labour, 20; for instrument, 10; costs = 80 thalers. Gain = 60 thalers. Now as before he would sell the product for 140 thalers, but would show a gain of 60 thalers instead of 40 as before. On one side, therefore, he throws only the same exchange value into circulation as before, 140 thalers. But the surplus value of his capital has grown by 20 thalers. Accordingly, only the share he gets of the 140 thalers [is] the rate of his profit. The worker in fact worked 2 hours more for him free of charge, i.e. 6 hours instead of 4, and this is the same for him as if he had worked 10 hours instead of 8 in the earlier relation, had increased his absolute labour time. But indeed a new value has arisen also; namely 20 additional thalers are posited as autonomous value, as objectified labour which has become free, unbound from the task of serving only in exchange for earlier labour power [Arbeitskraft]. This can present itself in two ways. Either the 20 thalers set as much additional labour into motion as becomes capital and creates larger exchange value: make more objectified labour into the point of departure for the new production process; or the capitalist exchanges the 20 thalers as money for commodities other than those which he needs in its production as industrial capital; all commodities other than labour and money themselves thus are exchanged for 20 more thalers, for 2 more hours of objectified labour time. Their exchange value has thus increased by just this liberated sum. In fact, 140 thalers are 140 thalers, as the very perceptive French publisher of the Physiocrats remarks against Boisguillebert. But it is false that these 140 thalers only represent more use value; they represent a greater amount of independent exchange value, of money, of latent capital; i.e. of wealth posited as wealth. The economists themselves admit this later when they allow the accumulation of capitals to accumulate not only the mass of use values, but that of exchange values too; for, according to Ricardo himself, the element of the accumulation of capitals is posited just as completely with relative surplus labour as with absolute impossible any other way. On the other side, it is already implicit in the thesis best developed by Ricardo, that these excess 20 thalers, which are created purely by the increase in productive force, can become capital again. Earlier, only 40 of the 140 thalers (leaving capital s consumption aside for now) could become new capital; 100 do not become capital but remain capital; now 60 [can], i.e. the present capital is greater by an exchange value of 20 thalers. Thus, exchange value, wealth as such, has increased, although the total sum of the same has not directly increased. Why has it increased? Because that part of the total sum has increased which was not a mere medium of circulation, but money; or which was not merely equivalent, but exchange value for-itself [f r sich seiend]. Either the liberated 20 thalers were accumulated as money, i.e. added to the stock of exchange values in general (abstract) exchange value form; or they all circulated, and then the prices of the commodities bought with them rise; they all represent more money, as well as, since the production cost of gold has not fallen (rather, risen relative to the commodity produced by the more productive capital), more objectified labour (because of this, the excess production, which at first only appeared on the side of the one producing capital, now appears on the side of the others, which produce the more expensive commodities); or the 20 thalers are directly used up as capital by the originally circulating capital. Thus a new capital of 20 thalers is posited a sum of self-preserving and self-realizing wealth. Capital has risen by the exchange value of 20 thalers. (Circulation actually does not yet concern us here, since we are here dealing with capital in general, and circulation can only mediate between capital in the form of money and capital in its form as capital; the first capital may realize money as such, i.e. exchange it for commodities, consume more than before; but in the hand of the producer of these commodities this money becomes capital. Thus it becomes capital directly in the hands of the first capital, or, via a detour, [in those] of another capital. But the other capital is always in turn capital as such; and we are concerned here with capital as such, [let us] say the capital of the whole society. The differentiation etc. of capitals does not concern us yet.) In general, these 20 thalers can appear only in a double form. As money, so that capital again exists in the character of money which has not yet become capital its point of departure; the abstract-autonomous form of exchange value or of general wealth; or itself in turn as capital, as a new domination of objectified labour over living labour. * (Every increase in the mass of capital employed can increase the productive force not only at an arithmetical but at a geometrical rate; although it can increase profit at the same time as increase of productive force only at a much lower rate. The influence of the increase of capital on the increase of productive force is thus infinitely greater than that of the increase of the productive force on the growth of capital.) As general wealth, materialized in the form of money (of the thing, in its mere abstractness), or of new living labour. The capitalist consumes, say, 20 of the 140 thalers as use values for himself, through the mediation of money as means of circulation. Thus, in the first presupposition, he could begin the process of self-realization only with a larger capital, a larger use value of 120 (as against 100). After the doubling in the productive forces, he can do it with 140 thalers without restricting his consumption. A larger part of the exchange values solidifies as exchange value, instead of vanishing in use value (whether it solidifies as such, through production, directly or indirectly). To create a larger capital means to create a larger exchange value; although exchange value in its direct form as simple exchange value has not been increased by the growth of productivity, it has in its intensified form as capital. This larger capital of 140 thalers represents, absolutely, more objectified labour than the earlier capital of 120 thalers. It therefore also, at least relatively, sets more living labour into motion and therefore also ultimately reproduces more simple exchange value. The capital of 120 thalers at 40% produced a product or simple exchange value of 60 thalers at 40%; the capital of 140 thalers a simple exchange value of 64 thalers. Here, then, the increase in exchange value in the form of capital is still posited directly as an increase in exchange value in its simple form. It is of the highest importance to remember this. It is not enough to say, like Ricardo, that exchange value does not increase; i.e. the abstract form of wealth; but only exchange value as capital. In saying this he is looking only at the original production process. But if relative surplus labour increases and capital therefore increases absolutely then there is necessarily also an increase within circulation also of relative exchange value existing as exchange value, money as such, and therefore, through the mediation of the production process, absolute exchange value. In other words, of this same amount of exchange value or money and the product of the realization process appears in this simple form the product is surplus value only relative to capital, to value such as it existed before the production process; for itself, regarded as an independent existence, it is merely quantitatively defined exchange value a part has become liberated, which does not exist as equivalent for already present exchange values or for already present labour time. If it is exchanged for those already present, it gives them not an equivalent but more than an equivalent, and thus liberates a part of the exchange value on their side. In a static state, this liberated exchange value by which society has become richer can only be money, in which case only the abstract form of wealth has increased; [is] in motion: [it] can realize itself only in new living labour (whether labour which had been dormant is set into motion, or new workers are created (population [growth] is accelerated) or again a new circle of exchange values, of exchange values in circulation, is expanded, which can occur on the production side if the liberated exchange value opens up a new branch of production, i.e. a new object of exchange, objectified labour in the form of a new use value; or the same is achieved when objectified labour is put in the sphere of circulation in a new country, by an expansion of trade). The latter must then be created. The form in which Ricardo attempts to clarify the matter for himself (and he is very unclear in this regard) says at bottom nothing more than that he just introduces a certain relation, instead of saying, simply, that out of the same sum of simple exchange values a smaller part posits itself in the form of simple exchange value (equivalent) and a larger part in the form of money (money as the original, antediluvian form out of which capital always arises anew; money in its character as money, not as coin etc.); that therefore the part posited as exchange value for-itself, i.e. as value, increases, i.e. wealth in the form of wealth (whereas he comes to just the mistaken conclusion that it increases only in the form of material, physical wealth as use value). The origin of wealth as such, in so far as it arises not from rent, i.e., according to him, not from the increase in productive force, but rather from the decrease of the same, is therefore totally incomprehensible to him, and he entangles himself in the wildest contradictions. Let us take the form of the matter. Capital 1,000 sets 50 workers into motion; or 50 living work days; through a doubling of the productive force, it could set 100 working days into motion. But these latter do not exist in the presupposition, and are introduced arbitrarily, because otherwise unless more real working days are introduced he does not grasp the increase in exchange value which arises from increased productivity. At the same time, the growth of population is never developed by him as an element in the increase of exchange values; never clearly and definitely stated. Let the presupposition be capital 1,000 and workers 50. The correct deduction, which he himself also draws (see Notebook) : capital 500 with 25 workers can produce the same use value as before; the other 500 with the other 25 workers establish a new business and likewise produce an exchange value of 500. The profit remains the same, since it arises not from the exchange of 500 for 500, but from the proportions in which profit and wages originally divide in the 500, and since exchange deals in equivalents, which can no more increase value than external trade can, which Ricardo explicitly demonstrates. Since the exchange of equivalents just means nothing more than that the value in the hands of A before the exchange with B still exists in his hands after the exchange with B. The total value or wealth has remained the same. Use value, however, or the material of wealth, has doubled. Now, there is absolutely no reason here why wealth should grow as wealth, exchange value as such as far as the increase in the productive forces is concerned. If the productive forces again double in both branches, then capital A can again divide into two of 250 with 12 1/2 working days each, capital B can do the same. There are now four capitals with the same total exchange value of 1,000, consuming 50 living work days as before, * producing four times as much use value as before the doubling of consumption value. Ricardo is too classical to commit absurdities, like those who claim to improve on him, who derive the larger value after the increase in productive force from one party selling at a higher price within circulation. As soon as the capital of 500 has become commodity, simple exchange value, instead of exchanging it for 500, he exchanges it for 550 (at 10%), but then the other party obviously only gets 450 in exchange value instead of 500 and the total sum remains 1,000 as before. This happens often enough in commerce, but explains the profit made by one capital only by the loss of the other capital, and not the profit of capital; and without this presupposition there can be profit neither on one nor on the other side. Ricardo s process can therefore go on without any other limit than the increase of the productive force (and this is again physical, located outside the economic relation itself) possible with a capital of 1,000 and 50 workers. See the following passage: Capital is that part of the wealth of a country which is employed with a view to future production, and may be increased in the same manner as wealth. (Wealth for him the abundance of use values; and, seen from the standpoint of simple exchange, the identical objectified labour can express itself in limitless use values and constantly remain the same exchange value, as long as it remains the same amount of objectified labour, for its equivalent is measured not by the mass of use value in which it exists, but rather by its own amount.) An additional capital will be equally efficacious in the formation of future wealth, whether it be obtained from improvements of skill or machinery, or from using more revenue productively; for wealth (use value) always depends on the quantity of commodities produced (also somewhat on their variety, it seems), without regard to the facility with which the instruments employed in production may have been produced (i.e. the labour time objectified in them). A certain quantity of clothes and provisions will maintain and employ the same number of men; but they will be of twice the value (exchange value) if 200 have been employed on their production. If, owing to an increase in the productive force, 100 produce as much in use values as 200 earlier, then: of the 200, half are let go, so that the remaining 100 produce as much as the 200 did before. Thus a half of the capital can be withdrawn from this branch of business; as much capital has become free as labour. And since one half of the capital now does quite the same service as did the whole, two capitals have now been formed etc. (cf. 39, 40 ibid. on national trade, to which we must return). Ricardo does not speak here about the working day; [the fact] that, if the capitalist earlier exchanged half of an objectified working day for the worker s entire living work day, [he] thus at bottom gains only half a living work day, since he gives the other half in objectified form to the worker, and obtains it from him in the living form, i.e. pays the worker a half of the working day, instead of in the form of simultaneous working days, i.e. of different workers; this does not alter the matter, only its expression. Each one of these working days furnishes so much more surplus time. If the capitalist, before, had the working day as limit, he now has 50 working days etc. As has been said, this form does not posit an increase in exchange values with an increase in the number of capitals through productivity, and, according to Ricardo, it would also be possible for the population to fall from, say, 10,000,000 to 10,000, without a decrease in exchange values or the quantity of use values (see conclusion of his book). We are the last to deny that capital contains contradictions. Our purpose, rather, is to develop them fully. But Ricardo does not develop them, but rather shifts them off by considering the value in exchange as indifferent for the formation of wealth. That is to say, he contends that in a society based upon the value of exchange, and wealth resulting from such value, the contradictions to which this form of wealth is driven with the development of productive powers etc. do not exist, and that a progress of value is not necessary in such a society to secure the progress of wealth, consequently that value as the form of wealth does not at all affect that wealth itself and its development, i.e. he regards exchange value as merely formal. Then, however, he remembers (1) that the capitalists are concerned with value, (2) that, historically, with the progress of the productive forces (of international trade too, he should have noted), there is a growth in wealth as such, i.e. the sum of values. Now, how to explain this? Capitals accumulate faster than the population; thus wages rise; thus population; thus grain prices; thus the difficulty of production and hence the exchange values. The latter are then finally reached by a detour. We will here entirely omit the moment of rent, since we are not yet concerned with increased difficulty of production but rather with its opposite, with increase in the productive forces. With the accumulation of capitals, wages rise unless population grows simultaneously; the worker marries, production is spurred on or his children live better, do not die before their time etc. In short, the population grows. Its growth, however, gives rise to competition among the workers, and thereby forces the worker to sell his labour power to the capitalist at its value again, or momentarily even below it. Now the accumulated capital, which has meanwhile grown up more slowly, again has the surplus which it earlier spent in the form of wages, i.e. as coin, in order to buy the use value of labour, available to it in the form of money, in order to realize it as capital in living labour, and, since it now also disposes over a greater amount of working days, its exchange value grows in turn. (Even this not really developed in Ricardo, but mixed up with the theory of rent; since the surplus which capital earlier lost in the form of wages is now lost to it in the form of rent, owing to the growth of population.) But even the growth of population is not really comprehensible in his theory. At no time has he shown that there is an inherent relation between the whole of the labour objectified in capital and the living work day (whether the latter is represented as one working day of 50 12 hours, or as 12 hours of labour by 50 workers, is the same thing as far as the relation goes), and that this inherent relation is just the relation between the fractional part of the living work day, or that between the equivalent of the objectified labour with which the worker is paid, and the living working day; where the whole is the day itself, and the inherent relation is the variable relation (the day itself is a constant) between the fractional part of the necessary hours of labour and the hours of surplus labour. And, just because he has not developed this relation, he has also not developed [the point] (which did not concern us up to now, since we were concerned with capital as such and introduced the development of the productive forces as an external relation) that the development of the productive forces itself presupposes both the increase of capital and the increase of simultaneous working days, which, however, within the given barrier of a capital that sets one working day into motion (even if it be a day of 50 12 hours, 600 hours), is itself the barrier to the development of its productive force. The wage covers not only the worker, but also his reproduction; so that when this specimen of the working class dies, another replaces it; after the 50 workers are dead, 50 new ones are there to replace them. The 50 workers themselves as living labour capacities represent not only the costs of their own production, but also the costs which had to be paid to their parents above and beyond their wages as individuals, in order to replace themselves with 50 new individuals. Thus the population progresses even without a rise in wages. But now, why does it not progress rapidly enough? and why does it need a special stimulus? Surely only because the aim of capital is not served merely by obtaining more wealth in the Ricardian sense, but because it wants more value, to command more objectified labour. But indeed, according to him, it can command the latter only if wages fall; i.e. if more living work days are exchanged for the same capital with objectified labour, and hence a greater value is created. In order to make wages fall, he presupposes increase of population. And in order to prove increase of population here, he presupposes that the demand for working days increases, in other words, that capital can buy more objectified labour (objectified in labouring capacity), hence that its value has grown. Originally, however, he proceeded from just the contrary presupposition, and took the detour only because that is where he began. If 1,000 was able to buy 500 working days, and the productive force increases, then either it can proceed to employ the 500 in the same branch of work, or it can divide up and employ 250 in one branch of work, 250 in another, so that this capital splits into 2 capitals of 500 each. But it can never command more than 500 working days, since otherwise, according to Ricardo, not only the use values it produces but also their exchange value must have multiplied itself, the objectified labour time over which it exercises command. Thus, given his presupposition, an increased demand for labour cannot take place. But if it does take place, then capital s exchange value has grown. Compare Malthus on value, who senses the contradictions, but falls flat when he himself tries to develop them. The individual capitalist may imagine (and for his accounts it serves as well) that, if he owns a capital of 100 thalers, 50 thalers in cotton, 40 thalers to buy labour with, 10 thalers in instrument, plus a profit of 10% counted as part of his production costs, then labour has to replace his 50 thalers of cotton, 40 thalers subsistence, 10 thalers instrument plus 10% of 50, of 40 and of 10; so that in his imagination, labour creates 55 thalers of raw material, 44 thalers subsistence and 11 thalers instrument for him, together = 110. But this is a peculiar notion for economists, even though it has been advanced with great pomp as an innovation against Ricardo. If the worker s working day = 10 hours, and if he can create 40 thalers in 8 hours, i.e. can create his wage, or, what is the same, can maintain and replace his labour capacity, then he needs 4/5 of a day in order to replace his wages for capital, and he gives capital 1/5 in surplus labour, or 10 thalers. In exchange for the 40 thalers in wages, for 8 hours of objectified labour, therefore, capital obtains 10 hours of living labour, and this excess constitutes the entirety of its profit. The total objectified labour which the worker has created, then, is 50 thalers, and, regardless of the costs of the instrument and of the raw materials, more he cannot add, for his day cannot objectify itself in more labour than that; now, the fact that he adds these 50 thalers 10 hours of labour (of which only 8 replace the wage) to the 60 thalers contained in raw material and instrument and thereby has simultaneously preserved the raw material and the instrument they are preserved just by coming into contact again with living labour, and being used as instrument and as material this costs him no labour (and he would have no time available in which to do this), nor does the capitalist pay him for it. Like every other natural or social power of labour unless it is the product of previous labour, or of such previous labour as does not need to be repeated (e.g. the historical development of the worker etc.), this natural animating power of labour namely that, by using the material and instrument, it preserves them in one or another form, including the labour objectified in them, their exchange value becomes a power of capital, not of labour. Hence not paid for by capital. As little as the worker is paid for the fact that he can think etc. We have seen the original presupposition of the coming into being of capital is the existence of money as money, i.e. as money which has withdrawn from circulation and asserts itself negatively towards it, i.e. value which has become independent from and against circulation i.e. the commodity for which the character of exchange value is not merely a formal, vanishing character, [which it possesses only] before being exchanged for another use value and finally disappearing as an object of consumption. On the other side, money (in its third, adequate form) as value which no longer enters circulation as equivalent, but is not yet potentiated as capital, i.e. value independent of and relating negatively against circulation is at the same time the result of capital s product, in so far as that product is not merely its own reproduction (but this reproduction is merely formal, since, of the three parts of its value, only one is really consumed and hence reproduced, namely that which replaces wages; profit, on the other hand, is not reproduction but addition of value, surplus value). Just as money at first appeared as the presupposition, the cause of capital, so it now appears as its effect. In the first movement, money arose out of simple circulation; in the second it arises from the production process of capital. In the first, it makes a transition to capital; in the second it appears as a presupposition of capital posited by capital itself; and is therefore already posited as capital in itself [an sich], already contains the ideal relation towards capital. It does not simply make a transition to capital, but rather, as money, its potential to be transformed into capital is already posited in it. Living labour time reproduces nothing more than that part of objectified labour time (of capital) which appears as an equivalent for the power of disposition over living labour capacity, and which, therefore, as an equivalent, must replace the labour time objectified in this labouring capacity, i.e. replace the production costs of the living labour capacities, in other words, must keep the workers alive as workers. What it produces in addition to that is not reproduction but rather new creation, and, more specifically, creation of new values, because it is the objectification of new labour time in a use value. That the labour time contained in the raw material and instrument is preserved at the same time is a result not of the quantity of labour, but of its quality of being labour as such; and there is no special payment for this, its general quality, for the fact that labour, as labour, is labour leaving aside all special qualifications, all specific kinds of labour because capital has bought this quality as part of its exchange with the worker. But the equivalent for this quality (for the specific use value of labour) is measured simply by the quantity of labour time which has produced it. Initially the worker s use of the instrument as an instrument, and his shaping of the raw material, adds to the value of the raw material and of the instrument as much new form as is = to the labour time contained in his own wage; what he adds additionally is surplus labour time, surplus value. For their part, the raw materials and the instrument are preserved not in their form but in their substance, through the simple relation of being used as instrument and being posited as the raw material of labour, the simple process of coming into contact with labour, being posited as its means and object and therefore as objectification of living labour, moments of labour itself; and, viewed economically, their substance is objectified labour time. By being posited as a material mode of existence means and end [Objekt] of living labour, objectified labour time ceases to exist in a one-sided, objective form, in which, as a mere thing, it is at the prey of processes of chemical decay etc. There is an indifference on the part of the substance [Stoff] towards the form, which develops out of merely objectified labour time, in whose objective existence labour has become merely the vanished, external form of its natural substance, existing merely in the external form of the substantial [das Stoffliche] (e.g. the form of the table for wood, or the form of the cylinder for iron); no immanent law of reproduction maintains this form in the way in which the tree, for example, maintains its form as a tree (wood maintains itself in the specific form of the tree because this form is a form of the wood; while the form of the table is accidental for wood, and not the intrinsic form of its substance); it exists only as a form external to the substance, or it exists only as a substance [stofflich]. The dissolution to which its substance is prey therefore dissolves the form as well. However, when they are posited as conditions of living labour, they are themselves reanimated. Objectified labour ceases to exist in a dead state as an external, indifferent form on the substance, because it is itself again posited as a moment of living labour; as a relation of living labour to itself in an objective material, as the objectivity of living labour (as means and end [Objekt]) (the objective conditions of living labour). The transformation of the material by living labour, by the realization of living labour in the material a transformation which, as purpose, determines labour and is its purposeful activation (a transformation which does not only posit the form as external to the inanimate object, as a mere vanishing image of its material consistency) thus preserves the material in a definite form, and subjugates the transformation of the material to the purpose of labour. Labour is the living, form-giving fire; it is the transitoriness of things, their temporality, as their formation by living time. In the simple production process leaving aside the realization process the transitoriness of the forms of things is used to posit their usefulness. When cotton becomes yarn, yarn becomes fabric, fabric becomes printed etc. or dyed etc. fabric, and this becomes, say, a garment, then (1) the substance of cotton has preserved itself in all these forms. (The chemical process, regulated by labour, has everywhere consisted of an exchange of (natural) equivalents etc.); (2) in each of these subsequent processes, the material has obtained a more useful form, a form making it more appropriate to consumption; until it has obtained at the end the form in which it can directly become an object of consumption, when, therefore, the consumption of the material and the suspension of its form satisfies a human need, and its transformation is the same as its use. The substance of cotton preserves itself in all of these processes; it becomes extinct in one form of use value in order to make way for a higher one, until the object is in being as an object of direct consumption. But when cotton is posited, say, as twist, then it is posited in a specific relation to a further kind of labour. If this labour were not to take place, then not only has the form been posited in it uselessly, i.e. the previous labour is not reaffirmed by new labour, but the material is also spoiled, because, in the form of twist, it has a use value only in so far as it is worked on further: it is a use value only in respect of the use which further labour makes of it; is use value only in so far as its form as twist is suspended in the form of fabric; while cotton in its existence as cotton is capable of an infinite number of useful employments. Thus, without further labour, the use value of cotton and twist, material and form, would be botched; it would be destroyed instead of produced. Material as well as form, substance like form, are preserved by further labour preserved as use value, until they obtain the form of use value as such, whose use is consumption. It is therefore already a part of the simple production process that the earlier stage of production is preserved by the later, and that positing the higher use value preserves the old, or, the old use value is transformed only to the extent that it is raised to a higher use value. It is living labour which preserves the use value of the incomplete product of labour by making it the material of further labour. It preserves it, however, i.e. protects it from uselessness and decay, only by working it in a purposeful way, by making it the object of new living labour. This preservation of the old use value is not a process taking place separately from the increase or the completion of the use value by new labour; it takes place, rather, entirely in this new labour of raising the use value. When the labour of weaving transforms yarn into fabric, i.e. treats yarn as the raw material of weaving (a particular form of living labour) (and twist has a use value only if it is woven into fabric), it thereby preserves the use value which cotton had as such, as well as that which cotton had obtained specifically as yarn. It preserves the product of labour by making it into the raw material of new labour; but what happens is not that it (1) adds new labour and (2) besides that, by means of additional labour, preserves the use value of the raw material. It preserves the utility of cotton as yarn by weaving the yarn into fabric. (All this belongs already in the first chapter on production in general.) Preserves it by weaving it. This preservation of labour as product of the use value of the product of labour by its becoming the raw material of new labour, being again posited as material objectivity of purposeful living labour is given with the simple production process. As regards use value, labour has the property of preserving the existing use value by raising it, and it raises it by making it into the object of new labour as defined by an ultimate aim; by changing it in turn from the form of its indifferent consistency into that of objective material, the body of labour. (The same holds for the instrument. A spindle maintains itself as a use value only by being used up for spinning. If it is not, the specific form which is here posited in iron and wood would be spoiled for use, together with the labour which posited it and the material in which it did the positing. The use value of wood and iron, and of their form as well, are preserved only by being posited as a means of living labour, as an objective moment of the existence of labour s vitality. As an instrument of labour, it is their destiny [Bestimmung] to be used up, but used up in the process of spinning. The increased productivity which it lends to labour creates more use values and thereby replaces the use value eaten up in the consumption of the instrument. This appears most clearly in agriculture, because there the instrument appears most easily, because most anciently, as a use value, directly as a means of life in contrast to exchange value. If the hoe allows the tiller to grow twice as much grain as before, then he has to spend less time on the production of the hoe itself; he has enough food to make a new hoe.) Now, in the realization process, the value components of capital the one in the form of the material, the other in the form of instrument confront the worker, i.e. living labour (for the labourer exists in the process only as such) not as values, but rather as simple moments of the production process; as use values for labour, as the objective conditions of its efficacity, or as its objective moments. It lies in the nature of labour itself to preserve them by using the instrument as instrument and by giving the raw material a higher form of use value. But, as components of capital, the use values thus obtained from labour are exchange values; as such, determined by the costs of production contained in them, the amount of labour objectified in them. (Use value is concerned only with the quality of the labour already objectified.) The quantity of objectified labour is preserved in that its quality is preserved as use value for further labour, through the contact with living labour. The use value of cotton, as well as its use value as yarn, are preserved by being woven; by existing as one of the objective moments (together with the spinning wheel) in the weaving process. The quantity of labour time contained in the cotton and the cotton yarn are therefore also preserved thereby. The preservation of the quality of previous labour in the simple production process, hence of its material as well becomes, in the realization process, the preservation of the quantity of labour already objectified. For capital, this preservation is the preservation of the amount of objectified labour by the production process; for living labour itself, it is merely the preservation of the already present use value. Living labour adds a new amount of labour; however, it is not this quantitative addition which preserves the amount of already objectified labour, but rather its quality as living labour, the fact that it relates as labour to the use values in which the previous labour exists. But living labour is not paid for this quality, which it possesses as living labour if it were not living labour, it would not be bought at all rather, it is paid for the amount of labour contained in itself. What is paid for is only the price of its use value, like that of all other commodities. It does not receive payment for its specific quality of adding new amounts of labour to the amounts of labour already objectified, and at the same time preserving labour which is already objectified as objectified labour; and this quality does not cost the worker anything either, since it is a natural property of his labouring capacity. Within the production process, the separation of labour from its objective moments of existence instruments and material is suspended. The existence of capital and of wage labour rests on this separation. Capital does not pay for the suspension of this separation which proceeds in the real production process for otherwise work could not go on at all. (Nor does this suspension take place in the process of exchange with the worker; but rather in the process of work itself, during production. But, as ongoing labour, it is itself already incorporated in capital, and a moment of the same. This preserving force of labour therefore appears as the self-preserving force of capital. The worker has merely added new labour; as for previous labour owing to the existence of capital this has an eternal existence as value, quite independent of its material existence. This is how the matter appears to capital and to the worker.) If it had to pay for this quality also, then it would just cease to be capital. This is part of the material role which labour plays by its nature in the production process; of its use value. But as use value, labour belongs to the capitalist; it belongs to the worker merely as exchange value. Its living quality of preserving objectified labour time by using it as the objective condition of living labour in the production process is none of the worker s business. This appropriation, by means of which living labour makes instrument and material in the production process into the body of its soul and thereby resurrects them from the dead, does indeed stand in antithesis to the fact that labour itself is objectless, is a reality only in the immediate vitality of the worker and that the instrument and material, in capital, exist as beings-for-themselves [f r sich selbst seiende]. (Return to this.) The process of the realization of capital proceeds by means of and within the simple production process, by putting living labour into its natural relation with its moments of material being. But to the extent that labour steps into this relation, this relation exists not for itself, but for capital; labour itself has become already a moment of capital. When e.g. in times of stagnations of trade etc. the mills are shut down, then it can indeed be seen that the machinery rusts away and that the yarn is useless ballast and rots, as soon as their connection with living labour ceases. If the capitalist employs labour only in order to create surplus value to create value in addition to that already present then it can be seen as soon as he orders work to stop that his already present capital, as well, becomes devalued; that living labour hence not only adds new value, but, by the very act of adding a new value to the old one, maintains, eternizes it. (This shows clearly the absurdity of the charge against Ricardo, that he conceives only profits and wages as necessary components of the cost of production, and not also the part of capital contained in raw materials and instrument. To the extent that the value which they represent is merely preserved, there are no new production costs. But as far as these present values themselves are concerned, they all dissolve again into objectified labour necessary labour and surplus labour wages and profit. The purely natural material in which no human labour is objectified, to the extent that it is merely a material that exists independently of labour, has no value, since only objectified labour is value; as little value as is possessed by the common elements as such.) The maintenance of present capital by the labour which realizes it therefore costs capital nothing and hence does not belong among the production costs; although the present values are preserved in the product and equivalents have therefore to be given for them in exchange. But the maintenance of these values in the product costs capital nothing and cannot therefore be cited among the costs of production. Nor are they replaced by labour, since they are not consumed, except in so far as they are consumed apart from and outside labour, i.e. as labour consumes (suspends) their transitoriness. Only the wage is really consumed. Let us return once more to our example. 100 thalers capital, i.e. 50 thalers raw material, 40 thalers labour, 10 thalers instrument of production. Let the worker require 4 hours in order to create the fraction of production necessary for his maintenance, the 40 thalers representing the means of his life. Let his working day be 8 hours. The capitalist then obtains a surplus of 4 hours free of charge; his surplus value equals 4 objectified hours, 40 thalers; hence his product = 50 + 10 (preserved, not reproduced values; remained constant, unchanged as values) + 40 thalers (wages, reproduced, because consumed in the form of wage) + 40 thalers of surplus value. Sum: 140 thalers. Of these 140, 40 are excess. The capitalist had to live during production and before he began to produce; say 20 thalers. He had to own the latter apart from his capital of 100 thalers; hence equivalents for them had to be present in circulation. (How these arose does not concern us here.) Capital presupposes circulation as a constant magnitude. These equivalents now present again. Thus consumes 20 thalers of his gain. These enter into simple circulation. The 100 thalers also enter into simple circulation, but only in order to be transformed again into the conditions of new production, 50 thalers of raw material, 40 subsistence for workers, 10 instrument. There remains a surplus value, an addition as such, newly created, of 20 thalers. This is money, posited as a negatively independent value against circulation. It cannot enter into circulation as a mere equivalent, in order to exchange for objects of mere consumption, since circulation is presupposed as constant. But the independent, illusory existence of money is suspended; it now only exists in order to be realized, i.e. to become capital. In order to become that, however, it would again have to be exchanged for the moments of the production process, subsistence for workers, raw material and instrument; all these dissolve into objectified labour, can only be posited by living labour. Money, then, in so far as it now already in itself exists as capital, is therefore simply a claim on future (new) labour. It exists, objectively, merely as money. Surplus value, the new growth of objectified labour, to the extent that it exists for itself, is money; but now, it is money which in itself is already capital; and, as such, it is a claim on new labour. Here capital already no longer enters into relation with ongoing labour, but with future labour. And it no longer appears dissolved into its simple elements in the production process, but as money; no longer, however, as money which is merely the abstract form of general wealth, but as a claim on the real possibility of general wealth labour capacity, and more precisely, labour capacity in the process of becoming [das werdende Arbeitsverm gen]. As a claim, its material existence as money is irrelevant, and can be replaced by any other title. Like the creditor of the state, every capitalist with his newly gained value possesses a claim on future labour, and, by means of the appropriation of ongoing labour has already at the same time appropriated future labour. (This side of capital to be developed to this point. But already here its property of existing as value separately from its substance can be seen. This already lays the basis for credit.) To stockpile it in the form of money is therefore by no means the same as materially to stockpile the material conditions of labour. This is rather a stockpiling of property titles to labour. Posits future labour as wage labour, as use value for capital. No equivalent on hand for the newly created value; its possibility only in new labour. In this example, then, an absolute surplus labour time of 4 hours created, added to the old values, to the world of available wealth, a new value of 20 thalers money, and money already in connection with its form as capital (already as posited possibility of capital, not as before, becoming the possibility of capital as such only by ceasing to be money as such). Now if the productive force doubles, so that instead of 4 hours the worker has to put in only 2 hours of necessary labour, and if the capitalist makes him work 8 hours as before, then the accounts are as follows: 50 thalers material, 20 wages, 10 instrument of labour, 60 surplus value (6 hours, 4 before). New growth of absolute surplus value: 2 hours or 20 thalers. Sum: 140 thalers (in the product). A total of 140 thalers as before; but now 60 of them are surplus value; of which 40 for absolute increase in surplus time as before, 20 for relative. But the simple exchange value only contains 140 thalers as before. Now, is it only the use values which have increased, or has a new value been created? Before, capital had to begin again with 100 in order to realize itself anew at 40%. What happens to the 20 of surplus value? Before, the capitalist ate up 20 of them; he was left with a value of 20. Now he eats up 20 and is left with 40. On another side, the capital entering into production remained 100; now it has become 80. What is gained in value on one side in one form is lost as value on the other side in another form. The first capital re-enters into the production process; again produces a surplus value (capitalist s consumption deducted) of 20. At the end of this second operation, a newly created value is present without equivalent. 20 thalers together with the first 40. Now let us take the second capital. Material, 50; wages (2 hours), 20; instrument, 10. But in the 2 hours he produces a value of 8, i.e. 80 thalers (of which 20 for costs of production). Remainder, 60, since 20 reproduce the wage (disappear as wage). 60 + 60 = 120. At the end of this second operation, 20 thalers for consumption; remainder surplus value 20; together with the first operation, 60. In the third operation with the first capital, 60; with the second, 80; in the fourth operation with the first capital 80, with the second, 100. The first capital has increased as value in proportion as its exchange value, as productive capital, has decreased. Suppose both capitals together with their surplus can be used as capital; i.e. their surplus exchanged for new labour. We then get the following calculation (leaving consumption aside): the first capital produces 40%, the second 60%. 40% of 140 is 56; 60% of 140 (i.e. capital, 80; surplus value, 60) is 84. The total product in the first case 140 + 56 = 196; in the second 140 + 84 = 224. In the second case absolute surplus value 28 higher than in the first. The first capital has 40 thalers with which to buy new labour time; the value of the hour of labour was presupposed at 10 thalers; therefore, his 40 thalers buy 4 new hours of labour, which produce 80 for him (of which 40 go to replace the wages of 8 hours of labour). At the end it was 140 + 80 (i.e. reproduction of the capital of 100: surplus value of 40, or reproduction of 140; or, in the first case, 100 thalers reproduce themselves as 140; the second 40, since they are spent only to buy new labour, hence do not simply replace value impossible presupposition, by the way) which produce 80. 140 + 80 = 220. The second capital of 140; the 80 produce 40; or the 80 thalers reproduce themselves as 120; the remaining 60, however, reproduce themselves (since they are spent purely for the purchase of labour, and do not therefore simply replace any value, but reproduce out of themselves and posit the surplus) as 180; then 120 + 120 = 240. (Produced 40 thalers more than the first capital, exactly the surplus time of two hours, for the first is a surplus time of 2 hours as assumed in the first case). Thus the result is a greater exchange value, because more labour objectified; 2 hours more surplus labour. Something else should be noted here as well: 140 thalers at 40% yield 56; capital and interest together = 140 + 56 = 196; but we have obtained 220; according to which the interest on 140 would be not 56 but 84; which would be 60% on 140 (140:84 = 100:x; x = 8,400/140 = 60). Similarly in the second case: 140 at 60% = 84; capital and interest = 140 + 84 = 224; but we obtain 240; according to which the interest on the 140 is not 84 but 100; (140 + 100 = 240); i.e., %, (140:100 = 100:x; x = 10,000/140); [x = 71 3/7%]. Now where does this come from? (In the first case 60% instead of 40; in the second 71 3/7 instead of 60%.) In the first case, where it was 60 instead of 40, hence 20% too much came out; in the second case 71 3/7 instead of 60, i.e. 11 3/7 too much. Why, then, firstly the difference between the two cases and secondly the difference in each case? In the first case, the original capital was 100 = 60 (material and instrument of labour) plus 40 in labour; 2/5 labour, 3/5 (material). The first 3/5 bring no interest at all; the last 2/5 bring 100%. But computed on the basis of the whole capital, the increase is only 40%; 2/5 of 100 = 40. But the 100% on the latter amount to only 40% on the whole 100; i.e. an increase of 2/5 in the whole. Now, if only 2/5 of the newly arrived capital of 40 had increased by 100%, then this would yield an increase of the whole by 16 [thalers]. 40 + 16 = 56. This together with the 140 = 196; which is then actually 40% on 156, capital and interest reckoned together. 40 increased by 100%, doubled, is 80; 2/5 of 40 increased by 100% is 16. 40 of the 80 replace capital. Gain of 40. The account then: 100c + 40 interest + 40c + 40i = 220; or, capital of 140 with an interest of 80; but if we had calculated 100c + 40i + 40c + 16i = 196; or, capital of 140 with interest of 56. An interest of 24 on a capital of 40 is too much; but 24 = 3/5 of 40 (3 8 = 24); i.e. in addition to the capital, only 2/5 of the capital grew by 100%; the whole capital therefore by only 2/5, i.e. 16%. The interest computation on 40 is 24% too high (by 100% on 3/5 of the capital); 24 on 24 is 100% on 3 8 (3/5 of 40). But on the whole amount of 140, it is 60% instead of 40; i.e. 24 too much out of 40, 24 out of 40 = 60%. Thus we figured 60% too much on a capital of 40 (60 = 3/5 of 100). But we figured 24 too high on 140 (and this is the difference between 220 and 196); this is first 1/5 of 100 then 1/12 of 100 too much; 1/5 of 100 = 20%; 1/12 of 100 = 8 4/12% or 8 1/3%; thus altogether 28 1/3% too high. Thus on the whole not 60%, as on 40, but only 28 1/3% too much; which makes a difference of 31 2/3, depending on whether we figure 24 too many on the 40 [or on] the capital of 140. Similarly in the other example. In the first 80 which produce 120, 50 + 10 was simply replaced, but 20 reproduced itself threefold: 60 (20 reproduction, 40 surplus). <If it is said: a capital of 100 yields 10% in one period, 5% in another, then nothing is more mistaken than to conclude, as do Carey and consorts, that the share of capital in production was 1/10 and that of labour 9/10 in the first case; in the second case, the share of capital only 1/20 and that of labour 19/20; i.e. that the share of labour rises as the rate of profit falls. From the viewpoint of capital and capital has no awareness whatever of the nature of its process of realization, and has an interest in having an awareness of it only in times of crisis a profit of 10% on a capital of 100 looks like a profit on each of its value components material, instrument, wages equally and indifferently, as if this capital were simply a sum of 100 thalers of value which had, as such, increased by 10%. But the question is, in fact: (1) what was the relation between the component parts of capital and (2) how much surplus labour did it buy with the wage with the hours of labour objectified in the wage? If I know the total size of a capital, the relation of its value components to one another (in practice, I would also have to know what part of the instrument of production is used up in the process, i.e. actually enters into it), and if I know the profit, then I know how much surplus labour has been created. If 3/5 of the capital consisted of material (which for the sake of convenience we here suppose to be entirely consumed productively as material of production), i.e. 60 thalers, and wages 40, and if the profit on the 100 thalers is 10, then the labour bought for 40 thalers of objectified labour time has created 50 thalers of objectified labour in the production process, hence has worked a surplus labour time or created a surplus value of 25% = 1/4 of the necessary labour time. Then if the worker works a day of 12 hours, he has worked 3 hours of surplus time, and the labour time necessary to maintain him alive for one day was 9 hours of labour. The new value created in production may only be 10 thalers, but, according to the real rate, these 10 thalers are to be reckoned on the base of the 40, not of the 100. The 60 thalers of value have created no value whatever; the working day has. Thus the worker has increased the part of capital spent for labour capacity by 25%, not by 10%. The total capital has grown by 10%. 10 is 25% of 40; it is only 10% of 100. Thus the profit rate on capital in no way expresses the rate at which living labour increases objective labour; for this increase is merely = to the surplus with which the worker reproduces his wage, i.e. = to the time which he works over and above that which he would have to work in order to reproduce his wages. If the worker in the above example were not a worker for a capitalist, and if he related to the use values contained in the 100 thalers not as to capital but simply as to the objective conditions of his labour, then, before beginning the production process anew, he would possess 40 thalers in subsistence, which he would consume during the working day, and 60 thalers in instrument and material. He would work only 3/4 of a day, 9 hours, and at the end of the day his product would be not 110 thalers but 100, which he would again exchange in the above proportions, beginning the process again and again. But he would also work 3 hours less; i.e. he would save 25% surplus labour = 25% surplus value out of the exchange which he undertakes between 40 thalers in subsistence and his labour time; and if at some time he worked 3 hours extra, because the material and the instrument were there on hand, then it would not occur to him to say that he had created a new value of 10%, but rather one of 25%, because he could buy one fourth additional subsistence, 50 thalers worth instead of 40; and, since he is concerned with use values, these items of subsistence by themselves would be of value for him. This illusion that the new value is derived not from the exchange of 9 hours of labour time as objectified in 40 thalers for 12 hours of living labour, i.e. a surplus value of 25% on this part, but that it comes from an even 10% increase in the total capital 10% of 60 is 6 and of 40 is 4 this illusion is the basis of the notorious Dr Price s compound interest calculation, which led the heaven-born Pitt to his sinking fund idiocy. The identity of surplus gain with surplus labour time absolute and relative sets a qualitative limit on the accumulation of capital, namely the working day, the amount of time out of 24 hours during which labouring capacity can be active, the degree to which the productive forces are developed, and the population, which expresses the number of simultaneous working days etc. If, on the other side, surplus value is defined merely as interest i.e. as the relation in which capital increases itself by means of some imaginary sleight of hand, then the limit is merely quantitative, and there is then absolutely no reason why capital cannot every other day convert the interest into capital and thus yield interest on its interest in infinite geometrical progression. Practice has shown the economists that Price s interest-multiplication is impossible; but they have never discovered the blunder contained in it. Of the 110 thalers which emerge at the end of production, 60 thalers (material and instrument), in so far as they are values, have remained absolutely unchanged. The worker took nothing away from them and added nothing to them. Of course, from the standpoint of the capitalist, the fact that the worker maintains the value of objectified labour by the very fact of his labour being living labour appears as if the worker still had to pay the capitalist to get permission to enter into the proper relation with the objectified moments, the objective conditions, of labour. Now, as regards the remaining 50 thalers, 40 of them represent not only preservation but actual reproduction, since capital has divested itself of them [von sich ent ussert] in the form of wages and the worker has consumed them; 10 thalers represent production above and beyond reproduction, i.e. 1/4 surplus labour (of 3 hours). Only these 50 thalers are a product of the production process. Therefore, if the worker, as is wrongly asserted, divided the product with the capitalist so that the former s share were 9/10, then he would have to get not 40 thalers (and he has obtained them in advance, in exchange for which he has reproduced them and paid them back in their entirety, as well as maintaining the already existing values for the capitalist free of charge), which is only 8/10 but rather 45, which would leave capital only 5. Then, having begun the production process with 100 thalers, the capitalist would have at the end only 65 thalers as product. But the worker obtains none of the 40 thalers he has reproduced, nor any of the 10 thalers of surplus value. If the 40 thalers which have been reproduced are to serve for the purchase of further living labour, then, as far as the relation is concerned, all that can be said is that an objectified labour of 9 hours (40 thalers) buys living labour for 12 hours (50 thalers) and thus yields a surplus value of 25% of the real product (partly reproduced as wage fund, partly newly produced as surplus value) in the realization process. Just now the original capital of 100 was: 50 10 40. Produced surplus gain of 10 thalers (25% surplus time). Altogether 110 thalers. Now suppose it were: 60 20 20. The result would be 110 thalers, so says the ordinary economist, and the even more ordinary capitalist says that 10% has been produced in equal proportions by all parts of the capital. Again, 80 thalers of capital would merely be preserved; no change taken place in its value. Only the 20 thalers would have turned into 30; i.e. surplus labour would have increased by 50%, not by 25% as before. Take the third case: 100: 70 20 10. Result 110. Then the invariable value, 90. The new product 20; hence surplus value or surplus time 100%. Here we have three cases in which the profit on the whole capital is always 10, but in the first case the new value created was 25% above the objectified labour spent to buy living labour, in the second case 50%, in the third: 100%.> The devil take this wrong arithmetic. But never mind. Commen ons de nouveau. In the first case we had: Now to the second presupposition: Thus: The conditions presupposed in No. II are in themselves as possible as those in No. I. But brought into connection with one another, those of No. II are absurd. Material and instrument have been raised from 60 to 80, the productivity of labour has fallen from 4 1/6 thalers per hour to 2 3/4 and surplus value increased by 100%. (Suppose, however, that the increased expenditure for wages expresses more working days in the first case, fewer in the second, and then the presupposition is correct.) It is in itself irrelevant that necessary wages, i.e. the value of labour expressed in thalers, have fallen. Whether the value of an hour of labour is expressed in 2 thalers or in 4, in both cases the product of 12 hours of labour is exchanged (in circulation) for 12 hours of labour, and in both cases surplus labour appears as surplus value. The absurdity of the presupposition comes from the fact (1) that we have posited 12 hours as the minimum working time; and hence cannot introduce additional or fewer working days; (2) the more we make capital increase on one side, the more we not only make necessary labour decline, but have also to decrease its value, although the value is the same. In the second case, the price would, rather, have to rise. The fact that the worker can live from less work, i.e. that he produces more in the same number of hours, would have to be shown not in a decrease in the thalers for necessary labour, but in the number of necessary hours. If he gets, as e.g. in the first case, 4 1/6 thalers, but if the use value of this value, which has to be constant in order to express value (not price), had multiplied, then he no longer needs 9 3/5 but only 4 hours for the reproduction of his living labouring capacity, and this would have to express itself in the surplus over the value. But the way we have set up the presuppositions, our invariable value is variable, while the 10% are invariable, here a constant addition to reproductive labour, although it expresses different percentage parts of the same. In the first case the invariable value is smaller than in the second case, but the total product of labour is larger; since, if one part of 100 is smaller, the other has to be larger; and, since absolute labour time is fixed at the identical amount, and since further the total product of labour becomes smaller, in proportion as invariable value becomes larger, and larger as the latter becomes smaller, we therefore obtain less product (absolutely) from the same labour time in proportion as more capital is employed. Now, this would be quite correct, since, if out of a given sum such as 100 more is spent as invariable value , less can be spent for labour time, and thus, relative to total capital, less new overall value can be created; but then, if capital is to make a profit, one cannot hold labour time constant, as is done here, or, if one holds it constant, the value of the working hour cannot become smaller, as it does here; which is impossible if invariable value becomes larger and surplus value becomes larger; the number of working hours would have to become smaller. But that is what we have assumed in the example. We assume in the first case that 50 thalers are produced in 12 hours of labour; in the second case, only 30 thalers. In the first, we make the worker work 9 3/5 hours; in the second only 6, although he produces less per hour. It s absurd. But, understood differently, is there not after all something correct in these figures? Does not absolute new value decrease despite an increase in the relative, as soon as relatively more material and instrument than labour is introduced into the component parts of capital? Relative to a given capital, less living labour is employed; hence, even if the excess of this living labour above its costs is greater, and therefore the percentage of wages rises, i.e. the percentage relative to capital actually consumed, then the absolute new value does not necessarily become relatively smaller than in the case of a capital which employs less material and instrument (and this is the main point of the change in invariable value, i.e. value unchanged as value in the production process) and relatively more living labour; precisely because relatively more living labour is employed? An increase in the productive force then corresponds to the increase in the instrument, since the surplus value of the instrument does not keep pace, as in the previous mode of production, with its use value, its productive force, and since any increase in productive force creates more surplus value, although by no means in the same numerical proportion. The increase in the productive forces, which has to express itself in an enlargement of the value of the instrument the space it takes up in capital expenditure necessarily brings with it an increase in the material, since more material has to be worked in order to produce more product. (The increase in the productive force can, however, also relate to quality; but if that is given, only to quantity; or to quantity if quality is given; or to both.) Now, although there is less (necessary) labour in relation to surplus labour, and absolutely less living labour in relation to capital, is it not possible for its surplus value to rise, although in relation to the capital as a whole it declines, i.e. the so-called rate of profit declines? Take for example a capital of 100. Let material be 30 at first. 30 for instrument. (Together, invariable value of 60.) Wages 40 (4 working days). Profit 10%. Here profit is 25% on wages and 10% on capital as a whole. Now let material become 40 and instrument 40. Let productivity double, so that only 2 working days necessary = 20. Now posit that the absolute profit be smaller than 10; i.e. the profit on total capital. Is it not possible for profit on labour employed to be more than 25%, i.e. in the given case, more than merely a fourth of 20? In fact, a third of 20 is 6 2/3; i.e. less than 10, but 33 1/3% of labour employed, while in the previous case it was only 25%. In this case, we would end up with only 106 2/3, while in the previous case we would have had 110, but still, with the same capital (100) the surplus labour, surplus gain relative to labour employed, would be greater than in the first case; but since 50% less labour was employed, in absolute terms, than in the first case, while the profit on labour employed was only 8 1/3 more than in the first case, it follows that the absolute quantity which results has to be smaller, and the same applies to the profit on total capital. For 20 33 1/3 is smaller than 40 25. This whole instance is improbable and cannot count as a general example in economics; for an increase in the instrument and an increase in the material worked are both presupposed, while not only the relative but the absolute number of workers has declined. (Of course, when two factors = a third, one has to grow smaller as the other grows larger.) But an increase in the value of the instrument in relation to capital as a whole, and an increase in the value of the material, all in all presuppose a division of labour, hence at least an absolute increase in the number of workers, if not an increase relative to capital as a whole. However, take the case of the lithographing machine, which everyone can use to make lithographs without special skill; suppose the value of the instrument immediately upon its invention to be greater than that which 4 workers absorbed before these handy things were invented; it now requires only 2 workers (here, as with many instrument-like machines, no further division of labour takes place; instead, the qualitative division disappears); let the instruments originally have a value of only 40, but let 4 working days be necessary (necessary, here, for the capitalist to make a profit). (There are machines, e.g. forced air heating ducts, where labour as such disappears altogether except at a single point; the duct is open at one point, and carries heat to the others; no workers are required at all. This the case generally (see Babbage) with energy transmission, where, previously, energy had to be carried in material form by numbers of workers, here firemen, from one point to another where the transmission from one room to another, which has now become a physical process, appeared as the labour of numbers of workers.) Now, if he uses this lithographing machine as a source of income, as capital, and not as use value, then the material must necessarily increase, since he can put out more lithographs in the same amount of time, which is precisely where this greater profit comes from. Let this lithographer then employ an instrument to the amount of 40, material 40, 2 working days (20) which [give] him 33 1/3%, i.e. 6 2/3 out of an objectified labour time of 20; then his capital, like the other s, consists of 100, only yields 6 2/3%, but he gains 33 1/3 on labour employed, while the other gains 10 on capital, but only 25% on labour. The value obtained from labour employed may be smaller, but the profits on the whole capital are greater if the other elements of capital are relatively smaller. Despite this, the business at 6 2/3% on the total capital and 33 1/3% on labour could become more profitable than the earlier one based on 25% on labour and 10% profit on the total capital. Suppose e.g. that grain prices etc. rose so that the maintenance of the worker rose by 25% in value. The 4 working days would now cost the first lithographer 50 instead of 40. His instruments and material would remain the same: 60 thalers. He would then have to lay out a capital of 110. With this capital, his profit on the 50 thalers for 4 working days would be 12 (25%). Hence 12 thalers on 110 (i.e. 9 1/6% on the total capital of 110). The other lithographer: machine 40, material 40; but the 2 working days will cost him 25% more than 20, i.e. 25. He would thus have to lay out 105; his surplus value on labour 33 1/3%, i.e. 1/3, is 8 1/3. He would gain then, 8 1/3 on 105; 13 1/8%. Then suppose a 10 year cycle with 5 bad and 5 good harvests at the above average proportions; then the first lithographer would gain 50 thalers of interest on the second during the first 5 years; in the last 5 45 5/6; altogether 95 5/6 thalers; average interest over the 10 years 9 7/12 thalers. The other capitalist would have gained 31 1/3 in the first 5 years, 65 5/8 in the last; 96 23/24 altogether; a 10-year average of 9 84/120. Since No. II uses up more material at the same price, he sells cheaper. It could be said in reply that he sells dearer because he uses up more instrument; especially because he uses up more of the value of the machine in proportion as he uses up more material; however, it is in practice not true that machines wear out and have to be replaced more rapidly as they work more material. But all this is beside the point. Let the relation between the value of the machine and that of the material be constant in both cases. This example attains significance only if we assume a smaller capital which employs more labour and less material and machinery, but yields a higher percentage on the total capital; and a larger capital employing more machinery and more material, as many working days in absolute numbers but relatively fewer, and a smaller percentage on the whole, because less on labour, being more productive, division of labour used, etc. It also has to be postulated (which was not done above) that the use value of the machine significantly greater than its value; i.e. that its devaluation in the service of production is not proportional to its increasing effect on production. Thus, as above, a press (first, hand-operated printing press; second, self-acting printing press). Capital I, 100, uses 30 in material; 30 for the manual press; 4 working days = 40 thalers; gain 10%; hence 25% on living labour (1/4 surplus time). Capital II, 200, uses 100 in materials; 60 in press, 4 working days (40 thalers); gain on the 4 working days 13 1/3 thalers = 1 working day and 1/3, compared to only 1 working day in the first case; total sum: 213 1/3. I.e. 6 2/3%, compared to 10% in the first case. Nevertheless, the surplus value on the labour which has been employed is 13 1/3 in this second case, as against 10 in the first; in the first, 4 days create 1 surplus day in 4 working days; in the second, 4 days create 1 1/3 surplus days. But the rate of profit on the total capital is 1/3 or 33 1/3% smaller than in the first; the total amount of the gain is 1/3 greater. Now let us suppose that the 30 and the 100 in material are sheets of book paper, and that the instruments wear out in the same space of time, say 10 years or 1/10 per year. Then No. I has to replace 1/10 of 30 in material, i.e. 3; No. II, 1/10 of 60, i.e. 6. The material does not enter further into annual production (which may be regarded as 4 working days of 3 months each) on either side, see above. Capital I sells 30 sheets at 30 for materials + 3 for instrument + 50 (objectified labour time) (production time) = 83. Capital II sells 100 sheets at 100, material, + 6, instrument, + 53 1/3 = 159 1/3. Capital I sells 30 sheets for 83 thalers, 1 sheet at 83/80 thalers = 2 thalers, 23 silver groschen. Capital II sells 100 sheets for 159 thalers, 10 silver groschen; 1 sheet at It is clear then that Capital I is done for, because its selling price is infinitely too high. Now, although in the first case the profit on total capital was 10% and in the second case only 6 2/3%, the first capital only took in 25% on labour time, while the second takes 33 1/3%. With Capital I, necessary labour is greater relative to the total capital; and hence surplus labour, while smaller in absolute terms than with Capital II, shows up as a higher rate of profit on the smaller total capital. 4 working days at 60 are greater than 4 at 160; in the first, 1 working day corresponds to a capital of 15; in the second, 1 working day corresponds to 40. But with the second capital, labour is more productive (which is given both in the greater amount of machinery, hence the greater amount of space that it takes up among the value components of capital; and in the greater amount of material in which a working day, which consists of a greater proportion of surplus time and hence uses more material in the same time, is expressed). It creates more surplus time (relative surplus time, i.e. determined by the development of the force of production). In the first case, surplus time is 1/4, in the second, 1/3. It therefore creates more use values and a higher exchange value in the same amount of time; but the latter not in proportion with the former, since, as we saw, exchange value does not rise in the same numerical proportion as the productivity of labour. The fractional price is therefore smaller than the total production price i.e. the fractional price multiplied by the amount of fractional prices produced is greater. Now, if we had assumed an absolutely greater number of working days than in No. I, although a relatively smaller number, then the matter would have been even more striking. The profit of the larger capital, working with more machinery, therefore appears smaller than that of the smaller capital working with relatively or absolutely more living labour, precisely because the higher profit on living labour appears as smaller, when calculated on the basis of a total capital in which living labour makes up a lesser proportion of the whole, than the lower profit on living labour which makes up a larger proportion of the smaller total capital. But the fact that No. II can employ more material, and that a larger proportion of the total value is in the instrument, is only the expression of the productivity of labour. This, then, is the unfortunate Bastiat s famous riddle; he had firmly convinced himself to which Mr Proudhon had no answer that because the rate of profit of the larger and more productive total capital is smaller, it follows that the worker s share has grown larger, whereas precisely the opposite is the case; his surplus labour has grown larger. Nor does Ricardo seem to have understood the matter, for otherwise he would not have tried to explain the periodic decline of profit merely by the rise in wages caused by the rise in grain prices (and hence of rent). But at bottom, surplus value in so far as it is indeed the foundation of profit, but still distinct from profit commonly so-called has never been developed. The unfortunate Bastiat would have said in the above case that in the first example the profit was 10% (i.e. 1/10), in the second only 6 1/4%, i.e. 1/16 (leaving out the percentage), so that the worker receives 9/10 in the first case, 15/16 in the second. The relation is correct in neither of the two cases, nor is their relation to one another correct. Now, as far as the further relation of the new value of capital to capital as indifferent total value is concerned (and this is how capital as such appeared to us at the beginning, before we moved on into the production process, and it must again appear to us in this way at the end of the process), this is to be developed partly under the rubric of profit, where the new value obtains a new character, and partly under the heading of accumulation. We are here initially concerned only with developing the nature of surplus value as the equivalent of the absolute or relative labour time mobilized by capital above and beyond necessary labour time. The consumption, in the production process, of the element of value consisting of the instrument cannot in the least [serve to] distinguish the instrument of labour from the material here, where all that is to be explained is the creation of surplus value, self realization. This is because this consumption is part of the simple production process itself, hence the value of the consumed instrument (whether it be the simple use value of the instrument itself or the exchange value, if production has already progressed to where there is a division of labour and where at least the surplus is exchanged) has to be recovered again in the value (exchange value) or the use value of the product so that the process can begin anew. The instrument loses its use value in the same proportion as it helps to raise the exchange value of the raw material and serves as a means of labour. This point must, indeed, be examined, because the distinction between the invariable value, the part of capital which is preserved; that which is reproduced (reproduced for capital; from the standpoint of the real production of labour produced); and that which is newly produced, is of essential importance. We now come to the point where we last broke off. An increase in productivity increases the surplus value, although it does not increase the absolute amount of exchange values. It increases values because it creates a new value as value, i.e. a value which is not merely an equivalent destined for exchange, but which asserts itself as such; in a word, more money. The question is: does it ultimately also increase the amount of exchange values? This is, at bottom, admitted; for even Ricardo admits that along with the accumulation of capitals there is an increase in savings, hence a growth in the exchange values produced. The growth of savings means nothing more than the growth of independent values of money. But Ricardo s demonstration contradicts his own assertion. Our old example. 100 thalers capital; 60 thalers in constant value; 40 in wages; produces 80; hence product = 140. * Let these 40 in surplus value be absolute labour time. Now suppose that productivity doubles: then, if a wage of 40 gives 8 hours of necessary labour, the worker could now produce a whole day of living labour in 4 hours. Surplus time would then increase by 1/3 (2/3 of a day to produce a whole day before, now 1/3). 2/3 of the product of the working day would be surplus value, and if the hour of necessary labour = 5 thalers (5 8 = 40), then he would now need only 5 4 = 20 thalers. For capital, then, a surplus gain of 20, i.e. 60 instead of 40. At the end, 140, of which 60 = the constant value, 20 = the wage and 60 = the surplus gain; together, 140. The capitalist can then begin production anew with 80 thalers of capital: Let capitalist A on the same stage of old production invest his capital of 140 in new production. Following the original proportions, he needs 3/5 for the invariable part of capital, i.e. 3 140/5 = 3 28 = 84, leaving 56 for necessary labour. Before, he spent 40 on labour, now 56; 2/5 of 40 additionally. Then at the end, his capital = 84 + 56 + 56 = 196. Capitalist B on the higher stage of production would similarly employ his 140 thalers for new production. If out of a capital of 80 he needs 60 for invariable value and only 20 for labour, then out of a capital of 60 he needs 45 for invariable value and 15 for labour; thus the total would be = 60 + 20 +20 = 100 in the first and, secondly, 45 + 15 + 15 = 75. Thus his total yield is 175, while that of the first = 196. An increase in the productivity of labour means nothing more than that the same capital creates the same value with less labour, or that less labour creates the same product with more capital. That less necessary labour produces more surplus labour. The necessary labour is smaller in relation to capital; for the process of its realization this is obviously the same as: capital is larger in relation to the necessary labour which it sets into motion; for the same capital sets more surplus labour in motion, hence less necessary labour. * It is sometimes said about machinery, therefore, that it saves labour; however, as Lauderdale correctly remarked, the mere saving of labour is not the characteristic thing; for, with the help of machinery, human labour performs actions and creates things which without it would be absolutely impossible of accomplishment. The latter concerns the use value of machinery. What is characteristic is the saving of necessary labour and the creating of surplus labour. The higher productivity of labour is expressed in the fact that capital has to buy a smaller amount of necessary labour in order to create the same value and a greater quantity of use values, or that less necessary labour creates the same exchange value, realizes more material and a greater mass of use values. Thus, if the total value of the capital remains the same, an increase in the productive force means that the constant part of capital (consisting of machinery and material) grows relative to the variable, i.e. to the part of capital which is exchanged for living labour and forms the wage fund. This means at the same time that a smaller quantity of labour sets a larger quantity of capital in motion. If the total value of capital entering into the production process increases, then the wage fund (this variable part of capital) must decrease relatively, compared to the relation if the productivity of labour, i.e. the relation of necessary to surplus labour, had remained the same. Now let us assume in the above case that the capital of 100 is agricultural capital. Then, 40 thalers for seeds, fertilizer etc.; 20 thalers instrument of labour, and 40 thalers wage labour, at the old level of production. (Let these 40 thalers = 4 days of necessary labour.) At the old production level, these create a total of 140. Now let fertility double, owing to improvement either in the instrument or in the fertilizer etc. In this case the product has to = 140 thalers (given that the instrument is entirely consumed). Let fertility double, so that the price of the necessary working day falls by half; so that only 4 necessary half days of work (i.e. 2 whole ones) are necessary in order to produce 8. 2 working days to produce 8 is the same as when 1/4 of each working day (3 hours) is required for necessary labour. Now, instead of 40 thalers, the farmer has to spend only 20 for labour. Thus at the end of the process the component parts of capital have changed; from the original 40 for seed etc., which now have double the use value; 20 for instrument and 20 for labour (2 whole working days). Before the relation of the constant part of capital to the variable = 60:40 = 3:2; now 80:20 = 4:1. Looking at the whole capital, necessary labour was = 2/5; now 1/5. Now, if the farmer wants to continue to use labour in the old relation, then by how much would his capital have to increase? Or in order to avoid the nefarious presupposition that he continued to operate with a constant capital of 60 and a wage fund of 40 after a doubling of productive force, which introduces false relations; * because it presupposes that, despite the doubled force of production, capital continued to operate with the same component parts, to employ the same quantity of necessary labour without spending more for raw material and instrument of labour; then, therefore, productivity doubles, so that he now needs to spend only 20 thalers on labour, whereas he needed 40 before. (If it is given that 4 whole working days were necessary, each = 10 thalers, in order to create a surplus of 4 whole working days, and if this surplus is provided for him by the transformation of 40 thalers of cotton into yarn, then he now needs only 2 whole working days in order to create the same value, i.e. that of 8 working days; the value of the yarn expressed a surplus time of 4 working days before, now of 6. Or, each of the workers needed 6 hours of necessary labour time before in order to create 12; now 3. Necessary labour time was 12 4 = 48, or 4 days. In each of these days, the surplus time was = 1/2 day (6 hours). It now amounts to only 12 2 = 24 or 2 days; 3 hours per day. In order to bring forth the surplus value, each of the 4 workers would have to work 6 2 hours; i.e. 1 day; now he needs to work only 3 2 hours; i.e. 1/2 day. Now, whether 4 work 1/2 a day or 2 a whole (1) day is the same. The capitalist could dismiss 2 workers. He would even have to dismiss them, since a certain quantity of cotton is only enough to make a certain quantity of yarn; thus he cannot order 4 whole days of work any more, but only 4 half days. But if the worker has to work 12 hours in order to obtain 3 hours, i.e. his necessary wage, then, if he works 6 hours, he will obtain only 1 1/2 hours of exchange value. But if he can live for 12 hours with 3 hours of necessary labour, then with it he can live only 6 hours. Thus if all 4 workers were to be employed, each of the 4 could live only half a day; i.e. the same capital cannot keep all 4 alive as workers, but only 2. The capitalist could pay 4 out of the old fund for 4 half days of work; then he would pay 2 too many and would make the workers a present of the productive force; since he can use only 4 half days of living labour; such possibilities neither occur in practice, nor can we deal with them here, where we are concerned with the relation of capital as such.) Now 20 thalers of the capital of 100 are not directly employed in production. The capitalist uses 40 thalers of raw material, 20 for instrument, together 60 as before, but now only 20 thalers for labour (2 working days). Of the whole capital of 80 he uses 3/4 (60) for the constant part and only 1/4 for labour. Then if he employs the remaining 20 in the same way, 3/4 for constant capital, 1/4 for labour; then 15 for the first, 5 for the second. Now since 1 working day = 10 thalers (given), 5 would be only = 6 hours = 1/2 working day. With the new value of 20, gained through productivity, capital could buy only 1/2 a working day more, if it continues to realize itself in the same proportion. It would have to grow threefold (namely, 60) (together with the 20 = 80) in order to employ the 2 dismissed workers for the previous 2 full working days. In the new relation, the capital uses 3/4 in constant capital in order to employ 1/4 as wage fund. Thus if 20 is the whole capital, 3/4 i.e. 15 constant and 1/4 labour (i.e. 5) = 1/2 a working day. With a whole capital of 4 20, hence 4 15 = 60 constant, hence 4 5 = 20 wages = 4/2 working days = 2 working days. Therefore, if the productive force of labour doubles, so that a capital of 60 thalers in raw materials and instrument now needs only 20 thalers in labour (2 working days) for its realization, whereas it needed 100 before, then the total capital of 100 would have to grow to 160, or the capital of 80 now being dealt with would have to double in order to retain all the labour put out of work. But the doubling of productive force creates a new capital of only 20 thalers = 1/2 of the labour time employed earlier; and this is only enough to employ 1/2 a working day additionally. Before the doubling of the productive force, the capital was 100 and employed 4 working days (on the supposition that 2/5 = wage fund of 40); now, when the wage fund has fallen to 1/5 of 100, to 20 = 2 working days (but to 1/4 of 80, the capital newly entering into the realization process), it would have to rise to 160, by 60%, in order still to be able to employ 4 working days as before. It can only employ 1/2 a new working day with the 20 thalers drawn from the increase in the productive force, if the whole old capital continues operating. Before, it employed with 100, 16/4 (4 days) working days; it could now employ only 5/4. Therefore, when the force of production doubles, capital does not need to double in order to set the same necessary labour into motion, 4 working days; i.e. it does not need to rise to 200, but needs to rise only by double the whole, minus the part deducted from the wage fund. (100 20 = 80) 2 = 160. (By contrast, the first capital, before the increase in productive force, which divided 100 as 60 constant 40 wages (4 working days), in order to employ two additional days, would need to grow from 100 to only 150; i.e. 3/5 constant capital (30) and 2/5 wage fund (20). If it is given that the working day doubles in both cases, then the second would amount to 250 at the end, the first only 160.) Of the part of capital which is withdrawn from the wage fund owing to the increase in the force of production, one part has to be transformed again into raw material and instrument, another part is exchanged for living labour; this can take place only in the proportions between the different parts which are posited by the new productivity. It can no longer take place in the old proportion, for the relation of the wage fund to the constant fund has decreased. If the capital of 100 first used 2/5 for wage fund (40) and, owing to a doubling of productive force, then used only 1/5 (20), then 1/5 of the capital has become free (20 thalers); and the employed part, 80, uses only 1/4 as wage fund. Thus, of the 20, similarly, only 5 thalers (1/2 working day). The whole capital of 100 therefore now employs 2 1/2 working days; or, it would have to grow to 160 in order to employ 4 again. If the original capital had been 1,000, divided in the same way: 3/5 constant capital, 2/5 wage fund, then 600 + 400 (let 400 equal 40 working days; each working day = 10 thalers). Now double the productive force of labour, i.e. only 20 working days required for the same product (= 200 thalers), then the capital necessary to begin production anew would be = 800; that is 600 + 200; 200 thalers would have been set free. Employed in the same relation, then 3/4 for constant capital = 150 and 1/4 wages = 50. Thus, if the 1,000 thalers are employed in their entirety, then now 750 constant + 250 wage fund = 1,000 thalers. But 250 wage fund would be = 25 working days (i.e. the new fund can employ labour time only in the new relation, i.e. at 1/4; in order to employ the entire labour time as before, it would have to quadruple). The liberated capital of 200 would employ a wage fund of 50 = 5 working days (1/4 of the liberated labour time). (The part of the labour fund disconnected from capital is itself employed as capital at only 1/4 for labour fund; i.e. precisely in the relation in which that part of the new capital which is labour fund stands to the total sum of the capital.) Thus in order to employ 20 working days (4 5 working days), this fund would have to grow from 50 to 4 50 = 200; i.e. the liberated part would have to grow from 200 to 600, i.e. triple; so that the entire new capital would amount to 800. Then the total capital, 1,600; of this, 1,200 constant part and 400 labour fund. Thus if a capital of 1,000 originally contained a labour fund of 400 (40 working days), and if, owing to a doubling of productive force, it now needs to employ a labour fund of only 200 in order to buy necessary labour, i.e. only 1/2 of the previous labour; then the capital would have to grow by 600 in order to employ all the previous labour in its entirety (in order to gain the same amount of surplus time). It would have to be able to employ twice the labour fund, i.e. 2 200 = 400; but, since the relation of the labour fund to the total capital is now = 1/4, this requires a total capital of 4 400 = 1,600. * Or, which is the same thing, it is = 2 the new capital which owing to the new productive force replaces the old in production (800 2) (thus if the productive force had quadrupled, quintupled etc. = 4 , 5 the new capital etc. If the force of production has doubled, then necessary labour is reduced to 1/2; likewise the labour fund. Thus if it amounted, as in the above case of the old capital of 1,000, to 400, i.e. 2/5 of the total capital, then, afterwards, 1/5 or 200. This relation, by which it is reduced, is the liberated part of the labour fund = 1/5 of the old capital = 200. 1/5 of the old = 1/4 of the new. The new capital is = to the old + 3/5 of the same. These trivia more closely later etc.) Given the same original relations between the parts of the capital and the same increase in the productive force, the largeness or smallness of the capital is completely irrelevant for the general theses. Quite another question is whether, when capital grows larger, the relations remain the same (but this belongs under accumulation). But, given this, we see how an increase in the force of production changes the relations between the component parts of capital. If in both cases 3/5 was originally constant and 2/5 labour fund, then doubling the productive force acts in the same way on a capital of 100 as on one of 1,000. (The word labour fund is here used only for convenience s sake; we have not yet developed capital in this specificity [Bestimmtheit]. So far two parts; the one exchanged for commodities (material and instrument), the other for labour capacity.) (The new capital, i.e. the part of the old capital which represents its function, is = the old minus the liberated part of the labour fund; this liberated part, however, = the fraction which used to express necessary labour (or, same thing, the labour fund) divided by the multiplier of the productive force. Thus, if the old capital = 1,000 and the fraction expressing necessary labour or the labour fund = 2/5, and if the force of production doubles, then the new capital which represents the function of the old = 800, i.e. 2/5 of the old capital = 400; this divided by 2, the multiplier of productive force, = 2/10 = 1/5 = 200. Then the new capital = 800 and the liberated part of the labour fund = 200.) We have seen that under these conditions a capital of 100 thalers has to grow to 160, and a capital of 1,000 to 1,600, in order to retain the same labour time (of 4 or 40 working days) etc.; both have to grow by 60%, i.e. 3/5 of themselves (of the old capital), in order to be able to re-employ the liberated labour time (in the first case 20 thalers, in the second 200) of 1/5 the liberated labour fund as such. <Thus the example is correct, the productive force compared under the same conditions with the same capital before the rise in productive force. Let a capital of 100 employ constant value 50, labour fund = 50. Let the fund increase by 50%, i.e. 1/2; then the total product = 125. Let the labour fund of 50 thalers employ 10 working days, pay 5 thalers per day. Since the new value is 1/2, the surplus time has to be = 5 working days; i.e. the worker who needed to work only 10 working days in order to live for 15 has to work 15 for the capitalist in order to live for 15; and his surplus labour of 5 days constitutes capital s surplus value. Expressed in hours, if the work day = 12 hours, then surplus labour = 6 per day. Thus in 10 days or 120 hours, the worker works 60 hours = 5 days too many. But now with the doubling of productivity, relations within the 100 thalers would be 75 and 25, i.e. the same capital now needs to employ only 5 workers in order to create the same value of 125; the 5 working days then = 10; doubled; i.e. 5 working days are paid, 10 produced. The worker would need to work only 5 days in order to live 10 (before the increase in productive force he had to work 10 to live 15; thus, if he worked 5, he could live only 7 1/2); but he has to work 10 for the capitalist in order to live 10; the latter thus makes a profit of 5 days; 1 day per day; or, expressed in days, the worker had to work 1/2 to live 1 before (i.e. 6 hours to live 12); now he needs to work only 1/4 to live 1 (i.e. 3 hours). If he worked a whole day, he could live 2; if he worked 12 hours, 24; if he worked 6, 12 hours. But he now has to work 12 hours to live 12. He would need to work only 1/2 in order to live 1; but he has to work 2 1/2 = 1 to live 1. In the old state of the productive force, he had to work 10 days to live 15; or 12 hours to live 18; or 1 hour to live 1 1/2, or 8 hours to live 12, i.e. 2/3 of a day to live 3/3. But he has to work 3/3 to live 2/3, i.e. 1/3 too much. The doubling of the productive force increases the relation of surplus time from 1:1 1/2 (i.e. 50%) to 1:2 (i.e. 100%). In the earlier labour time relation: he needed 8 to live 12, i.e. 2/ 3 of the whole day was necessary labour; he now needs only 1/2, i.e. 6, to live 12. That is why capital now employs 5 workers instead of 10. If the 10 (cost 50) produced 75 before, then now the 25, 50: i.e. the former only 50%, the second 100. The workers work 12 hours as before; but in the first case capital bought 10 working days, now merely 5; because the force of production doubled, the 5 produce 5 days of surplus labour; because in the first case 10 working days yielded only 5 days of surplus labour; now, with the force of production doubled, i.e. risen from 50% to 100% 5, 5; in the first case 120 working hours (= 10 working days) produce 180; in the second, 60, 60; i.e. in the first case, the surplus time is 1/3 of the whole day (50% of necessary labour) (i.e. 4 hours out of 12; necessary time 8); in the second case surplus time is 1/2 the whole day (100% of necessary labour) (i.e. 6 hours out of 12; necessary time 6); hence the 10 days yielded 5 days of surplus time (surplus labour) in the first case, and in the second the 5 yield 5. Thus relative surplus time has doubled; relative to the first relation it grew by only 1/2 compared to 1/3; i.e. by 16 4/6%.> Since surplus labour, or surplus time, is the presupposition of capital, it therefore also rests on the fundamental presupposition that there exists a surplus above the labour time necessary for the maintenance and reproduction of the individual; that the individual e.g. needs to work only 6 hours in order to live one day, or 1 day in order to live 2 etc. With the development of the forces of production, necessary labour time decreases and surplus labour time thereby increases. Or, as well, that one individual can work for 2 etc. ( Wealth is disposable time and nothing more. If the whole labour of a country were sufficient only to raise the support of the whole population, there would be no surplus labour, consequently nothing that can be allowed to accumulate as capital . . . Truly wealthy a nation, if there is no interest or if the working day is 6 hours rather than 12 Whatever may be due to the capitalist, he can only receive the surplus labour of the labourer; for the labourer must live. (The Source and Remedy of the National Difficulties.) Property. Origin in the productivity of labour. If one can produce only enough for one, everyone worker; there can be no property. When one man s labour can maintain five, there will be four idle men for one employed in production. Property grows from the improvement in the mode of production The growth of the property, this greater ability to maintain idle men and unproductive industry = capital machinery itself can seldom be applied with success to abridge the labours of an individual: more time would be lost in its construction than could be saved by its application. It is only really useful when it acts on great masses, when a single machine can assist the labours of thousands. It is accordingly in the most populous countries where there are most idle men that it is always most abundant. It is not called into action by scarcity of men, but by the facility with which they are brought together Not 1/4 of the English population provides everything that is consumed by all. Under William the Conqueror for example the amount of those directly participating in production much greater relative to the idle men. (Ravenstone, IX, 32.) Just as capital on one side creates surplus labour, surplus labour is at the same time equally the presupposition of the existence of capital. The whole development of wealth rests on the creation of disposable time. The relation of necessary labour time to the superfluous (such it is, initially, from the standpoint of necessary labour) changes with the different stages in the development of the productive forces. In the less productive stages of exchange, people exchange nothing more than their superfluous labour time; this is the measure of their exchange, which therefore extends only to superfluous products. In production resting on capital, the existence of necessary labour time is conditional on the creation of superfluous labour time. In the lowest stages of production, firstly, few human needs have yet been produced, and thus few to be satisfied. Necessary labour is therefore restricted, not because labour is productive, but because it is not very necessary; and secondly, in all stages of production there is a certain common quality [Gemeinsamkeit] of labour, social character of the same, etc. The force of social production develops later etc. (Return to this.) It is a law of capital, as we saw, to create surplus labour, disposable time; it can do this only by setting necessary labour in motion i.e. entering into exchange with the worker. It is its tendency, therefore, to create as much labour as possible; just as it is equally its tendency to reduce necessary labour to a minimum. It is therefore equally a tendency of capital to increase the labouring population, as well as constantly to posit a part of it as surplus population population which is useless until such time as capital can utilize it. (Hence the correctness of the theory of surplus population and surplus capital.) It is equally a tendency of capital to make human labour (relatively) superfluous, so as to drive it, as human labour, towards infinity. Value is nothing but objectified labour, and surplus value (realization of capital) is only the excess above that part of objectified labour which is necessary for the reproduction of labouring capacity. But labour as such is and remains the presupposition, and surplus labour exists only in relation with the necessary, hence only in so far as the latter exists. Capital must therefore constantly posit necessary labour in order to posit surplus labour; it has to multiply it (namely the simultaneous working days) in order to multiply the surplus; but at the same time it must suspend them as necessary, in order to posit them as surplus labour. As regards the single working day, the process is of course simple: (1) to lengthen it up to the limits of natural possibility; (2) to shorten the necessary part of it more and more (i.e. to increase the productive forces without limit). But the working day, regarded spatially time itself regarded as space is many working days alongside one another. The more working days capital can enter into exchange with at once, during which it exchanges objectified for living labour, the greater its realization at once. It can leap over the natural limit formed by one individual s living, working day, at a given stage in the development of the forces of production (and it does not in itself change anything that this stage is changing) only by positing another working day alongside the first at the same time by the spatial addition of more simultaneous working days. E.g. I can drive the surplus labour of A no higher than 3 hours; but if I add the days of B, C, D etc., then it becomes 12 hours. In place of a surplus time of 3, I have created one of 12. This is why capital solicits the increase of population; and the very process by means of which necessary labour is reduced makes it possible to put new necessary labour (and hence surplus labour) to work. (I.e. the production of workers becomes cheaper, more workers can be produced in the same time, in proportion as necessary labour time becomes smaller or the time required for the production of living labour capacity becomes relatively smaller. These are identical statements.) (This still without regard to the fact that the increase in population increases the productive force of labour, since it makes possible a greater division and combination of labour etc. The increase of population is a natural force of labour, for which nothing is paid. From this standpoint, we use the term natural force to refer to the social force. All natural forces of social labour are themselves historical products.) It is, on the other side, a tendency of capital just as in the case of the single working day to reduce the many simultaneous necessary working days (which, as regards their value, can be taken as one working day) to the minimum, i.e. to posit as many as possible of them as not necessary. Just as in the previous case of the single working day it was a tendency of capital to reduce the necessary working hours, so now the necessary working days are reduced in relation to the total amount of objectified labour time. (If 6 are necessary to produce 12 superfluous working hours, then capital works towards the reduction of these 6 to 4. Or 6 working days can be regarded as one working day of 72 hours; if necessary labour time is reduced by 24 hours, then two days of necessary labour fall away i.e. 2 workers.) At the same time, the newly created surplus capital can be realized as such only by being again exchanged for living labour. Hence the tendency of capital simultaneously to increase the labouring population as well as to reduce constantly its necessary part (constantly to posit a part of it as reserve). And the increase of population itself the chief means for reducing the necessary part. At bottom this is only an application of the relation of the single working day. Here already lie, then, all the contradictions which modern population theory expresses as such, but does not grasp. Capital, as the positing of surplus labour, is equally and in the same moment the positing and the not-positing of necessary labour; it exists only in so far as necessary labour both exists and does not exist. * If the relation of the necessary working days to the total number of objectified working days was = 9:12 (hence surplus labour = 1/4), then the striving of capital is to reduce it to 6:9 (i.e. 2/3, hence surplus labour = 1/3). (Develop this more closely later; still, the major basic traits here, where we are dealing with the general concept of capital.)

Grundrisse 07

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch07.htm

(3) Looked at precisely, that is, the realization process of capital and money becomes capital only through the realization process appears at the same time as its devaluation process [Entwertungsprozess], its demonetization. And this in two respects. First, to the extent that capital does not increase absolute labour time but rather decreases the relative, necessary labour time, by increasing the force of production, to that extent does it reduce the costs of its own production in so far as it was presupposed as a certain sum of commodities, reduces its exchange value: one part of the capital on hand is constantly devalued owing to a decrease in the costs of production at which it can be reproduced; not because of a decrease in the amount of labour objectified in it, but because of a decrease in the amount of living labour which it is henceforth necessary to objectify in this specific product. This constant devaluation of the existing capital does not belong here, since it already presupposes capital as completed. It is merely to be noted here in order to indicate how later developments are already contained in the general concept of capital. Belongs in the doctrine of the concentration and competition of capitals. The devaluation being dealt with here is this, that capital has made the transition from the form of money into the form of a commodity, of a product, which has a certain price, which is to be realized. In its money form it existed as value. It now exists as product, and only ideally as price; but not as value as such. In order to realize itself, i.e. to maintain and to multiply itself as value, it would first have to make the transition from the form of money into that of use values (raw material instrument wages); but it would thereby lose the form of value; and it now has to enter anew into circulation in order to posit this form of general wealth anew. The capitalist now enters the process of circulation not simply as one engaged in exchange, but as producer, and the others engaged in exchange are, relative to him, consumers. They must exchange money in order to obtain his commodity for their consumption, while he exchanges his product to obtain their money. Suppose that this process breaks down and the separation by itself implies the possibility of such a miscarriage in the individual case then the capitalist s money has been transformed into a worthless product, and has not only not gained a new value, but also lost its original value. But whether this is so or not, in any case devaluation forms one moment of the realization process; which is already simply implied in the fact that the product of the process in its immediate form is not value, but first has to enter anew into circulation in order to be realized as such. Therefore, while capital is reproduced as value and new value in the production process, it is at the same time posited as not-value, as something which first has to be realized as value by means of exchange. The three processes of which capital forms the unity are external; they are separate in time and space. As such, the transition from one into the other, i.e. their unity as regards the individual capitalists, is accidental. Despite their inner unity, they exist independently alongside one another, each as the presupposition of the other. Regarded broadly and as a whole, this inner unity must necessarily maintain itself to the extent that the whole of production rests on capital, and it must therefore realize all the necessary moments of its self-formation, and must contain the determinants necessary to make these moments real. But at the point we have reached so far, capital still does not appear as the determinant of circulation (exchange) itself but merely as one moment of the latter, and it appears to stop being capital just at the point where it enters into circulation. As a commodity, capital now shares the fate of commodities in general; it is a matter of accident whether or not it is exchanged for money, whether its price is realized or not. In the production process itself where capital continued to be presupposed as value its realization appeared totally dependent solely on the relation of itself as objectified labour to living labour; i.e. on the relation of capital to wage labour. But now, as a product, as a commodity, it appears dependent on circulation, which lies outside this process. (In fact, as we have seen, it returns into it as its ground, but also and equally emerges from it again.) As a commodity, it must be (1) a use value and, as such, an object of need, object of consumption; (2) it must be exchanged for its equivalent in money. The new value can be realized only through a sale. If it contained objectified labour at a price of 100 thalers before, and now at a price of 110 (the price here merely an expression, in money, of the amount of objectified labour), then this has to be demonstrated through the exchange of the labour objectified in the newly produced commodity for 110 thalers. The product is devalued [entwertet] initially in so far as it must be exchanged for money at all, in order to obtain its form as value again. Inside the production process, realization appeared totally identical with the production of surplus labour (the objectification of surplus time), and hence appeared to have no bounds other than those partly presupposed and partly posited within this process itself, but which are always posited within it as barriers to be forcibly overcome. There now appear barriers to it which lie outside it. To begin with, even on an entirely superficial inspection, the commodity is an exchange value only in so far as it is at the same time a use value, i.e. an object of consumption (still entirely irrelevant here, what kind of consumption); it ceases to be an exchange value when it ceases to be a use value (since it does not yet exist as money again, but rather still in a specific mode of existence coinciding with its natural quality). Its first barrier, then, is consumption itself the need for it. (Given the present presuppositions, there is no basis whatever for speaking of ineffective, non-paying needs; i.e. a need which does not itself possess a commodity or money to give in exchange.) Then, secondly, there has to be an equivalent for it, and, since circulation was presupposed at the outset as a constant magnitude as having a given volume but since, on the other hand, capital has created a new value in the production process, it seems indeed as if no equivalent were available for it. Thus, by emerging from the production process and re-entering circulation, capital (a) as production, appears to encounter a barrier in the available magnitude of consumption of consumption capacity. As a specific use value, its quantity is irrelevant up to a certain point; then, however, at a certain level since it satisfies only a specific need it ceases to be required for consumption. As a specific, one-sided, qualitative use value, e.g. grain, its quantity itself is irrelevant only up to a certain level; it is required only in a specific quantity; i.e. in a certain measure. This measure, however, is given partly in its quality as use value its specific usefulness, applicability partly in the number of individuals engaged in exchange who have a need for this specific consumption. The number of consumers multiplied by the magnitude of their need for this specific product. Use value in itself does not have the boundlessness of value as such. Given objects can be consumed as objects of needs only up to a certain level. For example: No more than a certain amount of grain is consumed etc. Hence, as use value, the product contains a barrier precisely the barrier consisting of the need for it which, however, is measured not by the need of the producers but by the total need of all those engaged in exchange. Where the need for a certain use value ceases, it ceases to be a use value. It is measured as a use value by the need for it. But as soon is it ceases to be a use value, it ceases to be an object of circulation (in so far as it is not money). (b) As new value and as value as such, however, it seems to encounter a barrier in the magnitude of available equivalents, primarily money, not as medium of circulation but as money. The surplus value (distinct, obviously, from the original value) requires a surplus equivalent. This now appears as a second barrier. (c) Money i.e. wealth as such, i.e. wealth existing in and because of the exchange for alien objectified labour originally appeared to collapse into itself [in sich zusammenzufallen] to the extent that it did not proceed to the exchange for alien living labour, i.e. to the production process. Circulation was incapable of renewing itself from within itself. At the same time, the production process now appears to be in a fix, in as much as it is not able to make the transition into the process of circulation. Capital, as production resting on wage labour, presupposes circulation as the necessary condition and moment of the entire motion. This specific form of production presupposes this specific form of exchange which finds its expression in the circulation of money. In order to renew itself, the entire product has to be transformed into money; not as in earlier stages of production, where exchange is by no means concerned with production in its totality, but only with superfluous production and superfluous products. These are, then, the contradictions which present themselves of their own accord to a simple, objective, non-partisan view. How they are constantly suspended in the system of production resting on capital, but also constantly created again and are suspended only by force (although this suspension appears up to a certain point merely as a quiet equilibration) this is another question. The important thing at present is to take note of the existence of these contradictions. All the contradictions of circulation come to life again in a new form. The product as use value is in contradiction with itself as value; i.e. in as much as it exists in a specific quality, as a specific thing, as a product of specific natural properties, as a substance of need in contradiction with its substance as value, which it possesses exclusively on account of its being objectified labour. But this time, this contradiction is posited not merely as it was in circulation, as a merely formal difference; rather the quality of being measured by use value is here firmly determined as the quality of being measured by the total requirement for this product by all those engaged in exchange i.e. by the amount of total consumption. The latter here appears as measure for it as use value and hence also as exchange value. In simple circulation it had simply to be transposed from the form of a particular use value into the form of exchange value. Its barrier then appeared only in the fact that, [coming] from circulation, it existed in a particular form owing to its natural composition, rather than in the value form in which it could be exchanged for all other commodities directly. What is posited now is that the measure of its availability is given in its natural composition itself. In order to be transposed into the general form, the use value has to be present in a limited and specific quantity; a quantity whose measure does not lie in the amount of labour objectified in it, but arises from its nature as use value, in particular, use value for others. At the same time, the previous contradiction, that money for-itself [das f r sich seiende Geld] had to proceed to exchange itself for living labour, now appears even greater, in as much as the surplus money, in order to exist as such, or the surplus value, has to exchange itself for surplus value. Hence, as value, it encounters its barrier in alien production, just as, as use value, its barrier is alien consumption; in the latter, its measure is the amount of need for the specific product, in the former, the amount of objectified labour existing in circulation. The indifference of value as such towards use value is thereby brought into just as false a position [Position] as are, on the other side, the substance of value and its measure as objectified labour in general. * The main point here where we are concerned with the general concept of capital is that it is this unity of production and realization, not immediately but only as a process, which is linked to certain conditions, and, as it appeared, external conditions. * The creation by capital of absolute surplus value more objectified labour is conditional upon an expansion, specifically a constant expansion, of the sphere of circulation. The surplus value created at one point requires the creation of surplus value at another point, for which it may be exchanged; if only, initially, the production of more gold and silver, more money, so that, if surplus value cannot directly become capital again, it may exist in the form of money as the possibility of new capital. A precondition of production based on capital is therefore the production of a constantly widening sphere of circulation, whether the sphere itself is directly expanded or whether more points within it are created as points of production. While circulation appeared at first as a constant magnitude, it here appears as a moving magnitude, being expanded by production itself. Accordingly, it already appears as a moment of production itself. Hence, just as capital has the tendency on one side to create ever more surplus labour, so it has the complementary tendency to create more points of exchange; i.e., here, seen from the standpoint of absolute surplus value or surplus labour, to summon up more surplus labour as complement to itself; i.e. at bottom, to propagate production based on capital, or the mode of production corresponding to it. The tendency to create the world market is directly given in the concept of capital itself. Every limit appears as a barrier to be overcome. Initially, to subjugate every moment of production itself to exchange and to suspend the production of direct use values not entering into exchange, i.e. precisely to posit production based on capital in place of earlier modes of production, which appear primitive [naturw chsig] from its standpoint. Commerce no longer appears here as a function taking place between independent productions for the exchange of their excess, but rather as an essentially all-embracing presupposition and moment of production itself. * On the other side, the production of relative surplus value, i.e. production of surplus value based on the increase and development of the productive forces, requires the production of new consumption; requires that the consuming circle within circulation expands as did the productive circle previously. Firstly quantitative expansion of existing consumption; secondly: creation of new needs by propagating existing ones in a wide circle; thirdly: production of new needs and discovery and creation of new use values. In other words, so that the surplus labour gained does not remain a merely quantitative surplus, but rather constantly increases the circle of qualitative differences within labour (hence of surplus labour), makes it more diverse, more internally differentiated. For example, if, through a doubling of productive force, a capital of 50 can now do what a capital of 100 did before, so that a capital of 50 and the necessary labour corresponding to it become free, then, for the capital and labour which have been set free, a new, qualitatively different branch of production must be created, which satisfies and brings forth a new need. The value of the old industry is preserved by the creation of the fund for a new one in which the relation of capital and labour posits itself in a new form. Hence exploration of all of nature in order to discover new, useful qualities in things; universal exchange of the products of all alien climates and lands; new (artificial) preparation of natural objects, by which they are given new use values. * The exploration of the earth in all directions, to discover new things of use as well as new useful qualities of the old; such as new qualities of them as raw materials etc.; the development, hence, of the natural sciences to their highest point; likewise the discovery, creation and satisfaction of new needs arising from society itself; the cultivation of all the qualities of the social human being, production of the same in a form as rich as possible in needs, because rich in qualities and relations production of this being as the most total and universal possible social product, for, in order to take gratification in a many-sided way, he must be capable of many pleasures [genussf hig], hence cultured to a high degree is likewise a condition of production founded on capital. This creation of new branches of production, i.e. of qualitatively new surplus time, is not merely the division of labour, but is rather the creation, separate from a given production, of labour with a new use value; the development of a constantly expanding and more comprehensive system of different kinds of labour, different kinds of production, to which a constantly expanding and constantly enriched system of needs corresponds. Thus, just as production founded on capital creates universal industriousness on one side i.e. surplus labour, value-creating labour so does it create on the other side a system of general exploitation of the natural and human qualities, a system of general utility, utilizing science itself just as much as all the physical and mental qualities, while there appears nothing higher in itself, nothing legitimate for itself, outside this circle of social production and exchange. Thus capital creates the bourgeois society, and the universal appropriation of nature as well as of the social bond itself by the members of society. Hence the great civilizing influence of capital; its production of a stage of society in comparison to which all earlier ones appear as mere local developments of humanity and as nature-idolatry. For the first time, nature becomes purely an object for humankind, purely a matter of utility; ceases to be recognized as a power for itself; and the theoretical discovery of its autonomous laws appears merely as a ruse so as to subjugate it under human needs, whether as an object of consumption or as a means of production. In accord with this tendency, capital drives beyond national barriers and prejudices as much as beyond nature worship, as well as all traditional, confined, complacent, encrusted satisfactions of present needs, and reproductions of old ways of life. It is destructive towards all of this, and constantly revolutionizes it, tearing down all the barriers which hem in the development of the forces of production, the expansion of needs, the all-sided development of production, and the exploitation and exchange of natural and mental forces. But from the fact that capital posits every such limit as a barrier and hence gets ideally beyond it, it does not by any means follow that it has really overcome it, and, since every such barrier contradicts its character, its production moves in contradictions which are constantly overcome but just as constantly posited. Furthermore. The universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension. Those economists who, like Ricardo, conceived production as directly identical with the self-realization of capital and hence were heedless of the barriers to consumption or of the existing barriers of circulation itself, to the extent that it must represent counter-values at all points, having in view only the development of the forces of production and the growth of the industrial population supply without regard to demand have therefore grasped the positive essence of capital more correctly and deeply than those who, like Sismondi, emphasized the barriers of consumption and of the available circle of counter-values, although the latter has better grasped the limited nature of production based on capital, its negative one-sidedness. The former more its universal tendency, the latter its particular restrictedness. The whole dispute as to whether overproduction is possible and necessary in capitalist production revolves around the point whether the process of the realization of capital within production directly posits its realization in circulation; whether its realization posited in the production process is its real realization. Ricardo himself, of course, has a suspicion that the exchange value of a commodity is not a value apart from exchange, and that it proves itself as a value only in exchange; but he regards the barriers which production thereby encounters as accidental, as barriers which are overcome. He therefore conceives the overcoming of such barriers as being in the essence of capital, although he often becomes absurd in the exposition of that view; while Sismondi, by contrast, emphasizes not only the encounter with the barriers, but their creation by capital itself, and has a vague intuition that they must lead to its breakdown. He therefore wants to put up barriers to production, from the outside, through custom, law etc., which of course, as merely external and artificial barriers, would necessarily be demolished by capital. On the other side, Ricardo and his entire school never understood the really modern crises, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten it as the foundation of society and of production itself. The attempts made from the orthodox economic standpoint to deny that there is general overproduction at any given moment are indeed childish. Either, in order to rescue production based on capital (see e.g. MacCulloch), all its specific qualities are ignored and their specific character as forms omitted, and capital is conceived as its inverse, as simple production for immediate use value. Totally abstracts away the essential relations. In fact, in order to cleanse it of contradictions, it is virtually dropped and negated. Or, like e.g. Mill, more perceptively (copied from the dull Say): supply and demand are allegedly identical, and should therefore necessarily correspond. Supply, namely, is allegedly a demand measured by its own amount. Here a great confusion: (1) This identity of supply, so that it is a demand measured by its own amount, is true only to the extent that it is exchange value = to a certain amount of objectified labour. To that extent it is the measure of its own demand as far as value is concerned. But, as such a value, it first has to be realized through the exchange for money, and as object of exchange for money it depends (2) on its use value, but as use value it depends on the mass of needs present for it, the demand for it. But as use value it is absolutely not measured by the labour time objectified in it, but rather a measuring rod is applied to it which lies outside its nature as exchange value. Or, it is further said: Supply itself is demand for a certain product of a certain value (which expresses itself in the demanded amount of the product). Then, if the supplied product is unsaleable, it proves that too much has been produced of the supplied commodity and too little of what the supplier demands. Thus allegedly there is no general overproduction, but merely overproduction of one or a few articles, as against underproduction of others. This again forgets that what the producing capital demands is not a specific use value, but value for itself, i.e. money money not in the role of medium of circulation, but as a general form of wealth, or a form of the realization of capital in one regard, a return to its original dormant state in the other. But the assertion that too little money is produced means indeed nothing else than what is being asserted, that production is not identical with realization, i.e. that it is overproduction, or, what is the same, that it is production which cannot be transformed into money, into value; production which does not pass the test of circulation. Hence the illusion of the money-artists (including Proudhon etc.), that it is a case of lack of means of circulation on account of the high cost of money and that more money has to be created artificially. (See also the Birminghamites, e.g. the Gemini.) Or it is said that production and consumption are the same from the social standpoint, that hence an excess or disproportion between the two can never take place. Social standpoint here means the abstraction which ignores precisely the specific social structure and relations and hence also the contradictions which emerge from it. Storch, for example, remarked quite correctly against Say that a great part of consumption is not consumption for immediate use, but consumption in the production process, e.g. consumption of machines, coal, oil, required buildings etc. This consumption is in no way identical with that at issue here. Malthus and Sismondi have likewise correctly remarked that e.g. the workers consumption is in no way in itself a sufficient consumption for the capitalist. The moment of realization is here simply thrown out entirely, and production and consumption are simply equated, i.e. not production based on capital but production based directly on use value is presupposed. Or, expressed socialistically: labour and the exchange of labour, i.e. production and its exchange (circulation), are allegedly the entire process; how then could a disproportion arise except by oversight, miscalculation? Labour is here regarded not as wage labour, nor capital as capital. On one side, the consequences of production based on capital are accepted, on the other side the presuppositions and conditions of these consequences are denied necessary labour as posited by and for surplus labour. Or e.g. Ricardo since production is itself regulated by the costs of production, it allegedly regulates itself, and if one branch of production does not realize itself then capital withdraws from it to a certain degree and throws itself on another point where it is needed. But apart from the fact that this necessity of evening-up already presupposes the unevenness, the disharmony and hence the contradiction in a general crisis of overproduction the contradiction is not between the different kinds of productive capital, but between industrial and loanable capital between capital as directly involved in the production process and capital as money existing (relatively) outside of it. Finally: proportionate production (this is already in Ricardo also, etc.) only when it is capital s tendency to distribute itself in correct proportions, but equally its necessary tendency since it strives limitlessly for surplus labour, surplus productivity, surplus consumption etc. to drive beyond the proportion. (In competition this inner tendency of capital appears as a compulsion exercised over it by alien capital, which drives it forward beyond the correct proportion with a constant march, march! Free competition, as Mr Wakefield correctly sniffs out in his commentary on Smith, has never yet been developed by the economists, no matter how much they prattle about it, and [no matter] how much it is the basis of the entirety of bourgeois production, production resting on capital. It has been understood only negatively: i.e. as negation of monopolies, the guild system, legal regulations etc. As negation of feudal production. But it also has to be something for itself, after all, since a mere 0 is an empty negation, abstraction, from a barrier which immediately arises again e.g. in the form of monopoly, natural monopolies etc. Conceptually, competition is nothing other than the inner nature of capital, its essential character, appearing in and realized as the reciprocal interaction of many capitals with one another, the inner tendency as external necessity.) (Capital exists and can only exist as many capitals, and its self-determination therefore appears as their reciprocal interaction with one another.) Capital is just as much the constant positing as the suspension of proportionate production. The existing proportion always has to be suspended by the creation of surplus values and the increase of productive forces. But this demand, that production should be expanded simultaneously and at once in the same proportion, makes external demands upon capital which in no way arise out of it itself; at the same time, the departure from the given proportion in one branch of production drives all of them out of it, and in unequal proportions. So far (for we have not yet reached the aspect of capital in which it is circulating capital, and still have circulation on one side and capital on the other, or production as its presupposition, or ground from which it arises), even from the standpoint of production alone, circulation contains the relation to consumption and production in other words, surplus labour as counter value [Gegenwert], and differentiation of labour in an ever richer form. The simple concept of capital has to contain its civilizing tendencies etc. in themselves; they must not, as in the economics books until now, appear merely as external consequences. Likewise the contradictions which are later released, demonstrated as already latent within it. So far in the realization process, we have only the indifference of the individual moments towards one another; that they determine each other internally and search for each other externally; but that they may or may not find each other, balance each other, correspond to each other. The inner necessity of moments which belong together, and their indifferent, independent existence towards one another, are already a foundation of contradictions. Still, we are by no means finished. The contradiction between production and realization of which capital, by its concept, is the unity has to be grasped more intrinsically than merely as the indifferent, seemingly reciprocally independent appearance of the individual moments of the process, or rather of the totality of processes. To approach the matter more closely: First of all, there is a limit, not inherent to production generally, but to production founded on capital. This limit is double, or rather the same regarded from two directions. It is enough here to demonstrate that capital contains a particular restriction of production which contradicts its general tendency to drive beyond every barrier to production in order to have uncovered the foundation of overproduction, the fundamental contradiction of developed capital; in order to have uncovered, more generally, the fact that capital is not, as the economists believe, the absolute form for the development of the forces of production not the absolute form for that, nor the form of wealth which absolutely coincides with the development of the forces of production. The stages of production which precede capital appear, regarded from its standpoint, as so many fetters upon the productive forces. It itself, however, correctly understood, appears as the condition of the development of the forces of production as long as they require an external spur, which appears at the same time as their bridle. It is a discipline over them, which becomes superfluous and burdensome at a certain level of their development, just like the guilds etc. These inherent limits have to coincide with the nature of capital, with the essential character of its very concept. These necessary limits are: (1) Necessary labour as limit on the exchange value of living labour capacity or of the woes of the industrial population; (2) Surplus value as limit on surplus labour time; and, in regard to relative surplus labour time, as barrier to the development of the forces of production; (3) What is the same, the transformation into money, exchange value as such, as limit of production; or exchange founded on value, or value founded on exchange, as limit of production. This is: (4) again the same as restriction of the production of use values by exchange value; or that real wealth has to take on a specific form distinct from itself, a form not absolutely identical with it, in order to become an object of production at all. However, these limits come up against the general tendency of capital (which showed itself in simple circulation, where money as medium of circulation appeared as merely vanishing, without independent necessity, and hence not as limit and barrier) to forget and abstract from: (1) necessary labour as limit of the exchange value of living labour capacity; (2) surplus value as the limit of surplus labour and development of the forces of production; (3) money as the limit of production; (4) the restriction of the production of use values by exchange value. Hence overproduction: i.e. the sudden recall of all these necessary moments of production founded on capital; hence general devaluation in consequence of forgetting them. Capital, at the same time, [is] thereby faced with the task of launching its attempt anew from a higher level of the development of productive forces, with each time greater collapse as capital. Clear, therefore, that the higher the development of capital, the more it appears as barrier to production hence also to consumption besides the other contradictions which make it appear as burdensome barrier to production and intercourse. <The entire credit system, and the over-trading, over-speculation etc. connected with it, rests on the necessity of expanding and leaping over the barrier to circulation and the sphere of exchange. This appears more colossally, classically, in the relations between peoples than in the relations between individuals. Thus e.g. the English forced to lend to foreign nations, in order to have them as customers. At bottom, the English capitalist exchanges doubly with productive English capital, (1) as himself, (2) as Yankee etc. or in whatever other form he has placed his money.> <Capital as barrier to production is pointed out: e.g. Hodgskin: In the present state, every accumulation of capital adds to the amount of profit demanded from the labourer, and extinguishes all that labour which would only procure the labourer his comfortable existence Profit the limitation of production. (H[odgskin, Notebook,] p. 46.) Through foreign trade, the barrier of the sphere of exchange [is] expanded, and [it is] made possible for the capitalist to consume more surplus labour: In a series of years the world can take no more from us than we can take from the world. Even the profits made by our merchants in their foreign trade are paid by the consumer of the return goods here. Foreign trade mere barter, and as such exchange for the convenience and enjoyment of the capitalist. But he can consume commodities to a certain degree only. He exchanges cottons etc. for the wines and silks of foreign countries. But these represent only the surplus labour of our own population as much as the clothes and cottons, and in this way the destructive power of the capitalist is increased beyond all bounds. Thus nature is outwitted. (Source and Remedy etc., pp. 27, 28.) How the glut is connected with the barrier of necessary labour: The very meaning of an increased demand by the labourers is, a disposition to take less themselves, and leave a larger share for their employers; and if it be said that this, by diminishing consumption, increases glut, I can only say that glut then is synonymous with high profits. (Enquiry, London, 1821, p. 12.) Herein the one side of the contradiction completely expressed. The practice of stopping labour at that point where it can produce, in addition to the subsistence of the labourer, a profit for the capitalist, opposed to the natural law which regulates production. (H[odgskin, Notebook,] 41, IX.) The more the capital accumulates, the more the whole amount of profit demanded does so; so there arises an artificial check to production and population. (H[odgskin, Notebook,] 46.) The contradictions between capital as instrument of production in general and as instrument of production of value, developed as follows by Malthus (X, 40 seq.): Profits are invariably measured by value and never by quantity The wealth of a country depends partly upon the quantity of produce obtained by its labour, and partly upon such an adaptation of this quantity to the wants and powers of the existing population as is calculated to give it value. Nothing can be more certain than that it is not determined by either of them alone. But where wealth and value are perhaps the most nearly connected, is in the necessity of the latter to the production of the former. The value set upon commodities, that is the sacrifice of labour which people are willing to make in order to sustain them, in the actual state of things may be said to be almost the sole cause of the existence of wealth The consumptive demand occasioned only by the workmen employed in productive labour can never alone furnish a motive to the accumulation and employment of capital the powers of production alone do not secure the creation of a proportionate degree of wealth, as little as the increase of population. What it requires in addition is such a distribution of produce, and such an adaptation of this produce to the wants of those who are to consume it, as constantly to increase the exchangeable value of the whole mass, i.e. the powers of production are only called fully into motion by the unchecked demand for all that is produced This is however brought about on the one hand by constantly new branches of industry (and reciprocal expansion of the old), by means of which the old obtain new markets etc. Production indeed itself creates demand, in that it employs more workers in the same branch of business, and creates new branches of business, where new capitalists again employ new workers and at the same time alternately become market for the old; but the demand created by the productive labourer himself can never be an adequate demand, because it does not go to the full extent of what he produces. If it did, there would be no profit, consequently no motive to employ him. The very existence of a profit upon any commodity presupposes a demand exterior to that of the labourer who has produced it. Both labourers and capital may be redundant compared with the means of employing them profitably. > <To be noted for (3), to which we shall soon proceed, that the provisional accumulation, as which capital appears vis- -vis labour, and by means of which it is the command over labour, is at first nothing else but surplus labour itself in the form of surplus produce, at the same time claim on alien co-existing labour.> The point here, of course, is not yet to develop overproduction specifically, but only the predisposition to it, such as it is posited in primitive form in the capital relation itself. We must also, therefore, omit here any regard for the other possessing and consuming etc. classes, which do not produce but live from their revenue, hence exchange with capital; form centres of exchange for it. We can consider them only partly (but better, along with accumulation), in so far as they are most important for the historic formation of capital. In production based on slavery, as well as in patriarchal agricultural-industrial production, where the greatest part of the population directly satisfies the greatest part of its needs directly by its labour, the sphere of circulation and exchange is still very narrow; and more particularly in the former, the slave does not come into consideration as engaged in exchange at all. But in production based on capital, consumption is mediated at all points by exchange, and labour never has a direct use value for those who are working. Its entire basis is labour as exchange value and as the creation of exchange value. Well. First of all the wage worker as distinct from the slave is himself an independent centre of circulation, someone who exchanges, posits exchange value, and maintains exchange value through exchange. Firstly: in the exchange between that part of capital which is specified as wages, and living labour capacity, the exchange value of this part of capital is posited immediately, before capital again emerges from the production process to enter into circulation, or this can be conceived as itself still an act of circulation. Secondly: To each capitalist, the total mass of all workers, with the exception of his own workers, appear not as workers, but as consumers, possessors of exchange values (wages), money, which they exchange for his commodity. They are so many centres of circulation with whom the act of exchange begins and by whom the exchange value of capital is maintained. They form a proportionally very great part although not quite so great as is generally imagined, if one focuses on the industrial worker proper of all consumers. The greater their number the number of the industrial population and the mass of money at their disposal, the greater the sphere of exchange for capital. We have seen that it is the tendency of capital to increase the industrial population as much as possible. To begin with: capital forces the workers beyond necessary labour to surplus labour. Only in this way does it realize itself, and create surplus value. But on the other hand, it posits necessary labour only to the extent and in so far as it is surplus labour and the latter is realizable as surplus value. It posits surplus labour, then, as the condition of the necessary, and surplus value as the limit of objectified labour, of value as such. As soon as it cannot posit value, it does not posit necessary labour; and, given its foundation, it cannot be otherwise. It therefore restricts labour and the creation of value by an artificial check, as the English express it and it does so on the same grounds as and to the same extent that it posits surplus labour and surplus value. By its nature, therefore, it posits a barrier to labour and value-creation, in contradiction to its tendency to expand them boundlessly. And in as much as it both posits a barrier specific to itself, and on the other side equally drives over and beyond every barrier, it is the living contradiction. * While capital thus, on one side, makes surplus labour and its exchange for surplus labour into the precondition of necessary labour and hence of the positing of labour capacity [Arbeitsverm gen] as a centre of exchange hence already narrows and attaches conditions to the sphere of exchange from this side it is just as essential to it, on the other side, to restrict the worker s consumption to the amount necessary to reproduce his labour capacity to make the value which expresses necessary labour the barrier to the realization of labour capacity and hence of the worker s exchange capacity, and to strive to reduce the relation of this necessary labour to surplus labour to the minimum. [Thus we have] a new barrier to the sphere of exchange, which is, however, at the same time identical, as is the first, with the tendency of capital to relate to every limit on its self-realization as to a barrier. The boundless enlargement of its value boundless creation of value therefore absolutely identical here with the positing of barriers to the sphere of exchange, i.e. the possibility of realization the realization of the value posited in the production process. The same with the productive force. On the one hand, the necessary tendency of capital to raise it to the utmost, in order to increase relative surplus time. On the other hand, thereby decreases necessary labour time, hence the worker s exchange capacity. Further, as we have seen, relative surplus value rises much more slowly than the force of production, and moreover this proportion grows ever smaller as the magnitude reached by the productive forces is greater. But the mass of products grows in a similar proportion if not, then new capital would be set free as well as labour which did not enter into circulation. But to the same degree as the mass of products grows, so grows the difficulty of realizing the labour time contained in them because the demands made on consumption rise. (We are still concerned here only with the way in which the capital realization process is its devaluation process. Out of place here would be the question how, while it has the tendency to heighten the productive forces boundlessly, it also and equally makes one-sided, limits etc. the main force of production, the human being himself, and has the tendency in general to restrict the forces of production.) Capital, then, posits necessary labour time as the barrier to the exchange value of living labour capacity; surplus labour time as the barrier to necessary labour time; and surplus value as the barrier to surplus labour time; while at the same time it drives over and beyond all these barriers, to the extent that it posits labour capacity opposite itself as something simply engaged in exchange, as money, and surplus labour time as the only barrier, because creatrix of surplus value. (Or, from the first aspect, it posits the exchange of surplus values as the barrier to the exchange of the necessary values.) In one and the same moment, it posits the values on hand in circulation or, what is the same, the proportion of values posited by it to the values contained in it and presupposed in circulation as the barrier, the necessary barrier to its value-creation; on the other hand, its productivity as the only barrier and creatrix of values. It therefore drives constantly on one side towards its own devaluation, on the other side towards the obstruction of the productive forces, and of labour which objectifies itself in values. Proudhon, who certainly hears the bells ringing but never knows where, therefore sees the origin of overproduction in the fact that the worker cannot buy back his product . By this he understands that interest and profit are added on to it; or that the price of the product is an overcharge on top of its real value. This demonstrates first of all that he understands nothing about the determination of value, which, generally speaking, can include no overcharge. In practical commerce, capitalist A can screw capitalist B. The one pockets what the other loses. If we add them both together, then the sum of their exchange = the sum of the labour time objectified in it, of which capitalist A has merely pocketed more than his share in relation to B. From all the profits made by capital, i.e. the total mass of capitalists, there is deducted (1) the constant part of capital; (2) the wage, or, the amount of objectified labour time necessary in order to reproduce living labour capacity. They can therefore divide nothing among themselves other than the surplus value. The proportion just or unjust in which they distribute this surplus value among themselves alters absolutely nothing about exchange or about the exchange relation between capital and labour. It might be said that necessary labour time (i.e. the wage), which therefore excludes profit, and is rather to be deducted from it, is itself again determined by the prices of products which already include profit. Where else could the profit come from which the capitalist who does not directly employ this worker makes in the exchange with him? For example, the spinner s worker exchanges his wages for so many bushels of grain. But in the price of each bushel, the profit of the farmer, i.e. of capital, is already included. So that the price of the consumption goods which are bought by necessary labour itself already includes surplus labour time. It is clear, first of all, that the wage paid by the spinner to his workmen must be high enough to buy the necessary bushel of wheat, regardless of what profit for the farmer may be included in the price of the bushel of wheat; but that, likewise, on the other side, the wage which the farmer pays his workers must be high enough to procure for them the necessary quantity of clothing, regardless of what profit for the weaver and the spinner may be included in the price of these articles of clothing. The puzzle arises simply because (1) price and value are being mixed up; (2) relations are brought in which are irrelevant to the determination of value of such. Suppose initially and this is the conceptual relation that capitalist A himself produces all the consumption goods which the worker needs, or which represent the sum of use values in which his necessary labour objectifies itself. Then, with the money which he obtains from the capitalist money appears in this transaction only as medium of circulation the worker would have to buy back from the capitalist, with that money, a fractional part the part representing his necessary labour of his product. The price of a fractional part of capitalist A s product is of course the same for the worker as for everyone else engaged in exchange. From the moment he buys from the capitalist, his specific quality as worker is extinguished; the money contains no trace of the relation in which, or of the operation by which, it was obtained; in circulation he confronts the capitalist simply as M, and the capitalist confronts him as C; as realizer of the price of C, which is hence presupposed for him just as for every other representative of M, i.e. buyer. Good. But in the price of the fractional part of the commodity which he buys, the profit is included in which the surplus value going to the capitalist appears. If his necessary labour time, therefore, represents 20 thalers = a certain fractional part of the product, it follows that, if the profit is 10%, the capitalist sells him the commodity for 22 thalers. That is what Proudhon thinks, and concludes from it that the worker cannot buy back his product, i.e. the fractional part of the total product which objectifies his necessary labour. (We will come back directly to his other conclusion, that therefore capital cannot adequately exchange, hence overproduction.) To make the matter tangible, say that the worker s 20 thalers = 4 bushels of grain. Consequently if 20 thalers is the value of the 4 bushels expressed in money if the capitalist sells them for 22, then the worker could not buy back the 4 bushels, or rather he could buy only 3 7/11 bushels. In other words, he imagines that the monetary transaction distorts the relation. 20 thalers is the price of necessary labour = 4 bushels; and the capitalist pays this to the worker; but as soon as the latter presents his 20 thalers and asks for the 4 bushels, he gets only 3 7/11. Since he would thereby receive less than the necessary wage, he could not live at all, and thus Mr Proudhon proves more than he intends. * But the presupposition, if you please, is wrong. If 5 thalers expresses the value of a bushel, i.e. the labour time objectified in it, and if 4 bushels express the necessary wages of labour, then capitalist A sells these 4 bushels not, as Proudhon thinks, for 22 but for 20 thalers. But the thing is this: let the total product (including necessary and surplus labour time) equal 110 thalers = 22 bushels; let 16 of these bushels = 80 thalers, represent the capital invested in seed, machinery etc.; 4 bushels = 20 thalers for necessary labour time; 2 bushels = 10 thalers, surplus labour time. The capitalist sells each bushel at 5 thalers, the necessary value of the bushel, and nevertheless he makes a gain of 10% on each bushel, or 5/10 of a thaler, 1/2 a thaler = 15 silver groschen. How? Because he sells 22 5 instead of 20 5. We can here equate to 0 the additional capital he would have to lay out in order to produce 2 additional bushels, since these can dissolve in pure surplus labour, more thorough ploughing, elimination of weeds, procurement of mineral fertilizer which, say, costs him nothing, etc. The value contained in the 2 surplus bushels has cost him nothing, hence makes up a surplus above his expenditures. If he sells 20 of the 22 bushels for what they cost him, for 100 thalers, plus 2, which cost him nothing but whose value = the labour contained in them for 10 thalers, then it is the same for him as if he sold all of them, each bushel for 15 silver groschen more than it cost him. (For 1/2 a thaler or 10% of 5 thalers = 5/10.) Therefore, although he makes 2 thalers on the 4 bushels he sells to the worker, the worker obtains each bushel at its necessary value. The capitalist makes 2 thalers on them only because, beside these 4 bushels, he sells 18 additional ones at the identical price. If he sold only 16, he would make nothing; for then he would sell a total of: 5 20 =100, his invested capital. Indeed, in manufacturing, too, it is possible that the capital s outlays do not increase, while a surplus value is sold nevertheless; i.e. it is not necessary that the outlay in raw material and machinery should grow. Assume that the same product obtains a higher finish through labour by hand the mass of required raw material and instrument held constant and hence its use value, therefore the use value of the product, increases, not in quantity, but in quality, owing to the increased hand labour employed on it. Its exchange value the labour objectified in it simply grows in relation to this labour. If the capitalist then sells for 10% more, then the worker gets paid the fractional part of the product, expressed in money, which represents necessary labour; and if the product could be divided, then the worker could buy this fractional part. The capitalist s profit would come not from overcharging the worker for this fractional part, but from the fact that in the whole of the product he sells a fractional part which he has not paid for, and which represents, precisely, surplus labour time. The product is always divisible as value; in its natural form, it need not be so. Profit here always comes from the fact that the whole value contains a fractional part which is not paid, and hence a fractional part of surplus labour is paid in each fractional part of the whole. So in the above example. When the capitalist sells 22 bushels, i.e. 2 which represent surplus labour, it is the same as if he sold an extra 1/10 of a bushel per bushel, i.e. 1/10 surplus value. If e.g. only one clock has been produced, where the relation of labour, capital and surplus value is the same, then the quality of the clock has been raised 1/10 in value by 1/10 labour time which costs the capitalist nothing. Third case, that the capitalist, as is usual in manufacturing (but not in extractive industry), needs more raw material (let the instrument remain constant; however, nothing is changed if it, too, is variable) in which the surplus labour time objectifies itself. (Actually this does not belong here yet, for capital here can or must just as well be assumed as having also produced the raw material, e.g. the cotton, and surplus production at any point has to reduce itself to mere surplus labour, or, what is rather the reality, presupposes simultaneous surplus labour at all points of circulation.) Assume that he spins up 25 lb. of cotton, which cost him 50 thalers, and for which he requires machinery (which we will assume to be entirely consumed in the production process) at 30 thalers, and wages 20 thalers, for 25 lb. of twist, which he sells at 110. He sells each pound of twist, then, for 4 2/5 thalers, or 4 thalers 12 silver groschen. The worker thus obtains 4 6/11 lb. of twist, if he wants to buy it again. If the worker were working for himself, he would likewise sell the pound for 4 thalers 12 silver groschen and make no profit presupposing that he performs only the necessary labour; but he would spin up less cotton. As we know, the value of a pound of twist consists exclusively of the amount of labour time objectified in it. Now suppose that the value of the pound of twist = 5 thalers. Given that 4/5, i.e. 4 thalers, represent cotton, instrument etc.; then 1 thaler represents the labour realized in the cotton by means of the instrument. If the worker, in order to live from spinning, needs say 20 thalers per month, then since he earns 1 thaler for spinning 1 lb. of twist, but needs 20 he would have to spin 20 lb. of twist. If he himself owned the cotton, material etc., and were working for himself, hence were his own master, then he would have to sell 20 lb. of twist; since he would earn only 1/5 on each, one thaler, and 1 20 = 20. If he works for the capitalist, then the labour which spins up 20 lb. of cotton only represents the necessary labour; for, by presupposition, of the 20 lb. of twist or 20 5 = 100 thalers, 80 thalers only represent the already purchased cotton and instrument, and the newly reproduced value represents nothing but necessary labour. Of the 20 lb. of twist, 4 lb. = 20 thalers would represent necessary labour, and 16 nothing more than the constant part of capital. 16 5 = 80 thalers. Each additional pound which the capitalist orders to be produced over and above the 20 contains 1/5 surplus labour, surplus value for him. (Objectified labour which he has sold without having paid for it.) If he orders 1 more pound spun, he gains 1 thaler; 10 lb, more, 10 thalers. Out of 10 lb. or 50 thalers, the capitalist would have 40 thalers to replace his investment and 10 thalers of surplus labour; or 8 lb. of twist with which to buy the material for 10 (machinery and cotton), and 2 lb. of twist, or their value, which have cost him nothing. If we now summarize the capitalist s accounts, we find that he has invested, in thalers Now assume that the productivity of labour grows to the extent that he is capable of spinning 40 lb. with the same wage cost. According to our assumption he would sell these 40 lb. at their real value, i.e. the pound at 5 thalers, of which 4 thalers is labour objectified in cotton etc., 1 thaler is newly added labour. He would then sell: In fact in the above example the capitalist s investment is only 180; on this he makes 20, or 11 1/9%. The smaller the part of the outlay becomes which represents necessary labour, the greater the gain, although it stands in no obvious relation to the real surplus value, i.e. surplus labour. For example. In order for the capitalist to gain 10%, he has to spin 40 lb. of twist; the worker needs to spin only 20 = necessary labour. Surplus labour = necessary labour, 100% surplus value. This is our old law. But this is not the matter at issue here. In the above example with the 40 lb., the real value of the pound is 5 thalers, and, like the capitalist, the worker himself, if he conducted his own business as a worker (and could advance himself enough funds to be able to realize the raw material etc. to the extent necessary to allow him to live as a worker), would sell the pound at 5 thalers. He would, however, produce only 20 lb., and from its sale he would use 4/5 to obtain new raw material, and 1/5 to live. The only thing he would make out of the 100 thalers would be his wages. The capitalist s gain comes not from selling the pound too dear he sells it at its exact value but from selling it above the costs of production, his costs (not the costs, for the 1/5 costs the worker surplus labour). If he sold at less than 5 thalers, he would be selling below the value, and the buyer would have the 1/5 of labour contained in every pound of twist above the investment etc., for nothing. But the capitalist calculates in this manner: It further follows from the above that the price can fall below the value, and capital can still make a gain; he must sell, however, a number multiplied by the unit large enough to form a surplus over the number multiplied by the unit which forms the necessary price of labour. If the relation of labour to raw material etc. is 1/5, then he can sell at e.g. only 1/10 above the constant value, since the surplus labour costs him nothing. He then makes a present of 1/10 of the surplus labour to the consumer and realizes only 1/10 for himself. This very important in competition; overlooked in particular by Ricardo. The determination of prices is founded on the determination of values, but new elements enter in. The price, which originally appeared only as the value expressed in money, becomes further determined as itself a specific magnitude. If 5 thalers is the value of a pound of twist, i.e. the same labour time as is contained in 5 thalers is contained in 1 pound of twist, then this remains its value regardless of whether 4 or 4 million lb. of twist are being appraised. The moment of the NUMBER OF POUNDS, because it expresses the relation of surplus labour to necessary labour in another form, becomes decisively important in the determination of price. This matter brought to popular awareness in the question of the ten hours bill etc. If the worker were to restrict himself to necessary labour, he would spin no more than 20 lb. of twist, and realize no more raw material, machinery etc. than would have a value of 80 thalers monthly. Apart from the raw material, machinery etc. which are required for the workers reproduction, self-maintenance, the capitalist must necessarily lay out capital in raw material (and machinery, even if not in the same proportion) for the objectification of surplus labour. (In agriculture, fishery, in short, the extractive industries, this is not absolutely necessary; it becomes so, however, when they are conducted on a large scale, i.e. industrially; it appears then as surplus outlay not in raw material itself, but in the instruments to take it out with.) These surplus outlays i.e. the tendering of the material for surplus labour of the objective elements of its realization [Verwirklichung] are actually what forms the specific so-called provisional accumulation of capital: the accumulation of the stock (let us say for the time being) specifically of capital. For it is stupid, as we shall see more closely, to regard it as a quality specific to capital that the objective conditions of living labour must be present, as such whether they are furnished by nature or produced in history. These specific advances which capital makes signify nothing more than that it realizes objectified surplus labour surplus product in new living surplus labour, instead of investing (spending) it, like, say, Egyptian kings or Etruscan priest-nobles for pyramids etc. Into the determination of prices (as we shall also see with profit) there also enters fraud, reciprocal chicanery. One party can win in exchange what the other loses; all they can distribute among themselves is the surplus value capital as a class. But these proportions open a field for individual deception etc. (apart from supply and demand) which has nothing to do with the determination of value as such. Thus, out the window goes Mr Proudhon s discovery that the worker cannot buy back his product. The basis on which this rests is that he (Proudhon) understands nothing, either about value-determination or about price-determination. But, furthermore and regardless of that, his conclusion that this is why there is over production is false in this abstraction. In the slave relation, the masters are not troubled by the fact that the workers do not compete with them as consumers. (Nevertheless, production for luxury as it presents itself in antiquity is a necessary result of the slave relation. Not overproduction, but over-consumption and insane consumption, signifying, by its turn towards the monstrous and the bizarre, the downfall of the old system of states.) With that, we come to another point. A general rate of profit as such is possible only if the rate of profit in one branch of business is too high and in another too low; i.e. that a part of the surplus value which corresponds to surplus labour is transferred from one capitalist to the other. If in 5 branches of business, for example, the respective rate of profit is Now in the above example, where capitalist A is forced, say by competition, to sell at a profit of 10% instead of 11 1/9%, and hence sells the pound of twist at 1/20 of a thaler too cheaply, the worker would continue to obtain 20 thalers as before, in money, his necessary wages; but in twist, he would obtain 4 4/90 lb. instead of 4 lb. If his wages were in twist, he would have obtained 4/20 of a thaler = 1/5 of a thaler or 6 silver groschen, i.e. 1% more than his necessary wages. If the worker works in a branch of business whose product lies entirely outside the sphere of his consumption, then he gains not a farthing in this operation; rather, for him it is a matter of performing a part of his surplus labour indirectly for capitalist B, instead of directly for capitalist A; i.e. through the mediation of capitalist A. He can gain from the fact that capitalist A lets go of a part of the labour objectified in his product for nothing, only if he is himself a consumer of this product, and only to the extent that he is such a consumer. Thus, if his consumption of twist makes up 1/10 of his expenditure, then he gains exactly 1/50 of a thaler from the operation (2/100 of a thaler out of 2 thalers, 1/100 of 1, exactly 1% of the 2 thalers), i.e. 1/10% of his total wages of 20 thalers, or, 7 1/5 pfennigs. This would be the proportion 7 1/5 pfennigs in which he would participate in his own surplus labour of 20 thalers. Such are the proportions of the surplus wages which the worker makes at best, when the price in the branch of business where he is occupied falls below the necessary value. In the best case and this is impossible the limit (in the instance given) is 6 silver groschen or 1%, i.e. if he could live exclusively on twist; i.e. in the best case his surplus wages are determined by the relation of necessary labour time to surplus labour time. In the luxury-goods industries proper, from whose consumption he is himself excluded, it is always = 0. Now let us assume that capitalists A, B, C exchange among one another; the total product of each = 200 thalers. Let A produce twist, B grain and C silver; let the relations of surplus and necessary labour, and of outlays and profit be just the same. A sells 40 lb. twist at 198, instead of at 200 thalers, and loses 1 1/9% of his gains; ditto B his, say 40 bushels wheat, at 198 instead of 200; but C exchanges the labour objectified in his 200 thalers in full. Between A and B the relation is such that neither of them loses in the exchange with the other. A would obtain 40 bushels wheat, B 40 lb. twist; but each of them a value of only 198. C obtains 40 lb. twist or 40 bushels wheat for 198 thalers and in both cases pays 2 thalers too little, or obtains 2/3 lb. twist or 2/5 bushel wheat too much. But now assume that the relation takes the form that A sells his 40 lb. to the silver man, C, for 200 thalers, but C has to pay 202 to the grain man, B, or 2 thalers above its value. Between twist A and silver C everything is all right; both exchange at value with each other; but because B s price has risen above its value, the 40 lb. twist and the 200 thalers silver, when expressed in grain, have fallen by 1 1/9%, or, neither of them could in fact any longer buy 40 bushels grain for 200 thalers, but only 39 2/5. 39 2/5 bushels wheat would cost 200 thalers, or the single bushel wheat, instead of 5 thalers, 5 1/20 thalers; 5 thalers 1 1/4 silver groschen. Now, in this last relation, assume that the worker s consumption consists 1/2 of wheat; his twist consumption was 1/10 of his income; his wheat consumption 5/10. On the 1/10 he had gained 1/10% on his total wages; on the wheat, he loses 5/10; thus on the whole he loses 4/10% instead of gaining. Although the capitalist would have paid him his necessary labour, his wages would fall beneath the necessary pay as a consequence of grain man B s overcharging. If this continued on, then his necessary wages would have to rise. Thus if the sale of twist by capitalist A is due to a rise above value in the price of grain or of other use values which form the most essential part of the worker s consumption then capitalist A s worker would lose in the same relation as his consumption of the now more expensive product is greater than the cheaper product he himself produces. But if A had sold twist at 1 1/9% above its value, and B sold grain at 1 1/9% below, then, in the best case, if the worker consumed nothing but grain, he could gain at most 6 silver groschen, or, since we presupposed half in grain, only 3 silver groschen, or 3% on his wages of 20 thalers. Thus the worker may experience all three cases: his gain or loss from the operation = 0; it may depreciate his necessary wages, so that they no longer suffice, hence make him fall below the necessary minimum; it can thirdly bring him a surplus wage, which is resolved into a very small share of his own surplus labour. We saw above that if the relation of necessary labour to the other conditions of production = 2/5 (20 out of 100 total outlay) or = 40% of the total value (in 20 lb. twist = 4 lb. twist) (or of 100 thalers, 80 raw material and instrument, 20 labour) and the relation of surplus labour to necessary labour is 100% (i.e. the same quantity), then the capitalist makes 11 1/9% on his outlay. If he took only 10% and made a gift of the 1 1/9 or 2 thalers (transferred surplus value), then the worker, in so far as he is a consumer, would likewise gain, and in the best (impossible) case, if he lived only from the products of his master, it would [be], as we saw: If on the other hand the capitalist had raised wages by 10% from 20 to 22 thalers, because, say, the demand for labour in his branch of business had risen above the supply while he continued to sell the pound of twist at its value, i.e. at 5 thalers as before, then his profit would have fallen by only 2 thalers, from 200 to 198, i.e. by 1 1/9%, and would still have been 10%. It follows from this that if the capitalist, say, out of consideration for Mr Proudhon, sold his commodities at the production costs they cost him, and if his total profit = 0, this would be merely a transfer of the surplus value or surplus labour time from capitalist A to B, C, D etc., and as regards his worker, his gain at best i.e. his share of his own surplus labour would be limited to that part of the wage which he consumed in the depreciated commodity; and if he spent his entire wages on it, the gain could not be greater than the proportion of necessary labour to the total product (in the above example 20: 200 = 1/10, 1/10 of 20 = 2 thalers). As regards the other workers, the case is entirely the same; they gain from the depreciated commodity only in relation (1) as they consume it; (2) relative to the size of their wage, which is determined by necessary labour. If the depreciated commodity were, e.g. grain one of the staffs of life then first its producer, the farmer, and following him all other capitalists, would make the discovery that the worker s necessary wage is no longer the necessary wage; but stands above its level; hence it is brought down; hence ultimately only the surplus value of capitals A, B, C etc. is increased, and the surplus labour of those occupied in them. Posit 5 capitalists, A, B, C, D and E. Let E produce a commodity which is consumed only by workers. E would then realize his profit purely in the exchange of his commodity with wages; but, as always, his profit would originate not in the exchange of his commodity for the workers money, but in the exchange of his capital with living labour. Posit that necessary labour relates in all 5 branches of business at 1/5; let 1/5 be surplus labour in all of them; let constant capital be = 3/5 in all. Capitalist E exchanges his product for 1/5 of capital A, 1/5 of capital B, 1/5 of capital C, 1/5 of capital D, and 1/5 constitutes his wages. He would make no profit on this last 1/5, as we have seen; or rather his profit would not arise from the fact that he gives the workers 1/5 of his capital in money, and that they buy back the same 1/5 from him as money would not originate from the exchange with them as consumers, as centres of circulation. His whole transaction with them as consumers rests on the basis that he gives them his product in the form of money, and they give him back the same money for exactly the same fractional part of the product. With the workers of A, B, C, D, his relation is not that of capitalist to worker, but of C[ommodity] to M[oney], of vendor to buyer. We have presupposed that the workers of A, B, C, D consume no part of their own products; D does, however, exchange for 1/5 of the product of A, B, C and E, i.e. 4/5 of their product; but this exchange is only a detour to get to the wages which A, B, C and D pay their own workers. They each give the workers money to the value of 1/5 of their product, or 1/5 of their product as payment for necessary labour, and with this, with 4/5 of the value of their product or capital, they then buy E s commodity. But this exchange with E is then only an indirect form of advancing the part of capital which represents necessary labour i.e. deduction from their capital. They cannot therefore gain thereby. The gain comes from the realization of the remaining 4/5 of capital A, B, C, D, and this realization consists of each of them, through the exchange, getting back the labour objectified in his product, in another form. For each of them, since there is a division of labour, 3/5 replaces his constant capital, raw material and material of labour. Their gain the realization of surplus labour time, its positing as surplus value consists in the reciprocal realization of the last 1/5. It is not necessary that capitals A, B, C, D exchange the entire 4/5 with one another. Since they are, as capitalists, at the same time large consumers, and can in no way live on air, but since, as capitalists, they do not live from their labour either, they have nothing to exchange or to consume apart from other peoples products. That is, for their own consumption they exchange just that 1/5 which represents surplus labour time, the labour created by means of capital. Posit that each consumes 1/5 of this 1/5, i.e. 1/25, in the form of his own product. There remain 4/25 to be either realized or to be transformed into use values for their own consumption through exchange. Let A exchange 2/25 with B, 1/25 with C, 1/25 with E, and likewise on the part of B, C, E. The case we have posited, where capital E realizes the whole of its profit in exchange with wages, is the most favourable or expresses, rather, the only correct relation in which it is possible for capital to realize the surplus value created in production through exchange with the workers consumption. But capitals A, B, C, D can realize their value in this case only through exchange among one another, i.e. through the exchange of capitalists among themselves. Capitalist E consumes nothing of his own commodity, since he has paid 1/5 of it to his own workers, exchanged 1/5 for 1/5 of capital A, 1/5 for 1/5 of capital B, 1/5 for 1/5 of capital C, 1/5 for 1/5 of capital D. A, B, C, D make no profit on this exchange, since it is the respective 1/5 which they have paid to their own workers. Given the relation we have assumed, of 2/5 raw material, 1/5 machinery, 1/5 workers necessaries, and 1/5 surplus product, from which Messrs the capitalists at the same time live and realize their surplus value, then we need, if the total product of each of A, B, C, D, E = 100, a producer E for workers necessaries, 2 capitalists A and B, who produce raw materials for all the others, 1, C, who produces the machinery, and 1, D, who makes the surplus produce, The accounts would be these (the machinery-maker etc. has to produce every part of his commodity for himself): This example may or may not be continued later. Does not actually belong here. This much is clear, that realization here takes place in the exchange among the capitalists, for although E produces only for workers consumption, he exchanges with the others through the form of wages, 1/5 of A, 1/5 of B, 1/5 of C, 1/5 of D etc. A, B, C, D likewise exchange with E: not directly, but indirectly, in that each of them requires 1/5 from him as necessaries for his workers. The realization consists of each of them exchanging his own product for fractional parts of the products of the other four, and this in such a way that a part of the surplus product goes for the capitalist s own consumption, and a part is transformed into surplus capital with which to set new labour into motion. The realization consists of the real possibility of increased realization production of new and larger values. It is clear here that D and E, where E represents all commodities consumed by the workers and D all those consumed by the capitalists, would have produced too much that is, too much relative to the proportion of the part of capital going to the worker, or too much relative to the part of capital consumable by the capitalists (too much relative to the proportion by which they must increase their capital; and this proportion later obtains a minimum limit in the form of interest) that general overproduction would take place, not because relatively too little [sic] had been produced of the commodities consumed by the workers or too little [sic] of those consumed by the capitalists, but because too much of both had been produced not too much for consumption, but too much to retain the correct relation between consumption and realization; too much for realization. A revolution in the forces of production further alters these relations, changes these relations themselves, whose foundations from the standpoint of capital and hence also of that of realization through exchange always remains the relation of necessary to surplus labour, or, if you like, of the different moments of objectified to living labour. It is possible, as we have already indicated earlier, that the capital as well as the living labour capacity set free owing to the increase in productive forces must both lie dormant, because they are not present in the proportions in which production must take place on the basis of the newly developed productive forces. If it proceeds regardless of that, then ultimately a minus, a negative magnitude, will come out of the exchange on one side or the other. The barrier always remains, that exchange hence production as well takes place in such a way that the relation of surplus labour to necessary labour remains the same for this is = to the constancy [Gleichbleiben] of the realization of capital. The second relation the proportion between the part of the surplus product consumed by capital and that part transformed anew into capital is determined by the first relation. Firstly, the magnitude of the sum to be divided into these two parts depends on this original relation; secondly, just as the creation of surplus value by capital depends on the creation of surplus labour, so does the increase of capital as capital (accumulation, and, without accumulation, capital cannot form the foundation of production, since it would remain stagnant, and would not be an element of progress, required already by the mere increase of population etc.) depend on the transformation of a part of this surplus product into new capital. If the surplus value were simply consumed, then capital would not have realized itself as capital, and not produced itself as capital, i.e. as value which produces value. We have seen that if 40 lb. of twist of a value of 200 thalers because they contain labour time objectified in 200 thalers are exchanged for 198 thalers, then not only does the manufacturer of twist lose 1 1/9% gain; but also his product is devalued, has been sold below its real value, although it is sold at a price which still leaves him a profit of 10%. On the other hand, the producer of silver gains 2 thalers. Keeps 2 thalers as liberated capital. Nevertheless, a devaluation has taken place as regards the total sum. For the sum is 398 thalers instead of 400. For, in the hand of the producer of silver, the 200 thalers of twist are also worth only 198; it is the same for him as if the productive force of his labour had increased to the point where the same objectified labour were contained in 200 thalers as before, but that 2 of these thalers had left the column of necessary outlays in his books and gone over into the column of surplus value, so that he would have paid 2 thalers less for necessary labour. The opposite could be the case only if the silver producer were able to re-sell for 200 thalers the 40 lb. of twist he bought at 198 thalers. Then he would have 202 thalers, and say he sold them to a manufacturer of silk who gave him silk to the value of 200 thalers in exchange for the 40 lb. of twist. The 40 lb. twist would then have been sold at their true value, although not first-hand by their producer, but rather second-hand, by their buyer, and the total accounts would look as follows: Exchanged, 3 products each containing objectified labour of a value of 200 thalers; hence sum of the values of the capitals: 600. The manufacturer of twist, A, the manufacturer of silver, B, the manufacturer of silk, C: A 198, B 202 (i.e. 2 extra from the first exchange and 200 in silk), C 200. Total 600. In this case the combined value of the capitals remained the same, and all that took place was a displacement, in that B pocketed as an extra the value-fraction which A lost. If A, the twist maker, could sell only 180 (the cost of the thing for him), and absolutely could not find a buyer for 20 twist, then objectified labour in the amount of 20 thalers would have become valueless. The same would be the case if he gave a value of 200 for 180 thalers; for B, the manufacturer of silver to the extent that this necessity had arisen for A owing to overproduction of twist, so that B, too, could not get rid of the value contained in the 40 lb. twist for more than 180 20 thalers of his capital would have been set free. He would have in hand a relative surplus value of 20 thalers, but in absolute values objectified labour time to the extent that it is exchangeable he would have only 200 as before that is, 40 lb. twist at 180 and 20 thalers liberated capital. It would be the same for him as if the production costs of twist had decreased, i.e. as if, owing to increased labour productivity, 40 lb. twist contained 20 thalers less labour time, or as if, with a working day = 4 thalers, 5 working days less were necessary in order to transform x lb. of cotton into 40 lb. twist; so that, then, he would have to exchange less labour time objectified in silver for the labour time objectified in twist. But the combined sum of the values on hand would be 380 instead of 400. Thus a general depreciation of 20 thalers would have taken place, or a destruction of capital to the amount of 20 thalers. A general devaluation thus takes place despite the fact that the depreciation of the twist manufacturer s 40 lb. twist from 200 to 180 necessarily appears as an appreciation on the part of silver, a depreciation of twist relative to silver; and a general depreciation of prices as such always includes an appreciation of money, i.e. of the commodity in which all the others are appraised. Thus, in a crisis a general depreciation of prices there occurs up to a certain moment a general devaluation or destruction of capital. The devaluation, like the depreciation, can be absolute and not merely relative, because value expresses not merely a relation between one commodity and another, as does price, but rather the relation between the price of the commodity and the labour objectified in it, or between one amount of objectified labour of the same quality and another. If these amounts are not equal, then devaluation takes place, which is not outweighed by appreciation on the other side, for the other side expresses a fixed amount of objectified labour which remains unchanged by exchange. In general crises, this devaluation extends even to living labour capacity itself. In consequence of what has been indicated above, the destruction of value and capital which takes place in a crisis coincides with or means the same thing as a general growth of the productive forces, which, however, takes place not by means of a real increase of the productive force of labour (the extent to which this happens in consequence of crises is beside the point here), but by means of a decrease of the existing value of raw materials, machines, labour capacity. For example. The cotton manufacturer loses capital on his products (e.g. twist), but he buys the same value of cotton, labour etc. at a lower price. It is the same for him as if the real value of labour, of cotton etc., had decreased, i.e. as if they had been produced more cheaply owing to an increase in the productive force of labour. In the same way, on the other hand, a sudden general increase in the forces of production would relatively devalue all the present values which labour objectifies at the lower stage of the productive forces, and hence would destroy present capital as well as present labouring capacity. The other side of the crisis resolves itself into a real decrease in production, in living labour in order to restore the correct relation between necessary and surplus labour, on which, in the last analysis, everything rests. (Thus it is by no means true, as Lord Overstone thinks as a true usurer that crises simply resolve themselves in enormous profits for the one, and tremendous losses for the other.) After capital, in the production process, (1) has realized itself, i.e. created a new value; (2) become devalued, i.e. made the transition from money to the form of a particular commodity, it (3) realizes itself together with its new value, in that the product is thrown into circulation again, and, as C, is exchanged for M. At the point where we stand now, where capital is being examined only in general, the real difficulties of this third process are present only as possibilities, and are therefore suspended, again as possibilities. Therefore, the product now posited as having been transformed back into money. Capital is thus now posited as money again, and money therefore posited in the new aspect of realized capital, not merely as realized price of the commodity. Or, the commodity realized in the price is now realized capital. We will examine this new aspect of money, or rather of capital as money, later. In accord with the initial nature of money, the only apparent feature by which capital when transformed into money may be measured is the new value which it has created; i.e. the first aspect of money as the general measure of commodities repeats itself; now as the measure of surplus value of the realization of capital. In the form of money, this realization appears as measured by itself; as being its own measure. The capital was originally 100 thalers; because it is now 110, the measure of its realization is posited in its own form as a proportion of the capital returned (returned to its money form) from the production process and from exchange, relative to the original capital; no longer as a relation between two unequal qualities objectified and living labour or necessary labour and surplus labour. When capital is posited as money, it is therefore posited in the first aspect of money, as measure of value. Here, however, this value is its own value, or the measure of its self, negation. We will return to this (under profit). The second form of money was that of the medium of circulation, and in this regard the money form of capital appeared as a mere vanishing moment for the purpose of exchanging it again, but not, as in the case of money as a medium of circulation in general, an exchange in return for commodities use values for final consumption, but rather an exchange in return for those particular use values in which it is able to begin its course as capital anew raw material and instrument on the one hand, living labour capacity on the other. In this role it is circulating capital, about which later. However, the end-product of money in its role as medium of circulation is the beginning of the act of production with posited capital as the point of departure, and this is the point which we will here examine before we go further. (In the first aspect, measure, the new value did appear as measured; but the difference merely formal; instead of surplus labour, money surplus labour objectified in a specific commodity. But the qualitative nature of this new value also undergoes a change i.e. the magnitude of the measure itself, to be examined only later. Secondly, as medium of circulation the disappearance of the money form is also merely formal. It only becomes essential after not only the first but also the second circular path has been completed. Thus initially it results only in our standing again at the beginning of the realization process. We therefore begin to take up the continuation at this point.) The third form of money, as independent value in a negative relation vis- -vis circulation, is capital which does not step out of the production process into exchange again to become money. Rather, it is capital which becomes a commodity and enters into circulation in the form of self-sufficient value [sich auf sich selbst beziehenden Werts]. This third form presupposes capital in the earlier forms and at the same time forms the transition from capital to the particular capitals, the real capitals; since now, in this last form, capital already in its very concept divides into two capitals with an independent existence. Along with the duality, plurality in general is then given. Such is the march of this development. <Before we go any further, just one remark. Capital in general, as distinct from the particular capitals, does indeed appear (1) only as an abstraction; not an arbitrary abstraction, but an abstraction which grasps the specific characteristics which distinguish capital from all other forms of wealth or modes in which (social) production develops. These are the aspects common to every capital as such, or which make every specific sum of values into capital. And the distinctions within this abstraction are likewise abstract particularities which characterize every kind of capital, in that it is their position [Position] or negation [Negation] (e.g. fixed capital or circulating capital); (2) however, capital in general, as distinct from the particular real capitals, is itself a real existence. This is recognized by ordinary economics, even if it is not understood, and forms a very important moment of its doctrine of equilibrations etc. For example, capital in this general form, although belonging to individual capitalists, in its elemental form as capital, forms the capital which accumulates in the banks or is distributed through them, and, as Ricardo says, so admirably distributes itself in accordance with the needs of production. Likewise, through loans etc., it forms a level between the different countries. If it is therefore e.g. a law of capital in general that, in order to realize itself, it must posit itself doubly, and must realize itself in this double form, then e.g. the capital of a particular nation which represents capital par excellence in antithesis to another will have to lend itself out to a third nation in order to be able to realize itself. This double positing, this relating to self as to an alien, becomes damn real in this case. While the general is therefore on the one hand only a mental [gedachte] mark of distinction [differentia specifica], it is at the same time a particular real form alongside the form of the particular and individual. (We will return later to this point, which, while having more of a logical than an economic character, will nevertheless have a great importance in the course of our inquiry. The same also in algebra. For example, a, b, c are numbers as such; in general; but then again they are whole numbers as opposed to a/b, b/c, c/b, c/a, b/a etc., which latter, however, presuppose the former as their general elements.>

Grundrisse 08

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch08.htm

Within the production process itself, surplus value, the surplus value procured through compulsion by capital, appeared as surplus labour, itself in the form of living labour, which, however, since it cannot create something out of nothing, finds its objective conditions laid out before it. Now this surplus labour appears in objectified form as surplus product, and, in order to realize itself as capital, this surplus product divides into a double form: as objective condition of labour material and instrument; as subjective consumption goods for the living labour now to be put to work. The general form as value objectified labour and objectified labour coming out of circulation is of course the general, self-evident presupposition. Further: the surplus product in its totality which objectifies surplus labour in its totality now appears as surplus capital (in contrast to the original capital, before it had undertaken this cycle), i.e. as independent exchange value, in which living labour capacity encounters its specific use value. All moments which confronted living labour capacity, and employed it as alien, external powers, and which consumed it under certain conditions independent of itself, are now posited as its own product and result. Firstly: surplus value or the surplus product are nothing but a specific sum of objectified living labour the sum of surplus labour. This new value which confronts living labour as independent, as engaged in exchange with it, as capital, is the product of labour. It is itself nothing other than the excess of labour as such above necessary labour in objective form and hence as value. Secondly: the particular forms which this value must adopt in order to realize itself anew, i.e. to posit itself as capital on one side as raw material and instrument, on the other as subsistence goods for labour during the act of production are likewise, therefore, only particular forms of surplus labour itself. Raw material and instrument are produced by it in such relations or, it is itself objectively posited in production as raw material and instrument in such a proportion that a given sum of necessary labour i.e. living labour which reproduces (the value of) the consumption goods can objectify itself in it, and objectify itself in it continuously, i.e. can always begin anew the diremption into the objective and subjective conditions of its self-preservation and self-reproduction. In addition to this, living labour, in the process of reproducing its objective conditions, has at the same time posited raw material and instrument in such proportions that it can realize itself in them as surplus labour, as labour beyond the necessary, and can hence make them into material for the creation of new values. The objective conditions of surplus labour which are restricted to the proportion of raw material and instrument beyond the requirements of necessary labour, whereas the objective conditions of necessary labour divide within their objectivity into objective and subjective, into objective moments of labour as well as subjective (consumption goods for living labour) therefore now appear, are therefore now posited, as the product, result, objective form, external existence of surplus labour itself. Originally, by contrast, the fact that instrument and necessaries were on hand in the amounts which made it possible for living labour to realize itself not only as necessary, but also as surplus labour this appeared alien to living labour itself, appeared as an act of capital. Thirdly: The independent, for-itself existence [F rsichsein] of value vis- -vis living labour capacity hence its existence as capital the objective, self-sufficient indifference, the alien quality [Fremdheit] of the objective conditions of labour vis- -vis living labour capacity, which goes so far that these conditions confront the person of the worker in the person of the capitalist as personification with its own will and interest this absolute divorce, separation of property, i.e. of the objective conditions of labour from living labour capacity that they confront him as alien property, as the reality of other juridical persons, as the absolute realm of their will and that labour therefore, on the other side, appears as alien labour opposed to the value personified in the capitalist, or the conditions of labour this absolute separation between property and labour, between living labour capacity and the conditions of its realization, between objectified and living labour, between value and value-creating activity hence also the alien quality of the content of labour for the worker himself this divorce now likewise appears as a product of labour itself, as objectification of its own moments. For, in the new act of production itself which merely confirmed the exchange between capital and living labour which preceded it surplus labour, and hence the surplus product, the total product of labour in general (of surplus labour as well as necessary labour), has now been posited as capital, as independent and indifferent towards living labour capacity, or as exchange value which confronts its mere use value. Labour capacity has appropriated for itself only the subjective conditions of necessary labour the means of subsistence for actively producing labour capacity, i.e. for its reproduction as mere labour capacity separated from the conditions of its realization and it has posited these conditions themselves as things, values, which confront it in an alien, commanding personification. The worker emerges not only not richer, but emerges rather poorer from the process than he entered. For not only has he produced the conditions of necessary labour as conditions belonging to capital; but also the value-creating possibility, the realization [Verwertung] which lies as a possibility within him, now likewise exists as surplus value, surplus product, in a word as capital, as master over living labour capacity, as value endowed with its own might and will, confronting him in his abstract, objectless, purely subjective poverty. He has produced not only the alien wealth and his own poverty, but also the relation of this wealth as independent, self-sufficient wealth, relative to himself as the poverty which this wealth consumes, and from which wealth thereby draws new vital spirits into itself, and realizes itself anew. All this arose from the act of exchange, in which he exchanged his living labour capacity for an amount of objectified labour, except that this objectified labour these external conditions of his being, and the independent externality [Ausserihmsein] (to him) of these objective conditions now appear as posited by himself, as his own product, as his own self-objectification as well as the objectification of himself as a power independent of himself, which moreover rules over him, rules over him through his own actions. In surplus capital, all moments are products of alien labour alien surplus labour transformed into capital; means of subsistence for necessary labour; the objective conditions material and instrument whereby necessary labour can reproduce the value exchanged for it in means of subsistence; finally the amount of material and instrument required so that new surplus labour can realize itself in them, or a new surplus value can be created. It no longer seems here, as it still did in the first examination of the production process, as if capital, for its part, brought with it any value whatever from circulation. Rather, the objective conditions of labour now appear as labour s product both to the extent that they are value in general, and as use values for production. But while capital thus appears as the product of labour, so does the product of labour likewise appear as capital no longer as a simple product, nor as an exchangeable commodity, but as capital; objectified labour as mastery, command over living labour. The product of labour appears as alien property, as a mode of existence confronting living labour as independent, as value in its being for itself; the product of labour, objectified labour, has been endowed by living labour with a soul of its own, and establishes itself opposite living labour as an alien power: both these situations are themselves the product of labour. Living labour therefore now appears from its own standpoint as acting within the production process in such a way that, as it realizes itself in the objective conditions, it simultaneously repulses this realization from itself as an alien reality, and hence posits itself as insubstantial, as mere penurious labour capacity in face of this reality alienated [entfremdet] from it, belonging not to it but to others; that it posits its own reality not as a being for it, but merely as a being for others, and hence also as mere other-being [Anderssein], or being of another opposite itself. This realization process is at the same time the de-realization process of labour. It posits itself objectively, but it posits this, its objectivity, as its own not-being or as the being of its not-being of capital. It returns back into itself as the mere possibility of value-creation or realization [Verwertung]; because the whole of real wealth, the world of real value and likewise the real conditions of its own realization [Verwirklichung] are posited opposite it as independent existences. As a consequence of the production process, the possibilities resting in living labour s own womb exist outside it as realities but as realities alien to it, which form wealth in opposition to it. In so far as the surplus product is realized anew as surplus capital, enters anew into the process of production and self-realization, it divides into (1) means of subsistence for the workers, to be exchanged for living labour capacity; let this part of capital be designated as labour fund; this labour fund, the part allotted for the maintenance of living labour capacity and for its progressive maintenance, since surplus capital constantly grows now likewise appears as the product of alien labour, labour alien to capital, as well as (2) its other component parts the material conditions for the reproduction of a value = to these means of subsistence + a surplus value. Further, if we consider this surplus capital, then the division of capital into a constant part raw material and instrument with an antediluvian existence before labour and a variable part, i.e. the necessary goods exchangeable for living labour capacity, appears as purely formal, in so far as both of them are equally posited by labour and are equally posited by it as its own presuppositions. Now, however, this internal division of capital appears in such a way that labour s own product objectified surplus labour splits into two component parts the objective conditions for new realization of labour (1), and a labour fund for maintaining the possibility of this living labour, i.e. of living labour capacity as alive (2), but in such a way that labour capacity can only re-appropriate that part of its own result of its own being in objective form which is designated as labour fund, can appropriate and extract this part from the form of the alien wealth which confronts it, only by reproducing not merely its own value, but by also realizing that part of the new capital which represents the objective conditions for the realization of new surplus labour and surplus production, or production of surplus values. Labour has itself created a new fund for the employment of new necessary labour, or, what is the same, a fund for the maintenance of new living labour capacities, of workers, but has created at the same time the condition that this fund can be employed only if new surplus labour is employed on the extra part of the surplus capital. Thus, the production by labour of this surplus capital surplus value is at the same time the creation of the real necessity of new surplus labour, and thus surplus capital is itself at the same time the real possibility both of new surplus labour and of new surplus capital. It here becomes evident that labour itself progressively extends and gives an ever wider and fuller existence to the objective world of wealth as a power alien to labour, so that, relative to the values created or to the real conditions of value-creation, the penurious subjectivity of living labour capacity forms an ever more glaring contrast. The greater the extent to which labour objectifies itself, the greater becomes the objective world of values, which stands opposite it as alien alien property. With the creation of surplus capital, labour places itself under the compulsion to create yet further surplus capital etc. etc. In regard to the original not-surplus capital, the relation has changed, as regards labour capacity, in so far as (1) the part of it which is exchanged for necessary labour has been reproduced by this labour itself, i.e. no longer comes to it out of circulation, but is its own product; and (2) that part of the value which, as raw material and instrument, represents the real conditions for the realization [Verwertung] of living labour, has been maintained by it itself in the production process; and, since every use value by its nature consists of transitory material, but since exchange value is present, exists, only in use value, therefore this maintenance = protection from decay and ruin, or negation of the transitory nature of the values owned by the capitalists; hence, this maintenance means to posit them as values for-themselves, as indestructible wealth. Hence, this original sum of values has been posited for the first time as capital in the production process, by living labour. But now let us think of this surplus capital as having been thrown back into the production process, as realizing its surplus value anew in exchange, and as appearing anew as new surplus capital at the beginning of a third production process. This, surplus capital II, has different presuppositions from surplus capital I. The presupposition of surplus capital I was the existence of values belonging to the capitalist and thrown by him into circulation, or, more exactly, into the exchange with living labour capacity. The presupposition of surplus capital II is nothing more than the existence of surplus capital I; i.e. in other words, the presupposition that the capitalist has already appropriated alien labour without exchange. This puts him into a position where he is able to begin the process again and again. True, in order to create surplus capital II, he had to exchange a part of the value of surplus capital I in the form of means of subsistence for living labour capacity, but the values he gave in that exchange were not values which he originally put into circulation out of his own funds; they were, rather, objectified alien labour which he appropriated without giving any equivalent whatever, and which he now re-exchanges for alien living labour; in the same way, moreover, as the material etc. in which this new labour realizes itself and in which it creates surplus value have come into his hands without exchange, by mere appropriation. The previous appropriation of alien labour now appears as the simple precondition for the new appropriation of alien labour; or, his ownership of alien labour in objective (material) form, in the form of existing values, appears as the condition of his ability to appropriate new alien living labour capacity, hence surplus labour, labour without equivalent. The fact that he has previously confronted living labour as capital appears as the only condition required in order that he may not only maintain himself as capital, but also, as a growing capital, increasingly appropriate alien labour without equivalent; or, that he may extend his power, his existence as capital opposite living labour capacity, and on the other side constantly posit living labour capacity anew in its subjective, insubstantial penury as living labour capacity. Property previous, or objectified, alien labour appears as the only condition for further appropriation of present or living alien labour. In so far as surplus capital I was created by means of a simple exchange between objectified labour and living labour capacity an exchange entirely based on the laws of the exchange of equivalents as measured by the quantity of labour or labour time contained in them and in so far as the legal expression of this exchange presupposed nothing other than everyone s right of property over his own products, and of free disposition over them but in so far as the relation of surplus capital II to I is therefore a consequence of this first relation we see that, by a peculiar logic, the right of property undergoes a dialectical inversion [dialektischer Umschlag], so that on the side of capital it becomes the right to an alien product, or the right of property over alien labour, the right to appropriate alien labour without an equivalent, and, on the side of labour capacity, it becomes the duty to relate to one s own labour or to one s own product as to alien property. The right of property is inverted, to become, on the one side, the right to appropriate alien labour, and, on the other, the duty of respecting the product of one s own labour, and one s own labour itself, as values belonging to others. The exchange of equivalents, however, which appeared as the original operation, an operation to which the right of property gave legal expression, has become turned round in such a way that the exchange by one side is now only illusory, since the part of capital which is exchanged for living labour capacity, firstly, is itself alien labour, appropriated without equivalent, and, secondly, has to be replaced with a surplus by living labour capacity, is thus in fact not consigned away, but merely changed from one form into another. The relation of exchange has thus dropped away entirely, or is a mere semblance. Furthermore, the right of property originally appeared to be based on one s own labour. Property now appears as the right to alien labour, and as the impossibility of labour appropriating its own product. The complete separation between property, and, even more so, wealth, and labour, now appears as a consequence of the law which began with their identity. Finally, the result of the process of production and realization is, above all, the reproduction and new production of the relation of capital and labour itself, of capitalist and worker. This social relation, production relation, appears in fact as an even more important result of the process than its material results. And more particularly, within this process the worker produces himself as labour capacity, as well as the capital confronting him, while at the same time the capitalist produces himself as capital as well as the living labour capacity confronting him. Each reproduces itself, by reproducing its other, its negation. The capitalist produces labour as alien; labour produces the product as alien. The capitalist produces the worker, and the worker the capitalist etc. Now, if we initially examine the relation such as it has become, value having become capital, and living labour confronting it as mere use value, so that living labour appears as a mere means to realize objectified, dead labour, to penetrate it with an animating soul while losing its own soul to it and having produced, as the end-product, alien wealth on one side and [, on the other,] the penury which is living labour capacity s sole possession then the matter is simply this, that the process itself, in and by itself, posits the real objective conditions of living labour (namely, material in which to realize itself, instrument with which to realize itself, and necessaries with which to stoke the flame of living labour capacity, to protect it from being extinguished, to supply its vital processes with the necessary fuels) and posits them as alien, independent existences or as the mode of existence of an alien person, as self-sufficient values for-themselves, and hence as values which form wealth alien to an isolated and subjective labour capacity, wealth of and for the capitalist. The objective conditions of living labour appear as separated, independent [verselbst ndigte] values opposite living labour capacity as subjective being, which therefore appears to them only as a value of another kind (not as value, but different from them, as use value). Once this separation is given, the production process can only produce it anew, reproduce it, and reproduce it on an expanded scale. How it does this, we have seen. The objective conditions of living labour capacity are presupposed as having an existence independent of it, as the objectivity of a subject distinct from living labour capacity and standing independently over against it; the reproduction and realization [Verwertung], i.e. the expansion of these objective conditions, is therefore at the same time their own reproduction and new production as the wealth of an alien subject indifferently and independently standing over against labour capacity. What is reproduced and produced anew [neuproduziert] is not only the presence of these objective conditions of living labour, but also their presence as independent values, i.e. values belonging to an alien subject, confronting this living labour capacity. The objective conditions of labour attain a subjective existence vis- -vis living labour capacity capital turns into capitalist; on the other side, the merely subjective presence of the labour capacity confronted by its own conditions gives it a merely indifferent, objective form as against them it is merely a value of a particular use value alongside the conditions of its own realization [Verwertung] as values of another use value. Instead of their being realized [realisiert] in the production process as the conditions of its realization [Verwirklichung], what happens is quite the opposite: it comes out of the process as mere condition for their realization [Verwertung] and preservation as values for-themselves opposite living labour capacity. The material on which it works is alien material; the instrument is likewise an alien instrument; its labour appears as a mere accessory to their substance and hence objectifies itself in things not belonging to it. Indeed, living labour itself appears as alien vis- -vis living labour capacity, whose labour it is, whose own life s expression [Lebens usserung] it is, for it has been surrendered to capital in exchange for objectified labour, for the product of labour itself. Labour capacity relates to its labour as to an alien, and if capital were willing to pay it without making it labour it would enter the bargain with pleasure. Thus labour capacity s own labour is as alien to it and it really is, as regards its direction etc. as are material and instrument. Which is why the product then appears to it as a combination of alien material, alien instrument and alien labour as alien property, and why, after production, it has become poorer by the life forces expended, but otherwise begins the drudgery anew, existing as a mere subjective labour capacity separated from the conditions of its life. The recognition [Erkennung] of the products as its own, and the judgement that its separation from the conditions of its realization is improper forcibly imposed is an enormous [advance in] awareness [Bewusstsein], itself the product of the mode of production resting on capital, and as much the knell to its doom as, with the slave s awareness that he cannot be the property of another, with his consciousness of himself as a person, the existence of slavery becomes a merely artificial, vegetative existence, and ceases to be able to prevail as the basis of production. However, if we consider the original relation, before the entry of money into the self-realization process, then various conditions appear which have to have arisen, or been given historically, for money to become capital and labour to become capital-positing, capital-creating labour, wage labour. (Wage labour, here, in the strict economic sense in which we use it here, and no other and we will later have to distinguish it from other forms of labour for day-wages etc. is capital-positing, capital-producing labour, i.e. living labour which produces both the objective conditions of its realization as an activity, as well as the objective moments of its being as labour capacity, and produces them as alien powers opposite itself, as values for-themselves, independent of it.) The essential conditions are themselves posited in the relation as it appears originally: (1) on the one side the presence of living labour capacity as a merely subjective existence, separated from the conditions of living labour as well as from the means of existence, the necessary goods, the means of self-preservation of living labour capacity; the living possibility of labour, on the one side, in this complete abstraction; (2) the value, or objectified labour, found on the other side, must be an accumulation of use values sufficiently large to furnish the objective conditions not only for the production of the products or values required to reproduce or maintain living labour capacity, but also for the absorption of surplus labour to supply the objective material for the latter; (3) a free exchange relation money circulation between both sides; between the extremes a relation founded on exchange values not on the master servant relation i.e., hence, production which does not directly furnish the producer with his necessaries, but which is mediated through exchange, and which cannot therefore usurp alien labour directly, but must buy it, exchange it, from the worker himself; finally (4) one side the side representing the objective conditions of labour in the form of independent values for-themselves must present itself as value, and must regard the positing of value, self-realization, money-making, as the ultimate purpose not direct consumption or the creation of use value. So long as both sides exchange their labour with one another in the form of objectified labour, the relation is impossible; it is likewise impossible if living labour capacity itself appears as the property of the other side, hence as not engaged in exchange. (The fact that slavery is possible at individual points within the bourgeois system of production does not contradict this. However, slavery is then possible there only because it does not exist at other points; and appears as an anomaly opposite the bourgeois system itself.) The conditions under which the relation appears at the origin, or which appear as the historic presuppositions of its becoming, reveal at first glance a two-sided character on one side, dissolution of lower forms of living labour; on the other, dissolution of happier forms of the same. The first presupposition, to begin with, is that the relation of slavery or serfdom has been suspended. Living labour capacity belongs to itself, and has disposition over the expenditure of its forces, through exchange. Both sides confront each other as persons. Formally, their relation has the equality and freedom of exchange as such. As far as concerns the legal relation, the fact that this form is a mere semblance, and a deceptive semblance, appears as an external matter. What the free worker sells is always nothing more than a specific, particular measure of force-expenditure [Kraft usserung]; labour capacity as a totality is greater than every particular expenditure. He sells the particular expenditure of force to a particular capitalist, whom he confronts as an independent individual. It is clear that this is not his relation to the existence of capital as capital, i.e. to the capitalist class. Nevertheless, in this way everything touching on the individual, real person leaves him a wide field of choice, of arbitrary will, and hence of formal freedom. In the slave relation, he belongs to the individual, particular owner, and is his labouring machine. As a totality of force-expenditure, as labour capacity, he is a thing [Sache] belonging to another, and hence does not relate as subject to his particular expenditure of force, nor to the act of living labour. In the serf relation he appears as a moment of property in land itself, is an appendage of the soil, exactly like draught-cattle. In the slave relation the worker is nothing but a living labour-machine, which therefore has a value for others, or rather is a value. The totality of the free worker s labour capacity appears to him as his property, as one of his moments, over which he, as subject, exercises domination, and which he maintains by expending it. This to he developed later under wage labour. The exchange of objectified labour for living labour does not yet constitute either capital on one side or wage labour on the other. The entire class of so-called services from the bootblack up to the king falls into this category. Likewise the free day-labourer, whom we encounter sporadically in all places where either the oriental community [Gemeinwesen] or the western commune [Gemeinde] consisting of free landowners dissolves into individual elements as a consequence of increase of population, release of prisoners of war, accidents by which the individual is impoverished and loses the objective conditions of his self-sustaining labour, owing to division of labour etc. If A exchanges a value or money, i.e. objectified labour, in order to obtain a service from B, i.e. living labour, then this can belong: (1) within the relation of simple circulation. Both in fact exchange only use values with one another; one exchanges necessaries, the other labour, a service which the other wants to consume, either directly personal service or he furnishes him the material etc. from which, with his labour, with the objectification of his labour, he makes a use value, a use value designed for A s consumption. For example, when the peasant takes a wandering tailor, of the kind that existed in times past, into his house, and gives him the material to make clothes with. Or if I give money to a doctor to patch up my health. What is important in these cases is the service which both do for one another. Do ut facias here appears on quite the same level as facio ut des, or do ut des. The man who takes the cloth I supplied to him and makes me an article of clothing out of it gives me a use value. But instead of giving it directly in objective form, he gives it in the form of activity. I give him a completed use value; he completes another for me. The difference between previous, objectified labour and living, present labour here appears as a merely formal difference between the different tenses of labour, at one time in the perfect and at another in the present. It appears in fact as a merely formal difference, a difference mediated by division of labour and by exchange, whether B himself produces the necessaries on which he has to subsist, or whether he obtains them from A and, instead of producing the necessaries himself, produces an article of clothing, in exchange for which he obtains them from A. In both cases he can take possession of the use value possessed by A only by giving him an equivalent for it; which, in the last analysis, always resolves itself into his own living labour, regardless of the objective form it may adopt, whether before the exchange is concluded, or as a consequence of it. Now, the article of clothing not only contains a specific, form-giving labour a specific form of usefulness imparted to the cloth by the movement of labour but it contains also a certain quantity of labour hence not only use value, but value generally, value as such. But this value does not exist for A, since he consumes the article, and is not a clothes-dealer. He has therefore bought the labour not as value-positing labour, but as an activity which creates utility, use value. In the case of personal services, this use value is consumed as such without making the transition from the form of movement [Bewegung] into the form of the object [Sache]. If, as is frequently the case in simple relations, the performer of the service does not obtain money, but direct use values themselves, then it no longer even seems as if value were being dealt in on one or the other side; merely use values. But even given that A pays money for the service, this is not a transformation of his money into capital, but rather the positing of his money as mere medium of circulation, in order to obtain an object for consumption, a specific use value. This act is for that reason not an act which produces wealth, but the opposite, one which consumes wealth. The point for A is not the objectification in the cloth of labour as such, of a certain amount of labour time, hence value, but rather the satisfaction of a certain need. Here A sees his money not realized but devalued in its transposition from the form of value into that of use value. Labour is here exchanged not as use value for value, but as itself a particular use value, as value for use. The more frequently A repeats the exchange, the poorer does he become. This exchange is not an act of wealth-getting for him, not an act of value creation, but of devaluation of the values he has in hand, in his possession. The money which A here exchanges for living labour service in kind, or service objectified in a thing is not capital but revenue, money as a medium of circulation in order to obtain use value, money in which the form of value is posited as merely vanishing, not money which will preserve and realize itself as such through the acquisition of labour. Exchange of money as revenue, as a mere medium of circulation, for living labour, can never posit money as capital, nor, therefore, labour as wage labour in the economic sense. A lengthy disquisition is not required to show that to consume (spend) money is not the same as to produce money. In situations in which the greatest part of surplus labour appears as agricultural labour, and where the owner of the land therefore appears as owner both of surplus labour and of the surplus product, it is the revenue of the owner of the land which forms the labour fund for the free worker, for the worker in manufactures (here, hand crafts) as opposed to the agricultural labourers. The exchange with them is a form of the consumption of the owner of the land he divides another part of his revenue directly for personal services, often only the illusion of services, with a heap of retainers. In Asiatic societies, where the monarch appears as the exclusive proprietor of the agricultural surplus product, whole cities arise, which are at bottom nothing more than wandering encampments, from the exchange of his revenue with the free hands , as Steuart calls them. There is nothing of wage labour in this relation, but it can stand in opposition to slavery and serfdom, though need not do so, for it always repeats itself under various forms of the overall organization of labour. To the extent that money mediates this exchange the determination of prices will become important on both sides, but it will do so for A only in so far as he does not want to pay too much for the use value of the labour; not in so far as he is concerned with its value. The essence of the relation remains unchanged even if this price, which begins as conventional and traditional, is thereafter increasingly determined economically, first by the relation of demand and supply, finally by the production costs at which the vendors themselves of these living services can be produced; nothing is essentially changed thereby, because the determination of prices remains a merely formal moment for the exchange of mere use values, as before. This determination itself, however, is created by other relations, by the general laws and the self-determination of the ruling mode of production, acting, as it were, behind the back of this particular act of exchange. One of the forms in which this kind of pay [Besoldung] first appears in the old communities is where an army is maintained. The pay [Sold] of the common soldier is also reduced to a minimum determined purely by the production costs necessary to procure him. But he exchanges the performance of his services not for capital, but for the revenue of the state. In bourgeois society itself, all exchange of personal services for revenue including labour for personal consumption, cooking, sewing etc., garden work etc., up to and including all of the unproductive classes, civil servants, physicians, lawyers, scholars etc. belongs under this rubric, within this category. All menial servants etc. By means of their services often coerced all these workers, from the least to the highest, obtain for themselves a share of the surplus product, of the capitalist s revenue. But it does not occur to anyone to think that by means of the exchange of his revenue for such services, i.e. through private consumption, the capitalist posits himself as capitalist. Rather, he thereby spends the fruits of his capital. It does not change the nature of the relation that the proportions in which revenue is exchanged for this kind of living labour are themselves determined by the general laws of production. As we have already mentioned in the section on money, it is here rather the performer of the service who actually posits value; who transposes a use value a certain kind of labour, service etc. into value, money. Hence in the Middle Ages, those who are oriented towards the production and accumulation of money proceed partly not from the side of the consuming landed nobility, but quite the opposite, from the side of living labour; they accumulate and thus become capitalists, , for a later period. The emancipated serf becomes, in part, the capitalist. It thus does not depend on the general relation, but rather on the natural, particular quality of the service performed, whether the recipient of payment receives it as day-wages, or as an honorarium, or as a sinecure and whether he appears as superior or inferior in rank to the person paying for the service. However, with the presupposition of capital as the dominant power, all these relations become more or less dishonoured. But this does not belong here yet this demystification [Entg tterung] of personal services, regardless of the lofty character with which tradition may have poetically endowed them. It is not, then, simply the exchange of objectified labour for living labour which appear, from this standpoint, as two different aspects, as use values in different forms, the one objective, the other subjective which constitutes capital and hence wage labour, but rather, the exchange of objectified labour as value, as self-sufficient value, for living labour as its use value, a use value not for a specific, particular use or consumption, but as use value for value. In the exchange of money for labour or service, with the aim of direct consumption, a real exchange always takes place; the fact that amounts of labour are exchanged on both sides is of merely formal interest for measuring the particular forms of the utility of labour by comparing them with each other. This concerns only the form of the exchange; but does not form its content. In the exchange of capital for labour, value is not a measure of the exchange of two use values, but is rather the content of the exchange itself. (2) In periods of the dissolution of pre-bourgeois relations, there sporadically occur free workers whose services are bought for purposes not of consumption, but of production; but, firstly, even if on a large scale, for the production only of direct use values, not of values; and secondly, if a nobleman e.g. brings the free worker together with his serfs, even if he re-sells a part of the worker s product, and the free worker thus creates value for him, then this exchange takes place only for the superfluous [product] and only for the sake of superfluity, for luxury consumption; is thus at bottom only a veiled purchase of alien labour for immediate consumption or as use value. Incidentally, wherever these free workers increase in number, and where this relation grows, there the old mode of production commune, patriarchal, feudal etc. is in the process of dissolution, and the elements of real wage labour are in preparation. But these free servants [Knechte] can also emerge, as e.g. in Poland etc., and vanish again, without a change in the mode of production taking place. <In order to express the relations into which capital and wage labour enter as property relations or laws, we need do no more than express the conduct of both sides in the realization process as an appropriation process. For example, the fact that surplus labour is posited as surplus value of capital means that the worker does not appropriate the product of his own labour; that it appears to him as alien property; inversely, that alien labour appears as the property of capital. This second law of bourgeois property, the inversion of the first which, through laws of inheritance etc., attains an existence independent of the accidental transitoriness of individual capitalists becomes just as established in law as the first. The first is the identity of labour with property; the second, labour as negated property, or property as negation of the alien quality of alien labour. In fact, in the production process of capital, as will be seen more closely in its further development, labour is a totality a combination of labours whose individual component parts are alien to one another, so that the overall process as a totality is not the work of the individual worker, and is furthermore the work of the different workers together only to the extent that they are [forcibly] combined, and do not [voluntarily] enter into combination with one another. The combination of this labour appears just as subservient to and led by an alien will and an alien intelligence having its animating unity elsewhere as its material unity appears subordinate to the objective unity of the machinery, of fixed capital, which, as animated monster, objectifies the scientific idea, and is in fact the coordinator, does not in any way relate to the individual worker as his instrument; but rather he himself exists as an animated individual punctuation mark; as its living isolated accessory. Thus, combined labour is combination in-itself in a double way; not combination as a mutual relation among the individuals working together, nor as their predominance either over their particular or individual function or over the instrument of labour. Hence, just as the worker relates to the product of his labour as an alien thing, so does he relate to the combination of labour as an alien combination, as well as to his own labour as an expression of his life, which, although it belongs to him, is alien to him and coerced from him, and which A. Smith etc. therefore conceives is a burden, sacrifice etc. Labour itself, like its product, is negated as the labour of the particular, isolated worker. This isolated labour, negated, is now indeed communal or combined labour, posited. The communal or combined labour posited in this way as activity and in the passive, objective form is however at the same time posited as an other towards the really existing individual labour as an alien objectivity (alien property) as well as an alien subjectivity (of capital). Capital thus represents both labour and its product as negated individualized labour and hence as the negated property of the individualized worker. Capital therefore is the existence of social labour the combination of labour as subject as well as object but this existence as itself existing independently opposite its real moments hence itself a particular existence apart from them. For its part, capital therefore appears as the predominant subject and owner of alien labour, and its relation is itself as complete a contradiction as is that of wage labour.> In both forms, the individuals relate not as workers but as proprietors and members of a community, who at the same time work. The aim of this work is not the creation of value although they may do surplus labour in order to obtain alien, i.e. surplus products in exchange rather, its aim is sustenance of the individual proprietor and of his family, as well as of the total community. The positing of the individual as a worker, in this nakedness, is itself a product of history. In the first form of this landed property, an initial, naturally arisen spontaneous [naturw chsiges] community appears as first presupposition. Family, and the family extended as a clan [Stamm], or through intermarriage between families, or combination of clans. Since we may assume that pastoralism, or more generally a migratory form of life, was the first form of the mode of existence, not that the clan settles in a specific site, but that it grazes off what it finds humankind is not settlement-prone by nature (except possibly in a natural environment so especially fertile that they sit like monkeys on a tree; else roaming like the animals) then the clan community, the natural community, appears not as a result of, but as a presupposition for the communal appropriation (temporary) and utilization of the land. When they finally do settle down, the extent to which this original community is modified will depend on various external, climatic, geographic, physical etc. conditions as well as on their particular natural predisposition their clan character. This naturally arisen clan community, or, if one will, pastoral society, is the first presupposition the communality [Gemeinschaftlichkeit] of blood, language, customs for the appropriation of the objective conditions of their life, and of their life s reproducing and objectifying activity (activity as herdsmen, hunters, tillers etc.). The earth is the great workshop, the arsenal which furnishes both means and material of labour, as well as the seat, the base of the community. They relate na vely to it as the property of the community, of the community producing and reproducing itself in living labour. Each individual conducts himself only as a link, as a member of this community as proprietor or possessor. The real appropriation through the labour process happens under these presuppositions, which are not themselves the product of labour, but appear as its natural or divine presuppositions. This form, with the same land-relation as its foundation, can realize itself in very different ways. E.g. it is not in the least a contradiction to it that, as in most of the Asiatic land-forms, the comprehensive unity standing above all these little communities appears as the higher proprietor or as the sole proprietor; the real communities hence only as hereditary possessors. Because the unity is the real proprietor and the real presupposition of communal property, it follows that this unity can appear as a particular entity above the many real particular communities, where the individual is then in fact propertyless, or, property i.e. the relation of the individual to the natural conditions of labour and of reproduction as belonging to him, as the objective, nature-given inorganic body of his subjectivity appears mediated for him through a cession by the total unity a unity realized in the form of the despot, the father of the many communities to the individual, through the mediation of the particular commune. The surplus product which is, incidentally, determined by law in consequence of the real appropriation through labour thereby automatically belongs to this highest unity. Amidst oriental despotism and the propertylessness which seems legally to exist there, this clan or communal property exists in fact as the foundation, created mostly by a combination of manufactures and agriculture within the small commune, which thus becomes altogether self-sustaining, and contains all the conditions of reproduction and surplus production within itself. A part of their surplus labour belongs to the higher community, which exists ultimately as a person, and this surplus labour takes the form of tribute etc., as well as of common labour for the exaltation of the unity, partly of the real despot, partly of the imagined clan-being, the god. Now, in so far as it actually realizes itself in labour, this kind of communal property can appear either in the form where the little communes vegetate independently alongside one another, and where, inside them, the individual with his family work independently on the lot assigned to them (a certain amount of labour for the communal reserves, insurance so to speak, and to meet the expenses of the community as such, i.e. for war, religion etc.; this is the first occurrence of the lordly dominium in the most original sense, e.g. in the Slavonic communes, in the Rumanian etc. Therein lies the transition to villeinage [Frondienst] etc.); or the unity may extend to the communality of labour itself, which may be a formal system, as in Mexico, Peru especially, among the early Celts, a few clans of India. The communality can, further, appear within the clan system more in a situation where the unity is represented in a chief of the clan-family, or as the relation of the patriarchs among one another. Depending on that, a more despotic or a more democratic form of this community system. The communal conditions of real appropriation through labour, aqueducts, very important among the Asiatic peoples; means of communication etc. then appear as the work of the higher unity of the despotic regime hovering over the little communes. Cities proper here form alongside these villages only at exceptionally good points for external trade; or where the head of the state and his satraps exchange their revenue (surplus product) for labour, spend it as labour-fund. The second form and like the first it has essential modifications brought about locally, historically etc. product of more active, historic life, of the fates and modifications of the original clans also assumes the community as its first presupposition, but not, as in the first case, as the substance of which the individuals are mere accidents, or of which they form purely natural component parts it presupposes as base not the countryside, but the town as an already created seat (centre) of the rural population (owners of land). The cultivated field here appears as a territorium belonging to the town; not the village as mere accessory to the land. The earth in itself regardless of the obstacles it may place in the way of working it, really appropriating it offers no resistance to [attempts to] relate to it as the inorganic nature of the living individual, as his workshop, as the means and object of labour and the means of life for the subject. The difficulties which the commune encounters can arise only from other communes, which have either previously occupied the land and soil, or which disturb the commune in its own occupation. War is therefore the great comprehensive task, the great communal labour which is required either to occupy the objective conditions of being there alive, or to protect and perpetuate the occupation. Hence the commune consisting of families initially organized in a warlike way as a system of war and army, and this is one of the conditions of its being there as proprietor. The concentration of residences in the town, basis of this bellicose organization. The clan system in itself leads to higher and lower ancestral lineages [Geschlechtern], a distinction which is still further developed through intermixture with subjugated clans etc. Communal property as state property, ager publicus here separated from private property. The property [Eigentum] of the individual is here not, unlike the first case, itself directly communal property; where it is, the individual has no property as distinct from the commune, but rather is merely its possessor [Besitzer]. The less it is the case that the individual s property can in fact be realized solely through communal labour thus e.g. the aqueducts in the Orient the more the purely naturally arisen, spontaneous character of the clan has been broken by historic movement, migration; the more, further, the clan removes itself from its original seat and occupies alien ground, hence enters into essentially new conditions of labour, and develops the energy of the individual more its common character appearing, necessarily, more as a negative unity towards the outside the more, therefore, are the conditions given under which the individual can become a private proprietor of land and soil of a particular plot whose particular cultivation falls to him and his family. The commune as state is, on one side, the relation of these free and equal private proprietors to one another, their bond against the outside, and is at the same time their safeguard. The commune here rests as much on the fact that its members consist of working landed proprietors, small-owning peasants, as the peasants independence rests on their mutual relations as commune members, on protection of the ager publicus for communal needs and communal glory etc. Membership in the commune remains the presupposition for the appropriation of land and soil, but, as a member of the commune, the individual is a private proprietor. He relates to his private property as land and soil, but at the same time as to his being as commune member; and his own sustenance as such is likewise the sustenance of the commune, and conversely etc. The commune, although already a product of history here, not only in fact but also known as such, and therefore possessing an origin, is the presupposition of property in land and soil i.e. of the relation of the working subject to the natural presuppositions of labour as belonging to him but this belonging [is] mediated by his being a member of the state, by the being of the state hence by a presupposition regarded as divine etc. Concentration in the town, with the land as territorium; small agriculture working for direct consumption; manufacture as domestic side occupation of wives and daughters (spinning and weaving) or, independently, in individual branches only (fabri etc.). The presupposition of the survival of the community is the preservation of equality among its free self-sustaining peasants, and their own labour as the condition of the survival of their property. They relate as proprietors to the natural conditions of labour; but these conditions must also constantly be posited as real conditions and objective elements of the personality of the individual, by means of personal labour. On the other side, the tendency of this small bellicose community system drives beyond these barriers etc. (Rome, Greece, Jews etc.). When the auguries , Niebuhr says, had assured Numa of the divine sanction of his election, the pious king s first concern was not worship at the temple, but a human one. He divided the lands which Romulus had won in war and given over to occupation: he endowed the order of Terminus. All the law-givers of antiquity, Moses above all, founded their success in commanding virtue, integrity and proper custom on landed property, or at least on secured, hereditary possession of land, for the greatest possible number of citizens. (Vol. I, 245, 2nd edition. R m. Gesch.) The individual is placed in such conditions of earning his living as to make not the acquiring of wealth his object, but self-sustenance, his own reproduction as a member of the community; the reproduction of himself as proprietor of the parcel of ground, and, in that quality, as a member of the commune. The survival of the commune is the reproduction of all of its members as self-sustaining peasants, whose surplus time belongs precisely to the commune, the work of war etc. The property in one s own labour is mediated by property in the condition of labour the hide of land, guaranteed in its turn by the existence of the commune, and that in turn by surplus labour in the form of military service etc. by the commune members. It is not cooperation in wealth-producing labour by means of which the commune member reproduces himself, but rather cooperation in labour for the communal interests (imaginary and real), for the upholding of the association inwardly and outwardly. Property is quiritorium, of the Roman variety; the private proprietor of land is such only as a Roman, but as a Roman he is a private proprietor of land. A[nother] form of the property of working individuals, self-sustaining members of the community, in the natural conditions of their labour, is the Germanic. Here the commune member is neither, as such, a co-possessor of the communal property, as in the specifically oriental form (wherever property exists only as communal property, there the individual member is as such only possessor of a particular part, hereditary or not, since any fraction of the property belongs to no member for himself, but to him only as immediate member of the commune, i.e. as in direct unity with it, not in distinction to it. This individual is thus only a possessor. What exists is only communal property, and only private possession. The mode of this possession in relation to the communal property may be historically, locally etc. modified in quite different ways, depending on whether labour itself is performed by the private possessor in isolation, or is in turn determined by the commune or by the unity hovering above the particular commune); nor is the situation such as obtains in the Roman, Greek form (in short, the form of classical antiquity) in this case, the land is occupied by the commune, Roman land; a part remains to the commune as such as distinct from the commune members, ager publicus in its various forms; the other part is divided up and each parcel of land is Roman by virtue of being the private property, the domain of a Roman, the part of the laboratorium belonging to him; but, also, he is a Roman only in so far as he possesses this sovereign right over a part of the Roman earth. <In antiquity, urban occupation and trade little esteemed, agriculture, however, highly; in the Middle Ages the contrary appraisal.> <The right of using the communal land through possession originally appertained to the patricians, who then granted it to their clients; the transfer of property out of the ager publicus appertained exclusively to the plebeians; all assignments in favour of the plebeians and compensation for a share of the communal property. Actual property in land, excepting the area around the city walls, originally only in the hands of the plebeians (rural communes included later.)> <Basis of the Roman plebs as a totality of agriculturists, as is indicated in their quiritary property. Antiquity unanimously esteemed agriculture as the proper occupation of the free man, the soldier s school. In it the ancestral stock of the nation sustains itself; it changes in the cities, where alien merchants and dealers settle, just as the indigenous move where gain entices them. Wherever there is slavery, the freedman seeks his support in such dealings, in which he then often gathers riches: thus these occupations were mostly in their hands in antiquity, and were therefore not proper for a citizen: hence the opinion that admission of the craftsmen to full citizenship rights would be a risky undertaking (among the earlier Greeks they were as a rule excluded). . Antiquity had no inkling of a privileged guild-system such as prevailed in the history of medieval cities; and already here the martial spirit declined as the guilds defeated the aristocratic lineages, and was finally extinguished altogether; and consequently, with it, the cities external respect and freedom.> <The clans of the ancient states were founded on two different principles, either on ancestry [Geschlecht] or on the locality. The ancestral clans preceded the locality clans in time and are almost everywhere pushed aside by the latter. Their most extreme, strictest form is the caste-order, in which one is separated from the other, without the right of intermarriage, quite different in [degree of] privilege; each with an exclusive, irrevocable occupation. The locality clans originally corresponded to a partition of the countryside into districts and villages; so that someone residing in a given village at the time of this partition, in Attica under Cleisthenes, was registered as a demotes (villager) of that village, and as a member of the phylon (tribe) of the village s region. Now, his descendants, as a rule, remained in the same phylon and the same demos without regard to their residence; whereby this partition also took on an ancestral appearance.> <These Roman gens not blood relatives; to the communal name, Cicero adds descent from free men as a sign. Communal sacra (shrines) for the Roman gentiles; later ceased (already in Cicero s time). Practice of co-gentile inheritance, in cases without dependents or will, survived longest of all. In the earliest periods, obligation of all members of the gens to help those of their own who require this, to carry unaccustomed burdens. (This occurs originally everywhere among the Germans, remains longest among the Dithmarschen.) The gentes, corporations [Innungen]. There was in the world of antiquity no more general institution than that of kin groups. Thus among the Gaels the noble Campbells and their vassals forming one clan.> Since the patrician represents the community in a higher degree, he is the possessor of the ager publicus and uses it through his clients etc. (and also appropriates it little by little). The Germanic commune is not concentrated in the town; by means of such a concentration the town as centre of rural life, residence of the agricultural workers, likewise the centre of warfare the commune as such would have a merely outward existence, distinct from that of the individual. The history of classical antiquity is the history of cities, but of cities founded on landed property and on agriculture; Asiatic history is a kind of indifferent unity of town and countryside (the really large cities must be regarded here merely as royal camps, as works of artifice [Superf tation] erected over the economic construction proper); the Middle Ages (Germanic period) begins with the land as the seat of history, whose further development then moves forward in the contradiction between town and countryside; the modern [age] is the urbanization of the countryside, not ruralization of the city as in antiquity. The main point here is this: In all these forms in which landed property and agriculture form the basis of the economic order, and where the economic aim is hence the production of use values, i.e. the reproduction of the individual within the specific relation to the commune in which he is its basis there is to be found: (1) Appropriation not through labour, but presupposed to labour; appropriation of the natural conditions of labour, of the earth as the original instrument of labour as well as its workshop and repository of raw materials. The individual relates simply to the objective conditions of labour as being his; [relates] to them as the inorganic nature of his subjectivity, in which the latter realizes itself; the chief objective condition of labour does not itself appear as a product of labour, but is already there as nature; on one side the living individual, on the other the earth, as the objective condition of his reproduction; (2) but this relation to land and soil, to the earth, as the property of the labouring individual who thus appears from the outset not merely as labouring individual, in this abstraction, but who has an objective mode of existence in his ownership of the land, an existence presupposed to his activity, and not merely as a result of it, a presupposition of his activity just like his skin, his sense organs, which of course he also reproduces and develops etc. in the life process, but which are nevertheless presuppositions of this process of his reproduction is instantly mediated by the naturally arisen, spontaneous, more or less historically developed and modified presence of the individual as member of a commune his naturally arisen presence as member of a tribe etc. An isolated individual could no more have property in land and soil than he could speak. He could, of course, live off it as substance, as do the animals. The relation to the earth as property is always mediated through the occupation of the land and soil, peacefully or violently, by the tribe, the commune, in some more or less naturally arisen or already historically developed form. The individual can never appear here in the dot-like isolation [Punktualit t] in which he appears as mere free worker. If the objective conditions of his labour are presupposed as belonging to him, then he himself is subjectively presupposed as member of a commune, through which his relation to land and soil is mediated. His relation to the objective conditions of labour is mediated through his presence as member of the commune; at the same time, the real presence of the commune is determined by the specific form of the individual s property in the objective conditions of labour. Whether this property mediated by commune-membership appears as communal property, where the individual is merely the possessor and there is no private property in land and soil or whether property appears in the double form of state and private property alongside one another, but so that the latter appears as posited by the former, so that only the citizen is and must be a private proprietor, while his property as citizen has a separate, particular existence at the same time or whether, finally, the communal property appears only as a complement to individual property, with the latter as the base, while the commune has no existence for-itself except in the assembly of the commune members, their coming-together for common purposes these different forms of the commune or tribe members relation to the tribe s land and soil to the earth where it has settled depend partly on the natural inclinations of the tribe, and partly on the economic conditions in which it relates as proprietor to the land and soil in reality, i.e. in which it appropriates its fruits through labour, and the latter will itself depend on climate, physical make-up of the land and soil, the physically determined mode of its exploitation, the relation with hostile tribes or neighbour tribes, and the modifications which migrations, historic experiences etc. introduce. The survival of the commune as such in the old mode requires the reproduction of its members in the presupposed objective conditions. Production itself, the advance of population (this too belongs with production), necessarily suspends these conditions little by little; destroys them instead of reproducing them etc., and, with that, the communal system declines and falls, together with the property relations on which it was based. The Asiatic form necessarily hangs on most tenaciously and for the longest time. This is due to its presupposition that the individual does not become independent vis- -vis the commune; that there is a self-sustaining circle of production, unity of agriculture and manufactures, etc. If the individual changes his relation to the commune, he thereby changes and acts destructively upon the commune; as on its economic presupposition; on the other side, the alteration of this economic presupposition brought about by its own dialectic impoverishment etc. In particular, the influence of warfare and of conquest, which e.g. in Rome belonged to the essential conditions of the commune itself, suspends the real bond on which it rests. In all these forms, the reproduction of presupposed relations more or less naturally arisen or historic as well, but become traditional of the individual to his commune, together with a specific, objective existence, predetermined for the individual, of his relations both to the conditions of labour and to his co-workers, fellow tribesmen etc. are the foundation of development, which is therefore from the outset restricted, but which signifies decay, decline and fall once this barrier is suspended. Thus among the Romans, the development of slavery, the concentration of land possession, exchange, the money system, conquest etc., although all these elements up to a certain point seemed compatible with the foundation, and in part appeared merely as innocent extensions of it, partly grew out of it as mere abuses. Great developments can take place here within a specific sphere. The individuals may appear great. But there can be no conception here of a free and full development either of the individual or of the society, since such development stands in contradiction to the original relation. Do we never find in antiquity an inquiry into which form of landed property etc. is the most productive, creates the greatest wealth? Wealth does not appear as the aim of production, although Cato may well investigate which manner of cultivating a field brings the greatest rewards, and Brutus may even lend out his money at the best rates of interest. The question is always which mode of property creates the best citizens. Wealth appears as an end in itself only among the few commercial peoples monopolists of the carrying trade who live in the pores of the ancient world, like the Jews in medieval society. Now, wealth is on one side a thing, realized in things, material products, which a human being confronts as subject; on the other side, as value, wealth is merely command over alien labour not with the aim of ruling, but with the aim of private consumption etc. It appears in all forms in the shape of a thing, be it an object or be it a relation mediated through the object, which is external and accidental to the individual. Thus the old view, in which the human being appears as the aim of production, regardless of his limited national, religious, political character, seems to be very lofty when contrasted to the modern world, where production appears as the aim of mankind and wealth as the aim of production. In fact, however, when the limited bourgeois form is stripped away, what is wealth other than the universality of individual needs, capacities, pleasures, productive forces etc., created through universal exchange? The full development of human mastery over the forces of nature, those of so-called nature as well as of humanity s own nature? The absolute working-out of his creative potentialities, with no presupposition other than the previous historic development, which makes this totality of development, i.e. the development of all human powers as such the end in itself, not as measured on a predetermined yardstick? Where he does not reproduce himself in one specificity, but produces his totality? Strives not to remain something he has become, but is in the absolute movement of becoming? In bourgeois economics and in the epoch of production to which it corresponds this complete working-out of the human content appears as a complete emptying-out, this universal objectification as total alienation, and the tearing-down of all limited, one-sided aims as sacrifice of the human end-in-itself to an entirely external end. This is why the childish world of antiquity appears on one side as loftier. On the other side, it really is loftier in all matters where closed shapes, forms and given limits are sought for. It is satisfaction from a limited standpoint; while the modern gives no satisfaction; or, where it appears satisfied with itself, it is vulgar. What Mr Proudhon calls the extra-economic origin of property, by which he understands just landed property, is the pre-bourgeois relation of the individual to the objective conditions of labour, and initially to the natural objective conditions of labour for, just as the working subject appears naturally as an individual, as natural being so does the first objective condition of his labour appear as nature, earth, as his inorganic body; he himself is not only the organic body, but also the subject of this inorganic nature. This condition is not his product but something he finds to hand presupposed to him as a natural being apart from him. Before we analyse this further, one more point: the worthy Proudhon would not only be able to, but would have to, accuse capital and wage labour as forms of property of having an extra-economic origin. For the encounter with the objective conditions of labour as separate from him, as capital from the worker s side, and the encounter with the worker as propertyless, as an abstract worker from the capitalist s side the exchange such as takes place between value and living labour, presupposes a historic process, no matter how much capital and labour themselves reproduce this relation and work out its objective scope, as well as its depth a historic process, which, as we saw, forms the history of the origins of capital and wage labour. In other words: the extra-economic origin of property means nothing else than the historic origin of the bourgeois economy, of the forms of production which are theoretically or ideally expressed by the categories of political economy. But the fact that pre-bourgeois history, and each of its phases, also has its own economy and an economic foundation for its movement, is at bottom only the tautology that human life has since time immemorial rested on production, and, in one way or another, on social production, whose relations we call, precisely, economic relations. The original conditions of production (or, what is the same, the reproduction of a growing number of human beings through the natural process between the sexes; for this reproduction, although it appears as appropriation of the objects by the subjects in one respect, appears in another respect also as formation, subjugation of the objects to a subjective purpose; their transformation into results and repositories of subjective activity) cannot themselves originally be products results of production. It is not the unity of living and active humanity with the natural, inorganic conditions of their metabolic exchange with nature, and hence their appropriation of nature, which requires explanation or is the result of a historic process, but rather the separation between these inorganic conditions of human existence and this active existence, a separation which is completely posited only in the relation of wage labour and capital. In the relations of slavery and serfdom this separation does not take place; rather, one part of society is treated by the other as itself merely an inorganic and natural condition of its own reproduction. The slave stands in no relation whatsoever to the objective conditions of his labour; rather, labour itself, both in the form of the slave and in that of the serf, is classified as an inorganic condition of production along with other natural beings, such as cattle, as an accessory of the earth. In other words: the original conditions of production appear as natural presuppositions, natural conditions of the producer s existence just as his living body, even though he reproduces and develops it, is originally not posited by himself, but appears as the presupposition of his self; his own (bodily) being is a natural presupposition, which he has not posited. These natural conditions of existence, to which he relates as to his own inorganic body, are themselves double: (1) of a subjective and (2) of an objective nature. He finds himself a member of a family, clan, tribe etc. which then, in a historic process of intermixture and antithesis with others, takes on a different shape; and, as such a member, he relates to a specific nature (say, here, still earth, land, soil) as his own inorganic being, as a condition of his production and reproduction. As a natural member of the community he participates in the communal property, and has a particular part of it as his possession; just as, were he a natural Roman citizen, he would have an ideal claim (at least) to the ager publicus and a real one to a certain number of iugera of land etc. His property, i.e. the relation to the natural presuppositions of his production as belonging to him, as his, is mediated by his being himself the natural member of a community. (The abstraction of a community, in which the members have nothing in common but language etc., and barely that much, is obviously the product of much later historical conditions.) As regards the individual, it is clear e.g. that he relates even to language itself as his own only as the natural member of a human community. Language as the product of an individual is an impossibility. But the same holds for property. Language itself is the product of a community, just as it is in another respect itself the presence [Dasein] of the community, a presence which goes without saying. <Communal production and common property as they exist e.g. in Peru are evidently a secondary form; introduced by and inherited from conquering tribes, who, at home, had common property and communal production in the older, simpler form such as is found in India and among the Slavs. Likewise the form which we find among the Celts in Wales e.g. appears as a transplanted, secondary form, introduced by conquerors among the lesser, conquered tribes. The completion and systematic elaboration of these systems by a supreme central authority shows their later origin. Just as the feudalism introduced into England was more perfect in form than that which arose spontaneously in France.> <Among nomadic pastoral tribes and all pastoral peoples are originally migratory the earth appears like other natural conditions, in its elemental limitlessness, e.g. in the Asiatic steppes and the high plateau. It is grazed etc., consumed by the herds, from which the pastoral peoples in turn live. They relate to it as their property, although they never stabilize this property. This is the case too with the hunting grounds of the wild Indian tribes in America; the tribe regards a certain region as its hunting domain, and asserts it by force against other tribes, or tries to drive others off the domains they assert. Among the nomadic pastoral peoples, the commune is indeed constantly united; the travelling society, the caravan, the horde, and the forms of supremacy and subordination develop out of the conditions of this mode of life. What is in fact appropriated and reproduced here is not the earth but the herd; but the earth is always used communally at each halting place.> The only barrier which the community can encounter in relating to the natural conditions of production the earth as to its own property (if we jump ahead to the settled peoples) is another community, which already claims it as its own inorganic body. Warfare is therefore one of the earliest occupations of each of these naturally arisen communities, both for the defence of their property and for obtaining new property. (We can indeed content ourselves here with speaking of land and soil as original property, for among the herding peoples property in natural products of the earth e.g. sheep is at the same time property in the pastures they wander through. In general, property in land and soil includes its organic products.) <If human beings themselves are conquered along with the land and soil as its organic accessories, then they are equally conquered as one of the conditions of production, and in this way arises slavery and serfdom, which soon corrupts and modifies the original forms of all communities, and then itself becomes their basis. The simple construction is thereby negatively determined.> Property thus originally means no more than a human being s relation to his natural conditions of production as belonging to him, as his, as presupposed along with his own being; relations to them as natural presuppositions of his self, which only form, so to speak, his extended body. He actually does not relate to his conditions of production, but rather has a double existence, both subjectively as he himself, and objectively in these natural non-organic conditions of his existence. The forms of these natural conditions of production are double: (1) his existence as a member of a community; hence the existence of this community, which in its original form is a clan system, a more or less modified clan system; (2) the relation to land and soil mediated by the community, as its own, as communal landed property, at the same time individual possession for the individual, or in such a way that only the fruits are divided, but the land itself and the labour remain common. (However, residences etc., even if only the Scythians wagons, always appear in individual possession.) A natural condition of production for the living individual is his belonging to a naturally arisen, spontaneous society, clan etc. This is e.g. already a condition for his language etc. His own productive existence is possible only on this condition. His subjective existence is thereby conditioned as such, just as it is conditioned by his relation to the earth as his workshop. (Property is, it is true, originally mobile, for mankind first seizes hold of the ready-made fruits of the earth, among whom belong e.g. the animals, and for him especially the ones that can be tamed. Nevertheless even this situation hunting, fishing, herding, gathering fruits from trees etc. always presupposes appropriation of the earth, whether for a fixed residence, or for roaming, or for animal pasture etc.) Property therefore means belonging to a clan (community) (having subjective-objective existence in it); and, by means of the relation of this community to the land and soil, [relating] to the earth as the individual s inorganic body; his relation to land and soil, to the external primary condition of production since the earth is raw material, instrument and fruit all in one as to a presupposition belonging to his individuality, as modes of his presence. We reduce this property to the relation to the conditions of production. Why not to consumption, since the production of the individual is originally restricted to the reproduction of his own body through the appropriation of ready objects prepared by nature itself for consumption? Even where the only task is to find and to discover, this soon requires exertion, labour as in hunting, fishing, herding and production (i.e. development) of certain capacities on the part of the subject. Then also, situations in which it is possible to seize hold of the things available without any instruments whatever (i.e. products of labour destined for production), without alteration of form (which already takes place for herding) etc., are themselves transitional and in no case to be regarded as normal; nor as normal original situations. The original conditions of production, incidentally, of course include substances consumable directly, without labour; thus the consumption fund appears as s component part of the original production fund. The fundamental condition of property resting on the clan system (into which the community originally resolves itself) to be a member of the clan makes the clan conquered by another clan propertyless and throws it among the inorganic conditions of the conqueror s reproduction, to which the conquering community relates as its own. Slavery and serfdom are thus only further developments of the form of property resting on the clan system. They necessarily modify all of the latter s forms. They can do this least of all in the Asiatic form. In the self-sustaining unity of manufacture and agriculture, on which this form rests, conquest is not so necessary a condition as where landed property, agriculture are exclusively predominant. On the other hand, since in this form the individual never becomes a proprietor but only a possessor, he is at bottom himself the property, the slave of him in whom the unity of the commune exists, and slavery here neither suspends the conditions of labour nor modifies the essential relation. It is now clear, further, that: Property, in so far as it is only the conscious relation and posited in regard to the individual by the community, and proclaimed and guaranteed as law to the conditions of production as his own, so that the producer s being appears also in the objective conditions belonging to him is only realized by production itself. The real appropriation takes place not in the mental but in the real, active relation to these conditions in their real positing as the conditions of his subjective activity. It is thereby also clear that these conditions change. Only when tribes hunt upon it does a region of the earth become a hunting domain; only cultivation of the soil posits the land as the individual s extended body. After the city of Rome had been built and the surrounding countryside cultivated by its citizens, the conditions of the community were different from what they had been before. The aim of all these communities is survival; i.e. reproduction of the individuals who compose it as proprietors, i.e. in the same objective mode of existence as forms the relation among the members and at the same time therefore the commune itself. This reproduction, however, is at the same time necessarily new production and destruction of the old form. For example, where each of the individuals is supposed to possess a given number of acres of land, the advance of population is already under way. If this is to be corrected, then colonization, and that in turn requires wars of conquest. With that, slaves etc. Also, e.g., enlargement of the ager publicus, and therewith the patricians who represent the community etc. Thus the preservation of the old community includes the destruction of the conditions on which it rests, turns into its opposite. If it were thought that productivity on the same land could be increased by developing the forces of production etc. (this precisely the slowest of all in traditional agriculture), then the new order would include combinations of labour, a large part of the day spent in agriculture etc., and thereby again suspend the old economic conditions of the community. Not only do the objective conditions change in the act of reproduction, e.g. the village becomes a town, the wilderness a cleared field etc., but the producers change, too, in that they bring out new qualities in themselves, develop themselves in production, transform themselves, develop new powers and ideas, new modes of intercourse, new needs and new language. The older and more traditional the mode of production itself and this lasts a long time in agriculture; even more in the oriental supplementation of agriculture with manufactures i.e. the longer the real process of appropriation remains constant, the more constant will be the old forms of property and hence the community generally. Where there is already a separation between the commune members as private proprietors [on one side,] and they themselves as the urban commune and proprietors of the commune s territorium [on the other], there the conditions already arise in which the individual can lose his property, i.e. the double relation which makes him both an equal citizen, a member of the community, and a proprietor. In the oriental form this loss is hardly possible, except by means of altogether external influences, since the individual member of the commune never enters into the relation of freedom towards it in which he could lose his (objective, economic) bond with it. He is rooted to the spot, ingrown. This also has to do with the combination of manufacture and agriculture, of town (village) and countryside. In classical antiquity, manufacture appears already as a corruption (business for freedmen, clients, aliens) etc. This development of productive labour (not bound in pure subordination to agriculture as a domestic task, labour by free men for agriculture or war only, or for religious observances, and manufactures for the community such as construction of houses, streets, temples), which necessarily develops through intercourse with aliens and slaves, through the desire to exchange the surplus product etc., dissolves the mode of production on which the community rests, and, with it, the objective individual, i.e. the individual defined as Roman, Greek, etc. Exchange acts in the same way; indebtedness etc. The original unity between a particular form of community (clan) and the corresponding property in nature, or relation to the objective conditions of production as a natural being, as an objective being of the individual mediated by the commune this unity, which appears in one respect as the particular form of property has its living reality in a specific mode of production itself, a mode which appears both as a relation between the individuals, and as their specific active relation to inorganic nature, a specific mode of working (which is always family labour, often communal labour). The community itself appears as the first great force of production; particular kinds of production conditions (e.g. stock-breeding, agriculture), develop particular modes of production and particular forces of production, subjective, appearing as qualities of individuals, as well as objective [ones]. In the last analysis, their community, as well as the property based on it, resolves itself into a specific stage in the development of the productive forces of working subjects to which correspond their specific relations amongst one another and towards nature. Until a certain point, reproduction. Then turns into dissolution. Property, then, originally means in its Asiatic, Slavonic, ancient classical, Germanic form the relation of the working (producing or self-reproducing) subject to the conditions of his production or reproduction as his own. It will therefore have different forms depending on the conditions of this production. Production itself aims at the reproduction of the producer within and together with these, his objective conditions of existence. This relation as proprietor not as a result but as a presupposition of labour, i.e. of production presupposes the individual defined as a member of a clan or community (whose property the individual himself is, up to a certain point). Slavery, bondage etc., where the worker himself appears among the natural conditions of production for a third individual or community (this is not the case e.g. with the general slavery of the Orient, only from the European point of view) i.e. property no longer the relation of the working individual to the objective conditions of labour is always secondary, derived, never original, although [it is] a necessary and logical result of property founded on the community and labour in the community. It is of course very simple to imagine that some powerful, physically dominant individual, after first having caught the animal, then catches humans in order to have them catch animals; in a word, uses human beings as another naturally occurring condition for his reproduction (whereby his own labour reduces itself to ruling) like any other natural creature. But such a notion is stupid correct as it may be from the standpoint of some particular given clan or commune because it proceeds from the development of isolated individuals. But human beings become individuals only through the process of history. He appears originally as a species-being [Gattungswesen], clan being, herd animal although in no way whatever as a in the political sense. Exchange itself is a chief means of this individuation [Vereinzelung]. It makes the herd-like existence superfluous and dissolves it. Soon the matter [has] turned in such a way that as an individual he relates himself only to himself, while the means with which he posits himself as individual have become the making of his generality and commonness. In this community, the objective being of the individual as proprietor, say proprietor of land, is presupposed, and presupposed moreover under certain conditions which chain him to the community, or rather form a link in his chain. In bourgeois society, the worker e.g. stands there purely without objectivity, subjectively; but the thing which stands opposite him has now become the true community [Gemeinwesen], which he tries to make a meal of, and which makes a meal of him. All forms (more or less naturally arisen, spontaneous, all at the same time however results of a historic process) in which the community presupposes its subjects in a specific objective unity with their conditions of production, or in which a specific subjective mode of being presupposes the communities themselves as conditions of production, necessarily correspond to a development of the forces of production which is only limited, and indeed limited in principle. The development of the forces of production dissolves these forms, and their dissolution is itself a development of the human productive forces. Labour begins with a certain foundation naturally arisen, spontaneous, at first then historic presupposition. Then, however, this foundation or presupposition is itself suspended, or posited as a vanishing presupposition which has become too confining for the unfolding of the progressing human pack. In so far as classical landed property reappears in modern small-parcel landownership, it itself belongs to political economy and we shall come to it in the section on landed property. (All this is to be returned to at greater depth and length.) What we are here concerned with is this: the relation of labour to capital, or to the objective conditions of labour as capital, presupposes a process of history which dissolves the various forms in which the worker is a proprietor, or in which the proprietor works. Thus above all (1) Dissolution of the relation to the earth land and soil as natural condition of production to which he relates as to his own inorganic being; the workshop of his forces, and the domain of his will. All forms in which this property appears presuppose a community, whose members, although there may be formal distinctions between them, are, as members of it, proprietors. The original form of this property is therefore itself direct common property (oriental form, modified in the Slavonic; developed to the point of antithesis, but still as the secret, if antithetical, foundation in classical and Germanic property). (2) Dissolution of the relations in which he appears as proprietor of the instrument. Just as the above form of landed property presupposes a real community, so does this property of the worker in the instrument presuppose a particular form of the development of manufactures, namely craft, artisan work; bound up with it, the guild-corporation system etc. (The manufacture system of the ancient Orient can be examined under (1) already.) Here labour itself still half artistic, half end-in-itself etc. Mastery. Capitalist himself still master-journeyman. Attainment of particular skill in the work also secures possession of instrument etc. etc. Inheritability then to a certain extent of the mode of work together with the organization of work and the instrument of work. Medieval cities. Labour still as his own; definite self-sufficient development of one-sided abilities etc. (3) Included in both is the fact that he has the means of consumption in his possession before production, which are necessary for him to live as producer i.e. during production, before its completion. As proprietor of land he appears as directly provided with the necessary consumption fund. As master in a craft he has inherited it, earned it, saved it up, and as a youth he is first an apprentice, where he does not appear as an actual independent worker at all, but shares the master s fare in a patriarchal way. As journeyman (a genuine one) there is a certain communality in the consumption fund possessed by the master. While it is not the journeyman s property either, still, through the laws of the guild, tradition etc., at least co-possession etc. (To be gone into further.) (4) Dissolution likewise at the same time of the relations in which the workers themselves, the living labour capacities themselves, still belong directly among the objective conditions of production, and are appropriated as such i.e. are slaves or serfs. For capital, the worker is not a condition of production, only work is. If it can make machines do it, or even water, air, so much the better. And it does not appropriate the worker, but his labour not directly, but mediated through exchange. These are, now, on one side, historic presuppositions needed before the worker can be found as a free worker, as objectless, purely subjective labour capacity confronting the objective conditions of production as his not-property, as alien property, as value for-itself, as capital. But the question arises, on the other side, which conditions are required so that he finds himself up against a capital? <The formula of capital, where living labour relates to the raw material as well as to the instrument and to the means of subsistence required during labour, as negatives, as not-property, includes, first of all, not-land-ownership, or, the negation of the situation in which the working individual relates to land and soil, to the earth, as his own, i.e. in which he works, produces, as proprietor of the land and soil. In the best case he relates not only as worker to the land and soil, but also as proprietor of the land and soil to himself as working subject. Ownership of land and soil potentially also includes ownership of the raw material, as well as of the primordial instrument, the earth itself, and of its spontaneous fruits. Posited in the most original form, it means relating to the earth as proprietor, and finding raw material and instrument on hand, as well as the necessaries of life created not by labour but by the earth itself. Once this relation is reproduced, secondary instruments and fruits of the earth created through labour itself appear as included with landed property in its primitive forms. This historic situation is thus first of all negated as a full property relation, in the worker s relation to the conditions of labour as capital. This is historic state No. I, which is negated in this relation or presupposed as historically dissolved. Secondly, however, where there is ownership of the instrument on the part of the worker, i.e. the worker relates to the instrument as his own, where the worker works as owner of the instrument (which at the same time presupposes the subsumption of the instrument under his individual work, i.e. a particular, limited developmental stage of the productive force of labour), where this form of the worker as owner or of the working owner is already posited as an independent form beside and apart from landed property the artisan-like and urban development of labour not, as in the first case, as accidental to landed property and subsumed under it hence where the raw material and the necessaries of life are also mediated as the craftsman s property, mediated through his craft work, through his property in the instrument there a second historical stage is already presupposed beside and apart from the first, which must itself already appear significantly modified, through the achievement of independence by this second sort of property or by working owners. Since the instrument itself is already the product of labour, thus the element which constitutes property already exists as posited by labour, the community can no longer appear here in a naturally arisen, spontaneous form as in the first case the community on which this form of property founded but rather as itself already a produced, made, derived and secondary community, produced by the worker himself. It is clear that wherever ownership of the instrument is the relation to the conditions of production as property, there, in the real labour process, the instrument appears only as a means of individual labour; the art of really appropriating the instrument, of handling it as an instrument of labour, appears as the worker s particular skill, which posits him as the owner of the instrument. In short, the essential character of the guild-corporation system, of craft work as its subject, constituted by owners can be resolved into the relation to the instrument of production the instrument of labour as property as distinct from the relation to the earth, to land and soil (to the raw material as such) as one s own. That the relation to this one moment of the conditions of production constitutes the working subject as owner, makes him into a working owner, this [is] historic situation No. II, which by its nature can exist only as antithesis to or, if one will, at the same time as complement of a modified form of the first likewise negated in the first formula of capital. The third possible form, in which the worker relates as owner only to the necessaries of life, finding them on hand as the natural condition of the working subject, without relating to the land and soil, or to the instrument, or even (therefore) to labour itself as his own, is at bottom the formula of slavery and bondage, which is likewise negated, posited as a historically dissolved condition, in the relation of the worker to the conditions of production as capital. The original forms of property necessarily dissolve into the relation to the different objective moments which condition production, as one s own; they form the economic foundation of different forms of community, just as they for their part have specific forms of the community as presupposition. These forms are essentially modified by the inclusion of labour itself among the objective conditions of production (serfdom and slavery), through which the simply affirmative character of all forms of property included under No. I is lost and modified. They all contain, within themselves, slavery as possibility and hence as their own suspension. As regards No. II, where the particular kind of work mastery of it, and, consequent upon that, an identity between property in the instrument and property in the conditions of production while it excludes slavery and bondage, can take on an analogous negative development in the form of the caste system.> <The third form, ownership of the necessaries of life if it does not reduce itself to slavery and serfdom cannot contain a relation by the working individual to the conditions of production and hence of existence; it can therefore only be the relation of a member of the original community based on land ownership who has lost his landed property and not yet proceeded to variety No. II of property, such as the Roman plebs at the time of the bread and circuses.> <The relation of personal servitude, or of the retainers to their lord, is essentially different. For it forms, at bottom, only a mode of existence of the land-proprietor himself, who no longer works, but whose property includes, among the other conditions of production, the workers themselves as bondsmen etc. Here the master servant relation [Herrschaftsverh ltnis] as essential element of appropriation. Basically the appropriation of animals, land etc. cannot take place in a master servant relation, although the animal provides service. The presupposition of the master servant relation is the appropriation of an alien will. Whatever has no will, e.g. the animal, may well provide a service, but does not thereby make its owner into a master. This much can be seen here, however, that the master servant relation likewise belongs in this formula of the appropriation of the instruments of production; and it forms a necessary ferment for the development and the decline and fall of all original relations of property and of production, just as it also expresses their limited nature. Still, it is reproduced in mediated form in capital, and thus likewise forms a ferment of its dissolution and is an emblem of its limitation.> < The power to sell one s self and one s own when in distress was a grievous general right; it prevailed in the North as well as among the Greeks and in Asia: the power of the creditor to take into servitude a debtor who could not make payment, and to obtain payment through sale of the debtor s labour or of his person, was almost equally widespread. (Niebuhr, I, p. 600.)> <In one passage Niebuhr says that the Greek writers writing in the period of Augustus had great difficulty with, and misunderstood, the relation between patricians and plebeians, confusing this relation with that between patrons and clients, because they write at a time when rich and poor were the only true classes of citizens; where the needy person, no matter how noble his ancestry, required a patron, and where the millionaire, even if he were a freed slave, was sought out as a patron. They could hardly find a trace of inherited dependency-relations any longer. (I, 620.)> < Craftsmen were to be found in both classes Metoikoi and freedmen and their descendants and the plebeian who abandoned agriculture assumed the limited civic rights to which these were restricted. They did not lack the privilege of legal corporations; and their guilds were so highly esteemed, that Numa was named as their founder: they were 9: pipers, gold-smiths, carpenters, dyers, harness makers, tanners, copper-smiths, potters, and the ninth guild, the miscellaneous remainder Those among them who were independent citizens; isopolites, who belonged to no patron if there was such a right; and descendants of servitors, whose bondage was dissolved by extinction of their patron s line; all these people without a doubt remained as distant from the wranglings of the patricians and the commune as did the Florentine guilds from the feuds of the Guelphs and the Ghibellines: the servitors probably still stood entirely under the command of the patricians. (I, 623.)> On one side, historic processes are presupposed which place a mass of individuals in a nation etc. in the position, if not at first of real free workers, nevertheless of such who are so , whose only property is their labour capacity and the possibility of exchanging it for values then present; individuals who confront all objective conditions of production as alien property, as their own not-property, but at the same time as values, as exchangeable, hence appropriable to a certain degree through living labour. Such historic processes of dissolution are also the dissolution of the bondage relations which fetter the worker to land and soil and to the lord of land and soil; but which factually presuppose his ownership of the necessaries of life this is in truth the process of his release from the earth; dissolution of the landed property relations, which constituted him as a yeoman, as a free, working small landowner or tenant (colonus), a free peasant; * dissolution of the guild relations which presuppose his ownership of the instrument of labour, and which presuppose labour itself as a craftsmanlike, specific skill, as property (not merely as the source of property); likewise dissolution of the client-relations in the various forms in which not-proprietors appear in the retinue of their lord as co-consumers of the surplus product and wear the livery of their master as an equivalent, participate in his feuds, perform personal services, imaginary or real etc. It will be seen on closer inspection that all these processes of dissolution mean the dissolution of relations of production in which: use value predominates, production for direct consumption; in which exchange value and its production presupposes the predominance of the other form; and hence that, in all these relations, payments in kind and services in kind predominate over payment in money and money-services. But this only by the way. It will likewise be found on closer observation that all the dissolved relations were possible only with a definite degree of development of the material (and hence also the intellectual) forces of production. What concerns us here for the moment is this: the process of dissolution, which transforms a mass of individuals of a nation etc. into free wage labourers individuals forced solely by their lack of property to labour and to sell their labour presupposes on the other side not that these individuals previous sources of income and in part conditions of property have disappeared, but the reverse, that only their utilization has become different, that their mode of existence has changed, has gone over into other hands as a free fund or has even in part remained in the same hands. But this much is clear: the same process which divorced a mass of individuals from their previous relations to the objective conditions of labour, relations which were, in one way or another, affirmative, negated these relations, and thereby transformed these individuals into free workers, this same process freed these objective conditions of labour land and soil, raw material, necessaries of life, instruments of labour, money or all of these from their previous state of attachment to the individuals now separated from them. They are still there on hand, but in another form; as a free fund, in which all political etc. relations are obliterated. The objective conditions of labour now confront these unbound, propertyless individuals only in the form of values, self-sufficient values. The same process which placed the mass face to face with the objective conditions of labour as free workers also placed these conditions, as capital, face to face with the free workers. The historic process was the divorce of elements which up until then were bound together; its result is therefore not that one of the elements disappears, but that each of them appears in a negative relation to the other the (potentially) free worker on the one side, capital (potentially) on the other. The separation of the objective conditions from the classes which have become transformed into free workers necessarily also appears at the same time as the achievement of independence by these same conditions at the opposite pole. If the relation of capital and wage labour is regarded not as already commanding and predominant over the whole of production, * but as arising historically i.e. if we regard the original transformation of money into capital, the process of exchange between capital, still only existing on one side and the free workers existing on the other then of course one cannot help making the simple observation, out of which the economists make a great show, that the side which appears as capital has to possess raw materials, instruments of labour and necessaries of life so that the worker can live during production, before production is completed. This further takes the form that there must have taken place on the part of the capitalist an accumulation an accumulation prior to labour and not sprung out of it which enables him to put the worker to work and to maintain his effectiveness, to maintain him as living labour capacity. This act by capital which is independent of labour, not posited by labour, is then shifted from the prehistory of capital into the present, into a moment of its reality and of its present activity, of its self-formation. From this is ultimately derived the eternal right of capital to the fruits of alien labour, or rather its mode of appropriation is developed out of the simple and just laws of equivalent exchange. Wealth present in the form of money can be exchanged for the objective conditions of labour only because and if these are separated from labour itself. We saw that money can be piled up in part by way of the sheer exchange of equivalents; but this forms so insignificant a source that it is not worth mentioning historically if it is presupposed that this money is gained through the exchange of one s own labour. The monetary wealth which becomes transformed into capital in the proper sense, into industrial capital, is rather the mobile wealth piled up through usury especially that practised against landed property and through mercantile profits. We shall have occasion below to speak further of both of these forms in so far as they appear not as themselves forms of capital, but as earlier forms of wealth, as presuppositions for capital. It is inherent in the concept of capital, as we have seen in its origin that it begins with money and hence with wealth existing in the form of money. It is likewise inherent in it that it appears as coming out of circulation, as the product of circulation. The formation of capital thus does not emerge from landed property (here at most from the tenant [P chter] in so far as he is a dealer in agricultural products); or from the guild (although there is a possibility at the last point); but rather from merchant s and usurer s wealth. But the latter encounter the conditions where free labour can be purchased only when this labour has been released from its objective conditions of existence through the process of history. Only then does it also encounter the possibility of buying these conditions themselves. Under guild conditions, e.g., mere money, if it is not itself guild money, masters money, cannot buy the looms to make people work with them; how many an individual may operate etc. is prescribed. In short, the instrument itself is still so intertwined with living labour, whose domain it appears, that it does not truly circulate. What enables money-wealth to become capital is the encounter, on one side, with free workers; and on the other side, with the necessaries and materials etc., which previously were in one way or another the property of the masses who have now become object-less, and are also free and purchasable. The other condition of labour, however a certain level of skill, instrument as means of labour etc. is already available to it in this preliminary or first period of capital, partly as a result of the urban guild system, partly as a result of domestic industry, or industry which is attached to agriculture as an accessory. This historic process is not the product of capital, but the presupposition for it. And it is through this process that the capitalist inserts himself as (historic) middle-man between landed property, or property generally, and labour. History knows nothing of the congenial fantasies according to which the capitalist and the workers form an association etc., nor is there a trace of them in the conceptual development of capital. Manufactures may develop sporadically, locally, in a framework which still belongs to a quite different period, as e.g. in the Italian cities alongside the guilds. But as the sole predominant forms of an epoch, the conditions for capital have to be developed not only locally but on a grand scale. (Notwithstanding this, individual guild masters may develop into capitalists with the dissolution of the guilds; but the case is rare, in the nature of the thing as well. As a rule, the whole guild system declines and falls, both master and journeyman, where the capitalist and the worker arise.) It goes without saying and shows itself if we go more deeply into the historic epoch under discussion here that in truth the period of the dissolution of the earlier modes of production and modes of the workers relation to the objective conditions of labour is at the same time a period in which monetary wealth on the one side has already developed to a certain extent, and on the other side grows and expands rapidly through the same circumstances as accelerate the above dissolution. It is itself one of the agencies of that dissolution, while at the same time that dissolution is the condition of its transformation into capital. But the mere presence of monetary wealth, and even the achievement of a kind of supremacy on its part, is in no way sufficient for this dissolution into capital to happen. Or else ancient Rome, Byzantium etc. would have ended their history with free labour and capital, or rather begun a new history. There, too, the dissolution of the old property relations was bound up with development of monetary wealth of trade etc. But instead of leading to industry, this dissolution led in fact to the supremacy of the countryside over the city. The original formation of capital does not happen, as is sometimes imagined, with capital heaping up necessaries of life and instruments of labour and raw materials, in short, the objective conditions of labour which have already been unbound from the soil and animated by human labour. * Capital does not create the objective conditions of labour. Rather, its original formation is that, through the historic process of the dissolution of the old mode of production, value existing as money-wealth is enabled, on one side, to buy the objective conditions of labour; on the other side, to exchange money for the living labour of the workers who have been set free. All these moments are present; their divorce is itself a historic process, a process of dissolution, and it is the latter which enables money to transform itself into capital. Money itself, to the extent that it also plays an active role, does so only in so far as it intervenes in this process as itself a highly energetic solvent, and to that extent assists in the creation of the plucked, object-less free workers; but certainly not by creating the objective conditions of their existence; rather by helping to speed up their separation from them their propertylessness. When e.g. the great English landowners dismissed their retainers, who had, together with them, consumed the surplus product of the land; when further their tenants chased off the smaller cottagers etc., then, firstly, a mass of living labour powers was thereby thrown onto the labour market, a mass which was free in a double sense, free from the old relations of clientship, bondage and servitude, and secondly free of all belongings and possessions, and of every objective, material form of being, free of all property; dependent on the sale of its labour capacity or on begging, vagabondage and robbery as its only source of income. It is a matter of historic record that they tried the latter first, but were driven off this road by gallows, stocks and whippings, onto the narrow path to the labour market; owing to this fact, the governments, e.g. of Henry VII, VIII etc. appear as conditions of the historic dissolution process and as makers of the conditions for the existence of capital. On the other side, the necessaries of life etc., which the landowners previously ate up together with their retainers, now stood at the disposal of any money which might wish to buy them in order to buy labour through their instrumentality. Money neither created nor stockpiled these necessaries; they were there and were consumed and reproduced before they were consumed and reproduced through its mediation. What had changed was simply this, that these necessaries were now thrown on to the exchange market were separated from their direct connection with the mouths of the retainers etc. and transformed from use values into exchange values, and thus fell into the domain and under the supremacy of money wealth. Likewise with the instruments of labour. Money wealth neither invented nor fabricated the spinning wheel and the loom. But, once unbound from their land and soil, spinner and weaver with their stools and wheels came under the command of money wealth. Capital proper does nothing but bring together the mass of hands and instruments which it finds on hand. It agglomerates them under its command. That is its real stockpiling; the stockpiling of workers, along with their instruments, at particular points. This will have to be dealt with more closely in the so-called stockpiling of capital. Monetary wealth as merchant wealth had admittedly helped to speed up and to dissolve the old relations of production, and made it possible for the proprietor of land for example, as A. Smith already nicely develops, to exchange his grain and cattle etc. for use values brought from afar, instead of squandering the use values he himself produced, along with his retainers, and to locate his wealth in great part in the mass of his co-consuming retainers. It gave the exchange value of his revenue a higher significance for him. The same thing took place in regard to his tenants, who were already semi-capitalists, but still very hemmed-in ones. The development of exchange value favoured by money existing in the form of the merchant estate dissolves production which is more oriented towards direct use value and its corresponding forms of property the relations of labour to its objective conditions and thus pushes forward towards the making of the labour market (certainly to be distinguished from the slave market). However, even this action of money is only possible given the presupposition of an urban artisanate resting not on capital but on the organization of labour in guilds etc. Urban labour itself had created means of production for which the guilds became just as confining as were the old relations of landownership to an improved agriculture, which was in part itself a consequence of the larger market for agricultural products in the cities etc. The other circumstances which e.g. in the sixteenth century increased the mass of circulating commodities as well as that of money, which created new needs and thereby raised the exchange value of indigenous products etc., raised prices etc., all of these promoted on one side the dissolution of the old relations of production, sped up the separation of the worker or non-worker but able-bodied individual from the objective conditions of his reproduction, and thus promoted the transformation of money into capital. There can therefore be nothing more ridiculous than to conceive this original formation of capital as if capital had stockpiled and created the objective conditions of production necessaries, raw materials, instrument and then offered them to the worker, who was bare of these possessions. Rather, monetary wealth in part helped to strip the labour powers of able-bodied individuals from these conditions; and in part this process of divorce proceeded without it. When the formation of capital had reached a certain level, monetary wealth could place itself as mediator between the objective conditions of life, thus liberated, and the liberated but also homeless and empty-handed labour powers, and buy the latter with the former. But now, as far as the formation of money-wealth itself is concerned, this belongs to the prehistory of the bourgeois economy. Usury, trade, urbanization and the treasury rising with it play the main roles here. So, too, hoarding by tenants, peasants etc.; although to a lesser degree. This shows at the same time that the development of exchange and of exchange value, which is everywhere mediated through trade, or whose mediation may be termed trade money achieves an independent existence in the merchant estate, as does circulation in trade brings with it both the dissolution of labour s relations of property in its conditions of existence, in one respect, and at the same time the dissolution of labour which is itself classed as one of the objective conditions of production; all these are relations which express a predominance of use value and of production directed towards use value, as well as of a real community which is itself still directly present as a presupposition of production. Production based on exchange value and the community based on the exchange of these exchange values even though they seem, as we saw in the previous chapter on money, to posit property as the outcome of labour alone, and to posit private property over the product of one s own labour as condition and labour as general condition of wealth, all presuppose and produce the separation of labour from its objective conditions. This exchange of equivalents proceeds; it is only the surface layer of a production which rests on the appropriation of alien labour without exchange, but with the semblance of exchange. This system of exchange rests on capital as its foundation, and, when it is regarded in isolation from capital, as it appears on the surface, as an independent system, then it is a mere illusion, but a necessary illusion. Thus there is no longer any ground for astonishment that the system of exchange values exchange of equivalents measured through labour turns into, or rather reveals as its hidden background, the appropriation of alien labour without exchange, complete separation of labour and property. For the domination of exchange value itself, and of exchange-value-producing production, presupposes alien labour capacity itself as an exchange value i.e. the separation of living labour capacity from its objective conditions; a relation to them or to its own objectivity as alien property; a relation to them, in a word, as capital. Only in the period of the decline and fall of the feudal system, but where it still struggles internally as in England in the fourteenth and first half of the fifteenth centuries is there a golden age for labour in the process of becoming emancipated. In order for labour to relate to its objective conditions as its property again, another system must take the place of the system of private exchange, which, as we saw, posits the exchange of objectified labour for labour capacity, and therefore the appropriation of living labour without exchange. The way in which money transforms itself into capital often shows itself quite tangibly in history; e.g. when the merchant induces a number of weavers and spinners, who until then wove and spun as a rural, secondary occupation, to work for him, making their secondary into their chief occupation; but then has them in his power and has brought them under his command as wage labourers. To draw them away from their home towns and to concentrate them in a place of work is a further step. In this simple process it is clear that the capitalist has prepared neither the raw material, nor the instrument, nor the means of subsistence for the weaver and the spinner. All that he has done is to restrict them little by little to one kind of work in which they become dependent on selling, on the buyer, the merchant, and ultimately produce only for and through him. He bought their labour originally only by buying their product; as soon as they restrict themselves to the production of this exchange value and thus must directly produce exchange values, must exchange their labour entirely for money in order to survive, then they come under his command, and at the end even the illusion that they sold him products disappears. He buys their labour and takes their property first in the form of the product, and soon after that the instrument as well, or he leaves it to them as sham property in order to reduce his own production costs. The original historic forms in which capital appears at first sporadically or locally, alongside the old modes of production, while exploding them little by little everywhere, is on one side manufacture proper (not yet the factory); this springs up where mass quantities are produced for export, for the external market i.e. on the basis of large-scale overland and maritime commerce, in its emporiums like the Italian cities, Constantinople, in the Flemish, Dutch cities, a few Spanish ones, such as Barcelona etc. Manufacture seizes hold initially not of the so-called urban trades, but of the rural secondary occupations, spinning and weaving, the two which least requires guild-level skills, technical training. Apart from these great emporiums, where the external market is its basis, where production is thus, so to speak, naturally oriented towards exchange value i.e. manufactures directly connected with shipping, shipbuilding itself etc. it takes up its first residence not in the cities, but on the land, in villages lacking guilds etc. The rural subsidiary occupations have the broad basis [characteristic] of manufactures, while the urban trades demand great progress in production before they can be conducted in factory style. Likewise certain branches of production such as glassworks, metal works, sawmills etc., which demand a higher concentration of labour powers from the outset, apply more natural energy from the outset, demand mass production, likewise concentration of the means of labour etc. Likewise paper mills. On the other side the rise of the tenant and the transformation of the agricultural population into free day-labourers. Although this transformation in the countryside is the last to push on towards its ultimate consequences and its purest form, its beginnings there are among the earliest. Classical antiquity, which could never get beyond the urban artisanate proper, could therefore never get to large industry. The first presupposition of the latter is to draw the land in all its expanse into the production not of use values but of exchange values. Glass factories, paper mills, iron works etc. cannot be operated on guild principles. They demand mass production; sales to a general market; monetary wealth on the part of their entrepreneur not that he creates the conditions, neither the subjective nor the objective ones; but under the old relations of property and of production these conditions cannot be brought together. The dissolution of relations of serfdom, like the rise of manufacture, then little by little transforms all branches of work into branches operated by capital. The cities themselves, it is true, also contain an element for the formation of wage labour proper, in the non-guild day-labourers, unskilled labourers etc. While, as we have seen, the transformation of money into capital presupposes a historic process which divorces the objective conditions of labour from the worker and makes them independent of him, it is at the same time the effect of capital and of its process, once arisen, to conquer all of production and to develop and complete the divorce between labour and property, between labour and the objective conditions of labour, everywhere. It will be seen in the course of the further development how capital destroys craft and artisan labour, working small-landownership etc., together with itself in forms in which it does not appear in opposition to labour in small capital and in the intermediate species, the species between the old modes of production (or their renewal on the foundation of capital) and the classical, adequate mode of production of capital itself. The only stockpiling presupposed at the origin of capital is that of monetary wealth, which, regarded in and for itself, is altogether unproductive, as it only springs up out of circulation and belongs exclusively to it. Capital rapidly forms an internal market for itself by destroying all rural secondary occupations, so that it spins, weaves for everyone, clothes everyone etc., in short, brings the commodities previously created as direct use values into the form of exchange values, a process which comes about by itself through the separation of the workers from land and soil and from property (even in the form of serf property) in the conditions of production. With the urban crafts, although they rest essentially on exchange and on the creation of exchange values, the direct and chief aim of this production is subsistence as craftsmen, as master-journeymen, hence use value; not wealth, not exchange value as exchange value. Production is therefore always subordinated to a given consumption, supply to demand, and expands only slowly. The production of capitalists and wage labourers is thus a chief product of capital s realization process. Ordinary economics, which looks only at the things produced, forgets this completely. When objectified labour is, in this process, at the same time posited as the worker s non-objectivity, as the objectivity of a subjectivity antithetical to the worker, as property of a will alien to him, then capital is necessarily at the same time the capitalist, and the idea held by some socialists that we need capital but not the capitalists is altogether wrong. It is posited within the concept of capital that the objective conditions of labour and these are its own product take on a personality towards it, or, what is the same, that they are posited as the property of a personality alien to the worker. The concept of capital contains the capitalist. Still, this error is in no way greater than that of e.g. all philologists who speak of capital in antiquity, of Roman, Greek capitalists. This is only another way of expressing that labour in Rome and Greece was free, which these gentlemen would hardly wish to assert. The fact that we now not only call the plantation owners in America capitalists, but that they are capitalists, is based on their existence as anomalies within a world market based on free labour. If the concern is the word, capital, which does not occur in antiquity * then the still migrating hordes with their herds on the Asiatic high plateau are the biggest capitalists, since capital originally means cattle, which is why the m tairie contract still frequently drawn up in southern France, for lack of capital, just as an exception, is called: Bail de bestes cheptel. If one wants to descend to bad Latin, then our capitalists or Capitales Homines would be those qui debent censum de capite . The conceptual specification of capital encounters difficulties which do not occur with money; capital is essentially capitalist; but at the same time again as an element of his existence distinct from him, or production in general, capital. We shall likewise find later that many things are subsumed under capital which do not seem to belong within it conceptually. E.g. capital is lent out. It is stockpiled etc. In all these designations it appears to be a mere thing, and to coincide entirely with the matter in which it is present. But this and other questions will be cleared up in the course of the development. (Noted incidentally as a joke: the good Adam M ller, who takes all figurative ways of speaking as very mystical, has also heard of living capital in ordinary life as opposed to dead capital, and now rationalizes this theosophically. King Aethelstan could teach him a lesson here: Reddam de meo proprio decimas Deo tam in Vivente Capitale (livestock), quam in mortis fructuis terrae (dead fruits of the earth).) Money always remains the same form in the same substratum; and can thus be more easily conceived as a mere thing. But one and the same commodity, money etc., can represent capital or revenue etc. Thus it is clear even to the economists that money is not something tangible; but that one and the same thing can be subsumed sometimes under the title capital, sometimes under another and contrary one, and correspondingly is or is not capital. It is then evident that it is a relation, and can only be a relation of production. We have seen that the true nature of capital emerges only at the end of the second cycle. What we have to examine now is this cycle itself, or the circulation of capital. Production originally appeared to lie beyond circulation, and circulation beyond production. The circulation of capital circulation posited as the circulation of capital spans both moments. Production appears in it as the conclusion and the point of departure of circulation, and vice versa. The independence of circulation is here reduced to a mere semblance, as is the otherworldliness of production.

Grundrisse 09

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch09.htm

(It will be shown later that the most extreme form of alienation, wherein labour appears in the relation of capital and wage labour, and labour, productive activity appears in relation to its own conditions and its own product, is a necessary point of transition and therefore already contains in itself, in a still only inverted form, turned on its head, the dissolution of all limited presuppositions of production, and moreover creates and produces the unconditional presuppositions of production, and therewith the full material conditions for the total, universal development of the productive forces of the individual.) <We saw how at the end of the second cycle, i.e. the second cycle of surplus value which has been realized as surplus capital, the illusion disappears that the capitalist exchanges anything at all with the worker other than a part of the latter s own objectified labour. However, within the mode of production already founded on capital, the part of capital which represents raw materials and instrument appears to the individual capital as a value presupposed to it and likewise presupposed to the living labour which it buys. These two headings turn out to have been posited by alien capital, hence again by capital, but another one. One capitalist s raw material is another s product. One s product is the other s raw material. One capitalist s instrument is another s product, and may even serve as raw material for the production of another instrument. Thus, what we called the constant value which appeared as a presupposition in the case of the individual capital is nothing but the presupposition of capital by capital, i.e. the fact that the different capitals in the different branches of industry posit one another reciprocally as presupposition and condition. Each of them regarded for itself can be resolved into dead labour which, as value, has become independent vis- -vis living labour. None of them in the last analysis contains anything other than labour apart from the natural material from which value is absent. The introduction of many capitals must not interfere with the investigation here. The relation of the many will, rather, be explained after what they all have in common, the quality of being capital, has been examined.> The circulation of capital is at the same time its becoming, its growth, its vital process. If anything needed to be compared with the circulation of the blood, it was not the formal circulation of money, but the content-filled circulation of capital. Since circulation presupposes production at all points and is the circulation of products, whether money or commodity, while the latter always arise from the production process, which is itself the process of capital it follows that the circulation of money itself now appears as determined by the circulation of capital, whereas previously it seemed to run side by side with the production process. We shall return to this point. If we now consider circulation, or the circulation of capital as a whole, then the great distinction within it appears to be that between the production process and circulation itself, both as moments of its circulation. How long capital remains within the sphere of the production process depends on the latter s technological conditions, and the time it spends in this phase directly coincides even though the duration is necessarily different depending on the type of production, its object etc. with the development of the productive forces. The duration is here nothing but the labour time necessary for the making of the product (false!). The smaller this labour time, the greater, as we have seen, the relative surplus value. If less labour time is required to make a given quantity of products, it is the same thing as if more finished products can be supplied in a given amount of labour time. The abbreviation of the time during which a given amount of capital remains within the production process and is withdrawn from circulation, embarked , coincides with the abbreviation of the labour time required to make the product [therefore coincides] with the development of the forces of production, the utilization of the forces of nature, of machinery, and of the natural powers of social labour the agglomeration of the workers, the combination and division of labour. Thus no new moment seems to enter in from this side. However, when it is recalled that, as far as the individual capital is concerned, the part of it which constitutes raw material and instrument (means of labour) is itself the product of an alien capital, then it may be seen that the speed with which it can repeat the production process anew is at the same time determined by the development of the productive forces in all other branches of industry. This becomes quite clear if one supposes the same capital to produce its own raw materials, instruments and final products. The length of time during which capital remains in the phase of the production process becomes itself a moment of circulation, if we presuppose various capitals. But we are not yet concerned with many capitals here. This moment therefore does not belong here. The second moment is the space of time running from the completed transformation of capital into the product until when it becomes transformed into money. The frequency with which capital can repeat the production process, self-realization, in a given amount of time, evidently depends on the speed with which this space of time is run through, or on its duration. If a capital say originally a capital of 100 thalers turns over 4 times in one year; let the gain be 5% of itself each time, if the new value is not capitalized; this is the same as if a capital 4 times as large, say 400, at the same percentage, were to turn over once in one year; each time 20%. The velocity of turnover therefore the remaining conditions of production being held constant substitutes for the volume of capital. Or, if a value 4 times smaller realizes itself as capital 4 times in the same period in which a 4 times greater value realizes itself as capital only once, then the smaller capital s gain production of surplus value is at least as great as the larger s. We say at least. It can be greater, because the surplus value can itself again be employed as surplus capital. For example, assume that a capital of 100 has a profit (here anticipating this form of surplus value for the calculation s sake) of 10% each time, no matter how often it turns over. Then, at the end of the first 3 months, it would be 110, at the end of the second 121, at the end of the third 133 1/10, and at the end of the last turnover 146 41/100, while a capital of 400 with one annual turnover would be only 440. In the first case the gain = 46 41/100, in the second only = 40. (The fact that the presupposition is wrong, in as much as capital does not bring the same rate of profit with each increase in its size, is beside the point as far as the example is concerned, for the issue here is not how much more than 40 it brings, but the very fact that in the first case it does and it does bring in more than 40.) We have already encountered the law of the substitution of velocity for mass, and mass for velocity, in money circulation. It holds in production just as in mechanics. It is a circumstance to return to when we consider the equalization of the rate of profit, price etc. The question which interests us here is this: Does not a moment of value-determination enter in independently of labour, not arising directly from it, but originating in circulation itself? <The fact that credit equalizes the differences in capital turnover does not belong here yet. But the question itself belongs here, because it arises out of the simple concept of capital regarded in general.> The more frequent turnover of capital in a given period of time resembles the more frequent harvests during the natural year in the southerly countries compared with the northerly. As already stated above, we here abstract entirely from the different amounts of time which capital must spend in the phase of production in the productive realization process itself. Just as grain when it is put in the soil as seed loses its immediate use value, is devalued as immediate use value, so is capital devalued from the completion of the production process until its retransformation into money and from there into capital again. <This velocity with which it can transpose itself from the form of money back into the conditions of production unlike in slavery, it is not the worker himself who appears among these conditions of production, but rather the exchange with him depends on the production speed and continuity of the remaining capitals, which supply him with raw material and instrument, as well as on the availability of workers, and in this last respect a relative surplus population is the best condition for capital.> <Quite apart from capital A s production process, the speed and continuity of production process B appears as a moment which conditions the retransformation of capital A from the form of money into the form of industrial capital. The duration of the production process of capital B thus appears as a moment in the velocity of the circulation process of capital A. The duration of one capital s production phase determines the velocity of the other s circulation phase. Their simultaneity is a condition required so that A s circulation is not obstructed the fact that its own elements, for which it has to exchange and be exchanged, are thrown into production and circulation simultaneously. For example. In the final third of the eighteenth century, the hand-spinning system was incapable of supplying the required amounts of raw material for weaving or, what is the same spinning could not put the flax or cotton through its production process with the required simultaneity simultaneous velocity. The consequence was the invention of the spinning machine, which supplied a greater product in the same labour time, or, what is the same thing, required less labour time for the same product less time delay in the spinning process. All moments of capital which appear involved in it when it is considered from the point of view of its general concept obtain an independent reality, and, further, only show themselves when it appears as real, as many capitals. The inner, living organization, which takes place in this way within and through competition, thus develops all the more extensively.> If we examine the entire turnover of capital, then four moments appear, or, each of the two great moments of the production process and the circulation process appears again in a duality: we can take either circulation or production as the point of departure here. This much has now been said, that circulation is itself a moment of production, since capital becomes capital only through circulation; production is a moment of circulation only in so far as the latter is itself regarded as the totality of the production process. The moments are: (I) The real production process and its duration. (II) Transformation of the product into money. Duration of this operation. (III) Transformation of the money in the proper proportions into raw material, means of labour and labour, in short, into the elements of productive capital. (IV) The exchange of a part of the capital for living labour capacity can be regarded as a particular moment, and must be so regarded, since the labour market is ruled by other laws than the product market etc. Here population is the main thing, not in absolute but in relative terms. Moment I does not come into consideration here, as stated, since it coincides with the conditions of realization generally. Moment III can be considered only when the theme is not capital generally, but many capitals. Moment IV belongs in the section on wages etc. We are concerned here only with Moment II. In money circulation there was a merely formal alternation of exchange value as money and as commodity. Here money, commodity, are conditions of production, ultimately of the production process. The moments here are different; they are filled with content. The differences in capital turnover as posited in II since it depends neither on greater difficulty in the exchange with labour, nor on delays resulting from the fact that raw material [Rohstoff] and raw material [Rohmaterial] are not present simultaneously in circulation, nor in the different durations of the production process could therefore arise only from increased difficulties in realization. This is obviously not an immanent case arising from the relation itself, but rather coincides here, where we are examining capital in general, with what we have said about the way in which realization simultaneously results in devaluation. No business will be founded on the principle that it can sell its products with greater difficulty than another. If this resulted from the smaller size of the market, then not a larger as presupposed but a smaller capital would be employed there than in the business with a larger market. It could be connected, however, with the greater distance of the market in space and hence the delayed return. The longer time required by capital A to realize itself would be due here to the greater spatial distance it has to travel after the production process in order to exchange as C for M. But cannot e.g. the product produced for China be regarded in such a way that the product is completed, its production process completed, only when it has reached the Chinese market? Its realization costs would rise by the costs of transport from England to China. (We cannot yet speak about the compensation for the longer fallow period of capital here, because the secondary and derived forms of surplus value interest would already have to have been presupposed.) The costs of production would resolve into the labour time objectified in the direct production process + the labour time contained in transport. Now the question is initially this: Given the basic principles we have so far asserted, can a surplus value be extracted from the transport costs? Let us deduct the constant part of the capital consumed in transport, ship, vehicle etc. and everything which falls under the heading of their application, since this element contributes nothing to the question, and it is irrelevant whether this is posited as = 0 or = x. Is it possible, then, that there is surplus labour in these transport costs, and that capital can therefore squeeze a surplus value out of them? The question is simple to answer if we ask a further question, where and which is the necessary labour or the value in which it objectifies itself? The product must pay (1) its own exchange value, the labour objectified in itself; (2) the surplus time, which the shipper, carter etc. employs on its transportation. Whether he can or cannot extract the surplus value depends on the wealth of the country into which he brings the product and on its needs etc., on the use value of the product for this land. In direct production, it is clear that all the surplus labour which the manufacturer makes the worker do is surplus value for him, in that it is labour objectified in new use values, which costs him nothing. But he can obviously not employ him during transport for a longer time than is required for the transporting. Otherwise he would throw labour time away instead of realizing it, i.e. he would not objectify it in a use value. If the sailor, the carter etc. require only half a year of labour time to live a full year (if this is generally the proportion of labour necessary for subsistence), then the capitalist employs him for a whole year and pays him a half. By adding a whole year s labour time to the value of the transported products, but paying only 1/2, he gains a surplus value of 100% on necessary labour. The case is entirely the same as indirect production, and the original surplus value of the transported product can come about only because the workers are not paid for a part of the transportation time, because it is surplus time, time over and above the labour necessary for them to live. That an individual product might be made so much more expensive, owing to the transport costs, that it could not be sold on account of the disproportion between the value of the product and its surplus value as a transported product, a quality which becomes extinguished in it as soon as it has arrived at its destination does not affect the matter. If a manufacturer were to set his entire machinery into motion in order to spin 1 lb. of twist, then the value of this lb. would likewise rise so that it would hardly find a market. The rise in the prices of imported products, as well as the smaller consumption of them in the Middle Ages etc., stem precisely from this cause. Whether I extract metals from mines, or take commodities to the site of their consumption, both movements are equally spatial. The improvement of the means of transport and communication likewise falls into the category of the development of the productive forces generally. The fact that it can depend on the value of the products whether or not they are able to bear transport costs; that, further, commercial traffic in mass quantities is required to reduce transport costs a ship with a loading capacity of 100 tons can carry 2 or 100 tons with the same transport costs etc. and in order to make means of communication pay etc., all this does not belong here. (Nevertheless, it will be necessary to devote a special section to the means of communication, since they make up a form of fixed capital which has its own laws of realization.) If one imagines the same capital both producing and transporting, then both acts fall within direct production, and circulation as we have considered it so far, i.e. transformation into money as soon as the product has achieved its final form for consumption, would begin only when the product had been brought to its point of destination. This capitalist s delayed return compared to that of another, who gets rid of his product on the spot, would resolve into another form of greater use of fixed capital, with which we are not yet concerned here. Whether A requires 100 thalers more for instrument, or whether he needs 100 thalers more in order to bring his product to its destination, to market, is the same thing. In both cases more fixed capital is used; more means of production, which is consumed in direct production. In this respect, then, no immanent case would be posited here; it would fall under the examination of the difference between fixed capital and circulating capital. However, in so far as circulation itself creates costs, itself requires surplus labour, it appears as itself included within the production process. In this respect circulation appears as a moment of the direct production process. Where production is directly oriented towards use, and only the excess product is exchanged, the costs of circulation appear only for the excess product, not for the main product. The more production comes to rest on exchange value, hence on exchange, the more important do the physical conditions of exchange the means of communication and transport become for the costs of circulation. Capital by its nature drives beyond every spatial barrier. Thus the creation of the physical conditions of exchange of the means of communication and transport the annihilation of space by time becomes an extraordinary necessity for it. Only in so far as the direct product can be realized in distant markets in mass quantities in proportion to reductions in the transport costs, and only in so far as at the same time the means of communication and transport themselves can yield spheres of realization for labour, driven by capital; only in so far as commercial traffic takes place in massive volume in which more than necessary labour is replaced only to that extent is the production of cheap means of communication and transport a condition for production based on capital, and promoted by it for that reason. All labour required in order to throw the finished product into circulation it is in economic circulation only when it is present on the market is from capital s viewpoint a barrier to be overcome as is all labour required as a condition for the production process (thus e.g. expenses for the security of exchange etc.). The sea route, as the route which moves and is transformed under its own impetus, is that of trading peoples . On the other side, highways originally fall to the community, later for a long period to the governments, as pure deductions from production, deducted from the common surplus product of the country, but do not constitute a source of its wealth, i.e. do not cover their production costs. In the original, self-sustaining communes of Asia, on one side no need for roads; on the other side the lack of them locks them into their closed-off isolation and thus forms an essential moment of their survival without alteration (as in India). Road construction by means of the corv e, or through taxes, which is another form, is a forced transformation of a part of a country s surplus labour or surplus product into roads. If an individual capital is to undertake this i.e. if it is to create the conditions of the production process which are not included in the production process directly then the work must provide a profit. Presupposing a certain road between A and B (let land cost nothing), then this contains no more than a definite quantity of labour, hence value. Whether the capitalist or the state has it built is the same thing. Does the capitalist make a gain here, then, by creating surplus labour and hence surplus value? First, strip off what is puzzling about the road, which arises from its nature as fixed capital. Imagine that the road could be sold at once, like a coat or a ton of iron. If the production of the road cost say 12 months, then its value = 12 months. If the general standard of labour is such that a worker can live from say 6 months of objectified labour, then, if he built the entire road, he would create surplus value for himself to the amount of 6 months labour; or if the commune built the road, and the worker wanted to work only the necessary time, then another worker would have to be drawn in to work 6 months. The capitalist, however, forces the one worker to work 12 months, and pays him 6. The part of the value of the road which contains his surplus labour forms the capitalist s profit. The material form in which the product appears must absolutely not interfere in laying the foundations of the theory of value through objectified labour time. But the question is precisely: can the capitalist realize the road [den Weg verwerten], can he realize [realisieren] its value through exchange? This question naturally arises with every product, but it takes a special form with the general conditions of production. Suppose the value of the road is not realized. But it is built anyway, because it is a necessary use value. How does the matter stand then? It has to be built and has to be paid for in so far as its cost of production must be exchanged for it. It comes into existence only through a certain consumption of labour, means of labour, raw materials etc. Whether it is built by corv e or through taxes is the same. But it is built only because it is a necessary use value for the commune, because the commune requires it at any price. This is certainly a surplus labour which the individual must perform, whether in the form of forced labour, or in the indirect form of taxes, over and above the direct labour necessary for his subsistence. But to the extent that it is necessary for the commune, and for each individual as its member, what he performs is not surplus labour, but a part of his necessary labour, the labour necessary for him to reproduce himself as commune member and hence to reproduce the community, which is itself a general condition of his productive activity. If the labour time were entirely consumed in direct production (or, expressed indirectly, if it were impossible to raise surplus tax revenue for this specific purpose), then the road would have to remain unbuilt. If the whole society is regarded as one individual, then necessary labour would consist of the sum of all the particular labour functions which the division of labour separates off. This one individual would have to spend e.g. so much time for agriculture, so much for industry, so much for trade, so much for making instruments, so much, to return to our subject, for road building and means of communication. All these necessities resolve into so much labour time which must be directed towards different aims and expended in particular activities. How much labour time could be employed would depend on the amount of labour capacity (= the mass of individuals capable of labour who constitute the society) and on the development of the productive force of labour (the mass of products (use values) which it can create in a given span of time). Exchange value, which presupposes a more or less developed division of labour, depending on the level of exchange itself, presupposes that, instead of one individual (the society) doing different kinds of labour and employing his labour time in different forms, each and every individual s labour time is devoted exclusively to the necessary particular functions. If we speak of necessary labour time, then the particular separate branches of labour appear as necessary. Where exchange value is the basis, this reciprocal necessity is mediated through exchange, and shows itself precisely in the fact that every particular [piece of] objectified labour, every particularly specified and materialized [piece of] labour time exchanges for the product and symbol of labour time in general, of objectified labour time pure and simple, for money, and can thus be exchanged again for every particular labour. This necessity is itself subject to changes, because needs are produced just as are products and the different kinds of work skills. Increases and decreases do take place within the limits set by these needs and necessary labours. The greater the extent to which historic needs needs created by production itself, social needs needs which are themselves the offspring of social production and intercourse, are posited as necessary, the higher the level to which real wealth has become developed. Regarded materially, wealth consists only in the manifold variety of needs. The crafts themselves do not appear necessary ALONGSIDE self-sustaining agriculture, where spinning, weaving etc. are done as a secondary domestic occupation. But e.g. if agriculture itself rests on scientific activities if it requires machinery, chemical fertilizer acquired through exchange, seeds from distant countries etc., and if rural, patriarchal manufacture has already vanished which is already implied in the presupposition then the machine-making factory, external trade, crafts etc. appear as needs for agriculture. Perhaps guano can be procured for it only through the export of silk goods. Then the manufacture of silk no longer appears as a luxury industry, but as a necessary industry for agriculture. It is therefore chiefly and essentially because, in this case, agriculture no longer finds the natural conditions of its own production within itself, naturally, arisen, spontaneous, and ready to hand, but these exist as an independent industry separate from it and, with this separateness the whole complex set of interconnections in which this industry exists is drawn into the sphere of the conditions of agricultural production it is because of this, that what previously appeared as a luxury is now necessary, and that so-called luxury needs appear e.g. as a necessity for the most naturally necessary and down-to-earth industry of all. This pulling-away of the natural ground from the foundations of every industry, and this transfer of its conditions of production outside itself, into a general context hence the transformation of what was previously superfluous into what is necessary, as a historically created necessity is the tendency of capital. The general foundation of all industries comes to be general exchange itself, the world market, and hence the totality of the activities, intercourse, needs etc. of which it is made up. Luxury is the opposite of the naturally necessary. Necessary needs are those of the individual himself reduced to a natural subject. The development of industry suspends this natural necessity as well as this former luxury in bourgeois society, it is true, it does so only in antithetical form, in that it itself only posits another specific social standard as necessary, opposite luxury. These questions about the system of needs and system of labours at what point is this to be dealt with? Will be seen in due course. Now back to our road. If it can be built at all, it proves that the society possesses the labour time (living labour and objectified labour) required for its construction. * Why, then, as soon as production based on exchange value and division of labour appears does road building not become the business of individuals? (And it does not so become where it is conducted through taxes by the state.) First of all: the society, the united individuals, may possess the surplus time to build the road, but only in concentration. Concentration is always the addition of the part of labour capacity which each individual can employ on road building, apart from his particular work; but it is not only addition. The unification of their forces increases their force of production; but this is by no means the same as saying that all of them added together numerically would possess the same labour capacity if they did not work together, hence if to the sum of their labour capacities were not added the surplus existing only in and through their united, combined labour. Hence the violent rounding-up of the people in Egypt, Etruria, India etc. for forced construction and compulsory public works. Capital effects the same concentration in another way, through the manner of its exchange with free labour. Secondly: On one side, the population may be developed far enough, and the support which it finds in the employment of machinery etc. may be far enough advanced on the other side, so that the power arising only from the material, massive concentration of labour and in antiquity it is always this massive effect of forcibly concentrated labour may be superfluous, and a relatively smaller mass of living labour may be required. A special class of road-workers may form, employed by the state, or a part of the occasionally unemployed population is used for it, together with a number of superintendents etc., who do not work as capitalists, however, but as more highly educated menials. (About the relation of this skilled labour etc. later.) The workers are then wage workers, but the state employs them not as such, but as menial servants. Now, for the capitalist to undertake road building as a business, at his expense, * various conditions are required, which all amount to this, that the mode of production based on capital is already developed to its highest stage. Firstly: Large capital is itself presupposed, a large capital concentrated in his hands, in order that he may be able to undertake work of such dimensions and of such slow turnover, [and hence] realization. Hence mostly share-capital, the form in which capital has worked itself up to its final form, in which it is posited, not only in itself, in its substance, but is posited also in its form, as social power and product. Secondly: It must bring interest, but not necessarily profit (it may bring more than interest, but this is not required). We do not yet need to examine this point any further here. Thirdly: As presupposition, such a volume of traffic commercial, above all that the road pays for itself, i.e. that the price demanded for the use of the road is worth that much exchange value for the producers, or supplies a productive force for which they can pay that much. Fourthly: A portion of idle wealth which can lay out its revenue for these articles of locomotion. But these two presuppositions are what remains essential: (1) Capital in the required mass, employable for this object, at attractive interest; (2) it has to be worth it for the productive capitals, for industrial capital, to pay the price of passage. Thus e.g. the first railway between Liverpool and Manchester had become a necessity of production for the Liverpool cotton brokers and even more for the Manchester manufacturers. Capital as such its being posited with the necessary scope will produce roads only when the production of roads has become a necessity for the producers, especially for productive capital itself; a condition for the capitalist s profit-making. Then the road will pay for itself. But in this case, a large volume of traffic is already presupposed. It is the same presupposition doubly: On one side, the wealth of the country sufficiently concentrated and transformed into the form of capital, to allow it to undertake such works as realization processes for capital; on the other side the volume of traffic sufficient, and the barrier formed by the lack of means of communication sufficiently felt as such, to allow the capitalist to realize the value of the road (in instalments over time) as road (i.e. its use). All general conditions of production, such as roads, canals, etc., whether they facilitate circulation or even make it possible at all, or whether they increase the force of production (such as irrigation works etc. as in Asia and, incidentally, as still built by governments in Europe), presuppose, in order to be undertaken by capital instead of by the government which represents the community as such, the highest development of production founded on capital. The separation of public works from the state, and their migration into the domain of the works undertaken by capital itself, indicates the degree to which the real community has constituted itself in the form of capital. A country, e.g. the United States, may feel the need for railways in connection with production; nevertheless the direct advantage arising from them for production may be too small for the investment to appear as anything but sunk capital. Then capital shifts the burden on to the shoulders of the state; or, where the state traditionally still takes up a position superior to capital, it still possesses the authority and the will to force the society of capitalists to put a part of their revenue, not of their capital, into such generally useful works, which appear at the same time as general conditions of production, and hence not as particular conditions for one capitalist or another and, so long as capital does not adopt the form of the joint-stock company, it always looks out only for its particular conditions of realization, and shifts the communal conditions off on to the whole country as national requirements. Capital undertakes only advantageous undertakings, advantageous in its sense. True, it also speculates unsoundly, and, as we shall see, must do so. It then undertakes investments which do not pay, and which pay only as soon as they have become to a certain degree devalued. Hence the many undertakings where the first investment is sunk and lost, the first entrepreneurs go bankrupt and begin to realize themselves only at second or third hand, where the invested capital has become smaller owing to devaluation. Incidentally, the state itself and everything connected with it belongs with these deductions from revenue, belongs so to speak to the consumption costs for the individual, the production costs for society. A road itself may so increase the force of production that it creates new traffic which then makes the road profitable. There are works and investments which may be necessary without being productive in the capitalist sense, i.e. without the realization of the surplus labour contained in them through circulation, through exchange, as surplus value. If a worker works e.g. 12 hours per day for a year building a road, and if the generally necessary labour time is = 6 hours on the average, then he works a surplus time of 6 hours. But if the road cannot be sold for 12 hours, perhaps only for 6, then this road construction is not an undertaking for capital, and road building is not productive labour for it. Capital must be able to sell the road (the timing and mode of the sale are beside the point here) in such a way that both the necessary and the surplus labour are realized, or in such a way that it obtains out of the general fund of profits of surplus values a sufficiently large share to make it the same as if it had created surplus value. This relation is to be examined later in connection with profit and necessary labour. The highest development of capital exists when the general conditions of the process of social production are not paid out of deductions from the social revenue, the state s taxes where revenue and not capital appears as the labour fund, and where the worker, although he is a free wage worker like any other, nevertheless stands economically in a different relation but rather out of capital as capital. This shows the degree to which capital has subjugated all conditions of social production to itself, on one side; and, on the other side, hence, the extent to which social reproductive wealth has been capitalized, and all needs are satisfied through the exchange form; as well as the extent to which the socially posited needs of the individual, i.e. those which he consumes and feels not as a single individual in society, but communally with others whose mode of consumption is social by the nature of the thing are likewise not only consumed but also produced through exchange, individual exchange. In the case of the above road, road building must be so advantageous that the transformation of a given amount of labour time into the road must reproduce the worker s labour capacity to the same degree as if he transformed it into cultivated fields. Value is determined by objectified labour time, whatever form it may take. But it does depend now on the use value in which it is realized, whether this value is realizable. It is presupposed here that the road is a requirement for the commune, hence the use value is presupposed. For capital, on the other side, if it is to undertake the building of the road, it must be presupposed that not only the necessary labour time but also the surplus labour time worked by the worker can be paid for this is where his profit comes from. (The capitalist often compels this payment by means of protective tariffs, monopoly, state coercion; while the individuals engaged in exchange, under conditions of free exchange, would at most pay the necessary labour.) It is very possible that surplus labour time is present but not paid for (which can after all happen to every capitalist). Where capital rules (just as where there is slavery and bondage or serfdom of any sort), the worker s absolute labour time is posited for him as condition of being allowed to work the necessary labour time, i.e. of being allowed to realize the labour time necessary for the maintenance of his labour capacity in use values for himself. Competition then has the result, in every kind of work, that he must work the full time i.e. surplus labour time. But it may be the case that this surplus labour time, although present in the product, is not exchangeable. For the worker himself compared with the other wage workers it is surplus labour. For the employer, it is labour which, while it has a use value for him, like e.g. his cook, has no exchange value, hence the entire distinction between necessary and surplus labour time does not exist. Labour may be necessary without being productive. All general, communal conditions of production so long as their production cannot yet be accomplished by capital as such and under its conditions are therefore paid for out of a part of the country s revenue out of the government s treasury and the workers do not appear as productive workers, even though they increase the productive force of capital. The result of our digression is, incidentally, that the production of the means of communication, of the physical conditions of circulation, is put into the category of the production of fixed capital, and hence does not constitute a special case. Meanwhile, and incidentally, there opened up for us the prospect, which cannot be sharply defined yet at this point, of a specific relation of capital to the communal, general conditions of social production, as distinct from the conditions of a particular capital and its particular production process. Secondly, the temporal moment. This is an essential part of the concept of circulation. Suppose the act of making the transition from commodity to money is fixed by contract, then this still requires time calculating, weighing, measuring. The abbreviation of this moment is likewise development of productive force. However, this is time still conceived only as an external condition for the transition from the state of money into that of commodity; the transition itself is presupposed; the question is the time which elapses during this presupposed act. This belongs to the cost of production. Quite different is the time which generally passes before the commodity makes its transition into money; or the time during which it remains a commodity, only a potential but not a real value. This is pure loss. It is clear from everything said above that circulation appears as an essential process of capital. The production process cannot be begun anew before the transformation of the commodity into money. The constant continuity of the process, the unobstructed and fluid transition of value from one form into the other, or from one phase of the process into the next, appears as a fundamental condition for production based on capital to a much greater degree than for all earlier forms of production. On another side, while the necessity of this continuity is given, its phases are separate in time and space, and appear as particular, mutually indifferent processes. It thus appears as a matter of chance for production based on capital whether or not its essential condition, the continuity of the different processes which constitute its process as a whole, is actually brought about. The suspension of this chance element by capital itself is credit. (It has other aspects as well; but this aspect arises out of the direct nature of the production process and is hence the foundation of the necessity of credit.) Which is why credit in any developed form appears in no earlier mode of production. There was borrowing and lending in earlier situations as well, and usury is even the oldest of the antediluvian forms of capital. But borrowing and lending no more constitute credit than working constitutes industrial labour or free wage labour. And credit as an essential, developed relation of production appears historically only in circulation based on capital or on wage labour. (Money itself is a form for suspending the unevenness of the times required in different branches of production, to the extent that this obstructs exchange.) Although usury is itself a form of credit in its bourgeoisified form, the form adapted to capital, in its pre-bourgeois form it is rather the expression of lack of credit. (The retransformation of money into objective moments or conditions of production presupposes the latters availability. It constitutes the various markets where the producer encounters them as commodity in the hands of a merchant markets which (alongside the labour market) are essentially distinct from the markets for direct, individual, final consumption.) Money became transformed into commodity through circulation, and in the exchange of M C, consumption completed the process; or, the commodity was exchanged for money and in the exchange C M, M was either a vanishing moment itself to be exchanged for C again, in which case the process ended with consumption again, or the money withdrew from circulation and transformed itself into dead treasure, merely symbolic wealth. At no point did the process ignite from within, but rather the presuppositions of money circulation lay outside it, and it constantly required a new push from the outside. In so far as both moments were exchanged, their change of form within circulation was merely formal. But in so far as content entered in, it dropped out of the economic process; content did not form a part of it. The commodity did not sustain itself as money, nor the money as commodity; each was either one or the other. Value as such did not sustain itself in and through circulation as predominant over the process of its transformation, its metamorphosis; nor was the use value itself (as is the case in the capital production process) produced by the exchange value. With capital the consumption of the commodity is itself not final; it falls within the production process; it itself appears as a moment of production, i.e. of value-positing [Wertsetzen]. Capital is now posited, however, as not merely sustaining itself formally, but as realizing itself as value, as value relating to itself as value in every one of the moments of its metamorphosis, in which it appears at one time as money, at another time as commodity, then again as exchange value, then again as use value. The passage from one moment to the other appears as a particular process, but each of these processes is the transition to the other. Capital is thus posited as value-in-process, which is capital in every moment. It is thus posited as circulating capital; in every moment capital, and circulating from one form into the next. The point of return is at the same time the point of departure and vice versa namely the capitalist. All capital is originally circulating capital, product of circulation, as well as producing circulation, tracing in this way its own course. From the present standpoint, money circulation now appears as itself merely a moment of the circulation of capital, and its independence is posited as a mere semblance. It appears as determined on all sides by the circulation of capital, to which we shall return. In so far as it forms an independent motion alongside that of capital, this independence is posited only by the continuity of the circulation of capital, so that this one moment may be held constant and regarded for itself. < Capital a permanent, self-multiplying value which never decays. This value tears itself loose from the commodity which created it; remains, like a metaphysical, insubstantial quality, always in the possession of the same farmer, (e.g.), for whom it cloaks itself in different forms. (Sism. VI.) In the exchange of labour for capital, the worker demands subsistence in order to live; the capitalist demands work in order to make a profit. (Sism. loc. cit.) The master of the workshop gains, makes a profit from every increase in the powers of production which the division of labour brings about. (loc. cit.) Sale of labour = renunciation of all fruits of labour. (Cherbuliez, ch. XXVIII.) The three component parts of capital do not grow evenly (i.e. mati re premi re, instrument, approvisionnement), nor are they in the same relation in the different stages of society. The approvisionnement remains the same for a certain period, regardless of how quickly the speed of production and consequently the quantity of products may increase. Thus an increase of productive capital does not necessarily entail an increase of the approvisionnement which is destined to form the price of labour; it can be accompanied by a reduction of it. (loc. cit.) > If we now return to the circulation time of capital, then its abbreviation (except for development of the means of communication and transport required to bring the product to market) [means] in part the creation of a continuous and hence an ever more extensive market; and in part the development of economic relations, development of forms of capital, by means of which it artificially abbreviates the circulation time. (All forms of credit.) <It may be further remarked at this point that, since capital alone possesses the conditions of the production of capital, hence satisfies and strives to realize [them], [it is] a general tendency of capital at all points which are presuppositions of circulation, which form its productive centres, to assimilate these points into itself, i.e. to transform them into capitalizing production or production of capital. This propagandistic (civilizing) tendency a property exclusively of capital as distinct from the earlier conditions of production.> The modes of production where circulation does not form the immanent, dominant condition of production, naturally [do] not [meet] the specific circulation requirements of capital and hence also do not [provide for] the working-out of the economic forms as well as of the real forces of production corresponding to them. Production based on capital originally came out of circulation; we now see that it posits circulation as its own condition, and likewise the production process in its immediacy as moment of the circulation process, as well as the circulation process as one phase of the production process in its totality. In so far as different capitals have different circulation times (e.g. one a more distant market, the other a near one; one a guaranteed transformation into money, the other a risky one; one more fixed capital, the other more circulating capital), this makes for differences among them in realization. But this happens only in the secondary realization process. Circulation time in itself is a barrier to realization (necessary labour time is of course also a barrier; but at the same time an element, since value and capital would vanish without it); [it is a] deduction from surplus labour time or an increase in necessary labour time in relation to surplus labour time. The circulation of capital realizes value, while living labour creates value. Circulation time is only a barrier to this realization of value, and, to that extent, to value creation; a barrier arising not from production generally but specific to production of capital, the suspension of which or the struggle against which hence also belongs to the specific economic development of capital and gives the impulse for the development of its forms in credit etc. <Capital itself is the contradiction [, in] that, while it constantly tries to suspend necessary labour time (and this is at the same time the reduction of the worker to a minimum, i.e. his existence as mere living labour capacity), surplus labour time exists only in antithesis with necessary labour time, so that capital posits necessary labour time as a necessary condition of its reproduction and realization. At a certain point, a development of the forces of material production which is at the same time a development of the forces of the working class suspends capital itself.> < The entrepreneur can resume production only after he has sold the completed product, and has employed the price for the purchase of new materials and wages: thus, the more prompt circulation is in bringing about these two effects, the more is he capable of beginning his production anew, and the more products does the capital supply in a given period of time. (Storch, 34.) > < The specific advances of the capitalist do not consist of cloth etc., but of labour. (Malthus, IX, 26.) > < The accumulation of the general capital of the community in other hands [than] those of the operative labourers, necessarily retards the progress of all industry save that of the usual remuneration of capital, which the time and circumstances afford to the holders of the capital In the previous systems, the force of production regarded in reference to and subordinate to actual accumulations, and to the perpetuating of the existing modes of distribution. Actual accumulation and distribution are subordinate to the power of producing. (Thompson, 3.) > It is posited in the circulation process that the transformation of the capital into money is posited as a condition for the realization of capital through production, for the exploitation of labour by capital; or, the exchange of capital for capital * is posited as barrier to the exchange of capital for labour and vice versa. Capital exists as capital only in so far as it passes through the phases of circulation, the various moments of its transformation, in order to be able to begin the production process anew, and these phases are themselves phases of its realization but at the same time, as we saw, of its devaluation. As long as capital remains frozen in the form of the finished product, it cannot be active as capital, it is negated capital. Its realization process is delayed in the same degree, and its value-in-process [prozessierender Wert] negated. This thus appears as a loss for capital, as a relative loss of its value, for its value consists precisely in its realization process. This loss of capital means in other words nothing else but that time passes it by unseized, time during which it could have been appropriating alien labour, surplus labour time through exchange with living labour, if the deadlock had not occurred. Now let us imagine many capitals in particular branches of business, all of which are necessary (which would become evident if, in the eventuality of a massive flight of capital from a given branch, supply falling below demand, the market price would therefore rise above the natural price in that branch), and let a single branch of business require e.g. that capital A remain longer in the form of devaluation, i.e. that the time in which it passes through the various phases of circulation is longer than in all other branches of business, in which case this capital A would regard the smaller new value which it could produce as a positive loss, just as if it had so many more outlays to make in order to produce the same value. It would thus charge relatively more exchange value for its products than the other capitals, in order to share the same rate of gain. But this could take place in fact only if the loss were distributed among the other capitals. If A demands more exchange value for the product than there is labour objectified in it, then it can obtain this more only if the others obtain less than the real value of their products. That is, the less favourable conditions under which A has produced would be borne in proportional shares by all the capitalists who exchange with it, and in this way an equal average level would come out. But the sum of the surplus value created by all these capitals together would be lessened exactly by the amount of capital A s lesser realization in relation to the other capitals; only, instead of this reduction falling exclusively on capital A, it is borne as a general loss, as a loss shared proportionally by all the capitals. Nothing can therefore be more ridiculous than the notion (see e.g. Ramsay) that, apart from the exploitation of labour, capital forms an original source, separately from labour, of value-creation, because the distribution of surplus labour among the capitals takes place not in proportion to the surplus labour time achieved by the individual capital, but in proportion to the total surplus labour which the totality of capitals achieved, and hence a higher value-creation can be attributed to the individual capital than is directly explicable from its particular exploitation of labour power. But this more on one side has to be compensated by a less on the other. This is what average means, if it means anything at all. The question how the relation of capital to alien capital, i.e. the competition of capitals, distributes the surplus value among them obviously has nothing to do with the absolute amount of this surplus value. Nothing more absurd, then, than to conclude that, because one capital obtains a compensation for its exceptional circulation time, i.e. puts its relatively lesser realization to account as positively greater realization, now all capitals combined, capital can make something out of nothing, make a plus out of a minus, make a plus-surplus value out of a minus-surplus value or out of minus-surplus labour time, and that it possesses, therefore, a mystical wellspring of value independent of the appropriation of alien labour. The manner in which the capitals among other things compute their proportional share of the surplus value not only according to the surplus labour time which they set in motion, but also in accordance with the time which their capital has worked as such, i.e. lain fallow, found itself in the phase of devaluation does of course not alter in the least the total sum of the surplus value which they have to distribute among themselves. This sum itself cannot grow by being smaller than it would have been if capital A, instead of lying fallow, had created surplus value; i.e. by having created less surplus value in the same time as the other capitalists. And this lying-fallow is made good for capital A only in so far as it arises necessarily out of the conditions of the particular branch of production, and hence appears in respect to capital as such as a burden on realization, as a necessary barrier to its realization generally. The division of labour leaves this barrier as a barrier only as regards the production process of this particular capital. If the production process is regarded as conducted by capital as such, this lying-fallow is a general barrier to capital s realization. If one imagines all production carried out by labour alone, then all the larger advances which it requires during its realization appear as what they are deductions from surplus value. Circulation can create value only in so far as it requires fresh employment of alien labour in addition to that directly consumed in the production process. This is then the same as if more necessary labour were used in the direct production process. Only the actual circulation costs increase the value of the product, but decrease the surplus value. To the extent that the circulation of capital (the product etc.) does not merely express the phases necessary to begin the production process anew, this circulation (see Storch s example) does not form a moment of production in its totality is hence not circulation posited by production, and, in so far as it creates expenses, these are faux frais de production. The costs of circulation generally, in so far as their merely economic moments, circulation proper, are concerned (bringing the product to market gives it a new use value), are to be regarded as deduction from surplus value, i.e. as an increase of necessary labour in relation to surplus labour. The continuity of production presupposes that circulation time has been suspended. If it has not been suspended, then time must pass between the different metamorphoses through which capital must travel; its circulation time must appear as deduction from its production time. On the other hand, the nature of capital presupposes that it travels through the different phases of circulation not as it does in the mind, where one concept turns into the next at the speed of thought, in no time, but rather as situations which are separate in time. It must spend some time as a cocoon before it can take off as a butterfly. Thus the conditions of production arising out of the nature of capital itself contradict each other. The contradiction can be suspended and overcome only * in two ways: Firstly, credit: A pseudo-buyer B i.e. someone who really pays but does not really buy mediates the transformation of capitalist A s product into money. But B himself is paid only after capitalist C has bought A s product. Whether the money which this credit-man, B, gives to A is used by A to buy labour or to buy raw material and instrument, before A can replace either of them from the sale of his product, does not alter the case. Given our presupposition, he must basically give him both i.e. all the conditions of production (these represent, however, a greater value than the original ones with which A began the production process). In this case capital B replaces capital A; but they are not realized at the same time. Now B takes the place of A; i.e. his capital lies fallow, until it is exchanged with capital C. It is frozen in the product of A, who has made his product liquid in capital B. Mr Ramsay seems to imagine that, if a capital is the product of 20 working days (necessary and surplus together), this product of 20 working days can employ 30 working days. But this is by no means the case. Say that 10 days of necessary labour and 10 surplus days were employed on the product. Then the surplus value = 10 surplus days. If the capitalist then exchanges these again for raw material, instrument and labour, then he can set new necessary labour into motion with the surplus product. The point is not that he employed more labour time than is present in the product, but that he exchanges the surplus labour time, which costs him nothing, for new necessary labour time in other words, precisely, that he employs the entire labour time bestowed upon the product, while he has paid only part of that labour. Mr Ramsay s conclusion, that if the quantity of labour which every circulating capital will employ was no more than equal to that previously bestowed upon it, the value of the capital expended would be equal to that of the produce, i.e. no surplus value would be left, would be correct only if the quantity of labour bestowed upon the capital were wholly paid for, i.e. if capital did not appropriate a part of the labour without equivalent. These misunderstandings on Ricardo s part obviously arise from the fact that he himself was not clear about the process, nor, as a bourgeois, could he be. Insight into this process is = to the statement that capital is not only, as A. Smith thinks, command over alien labour, in the sense that every exchange value is that, since it gives its possessor buying power, but that it is the power to appropriate alien labour without exchange, without equivalent, but with the semblance of exchange. Ricardo knows no argument to refute those, like A. Smith and others, who fall into the same error regarding value as determined by labour, and value as determined by the price of labour (wages), other than to say: with the product of the same quantity of labour one can set sometimes more and sometimes less living labour into motion, i.e. he regards the product of labour in respect of the worker only as use value only the part of the product which he needs to be able to live as worker. But how it comes about that the worker suddenly only represents use value in the exchange, or only draws use value from the exchange, is by no means clear to him, as is already proved by his arguments against A. Smith, which are never in general terms, but always about particular examples. But why is it, then, that the share of the worker in the value of the product is determined not by the value, but rather by the use value of the product, thus not by the labour time employed on it, but by its quality of maintaining living labour capacity? If he tries to explain this with, say, competition among the workers, then the answer which would have to be given is the same as that which he gives A. Smith about competition among capitalists, i.e. that competition may well even out, equalize the level of profit, but in no way creates the measure of this level. Likewise, competition among the workers could press down a higher wages level etc., but the general standard of wages, or as Ricardo puts it the natural price of wages, could not be explained by the competition between worker and worker, but only by the original relation between capital and labour. Competition generally, this essential locomotive force of the bourgeois economy, does not establish its laws, but is rather their executor. Unlimited competition is therefore not the presupposition for the truth of the economic laws, but rather the consequence the form of appearance in which their necessity realizes itself. For the economists to presuppose, as does Ricardo, that unlimited competition exists is to presuppose the full reality and realization of the bourgeois relations of production in their specific and distinct character. Competition therefore does not explain these laws; rather, it lets them be seen, but does not produce them. Then Ricardo says, too: the production costs of living labour depend on the production costs of making the values required to reproduce it. While he previously regarded the product in relation to the worker only as a use value, he now regards the worker only as an exchange value in relation to the product. The historic process through which product and living labour come into this mutual relation is none of his concern. He is just as vague about the way in which this relation is perpetuated. Capital, with him, is the result of saving; this already shows that he misunderstands the process of its origins and reproduction. He therefore also imagines that production is impossible without capital, although he can very well imagine capital possible without ground rent. The distinction between profit and surplus value does not exist for him, proof that he is clear about the nature of neither one. His procedure already shows this from the very beginning. Originally, he makes workers exchange with workers and their exchange is then determined by the equivalent, by the labour time reciprocally expended in production. Then comes the real problem of his economics, to demonstrate that this determination of value is not altered by the accumulation of capitals i.e. by the presence [Dasein] of capital. Firstly, he has no inkling that his first spontaneous relation is itself only a relation abstracted from the mode of production resting on capital. Secondly, what he has available is a definite amount of objective labour time, which may of course increase, and he asks himself, how is it distributed? The question is rather how is it created, and there it is precisely the specific nature of the relation of capital and labour, or the specific and distinct character of capital, which explains this. As Quincey (X, 5) puts it, modern economics (the economics of Ricardo) is in fact concerned only with the dividends, while the total product is regarded as fixed, determined by the quantity of labour employed on it its value appraised in accordance with that. Accordingly, Ricardo has rightly been accused of not understanding surplus value, although his opponents understand it even less. Capital is represented as appropriating a certain part of the ready and available value of labour (of the product); the creation of this value, which it appropriates above and beyond the reproduced capital, is not presented as the source of the surplus value. This creation is identical with the appropriation of alien labour without exchange, and for that reason the bourgeois economists are never permitted to understand it clearly. Ramsay accuses Ricardo of forgetting that the fixed capital (which consists of capital not included in approvisionnement, with Ramsay the raw material at the same time along with the instrument) is a deduction from the sum total available for distribution among capitalist and worker. Ricardo forgets that the whole product is divided not only between wages and profits, but that another part is necessary for replacing fixed capital. (IX, p. 88. R. 174, note.) Indeed, since Ricardo does not grasp the relation between objectified and living labour in its living movement [a relation] not to be deduced from the dividends of a given quantity of labour, but from the positing of surplus labour and does not, therefore, grasp the relation among the different component parts of capital, it therefore seems with him as if the entire product were divided into wages and profits, so that the reproduction of capital is itself counted as part of profit. Quincey (loc. cit. Notebook X, 5) gives this exposition of the Ricardian doctrine: If the price is 10s. then wages and profit as a whole cannot exceed 10s. But do not the wages and profits as a whole, themselves, on the contrary, predetermine the price? No, that is the old superannuated doctrine. (p. 204). The new economics has shown that all price is governed by proportional quantity of the producing labour, and by that only. Being itself once settled, then ipso facto, price settles the fund out of which both wages and profits must derive their separate dividends. (loc. cit. 204.) Capital here appears not as positing surplus value, i.e. surplus labour, but only as making deductions from a given quantity of labour. The fact that instrument and raw material appropriate these dividends then has to be explained by their use value in production, which then presupposes the absurdity that raw material and instrument create use value through their separation from labour. For this separation makes them into capital. Considered for themselves, they are themselves labour, accumulated labour. Besides, this clashes with sound common sense, because the capitalist knows very well that he counts wages and profit among the production costs and regulates the necessary price accordingly. This contradiction in the determination of the product by relative labour time, and the limitation of the sum of profit and wages by the sum of this labour time, and the real determination of prices in practice, comes about only because profit is not grasped as itself a derivative, secondary form of surplus value; the same is true of what the capitalist justly regards as his production costs. His profit arises simply from the fact that a part of the cost of production costs him nothing, hence does not enter into his outlays, his production costs.

Grundrisse 10

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch10.htm

First presupposition with him, competition without restriction , and unhampered increase of products through industry. (19. R. 5.) This means in other words nothing other than that the laws of capital are completely realized only within unlimited competition and industrial production. Capital develops adequately on the latter productive basis and in the former relation of production; i.e. its immanent laws enter completely into reality. Since this is so, it would have to be shown how this unlimited competition and industrial production are conditions of the realization of capital, conditions which it must itself little by little produce (instead of the hypothesis appearing here as merely that of the theoretician, who places free competition and the productive mode of capital s existence externally and arbitrarily into the relation of capital to itself as capital, not as developments of capital itself, but as imaginary presuppositions of capital for the sake of purity.) This by the way the only place in Ricardo where a faint notion of the historic nature of the laws of bourgeois economy. With this presupposition, the relative value of commodities (this word meaningless, since absolute value is nonsense) is determined by the different quantity which can be produced in the same labour time, or by the quantity of labour relatively realized in different commodities. (p. 4.) (Notebook, 19.) (Henceforth the first number for the page in the notebook; the second for the page in Ricardo.) Now, how one gets from value as equivalent determined by labour to the non-equivalent, i.e. to the value which posits surplus value through exchange, i.e. how one gets from value to capital, from one aspect to its apparent opposite, this does not interest Ricardo. The only question for him: how the value relation between the commodities can remain the same and can and must be determined by relative quantities of labour, although the owners of accumulated labour do not exchange labour equivalents in living labour, i.e. despite the relation of capital and labour. It is then a very simple arithmetical proof that commodity A and commodity B can exchange in relation to the labour realized in them, although the producers of A or B distribute product A, or the product B exchanged for it, in different ways among themselves. But since all distribution here proceeds on the basis of exchange, it appears in fact altogether impossible to explain why one of the exchange values living labour is exchanged according to the amount of labour time realized in it, while the other exchange value accumulated labour, capital is not exchanged according to the standard of the labour time realized in it. Bray e.g. therefore believes that he is the first to draw the true conclusion from Ricardo with his equal exchange between living and dead labour. That from the standpoint of exchange alone, the worker s pay would have to = the value of the product, i.e. the amount of labour in objective form which the worker obtains in pay, = the amount of labour in subjective form which he expends in labour, is so necessary a conclusion that A. Smith falls into it. Ricardo, by contrast, avoids this fallacy, but how? The value of labour, and the quantity of commodities which a specific quantity of labour can buy, are not identical. Why not? Because the worker s product or an equivalent of this product is not = to the worker s pay. I.e. the identity does not exist, because a difference exists. Therefore (because this is not the case) it is not the value of labour which is the measure of value, but the quantity of labour bestowed on the commodity. (19, 3.) Value of labour is not identical with wages of labour. Because they are different. Therefore they are not identical. This is a strange logic. There is basically no reason for this other than that it is not so in practice. But it ought to be so, according to the theory. For the exchange of values [is] determined by the labour time realized in them. Hence equivalents are exchanged. Thus a specific quantity of labour time in living form would have to exchange for the same quantity of labour time in accumulated form. What would have to be demonstrated is precisely that the law of exchange turns into its precise opposite. Not even a faint suspicion that it does so is expressed here. Or the suspicion would have to lie in the frequently repeated admonition against mixing them up; that the distinction between past and living labour cannot do the job either is readily admitted: The comparative quantity of commodities which a given quantity of labour will produce determines their past and present value (19, 9) where living labour thus even determines the value of past labour retroactively. Why then is capital not also exchanged for living labour in proportion to the labour realized in the capital? Why is it that a quantity of living labour is not itself = the quantity of labour in which it has objectified itself? Labour is by nature of different quality, and it is difficult to compare different hours of labour in different branches of business. But this scale is very soon established in practice. (19, 13.) For short periods, at least from year to year, the variation in this inequality is insignificant, and is therefore left out of account. (19, I 5.) This is nothing. If Ricardo had applied his own principle, the amounts of (simple) labour to which the different labour capacities are reducible, then the matter would have been simple. Generally, he is concerned straight away with the hours of labour. What the capitalist acquires through exchange is labour capacity: this is the exchange value which he pays for. Living labour is the use value which this exchange value has for him, and out of this use value springs the surplus value and the suspension of exchange as such. Because Ricardo allows exchange with living labour and thus falls straight into the production process it remains an insoluble antinomy in his system that a certain quantity of living labour does not = the commodity which it creates, in which it objectifies itself, although the value of the commodity = to the amount of labour contained in it. The value of the commodity includes also the labour of bringing the commodity to market . (19, 18.) We shall see that circulation time, in so far as it appears as determining value with Ricardo, is only the labour required to bring the commodities to market. The principle of value-determination by the relative amounts of labour contained in the commodity is considerably modified by the employment of machinery and other fixed and durable capital. A rise or fall in wages differently affects two capitals of which one is almost entirely circulating, the other almost entirely fixed; likewise the unequal duration of the fixed capital employed. Namely, there is added the profit on fixed capital (interest), as well as the compensation for the greater length of time which must elapse before the more valuable of the two commodities can be brought to market. (19, 29, 30.) The latter moment concerns only the duration of the production process, i.e. labour time directly employed, at least in Ricardo s example of the farmer and the baker. (If one farmer s wheat becomes ready for the market later than another s, then this so-called compensation already presupposes interest; thus already something derivative, not an original aspect.) Profit and wages are only portions in which the two classes, of capitalists and workers, partake in the original commodity, i.e. also in that exchanged for it. (p. 31.) The very great extent to which the production of the original commodity, its origin, is itself determined by these portions, the extent to which, therefore, it precedes these portions as basic determinant, proves that the original commodity [would] not be produced at all, if it did not contain surplus labour for capital. Commodities on which the same quantity of labour has been bestowed vary in relative value if they cannot be brought to market in the same amount of time. With a greater fixed capital, too, the higher value of a commodity is due to the greater length of time which must elapse before it can be brought to market The difference arises in both cases from the profits being accumulated as capital, and is only a compensation for the time during which profits were withheld. (34, 35.) This means absolutely nothing other than that capital lying fallow is reckoned in and up as if it were not lying fallow, but were being exchanged with surplus labour time. This has nothing to do with the determination of value. It belongs with price. (In the case of fixed capital it [enters] into the determination of value only as another method of paying for the objectified labour, abstracted from the profit.) There is another principle of labour which nothing points out to the economic inquirer in old countries, but of which every colonial capitalist has been made conscious in his own person. By far the greater part of the operations of industry, and especially those of which the produce is great in proportion to the capital and labour employed, require a considerable time for [their] completion. As to most of them, it is not worth while to make a commencement without the certainty of being able to carry them on for several years. A large portion of the capital employed in them is fixed, inconvertible, durable. If anything happens to stop the operation, all this capital is lost. If the harvest cannot be gathered, the whole outlay in making it grow has been thrown away This shows that constancy is a no less important principle than combination of labour. The importance of the principle of constancy is not seen here, because rarely indeed does it happen, that the labour which carries on a business, is stopped against the will of the capitalists But in the colonies just the opposite. Here capitalists are so much afraid of it that they avoid its occurrence as much as they can, by avoiding, as much as possible, operations which require much time for their completion. (Wakefield, 169, XIV, 71.) There are numerous operations of so simple a kind as not to admit a division into parts, which cannot be performed without the cooperation of many pairs of hands. For example, the lifting of a large tree on to a wain, keeping down weeds in a large field of growing crops, shearing a large flock of sheep at the same time, gathering a harvest of corn at the time when it is ripe enough and not too ripe, moving any great weight; everything, in short, which cannot be done unless a good many pairs of hands help together in the same undivided employment, and at the same time. (168 loc. cit.) Combination and constancy of labour are provided for in old countries, without an effort or thought on the part of the capitalist, merely by the abundance of labourers for hire. The scarcity of labourers for hire is the universal complaint of colonies. (170 loc. cit.) Only the cheapest land in a colony is that whose price affects the labour market. The price of this land, as of all bare land, and of everything else which it costs nothing to produce, depends of course on the relation between the demand and supply. (p. 332.) In order that the price of waste land should accomplish its objects (namely of making the worker into a non-landowner), it must be sufficient for the purpose. Hitherto the price has been everywhere insufficient. (338 loc. cit.) This sufficient price: In founding a colony the price might be so low as to render the quantity of land appropriated by settlers practically unlimited: it might be high enough to occasion a proportion between land and people similar to that of old countries, in which case, if this very high price did not prevent emigration, the cheapest land in the colony might be as dear, and the superabundance of labourers as deplorable as in England: or it might be a just medium between the two, occasioning neither superabundance of people nor superabundance of land, but so limiting the quantity of land as to give the cheapest land a market value that would have the effect of compelling labourers to work some considerable time for wages before they could become landowners. (339 loc. cit.) (Notebook XIV, 71.) (These excerpts here quoted from Wakefield s Art of Colonization belong with the ones given above about the necessary separation of the worker from the conditions of property.) The capital laid out in labour is 2,600; the surplus value = 1,650 (850 interest + 150 rents etc., makes 1,000 + 650 profit). But 2,000:1,650 = 100:63 6/13. Thus the rate of surplus value is 63 6/13%. According to the profit calculation it would have to be 850 interest, 150 rents and 650 profit, or 1,650:15,350; nearly 10.1%. In the above example, the floating capital turns over 167/70 times per year; the fixed capital turns over once in 15 5/13 years; once in 200/13 year. Profit: 650 or about 4.2. The wages of the operatives 1/6. The profit is indicated here as 4.2; say it were only 4%. This 4% figured on an outlay of 15,350. But then we also have 5% interest on 10,000 and 5% on 7,000; 850 = 5% of 17,000. From the actual annual advances made, we must deduct (1) the part of the fixed capital which does not figure in the sinking fund; (2) that which is figured as interest. (It is possible that capitalist A does not pocket the interest, but capitalist B. In any case they are revenue, not capital; surplus value.) From the 15,350 outlays thus deduct 850; leaves: 14,500. Of the 2,600 for wages and salaries there were 183 1/3 in the form of salary, since 1/6 of 14,500 is not 2,600 but 2,416 2/3, and 14,500 divided by this is 6. Thus, he sells the 14,500 at 16,000 or a profit of 1,500; makes 10 2/3%; but let us ignore these 2/3 and say 10%; 1/6 of 100 is 16 2/3. Thus, out of 100, he would give: 83 1/3 for advances, 16 2/3 wages and 10 profit. In detail: In his Principles of Political Economy, 2nd ed., 1836, Malthus has an inkling that profit, i.e. not profit, but real surplus value, has to be calculated not in respect of capital advanced, but of living labour advanced, whose value is expressed objectively in wages; but this leads him into playing games which become absurd if they are to serve as a basis for any determination of value, or for reasoning about the relation of labour to the determination of value. For example, if I take the total value of the finished product, then I can compare every part of the product advanced with the part of the outlay corresponding to it; and the percentage of profit in relation to the whole product is naturally the same percentage for any fractional part of the product. Say e.g. that 100 thalers brought 110; thus 10% the whole product; 75%, say, for the invariable part of capital, 25 for labour, i.e. 3/4 for the former, 1/4 for living labour. Now if I take 1/4 of the total product, i.e. of 110, then I obtain 27 2/4 or 27 1/2. On an outlay of 25 for labour, the capitalist would have a gain of 2 1/2, i.e. 10%. Likewise Malthus could have said that if I take 3/4 of the total product, i.e. 75, then these 3/4 are represented in the total product by 82 1/2; then 7 1/2 out of 75 is exactly 10%. This obviously means nothing other than that if I gain 10% on 100 then the gain on every part of 100 amounts to as much as, when added together, will be 10% on the total sum. If I have gained 10 on 100, then on 2 50 I have gained 5 each time etc. The fact that, if I gain 10 on 100, I gain 2 1/2 on 1/4 of 100 and 7 1/2 on 3/4 takes us not a single step further. If I have gained 10 on 100, how much have I then won on 1/4 of 100 or on 3/4? Malthus s insight can be reduced to this childishness. The advance for labour amounted to 1/4 of the 100, and the gain on it amounted to 10%. 10% of 25 is 2 1/2. Or the capitalist, if he has gained 10 on 100, has gained 1/10 on every part of his capital, i.e. 10%. This gives the parts of the capital no qualitative character whatever, and it therefore holds for fixed capital etc. just as well as for the part advanced in labour. Moreover, this only expresses the illusion that each part of the capital is involved to an equal degree in the newly created value. Nor has the 1/4 of the capital advanced for wages created the surplus value; rather, the unpaid living labour has done so. However, from the relation of the total value here the 10 thalers to wages we can see what percentage of labour was not paid, or, how much surplus labour there was. In the above relation, the necessary labour is objectified in 25 thalers, the surplus labour in 10; thus they relate as 25:10 = 100:40; 40% of the labour was surplus labour, or, what is the same, 40% of the value it produced was surplus value. It is quite true that the capitalist can make this reckoning: if I make 10 on 100, then, on wages, = 25, I have made 2 1/2. It is impossible to see what use this calculation is. But what Malthus wants to do with it will be seen shortly when we go into his determination of value. However, it is clear from the following that he indeed believes that his simple arithmetical example contains a real determination: Suppose the capital be expended only for wages, 100 expended in immediate labour. The returns at the end of the year 110, 120, or 130; it is evident that in each case the profits will be determinated by the proportion of the value of the whole produce which is required to pay the labour employed. If the value of the produce in the market = 110, the proportion required to pay the labourers = 10/11 of the value of the produce, or the profits = 10%. (Here Mr Malthus does nothing more than to express the original advance, 100, as a relation to the total product. 100 is 10/11 of 110. Whether I say I gain 10 on 100, i.e. 1/10 of 100, or I say 1/11 of the 110 are gain, it is the same.) If the value of the product is 120, the proportion for labour = 10/12 and the gain 20%; if 130, the proportion required to pay the labour = 10/13 and the gain = 30%. (Instead of saying: I gain 10 on 100, I can also say that 10/11 of the 110 were the advances; or, 20 on the 100, the advances amount only to 10/12 of 120 etc. The character of these advances, whether in labour or otherwise, has absolutely nothing to do with this other arithmetic form of expressing the matter. If a capital of 100 has brought in 110, then either I can start with the capital and say I gained 10 on it, or I can start with the product, with 110, and say that I advanced only 10/11 on it beforehand. The relation is, of course, the same.) Now assume that the capitalist s advances do not consist entirely of labour. The capitalist expects an equal benefit on all parts of the capital he advances (that means simply that he distributes the benefit he has made, and whose origin may be quite obscure to him, among all parts of his outlays equally, entirely abstracting away their qualitative difference). Suppose 1/4 of the advances, for labour (direct), 3/4 consisting of accumulated labour and profits, with any additions which may arise of rents, taxes and other outgoings. Then strictly true that the profits of the capitalist will vary with the varying value of this 1/4 of the produce compared with the quantity of labour employed. (Not quantity with Mr Malthus, but rather compared with the salary paid.) (Thus strictly true that his profits will vary with the varying value of the 3/4 of his profits compared with the advances in accumulated labour, i.e. the gain relates to the total capital advanced (10:100) as every part of the total product (110) does to the part of the advance corresponding to it.) For example, Malthus continues, a farmer employs 2,000 in cultivation, of which 1,500 in seed, keep of horses, wear and tear of his fixed capital, etc., and 500 on immediate labour, and the returns at the end are 2,400. His profit 400, on 2,000 = 20%. And it is immediately obvious that if we took 1/4 of the value of the produce, namely 600, and compared it with the amount paid in the wages of the immediate labour, the result would show exactly the same rate of profits. (loc. cit. 267, 268. Notebook X, 41, 42.) (It is equally obvious that if we took 3/4 of the value of the produce, namely 1,800, and compared it with the amount paid in the advances on accumulated labour, namely with 1,500, the result would show exactly the same rate of profits. 1,800:1,500 = 18:15 = 6:5. And 6 is 1/5 more than 5, hence 20%.) (Malthus here has two different arithmetic formulae in mind and gets them mixed up: firstly, if I make 10 on 100, then on every part of the 100 my gain is not 10 but 10%: i.e. 5 on 50, 2 1/2 on 25 etc.; to gain 10 on 100 means to gain 1/10 on each part of the 100, and consequently the profit has to show up also as 1/10 profit on wages, and if the profit is distributed evenly among all parts of the capital, then I can say that the rate of profit on the total capital varies with the rate of profit on each of its parts, including e.g. the part advanced as wages; secondly if I gained 10% on 100, then the total product 110. Now, if wages formed 1/4 of the advances = 25, then they form only a 4 2/5 part of 110; i.e. they form a fraction that is smaller by 2/5, and it will form an ever smaller part of the total product in proportion as the latter has risen in comparison with the original. This is again only another way of calculating. 10 is 1/10 of 100 but only 1/11 of 110. I can therefore say that as the total product grows larger, each of the fractional parts of the original capital forms a relatively smaller part of it. Tautology.) In his work The Measure of Value Stated and Illustrated, London, 1823 (Notebook IX), Malthus asserts that the value of labour is constant and is hence the true Measure of Value generally. Any given quantity of labour must be of the same value as the wages which command it, or for which it actually exchanges. (p. 5, loc. cit.) (IX, 29.) He is speaking here, of course, about wage labour. The truth is rather: any given quantity of labour is = the same quantity of labour expressed in a product; or, each product is only a specific quantity of labour, objectified in the value of the product, which is measured with respect to other products by this quantity. Wages, however, express the value of living labour capacity, but in no way the value of living labour, which is expressed, rather, in wages + profit. Wages are the price of necessary labour. If the worker had to work 6 hours in order to live, and if he produced for himself as mere worker, then he would daily receive the commodity of 6 hours of labour, say 6d. Now the capitalist makes him work 12 hours, and pays him 6d. He pays him 1/2d. per hour, i.e. a given quantity of 12 hours of labour has the value of 12d., and 12d. is indeed the value for which the product exchanges, when it gets sold. On the other hand, the capitalist commands with this value, if he could re-invest it in mere labour, 24 hours. The wages command, therefore, a much greater quantity of labour than they consist of, and a given quantity of living labour actually exchanges for a much smaller one of accumulated labour. The only thing that is sure is that the price of labour, wages, must always express the quantity of labour which the labourers want in order to keep soul and body together. The wages of any quantity of labour must be equal to the quantity of labour which the labourer must expend upon his own reproduction. In the above instance a man would set to work two men for 12 hours each together 24 hours with the quantity of labour afforded by one man. In the case above, the product would be exchanged for another product with a value of 12d., or for 12 hours of labour, and this would be the source of its profit of 6d. (its surplus value for the capitalist). The value of products is determined by the labour contained in them, not by that part of the labour in them which the employer pays for. The value of the product is constituted by labour done, including that not paid for; but wages only express paid labour, never all labour done. The measure of this payment itself depends on the productivity of labour, for the latter determines the amount of necessary labour time. And since these wages constitute the value of labour (labour itself posited as commodity), this value is constantly variable, and is the opposite of constant. The amount of labour which the worker works is very different from the amount of labour that is worked up into his labour capacity, or which is required to reproduce his labour capacity. But he does not sell as commodity the use made of him, he sells himself not as cause but as effect. Let us listen how Mr Malthus exerts himself to get the matter clear: The conditions of the supply of commodities do not require that they should retain always the same relative values, but that each should retain its proper natural value, or the means of obtaining those objects which will continue to the producer the same power of production AND accumulation profits are calculated upon the advances necessary to production the specific advances of capitalists do not consist of cloth, but of labour; AND as no other object whatever can represent a given quantity of labour, it is clear that it is the quantity of labour which a commodity will command, and not the quantity of any other commodity, which can represent the condition of its supply, or its natural value. (17, 18.) (IX, 29.) Already, from the fact that the capitalist s advances consist of labour, Malthus could have seen that the matter has not become clear. Posit that the necessary labour time is 6 hours; also A, B, two men each of whom works for himself but who exchange with one another. Let A work 6 hours, B 12 hours. Now if A wants to eat up the 6 extra hours worked by B, if he wants to consume the product of B s 6 surplus hours, there is nothing he can give him other than 6 hours of living labour, say the next day. B now has a product of 6 hours of labour more than A. Now posit that under these circumstances he begins to fancy himself a capitalist and stops working altogether. Then on the third day, the only thing he could give in exchange for A s 6 hours is his own accumulated product of 6 hours, and, as soon as this exchange was accomplished, he would have to begin working again himself, or starve. But if he continues to work 12 hours for A, and A continues to work 6 hours for himself and 6 for B, then they exchange exactly 12 hours with one another. The natural value of the commodity, says Malthus, consists in its giving back to its possessor through exchange the same power of production AND accumulation. His commodity consists of 2 quantities of labour, one quantity of accumulated labour + one quantity of immediate labour. Thus if he exchanges his commodity for another which contains exactly the same total quantity of labour, then his power of production and accumulation has remained at least the same, equal. But it grew, because a part of the immediate labour has cost him nothing, while he sells it nevertheless. Yet Malthus comes to the conclusion that the quantity of labour of which the product consists is paid labour only, hence = to the sum of the wages, or, that wages are the measuring rod of the value of the commodity. If every amount of labour contained in the commodity were paid for, then Mr Malthus s doctrine would be correct, but it would be equally true that his capitalist would have no advances of labour to make, and his powers of accumulation would become totally forfeited . Where is the profit to come from, if no unpaid labour is performed? Well, thinks Mr Malthus, [from] the wages for accumulated labour. But since labour done has ceased to work, it also ceases to draw wages. True, the product in which it exists could now be again exchanged for living labour, but posit that this product = 6 hours of labour; then the worker would give 6 hours of living labour and would receive the advances, the capitalist s 6 hours of done labour, in return; so that the capitalist would not have budged a single step forward. Living labour would very soon be in possession of his dead labour. The reason Malthus gives, however, is that because no other object whatsoever can represent a given quantity of labour , the natural value of a commodity consists of the quantity of labour which a commodity will command, and not the quantity of any other commodity . That means a given quantity of labour can be represented only by a quantity of living (immediate) labour. Not no other object whatsoever but rather every object whatsoever can represent a given quantity of labour, namely every object in which the same quantity of labour is contained. But Malthus wants the quantity of labour contained in the commodity to be measured by, to be equal to, not the quantity of living labour which it can set in motion, but the quantity of paid labour which it sets in motion. Posit that the commodity contains 24 hours of labour; he thinks, then, that the capitalist can buy 2 working days with it; and if the capitalist paid all of this labour, or if the quantity of labour done = the quantity of paid living labour, then he could buy only 24 hours of living labour with his 24 hours of done labour, and his powers of accumulation would have gone to the wall. But the capitalist does not pay the worker the labour time, the amount of labour, but rather pays him only the necessary labour, while forcing him to work the rest free of charge. Thus, with the 24 hours of done labour he may perhaps set 48 hours of living labour into motion. Thus he in fact pays 1 hour of done labour for 2 hours of living labour, and thus gains 100% on the exchange. The value of his commodity now = 48 hours, but is in no way equal to the wages exchanged for them, nor equal to the wages for which it then in turn exchanges. If he continues in the same way, his 48 hours of done labour will buy 96 hours of living labour. Posit that no capitalists exist at all, but that the independent and mutually exchanging workers worked more than necessary to live, because they want to accumulate too, etc. Call that part of the work which the worker does in order to live, wages; and the surplus time he works in order to accumulate, profit. Then the value of his commodity would be = to the total amount of labour contained in it, = to the total sum of living labour time; but in no way = to the wages he paid himself, or equal to the part of the commodity which he would have to reproduce in order to live. Because the value of a commodity = a specific quantity of labour, Malthus says it is = to the quantity of necessary labour (i.e. wages) contained in it, and not = to the total sum of labour contained in it; its totality is = to a fraction of it. But the worker s powers of accumulation evidently would arise only because he has worked more than necessary to pay himself his wages. If a specific quantity of living labour time were = to the time required for the worker to live, then a specific quantity of living labour would be = to the wages which he produces, or the wages would be exactly equal to the living labour which they set in motion. If such were the case, capital would of course be impossible. If the worker, in the whole of his working time, can produce not a farthing more than his wages, then with the best of wills he cannot squeeze out a farthing for the capitalist. Property is the offspring of the productivity of labour. If one can produce only for one, everyone a worker; there can be no property. If one man s labour can maintain 5, there will be 4 idle men for 1 employed in production. (Ravenstone.) We saw above how Malthus s fantasizing profundity expressed itself in a purely childish kind of calculation. What lay behind this, by the way, was the doctrine that the value of labour was constant and that wages constituted price. Because the rate of profit on a total capital can be expressed as the same rate on the fraction of the capital made up by wages, he asserts that this fractional part constitutes and determines the price. Exactly the same profundity as here. If commodity A = an amount of x commodity, he thinks that this can mean nothing else than that it = x living labour, for only labour can represent labour. From this he concludes that commodity A = the amount of wage labour which it can command, and that therefore the value of labour is constant, because always = to the commodity by which it is set in motion. The nub of it is simply that the amount of living labour and the amount of wage labour are identical for him, and that he believes that every fractional part of wage labour is really paid for. But x living labour can be (and, as wage labour, always is) = x y necessary labour (wages) + y surplus labour. x dead labour can therefore set in motion x y necessary labour (wages) + y surplus labour time; i.e. it always sets in motion as many additional hours of living labour time as there are hours of surplus labour time over and above necessary labour time contained within x hours of labour. Wage labour always consists of paid and unpaid labour. The value of labour is constant, thus means nothing other than that all labour time is necessary, i.e. wage-producing labour time. There is no surplus labour time but nevertheless there are powers of accumulation and capital. Since wages are always equal to a given quantity of labour, namely the quantity of living labour which they set in motion, and since this is the same quantity of labour contained in the wages, therefore the value of labour is constant, for it is always = to the quantity of objectified labour. The rise and fall in the price of commodities, not of the value of labour. If a worker gets 8s. silver per week or 16, this comes about only because the price of shillings has risen or fallen, but the value of labour has remained the same. In both cases he obtains a week of done labour for a week of living labour. Mr M. proves this as follows: If labour alone, without capital, were employed in procuring the fruits of the earth, the greater facility of procuring one sort of them compared with another would not, it is acknowledged, alter the value of labour, or the exchangeable value of the whole produce obtained by a given quantity of exertion. This means nothing but that each of the commodities, regardless of their quantity, would be determined by the labour contained in it, despite the fact that, depending on the degree of its productivity, it would express itself in one case in more, in another in fewer, use values. We should, without hesitation, allow that the difference was in the cheapness or dearness of the produce, not of the labour. We would say labour is more productive in one branch than in the other, or, alternatively, the product costs more or less labour. We could not speak of cheapness or dearness of labour, since no wage labour existed, and hence an hour of immediate labour would always command an hour of objectified labour, which would naturally not prevent one hour from being more productive than another. But still, to the extent that we distinguish the part of labour necessary for subsistence from the part that is surplus labour and if any hours of the day are at all worked as surplus time, then it is the same as if every fractional part of labour time consisted of a part necessary and a part surplus labour done by the immediate labourers, it could still not be said that the value of labour, i.e. wages (the part of the product exchanged for necessary labour, or the part of the total labour which is employed for the necessary product), are constant. The fractional part of labour time which reproduces wages would vary with productivity; thus, with the productivity of labour, the value of labour, i.e. wages, would constantly vary. Wages would be measured both before and after by a definite use value, and since the latter constantly varies in its exchange value depending on the productivity of labour, wages would change, or [in other words] the value of labour. Value of labour presupposes in principle that living labour is not equal to its product, or, what is the same, that it is sold not as an acting cause, but as itself a produced effect. The value of labour is constant means nothing further than that it is constantly measured by the quantity of labour contained in it. A product may contain more or less labour. Therefore sometimes a greater, sometimes a lesser portion of product A may exchange for product B. But the quantity of living labour which the product buys can never be greater or smaller than the done labour which it represents, for a given quantity of labour is always a given quantity of labour, whether it exists in the form of objectified or in the form of living labour. Thus if more or less of a product is given for a specific quantity of living labour, i.e. if wages rise and fall, then this comes about not because the value of labour rose or fell, for the value of a specific quantity of labour is always equal to the same specific quantity of labour, but rather because the products have cost more or less labour, because a greater or lesser quantity of the products thus represents the same quantity of labour. Thus the value of labour remains constant. Only the value of the products changes, i.e. the productivity of labour changes, not its values. This is the pith of the theory of Malthus, if you can call such a shallow fallacy a theory. First of all, a product which has cost only half a working day may suffice for me to live and work a whole day. Whether or not the product possesses this quality depends not on its value, i.e. the labour time bestowed on it, but rather on its use value, and the exchange which takes place in this regard between living labour and the product of labour is not an exchange between both as use values, but rather their relation lies on the one side in the use value of the product, on the other side in the conditions of the existence of living labour capacity. Now, if objectified labour were exchanged for living labour, then according to the laws of exchange value the product which = half a day of work could only buy half a day of living labour, even though the worker could live from it for a whole day of work; and if his entire working day were to be bought, then he would have to obtain a whole working day in the product, with which, according to the assumption, he could live for two working days. But on the basis of capital, living labour and done labour do not exchange with one another as exchange values, as identical quantities: the same quantity of labour in objectified form as value being equivalent to the same quantity of labour in living form. Rather, what is exchanged is a product, and labour capacity, which is itself a product. Labour capacity is not = to the living labour which it can do, = to the quantity of labour which it can get done this is its use value. It is equal to the quantity of labour by means of which it must itself be produced and can be reproduced. The product is thus in fact exchanged not for living labour, but for objectified labour, labour objectified in labour capacity. Living labour itself is a use value possessed by the exchange value [, labour capacity,] which the possessor of the product [, the capitalist,] has acquired in trade, and whether he has acquired less or more of this living labour than he has spent in the form of the product [, wages,] for labour capacity depends on the amount of living labour paid to the worker in the product. If an amount of labour were exchanged for an amount of labour, regardless of whether it were living or objectified, then of course every amount of labour would be equal to itself and its value equal to its amount. The product of half a working day thus could buy only half a working day. But then in fact no wages would exist, and no value of labour. Labour would have no value distinct from that of its product or the equivalent of its product, no specific value, and it is precisely the latter which constitutes the value of labour, wages. From the fact, therefore, that a specific quantity of labour = a specific quantity of labour, or also that a specific quantity = itself, from the great discovery that a specific quantity is a specific quantity, Mr Malthus concludes that wages are constant, that the value of labour is constant, namely = to the same amount of labour objectified. This would be correct if living labour and stored-up labour were exchanged for one another as exchange values. But then there would exist neither value of labour, nor wages, nor capital, nor wage labour, nor Malthus s inquiries. All of these are based on the fact that living labour appears as a use value and living labour capacity as an exchange value opposite the labour stored up in capital. Malthus calmly proceeds: The same holds if capital and profits enter into the computation of value and the demand for labour varies. Here we have the whole profundity. As soon as capital and profits are introduced, living labour capacity begins to be bought, and therefore a smaller portion of stored-up labour is exchanged for a larger portion of living labour. It is a general characteristic of this profundity that the entry of capital, which posits wage labour and which for the first time transforms labour into wage labour and labour capacity into a commodity, introduces no change whatever, either into the realization of labour or into the realization of stored-up labour. Capital, a specific form of the relation of labour to its product and to its value, is, according to Malthus, entering without changing anything. It is just as if he allowed of no change in the constitution of the Roman Republic other than the introduction, the entering of emperors . He continues: If an increased reward of the labourers takes place without an increase in the produce, this is possible only with a fall of profits To obtain any given portion of the produce the same quantity of labour is necessary as before, but profit being diminished, the value of the produce is decreased; while this diminution of profits in reference to the value of wages is just counterbalanced by the increased quantity of labour necessary to procure the increased produce awarded to the labourer, leaving the value of labour the same as before. (p. 33, 34 loc. cit. Notebook IX, 29.) According to the presupposition, the product contains the same quantity of labour. But its value is supposed to have diminished because profits have fallen. However, if the labour time contained in the product has remained the same, how can profits fall? If wages rise while total labour time remains the same not for momentary causes such as e.g. that competition has become favourable for the workers then this means nothing other than that the productivity of labour has fallen, that a greater amount of time is necessary to reproduce labour capacity; that, therefore, a larger part of the living labour set in motion by capital falls to necessary labour and a smaller part to surplus labour. Let us leave these trivia for later. Only the following final quotation now for the sake of completeness: Inversely in the opposite case. A smaller quantity of the produce would be awarded to the labourer and profits would rise. A given quantity of produce, which had been obtained by the same quantity of labour as before, would rise in value on account of the rise of profits; while this rise of profits, in reference to the wages of the labourer, would be balanced by the smaller quantity of labour necessary to obtain the diminished produce awarded to the labourer. (M. p. 35) (loc. cit. IX, 29.) What he says on this occasion about money prices in different countries, proceeding from his principles, to be looked at later. <For example, commodity A can buy one working day; it pays only a half (the necessary half), but it exchanges for the whole. The amount of the total labour purchased by the commodity is then equal to necessary + surplus time. Thus if I know the price of necessary labour = x, then the price of the whole labour = 2x, and I could in this way appraise the newly created commodity in terms of wages, and thus establish the prices of all commodities in wages. But this would indeed be anything but a constant value. Through the confusion that in civilized countries an average time must indeed be worked for wages, say 12 hours, regardless of the wages and regardless of how many of these 12 hours are necessary or surplus labour time, Mr Carey as well who reduces the amount of labour to working days (and indeed they can be reduced to living work days) is led to make the assertion that, because the same capital costs constantly less labour time to reproduce, a machine of 100 will, for example, cost after a time only 50 owing to the growth of the productive forces, and hence will be the result of half as much labour time, working days or hours, whichever you like. From this Mr Carey concludes that the worker can buy, can obtain this machine, with half as many working days as before. He commits the little mistake of regarding the growth of surplus labour time as if it had been gained for the worker, whereas the whole matter comes down to just the opposite, namely that the worker spends less of his whole working day working for himself, and more for capital, hence that the objective power of capital grows rapidly over against him, in a specific relation with the increase of the productive forces. Mr Carey lets the worker buy or borrow the machine; in short, he transforms him into a capitalist. And he is supposed to achieve this increased power over capital precisely because the reproduction of a specific quantity of capital costs less necessary labour, i.e. less paid labour, thus wages fall in relation to profit. In America, as long as the worker there still appropriates a part of his surplus labour for himself, he may accumulate enough to become e.g. a farmer etc. (although that too is already coming to a halt now). In places where wage labour in America can still get somewhere rapidly, this happens through the reproduction of earlier modes of production and property on the foundation of capital (e.g. the independent peasantry). In short, he regards the working days as working days belonging to the worker, and instead of concluding that he has to produce more capital in order to be employed for the same labour time, he concludes that he has to work less in order to buy the capital (to appropriate the conditions of production for himself). If he produced 20 machines and can now produce 40 owing to increased productivity, then indeed the single machine becomes cheaper, but, because a smaller part of the working day is necessary in order to produce a given quantity of it, it does not follow that the product of the working day rose for the worker, but rather the reverse, that less living labour is employed for the production of a given quantity of machinery. By the way, Mr Carey, whose aim is harmony, himself finds that if the rate of profit declines, then the gross profit rises, because an ever larger capital is required in proportion to employed living labour, and it therefore becomes ever more impossible for the worker to appropriate the necessary sum of capital, the minimum of capital required for the productive employment of labour at the new stage of production. A fractional part of the capital requires less labour time for its reproduction, but a larger mass of capital is required in order to realize the lesser labour time. The growth of the productive forces expresses itself in a continuous decline of the part of capital consisting of labour compared with that laid out in advances, machinery etc. Carey s entire bad joke, which was of course grist to Bastiat s mill, rests on his transformation of the labour time or working days necessary for production into labour time belonging to the worker, whereas this time belongs in fact to capital, and an ever smaller portion of it remains for the worker in proportion to the growth in the productive force of labour. The less living labour time a given capital has to buy or, the greater the total sum of the capital and the less the living labour employed by it relative to its size the greater, according to Mr Carey, the chance for the worker to become owner of capital, because capital is reproduced by less living labour. The greater the capital and the smaller the number of workers it employs, relatively, the greater the chance these workers have of becoming capitalists, for has not capital now been reproduced with fewer working days? Cannot it therefore also be bought, gained with fewer working days? Take a capital of 100, employing 50 on advances, 50 on labour, and making 50% profit, for the decline of the rate of profit is Carey s chief hobby horse and belongs with his theory. Let each in wages be equal to 1 working day = 1 worker. Now take another capital of 16,000, which uses 14,500 in advances, 1,500 in wages (let this also = 1,500 workers) and makes only 20% profit. In the first case the product = 150; in the second (for convenient calculation s sake let the fixed capital turn over in one year) = 19,200 (3,200 profit). Here we have the most advantageous case for Mr Carey. The rate of profit has declined from 50% to 20, i.e. by 3/5 or by 60%. In the one case, a product of 50 is the result of 50 living work days. In the other case, a product of 3,200 by 1,500 workers. In the first case the result of 1 working day a product of 1; in the second the result of 1 working day a product of 2 2/15. In the second case less than half the labour time is necessary to produce a value of 1 as in the first. Now, does this mean that in the second case half the worker s day produces 1/15 for himself, while the other produces only 1 in twice the time, i.e. that he is on the high road to becoming a capitalist? He would first have to acquire a capital of 16,000, and buy alien labour instead of working himself, before this decrease in necessary labour time would aid him in the least. All it has done this way is created an infinite gap between his labour and the conditions of its employment, and decreased the rate of necessary labour, thus, in proportion to the first relation, thrown more than 6 times as many workers into the street. These workers thrown into the street are now supposed to console themselves with the thought that if they had the conditions to work independently, or rather to work as capitalists, then they themselves would have to hire fewer workers. In the first case the entire capital necessary is 100, and there is more of a chance here for the individual worker in an exceptional case to save up enough, and, with a special combination of luck, himself become a capitalist at the same level as capitalist A. The labour time which the worker works is the same with A and B, although the total sum of working days needed by the capitalists is essentially different. For every 6 workers needed by the first capitalist, the second needs not quite 1. The remainder therefore have to work just as much and more surplus time. That capital needs fewer living work days at the stage of production to which it has risen along with the forces of production is the same thing, according to Carey, as that the worker needs fewer working days to appropriate capital for himself; probably with the working days of the un- occupied workers.> Because the capitalist needs fewer workers to realize his immense capital, the worker employed by him can, with less labour, make the greater capital his own. Such is the logic of Mr Carey, the harmonizer. In connection with Ricardo s theory, Wakefield says (Notebook VII, p. 74) loc. cit. p. 231 note: Treating labour as a commodity, and capital, the produce of labour, as another, then, if the value of these two commodities were regulated by equal quantities of labour, a given amount of labour would, under all circumstances, exchange for that quantity of capital which had been produced by the same amount of labour; antecedent labour would always exchange for the same amount as present labour But the value of labour, in relation to other commodities, in so far, at least, as wages depend upon share, is determined, not by equal quantities of labour, but by the proportion between supply and demand. Thus, in order that money may become transformed into capital, it is necessary not only that it should be able to set surplus labour in motion, but also that there should be a certain quantity of surplus labour, the surplus labour of a given mass of necessary labour, i.e. of many workers at once, so that their combined sum is sufficient for it not only to lead an existence as capital, i.e. to represent wealth in consumption in contrast to the worker s life, but also to set aside surplus labour for accumulation. From the outset, capital does not produce for use value, for immediate subsistence. Surplus labour must therefore be large enough from the beginning to allow a part of it to be re-employed as capital. Thus, whenever the stage is reached where a certain mass of social wealth is already concentrated in one hand, which is objectively capable of appearing as capital, first as the exchange with many workers, later as production by many workers in combination, and is capable of setting a certain quantity of living labour capacities to work simultaneously, then, at that point, production by capital begins, which thus from the outset appears as the collective force, the social force, the suspension of individual isolation, first that of exchange with the workers, then that of the workers themselves. The workers individual isolation still implies their relative independence. Hence their regroupment around the individual capital as the exclusive base of their subsistence implies full dependence on capital, complete dissolution of the ties between the workers and the conditions of production. The result will be the same or it is the same in another form when the point of departure is the particular form of exchange which is presupposed for capital to exchange as capital, where money must already represent many exchangers or possess a buying power surpassing that of the individual and his individual surplus, one which, while belonging to an individual, is already more than individual, and belongs to him as a social function, in his capacity as representative, within exchange, of the social wealth and it arises on the other side from the conditions of free labour. The detachment of the individual from the production conditions of labour = the regroupment of many around one capital. *> This continual progression of knowledge and of experience, says Babbage, is our great power. This progression, this social progress belongs [to] and is exploited by capital. All earlier forms of property condemn the greater part of humanity, the slaves, to be pure instruments of labour. Historical development, political development, art, science etc. take place in higher circles over their heads. But only capital has subjugated historical progress to the service of wealth. <Before accumulation by capital, there is presupposed an accumulation which constitutes capital, which is a part of its conceptual determination; we can hardly call it concentration yet, because this takes place in distinction to many capitals; but if one still speaks only of capital generally, then concentration still coincides with accumulation or with the concept of capital. I.e. it does not yet form a particular aspect. However, capital does indeed exist from the outset as One or Unity as opposed to the workers as Many. And it thus appears as the concentration of workers as distinct from that of work, as a unity falling outside them. In this respect, concentration is contained in the concept of capital the concentration of many living labour capacities for one purpose; a concentration which does not in any way need to have been established in production, or penetrated production, at the origin. Centralizing effect of capital on labour capacities, or positing of itself as the independent and external unity of these many available existences.> <Rossi says in his Cours d conomie politique (Notebook, p. 26): Social progress cannot consist in the dissolution of all association, but in the replacement of the forced and oppressive associations of times past by voluntary and equitable associations. The highest degree of isolation is the condition of the savage; the highest degree of forced, oppressive association is barbarism. Apart from these extremes, history shows us a great diversity of varieties and shadings. Perfection is found in voluntary associations, which by their union multiply the forces, without taking away the energy, the morality and the responsibility of individual authority. (p. 354.) Under capital, the association of workers is not compelled through direct physical force, forced labour, statute labour, slave labour; it is compelled by the fact that the conditions of production are alien property and are themselves present as objective association, which is the same as accumulation and concentration of the conditions of production.>

Grundrisse 11

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch11.htm

Profit, says the same Chalmers, has the effect of attaching the services of the disposable population to other masters, besides the mere landed proprietors, while their expenditure reaches higher than the necessaries of life. (78. Notebook IX, p.53.)> In the book just referred to, Chalmers calls the whole circulation process the economic cycle: The world of trade may be conceived to revolve in what we shall call an economic cycle, which accomplishes one revolution by business coming round again, through its successive transactions, to the point from which it set out. Its commencement may be dated from the point at which the capitalist has obtained those returns by which his capital is replaced to him: whence he proceeds anew to engage his workmen; to distribute among them, in wages, their maintenance, or rather the power of lifting it; to obtain from them in finished work, the articles in which he specially deals; to bring these articles to market, and there terminate the orbit of one set of movements, by effecting a sale, and receiving in its proceeds, a return for the whole outlays of the period. The intervention of money alters nothing in the real character of this operation (85 loc. cit.) (Notebook, p. 54, 55.) Inequality in the periods necessary for production. The difference of time required to complete the products of agriculture, and of other species of labour, is the main cause of the great dependence of the agriculturists. They cannot bring their commodities to market in less time than a year. For that whole period they are obliged to borrow from the shoemaker, the tailor, the smith, the wheelwright and the various other labourers, whose products they need and which are completed in a few days or weeks. Owing to this natural circumstance, and owing to the more rapid increase of the wealth produced by other labour than that of agriculture, the monopolizers of all the land, although they have also monopolized the legislation, are unable to save themselves and their servants, the farmers, from being the most dependent class in the community. (Thomas Hodgskin, Popular Polit. Econ. Four lectures etc. London, 1827, p. 147 note.) (Notebook IX, p. 44.) The natural circumstance of all commodities being produced in unequal periods, while the wants of the labourer must be supplied daily This inequality in the time necessary to complete different commodities, would in the savage state cause the hunter etc. to have a surplus of game etc., before the maker of bows and arrows etc. had any commodity completed to give for the surplus game. No exchange could be made; the bow-maker must be also a hunter and division of labour impossible. This difficulty contributed to the invention of money. (179, 180.) (loc. cit.) Malthus s theory, which incidentally not his invention, but whose fame he appropriated through the clerical fanaticism with which he propounded it actually only through the weight he placed on it is significant in two respects: (1) because he gives brutal expression to the brutal viewpoint of capital; (2) because he asserted the fact of overpopulation in all forms of society. Proved it he has not, for there is nothing more uncritical than his motley compilations from historians and travellers descriptions. His conception is altogether false and childish (1) because he regards overpopulation as being of the same kind in all the different historic phases of economic development; does not understand their specific difference, and hence stupidly reduces these very complicated and varying relations to a single relation, two equations, in which the natural reproduction of humanity appears on the one side, and the natural reproduction of edible plants (or means of subsistence) on the other, as two natural series, the former geometric and the latter arithmetic in progression. In this way he transforms the historically distinct relations into an abstract numerical relation, which he has fished purely out of thin air, and which rests neither on natural nor on historical laws. There is allegedly a natural difference between the reproduction of mankind and e.g. grain. This baboon thereby implies that the increase of humanity is a purely natural process, which requires external restraints, checks, to prevent it from proceeding in geometrical progression. This geometrical reproduction is the natural reproduction process of mankind. He would find in history that population proceeds in very different relations, and that overpopulation is likewise a historically determined relation, in no way determined by abstract numbers or by the absolute limit of the productivity of the necessaries of life, but by limits posited rather by specific conditions of production. As well as restricted numerically. How small do the numbers which meant overpopulation for the Athenians appear to us! Secondly, restricted according to character. An overpopulation of free Athenians who become transformed into colonists is significantly different from an overpopulation of workers who become transformed into workhouse inmates. Similarly the begging overpopulation which consumes the surplus produce of a monastery is different from that which forms in a factory. It is Malthus who abstracts from these specific historic laws of the movement of population, which are indeed the history of the nature of humanity, the natural laws, but natural laws of humanity only at a specific historic development, with a development of the forces of production determined by humanity s own process of history. Malthusian man, abstracted from historically determined man, exists only in his brain; hence also the geometric method of reproduction corresponding to this natural Malthusian man. Real history thus appears to him in such a way that the reproduction of his natural humanity is not an abstraction from the historic process of real reproduction, but just the contrary, that real reproduction is an application of the Malthusian theory. Hence the inherent conditions of population as well as of overpopulation at every stage of history appear to him as a series of external checks which have prevented the population from developing in the Malthusian form. The conditions in which mankind historically produces and reproduces itself appear as barriers to the reproduction of the Malthusian natural man, who is a Malthusian creature. On the other hand, the production of the necessaries of life as it is checked, determined by human action appears as a check which it posits to itself. The ferns would cover the entire earth. Their reproduction would stop only where space for them ceased. They would obey no arithmetic proportion. It is hard to say where Malthus has discovered that the reproduction of voluntary natural products would stop for intrinsic reasons, without external checks. He transforms the immanent, historically changing limits of the human reproduction process into outer barriers; and the outer barriers to natural reproduction into immanent limits or natural laws of reproduction. (2) He stupidly relates a specific quantity of people to a specific quantity of necessaries. Ricardo immediately and correctly confronted him with the fact that the quantity of grain available is completely irrelevant to the worker if he has no employment; that it is therefore the means of employment and not of subsistence which put him into the category of surplus population. But this should be conceived more generally, and relates to the social mediation as such, through which the individual gains access to the means of his reproduction and creates them; hence it relates to the conditions of production and his relation to them. There was no barrier to the reproduction of the Athenian slave other than the producible necessaries. And we never hear that there were surplus slaves in antiquity. The call for them increased, rather. There was, however, a surplus population of non-workers (in the immediate sense), who were not too many in relation to the necessaries available, but who had lost the conditions under which they could appropriate them. The invention of surplus labourers, i.e. of propertyless people who work, belongs to the period of capital. The beggars who fastened themselves to the monasteries and helped them eat up their surplus product are in the same class as the feudal retainers, and this shows that the surplus produce could not be eaten up by the small number of its owners. It is only another form of the retainers of old, or of the menial servants of today. The overpopulation e.g. among hunting peoples, which shows itself in the warfare between the tribes, proves not that the earth could not support their small numbers, but rather that the condition of their reproduction required a great amount of territory for few people. Never a relation to a non-existent absolute mass of means of subsistence, but rather relation to the conditions of reproduction, of the production of these means, including likewise the conditions of reproduction of human beings, of the total population, of relative surplus population. This surplus purely relative: in no way related to the means of subsistence as such, but rather to the mode of producing them. Hence also only a surplus at this state of development. (3) What is not actually proper to Malthus at all, the introduction of the theory of rent at bottom only a formula for saying that in the stage of industry familiar to Ricardo etc., agriculture remained behind industry, which incidentally inherent in bourgeois production although in varying relations does not belong here.> <The way in which A. Smith lets profit arise is very na ve. In the primitive state, the product of labour belongs wholly to the worker. The quantity (including also the greater difficulty etc.) of labour employed to obtain or to produce an exchangeable object is the only circumstance which governs the quantity of labour which this object can on the average buy, command or obtain in exchange BUT as soon as a stock accumulates in the hands of private persons, the value which the workers add to the object dissolves into two parts, of which one pays their wages, the other the profit which the entrepreneur makes on the sum of the stock which has served him to advance these wages and the materials of labour. He would have no interest in employing these workers if he did not expect from the sale of their works something more than is necessary to replace this fund, and he would have no interest in employing a larger in preference over a small amount of funds if his profit did not stand in some proportion to the volume of the funds employed. (loc. cit. p. 96, 97.) (N., p. 9.) (See A. Smith s peculiar view that before the division of labour, where every one produced everything necessary, no stock was necessary . As if, in this state, while he finds no stock in nature, he would not have to find the objective conditions of life, in order to work. Even the savage, even animals, set aside a reserve. Smith can at most have in mind a situation in which the impulse to labour is still a direct, momentary instinct, and then a stock still has to be present in nature in one way or another without labour. (Notebook, p. 19.) (Smith is confused here. Concentration of the stock in a single hand then not necessary.)> <In Vol. III of his edition of A. Smith, Wakefield remarks: The labour of slaves being combined, is more productive than the much divided labour of freemen. The labour of freemen is more productive than that of slaves, only when it comes to be combined by means of greater dearness of land, and the system of hiring for wages. (Note to p. 18.) (Notebook VIII, p. 1.) In countries where land remains very cheap, either all the people are in a state of barbarism, or some of them are in a state of slavery. (Note to p. 20.)> < Profit is a term signifying the increase of capital or wealth; so, failing to find the laws which govern the rate of profit, is failing to find the laws of the formation of capital. (p. 55. Atkinson (W.), Principles of Political Economy, London, 1840.) (Notebook, p. 2.)> < Man is as much the produce of labour as any of the machines constructed by his agency; and it appears to us that in all economical investigations he ought to be considered in precisely the same point of view. Every individual who has arrived at maturity may, with perfect propriety, be viewed as a machine which it has cost 20 years of assiduous attention and the expenditure of a considerable capital to construct. And if a further sum is laid out for his education or qualification for the exercise of a business etc., his value is proportionally increased, just as a machine is made more valuable through the expenditure of additional capital or labour in its construction, in order to give it new powers. (McCulloch, The Principles of Pol. Econ., London, 1825, p. 115.) (Notebook, p. 9.)> < In point of fact, a commodity will always exchange for more labour (than it was produced by): and it is this excess that constitutes profits. (p. 221, McCulloch loc. cit.) (Notebook, p. 13.) The same gentle McCulloch, about whom Malthus rightly says that he sees it as the proper task of science to equate everything with everything else, says: the profits of capital are only another name for the wages of accumulated labour (p. 291) (loc. cit. Notebook, 14) and hence no doubt the wages of labour are only another name for the profits of living capital. Wages really consist of a part of the produce of the industry of the labourer; consequently, they have a high real value if the labourer receives a comparatively high share of the product of his industry, and vice versa. (295 loc. cit.) (Notebook, p. 15.)> Whatever is destined to be employed reproductively, be it in its existing form, or indirectly by a previous (or even subsequent) exchange, is capital. Suppose I have laid out all my money in wages and machinery, and the article I produce is just finished: in the interval, before I can sell these articles, realize the gain, and lay it out again in wages and tools, will it be said that I have no capital? Certainly not: I have the same capital as before, perhaps a larger one, but it is tied down, and is not disposable. (p. 55.) (Notebook, p. 36.) At all times a very large part of the capital in a country lies idle. The annual product of a country never achieves in height what it could, if all resources were devoted to reproduction, if, in short, all the country s capital were in full employment. If every commodity on the average remained unsold for a length of time equal to that required for its production, then it is clear that at any one time not more than a half of the productive capital of the country would in reality perform the function of capital. The employed half is a fluctuating portion, composed of various elements; but the result would be that every producer would be capable of producing each year only half the supply of commodities which he could produce if he were sure of selling them at the moment of their completion. (loc. cit. p. 55, 56.) This, or something similar, is, however, the usual state of a very great part of all capitalists in the world. (p. 56.) The number of producers or vendors who turn over their capital in the very shortest time is very small. Few have so rapid a sale of their commodities that all goods which their own or borrowed capital can supply them can be cleared out as quickly as supplied. The majority do not have an extent of business at all adequate to the amount of capital they dispose of. It is true that in communities where industry and trade are practised with the greatest success, the contrivances of banking enable the owner of a capital greater than he can himself employ, to apply it productively and to derive a revenue from it. Still, even then, there is a great quantity of capital which remains fixed in the form of implements, machinery, buildings etc., whether only half employed or in complete employment: and every dealer keeps a stock in trade, to be ready for a possible sudden demand, although he may not be able to dispose of it for an indefinite period. (p. 56.) This constant non-employment of a large part of capital is the price we pay for the division of labour. The purchase is worth what it costs; but the price is considerable. (56.) If I have 1,500 thalers in the shop and take in 10%, while 500 lie idle to ornament the shop, it is the same as if I invest 1,000 thalers at 7 1/2% In many trades there are a few dealers who sell articles of equal quality at a lower price than other dealers. This is not a voluntary sacrifice of profits; from the consequent overflow of customers they expect to turn over their capital more rapidly, and to be the winners by keeping the whole of their capital in more constant employment, although on a given operation their gains are smaller. (p. 56, 57.) It is questionable whether there are any dealers for whom one additional buyer is of no use; and for the great majority, this hypothesis altogether inapplicable. An additional customer is for most dealers equivalent to a growth of their productive capital. It enables them to transform a part of their capital, which lay idle (and perhaps would never have become productive in their hands until a customer had been found), into wages and instruments of production A country s aggregate product for the following year is hence increased; not through pure exchange, but by calling into activity a portion of the national capital which, had it not been for the exchange, would have remained unemployed for some time longer. (57, 58.) The advantages gained from a new customer are, for the producer or dealer: (1) say, a part of his capital lies in the form of unsold goods, producing (during a longer or shorter time) nothing at all; then a part thereof is called into greater activity and becomes more constantly productive. (2) If the additional demand exceeds what can be supplied through liberation of capital existing as unsold goods, and if the dealer has additional resources (e.g. in government bonds), but not in his own trade, then he is enabled to obtain on a portion of these, no longer interest, but profit, and thus to gain the difference between the rate of interest and of profits. (3) If all his capital is employed in his own business and no part stored up as unsold goods, then he can conduct a surplus business with borrowed capital and gain the difference between interest and profit. (59.) The phases through which capital travels, which form one turnover of capital, begin conceptually with the transformation of money into the conditions of production. Now, however, that we begin not with capital in the process of becoming, but capital which has become, [we can see that] it travels through the following phases: (1) Creation of surplus value, or immediate production process. Its result, the product. (2) Bringing the product to market. Transformation of product into commodity. (3) ( ) Entry of the commodity into ordinary circulation. Circulation of the commodity. Its result: transformation into money. This appears as the first moment of ordinary circulation. ( ) Retransformation of money into the conditions of production: money circulation; in ordinary circulation, the circulation of commodities and the circulation of money always appear distributed among two different subjects. Capital circulates first as a commodity, then as money, and vice versa. (4) Renewal of the production process, which appears here as reproduction of the original capital, and production process of surplus capital. The costs of circulation break down into costs of movement; costs to bring the product to market; the labour time required to effect the transformation from one state to the other; all of which actually come down to accounting operations and the time they cost (this is the foundation of a special, technical money trade). (Whether the latter costs are to be considered deductions from the surplus value or not will be seen later.) If we examine this movement, we find that the circulation of capital, through the operation of exchanges, opens up at one point to release the product into general circulation, and to constitute itself out of the latter as equivalent in money. What happens to this product, which has in this way fallen out of the circulation of capital and into ordinary circulation, is here beside the point. On the other side, capital throws its form as money out of its circulation process again (partially, that is, in so far as it is not wages), or, after having realized itself as value in ordinary circulation and at the same time posited itself as the measure of its own realization, it then moves in the money form only as medium of circulation, and thus sucks into itself out of general circulation the commodities necessary for production (conditions of production). As commodity, capital throws itself out of its own circulation into general circulation; and, again as commodity, capital leaves general circulation and enters its own course, issuing into the production process. The circulation of capital thus contains a relation to general circulation, of which its own circulation forms a moment, while the latter likewise appears as posited by capital. This to be examined later. The total production process of capital includes both the circulation process proper and the actual production process. These form the two great sections of its movement, which appears as the totality of these two processes. On one side, labour time, on the other, circulation time. And the whole of the movement appears as unity of labour time and circulation time, as unity of production and circulation. This unity itself is motion, process. Capital appears as this unity-in-process of production and circulation, a unity which can be regarded both as the totality of the process of its production, as well as the specific completion of one turnover of the capital, one movement returning into itself. The condition, for capital, of circulation time is besides labour time only the same as the condition of production based on division of labour and exchange, in adequate form, in the highest form. The costs of circulation are costs of the division of labour and of exchange, which are necessarily found in every previous, pre-capitalist form of production resting on this basis. As the subject predominant [ bergreifend] over the different phases of this movement, as value sustaining and multiplying itself in it, as the subject of these metamorphoses proceeding in a circular course as a spiral, as an expanding circle capital is circulating capital. Circulating capital is therefore initially not a particular form of capital, but is rather capital itself, in a further developed aspect, as subject of the movement just described, which it, itself, is as its own realization process. In this respect, therefore, every capital is circulating capital. In simple circulation, circulation itself appears as the subject. One commodity is thrown out of it, another enters into it. But the same commodity is within it only fleetingly. Money itself, in so far as it ceases to be a medium of circulation and posits itself as independent value, withdraws from circulation. Capital, however, exists as the subject of circulation; circulation is posited as its own life s course. But while capital thus, as the whole of circulation, is circulating capital, is the process of going from one phase into the other, it is at the same time, within each phase, posited in a specific aspect, restricted to a particular form, which is the negation of itself as the subject of the whole movement. Therefore, capital in each of its particular phases is the negation of itself as the subject of all the various metamorphoses. Not-circulating capital. Fixed capital, actually fixated capital, fixated in one of the different particular aspects, phases, through which it must move. As long as it persists in one of these phases [as long as] the phase itself does not appear as fluid transition and each of them has its duration, [then] it is not circulating, [but] fixated. As long as it remains in the production process it is not capable of circulating; and it is virtually devalued. As long as it remains in circulation, it is not capable of producing, not capable of positing surplus value, not capable of engaging in the process as capital. As long as it cannot be brought to market, it is fixated as product. As long as it has to remain on the market, it is fixated as commodity. As long as it cannot be exchanged for conditions of production, it is fixated as money. Finally, if the conditions of production remain in their form as conditions and do not enter into the production process, it is again fixated and devalued. As the subject moving through all phases, as the moving unity, the unity-in-process of circulation and production, capital is circulating capital; capital as restricted into any of these phases, as posited in its divisions, is fixated capital, tied-down capital. As circulating capital it fixates itself, and as fixated capital it circulates. The distinction between circulating capital and fixed capital thus appears initially as a formal characteristic of capital, depending on whether it appears as the unity of the process or as one of its specific moments. The concept of dormant capital, capital lying fallow, can refer only to its barren existence in one of these aspects, and it is a condition of capital that part of it always lies fallow. This takes the visible form that a part of the national capital is always stuck in one of the phases through which capital has to move. Money itself, to the extent that it forms a particular part of the nation s capital, but always remains in the form of medium of circulation, i.e. never goes through the other phases, is therefore regarded by A. Smith as a subordinate form of fixed capital. Capital can likewise lie fallow, be fixated in the form of money, of value withdrawn from circulation. During crises after the moment of panic during the standstill of industry, money is immobilized in the hands of bankers, billbrokers etc.; and, just as the stag cries out for fresh water, money cries out for a field of employment where it may be realized as capital. Much confusion in political economy has been caused by this, that the aspects of circulating and fixed are initially nothing more than capital itself posited in the two aspects, first as the unity of the process, then as a particular one of its phases, itself in distinction to itself as unity not as two particular kinds of capital, not capital of two particular kinds, but rather as different characteristic forms of the same capital. While some held fast to the aspect of a material product in which it was supposed to be circulating capital, others had no difficulty in pointing out the opposite aspect, and vice versa. Capital as the unity of circulation and production is at the same time the division between them, and a division whose aspects are separated in space and time, at that. In each moment it has an indifferent form towards the other. For the individual capital, the transition from one into the other appears as chance, as dependent on external, uncontrollable circumstances. One and the same capital therefore always appears in both states; this is expressed by the appearance of one part of it in one [phase], another in another; one part tied down, another part circulating; circulating, here, not in the sense that it is in the circulatory phase proper as opposed to the production phase, but rather in the sense that in the phase in which it finds itself it is in a fluid phase, a phase in-process, a phase in transition to the next phase; not stuck in one of them as such and hence delayed in its total process. For example: the industrialist uses only a part of the capital at his disposal (whether borrowed or owned is beside the point here, nor, if we consider capital as a whole, does it affect the economic process) in production, because another part requires a certain amount of time before it comes back out of circulation. The part moving [prozessierend] within production is then the circulating part; the part in circulation is the immobilized part. His total productivity is thereby restricted; the reproduced part restricted, hence also the part thrown on to the market restricted. Thus the merchant; a part of his capital is tied down as stock in trade, the other part moves. To be sure, sometimes one and sometimes another part is in this phase, as with the industrialist, but his total capital is always posited in both aspects. Then again, since this limit arising out of the nature of the realization process itself is not fixed, but changes with circumstances, and since capital can approach its adequate character as that which circulates, to a greater or lesser degree; since the decomposition into these two aspects, in which the realization process appears at the same time as the devaluation process, contradicts the tendency of capital towards maximum realization, it therefore invents contrivances to abbreviate the phase of fixity; and at the same time also, instead of the simultaneous coexistence of both states, they alternate. In one period the process appears as altogether fluid the period of the maximum realization of capital; in another, a reaction to the first, the other moment asserts itself all the more forcibly the period of the maximum devaluation of capital and congestion of the production process. The moments in which both aspects appear alongside one another themselves only form interludes between these violent transitions and turnings-over. It is extremely important to grasp these aspects of circulating and fixated capital as specific characteristic forms of capital generally, since a great many phenomena of the bourgeois economy the period of the economic cycle, which is essentially different from the single turnover period of capital; the effect of new demand; even the effect of new gold- and silver-producing countries on general production [would otherwise be] incomprehensible. It is futile to speak of the stimulus given by Australian gold or a newly discovered market. If it were not in the nature of capital to be never completely occupied, i.e. always partially fixated, devalued, unproductive, then no stimuli could drive it to greater production. At the same time, [note] the senseless contradictions into which the economists stray even Ricardo when they presuppose that capital is always fully occupied; hence explain an increase of production by referring exclusively to the creation of new capital. Every increase would then presuppose an earlier increase or growth of the productive forces. These barriers to production based on capital are even more strongly inherent in the earlier modes of production, in so far as they rest on exchange. But they do not form a law of production pure and simple; [and,] as soon as exchange value no longer forms a barrier to material production, as soon as its barrier is rather posited by the total development of the individual, the whole story with its spasms and convulsions is left behind. As we saw earlier that money suspends the barriers of barter only by generalizing them i.e. separating purchase and sale entirely so shall we see later that credit likewise suspends these barriers to the realization of capital only by raising them to their most general form, positing one period of overproduction and one of underproduction as two periods. The value which capital posits in one cycle, one revolution, one turnover, is = to the value posited in the production process, i.e. = to the value reproduced + the new value. Whether we regard the turnover as completed at the point where the commodity is transformed into money, or at the point where the money is transformed back into conditions of production, the result, whether expressed in money or in conditions of production, is always absolutely equal to the value posited in the production process. We count the physical bringing of the product to market as = to 0; or, rather, we include it in the direct production process. The economic circulation of the product begins only when it is on the market as a commodity only then does it circulate. We are dealing here only with the economic differences, aspects, moments of circulation; not with the physical conditions for bringing the finished product into the second phase, that of circulation as commodity; nor are we concerned with the technological process by which the raw material is transformed into product. The greater or lesser distance of the market from the producer etc. does not concern us here yet. What we want to determine here first of all is that the costs arising from the motion through the different economic moments as such, the costs of circulation as such, do not add anything to the value of the product, are not value-positing costs, regardless of how much labour they may involve. They are merely deductions from the created value. If, of two individuals, each one were the producer of his own product, but their labour rested on division of labour, so that they exchanged with each other, and the realization of their product depended on the satisfaction of their needs through this exchange, then obviously the time which this exchange would cost them, e.g. the mutual bargaining, calculating before closing the deal, would make not the slightest addition either to their products or to the latter s exchange values. If A were to argue that the exchange takes up so much time, then B would respond in kind. Each of them loses just as much time in the exchange as the other. The exchange time is their common time. If A demanded 10 thalers for the product its equivalent and 10 thalers for the time it costs him to get the 10 thalers from B, then the latter would declare him a candidate for the madhouse. This loss of time arises from the division of labour and the necessity of exchange. If A produced everything himself, then he would lose no part of his time in exchanging with B, or in transforming his product into money and the money into product again. The costs of circulation proper (and they achieve a significant independent development in the money trade) are not reducible to productive labour time. But they are also by nature restricted to the time it necessarily costs to transform the commodity into money and the money back into commodity; i.e. to the time it costs to transpose capital from one form into the other. B and A might now find that they could save time by inserting a third person C as middleman between them, who consumed his time in this circulation process circumstances which would arise e.g. if there were enough exchangers, enough subjects of the circulation processes, so that the time needed by each pair of them alternately over a year = one year; each individual, say, had to spend 1/50 of a year alternately in circulation, and there are 50 of them, then 1 individual could spend his entire time in this occupation. For this individual, if only his necessary labour time were paid him, i.e. if he had to give up his entire time in exchange for the necessaries of life, then the reward which he would obtain would be wages. But if it amounted to his entire time, then the wage he would obtain would be an equivalent, objectified labour time. This individual then, would have added nothing to the value, but would, rather, have obtained a share of the surplus value belonging to capitalists A, B, etc. They would have gained, since, according to the presupposition, a lesser deduction from their surplus value would have taken place. (Capital is not a quantity simply, nor an operation simply; but both at the same time.) Money itself, to the extent that it consists of precious metals, or its production generally e.g. in paper circulation creates expense, to the extent that it also costs labour time, adds no value to the exchanged objects to the exchange values; rather, its costs are a deduction from these values, a deduction which must be borne in proportional parts by the exchangers. The preciousness of the instrument of circulation, of the instrument of exchange, expresses only the costs of exchange. Instead of adding to value, they subtract from it. Gold money and silver money, e.g., are themselves values, like others (not in the sense of money), in so far as labour is objectified in them. But that these values serve as medium of circulation is a deduction from disposable wealth. The same relation holds for the production costs of the circulation of capital. This adds nothing to the values. The costs of circulation as such do not posit value, they are costs of the realization of values deductions from them. Circulation as a series of transformations, in which capital posits itself; but, as regards value, circulation does not add to it, but posits it, rather, in the form of value. The potential value which is transformed into money through circulation is presupposed as a result of the production process. In so far as this series of processes takes place in time and involves costs, costs labour time, or objectified labour time, these circulation costs are deductions from the sum of value. When circulation costs are posited = 0, then the result of one turnover of capital, as regards value, = the value posited in the production process. That is, the value presupposed to circulation is the same as emerges from it. The most that can happen is that owing to the circulation costs a smaller value can come out than went in. In this respect, circulation time adds nothing to value; circulation time does not appear as value-positing time, the same as labour time. If production has created a commodity = to the value of 10, then circulation is necessary in order to equate this commodity to the 10, its value, which exists as money. The costs involved in this process, caused by this change of form, are a deduction from the value of the commodity. The circulation of capital is the change of forms by means of which value passes through different phases. The time which this process lasts or costs to bring about belongs among the production costs of circulation, of the division of labour, of production based on exchange. This holds for one turnover of capital, i.e. for the single course of capital through this, its different moments. The process of capital as value has its point of departure in money and ends in money, but in a greater quantity of money. The difference is only quantitative. M C C M has thus obtained a content. If we examine the cycle up to this point, we stand at the point of departure again. Capital has become money again. But it is now at the same time posited, it has now become a condition for this money that it becomes capital again, money which preserves and multiplies itself through the purchase of labour, by passing through the production process. Its form as money is posited as mere form; one of the many forms through which it moves in its metamorphosis. If we regard this point now not as a terminal point, but rather as we must now regard it as transition point, or new point of departure, itself posited by the production process as a vanishing terminal point and only a seeming point of departure, then it is clear that the retransformation of value, posited as money, into value-in-process, into value entering into the production process, can only proceed that the renewal of the production process can only take place when the part of the circulation process which is distinct from the production process has been completed. The second turnover of capital the retransformation of money into capital as such, or the renewal of the production process depends on the time capital requires to complete its circulation; i.e. on its circulation time, the latter here as distinct from production time. But since we have seen that the total value created by capital (reproduced value as well as newly created), which is realized in circulation as such, is exclusively determined by the production process, it follows that the sum of values which can be created in a given period of time depends on the number of repetitions of the production process within this period. The repetition of the production process, however, is determined by circulation time, which is equal to the velocity of circulation. The more rapid the circulation, the shorter the circulation time, the more often can the same capital repeat the production process. Hence, in a specific cycle of turnovers of capital, the sum of values created by it (hence surplus values as well, for it posits necessary labour always merely as labour necessary for surplus labour) is directly proportional to the labour time and inversely proportional to the circulation time. In a given cycle, the total value (consequently also the sum of newly posited surplus values) = labour time multiplied by the number of turnovers of the capital. Or, the surplus value posited by capital now no longer appears as simply determined by the surplus labour appropriated by it in the production process, but rather [it is determined] by the coefficient of the production process; i.e. the number which expresses how often it is repeated in a given period of time. This coefficient, in turn, is determined by the circulation time required by the capital for one turnover. The sum of values (surplus values) is thus determined by the value posited in one turnover multiplied by the number of turnovers in a given period of time. One turnover of capital is = to the production time + the circulation time. If circulation time is presupposed as given, then the total time required for one turnover depends on the production time. If production time is given, the duration of the turnover depends on the circulation time. Hence, to the extent that circulation time determines the total mass of production time in a given period of time, and to the extent that the repetition of the production process, its renewal in a given period depends on the circulation time, to that extent is it itself a moment of production, or rather appears as a limit of production. This is the nature of capital, of production founded on capital, that circulation time becomes a determinant moment for labour time, for the creation of value. The independence of labour time is thereby negated, and the production process is itself posited as determined by exchange, so that immediate production is socially linked to it and dependent on this link not only as a material moment, but also as an economic moment, a determinant, characteristic form. The maximum of circulation the limit of the renewal of the production process through it is obviously determined by the duration of production time during one turnover. Suppose the production process of a specific capital, i.e. the time it needs to reproduce its value and to posit surplus value, lasts 3 months. (Or, the time required to complete a quantity of product = to the total value of the producing capital + the surplus value.) Then this capital could under no circumstances renew the production or realization process more often than 4 times a year. The maximum turnover of this capital would be 4 turnovers per year; i.e. if no interruptions took place between the completion of one production phase and the renewal. The maximum number of turnovers would be = to the continuity of the production process, so that, as soon as the product was finished, new raw material would be worked up into product again. This continuity would extend not only to the continuity within a single production phase, but to the continuity of these phases themselves. But supposing now that this capital required one month of circulation time at the end of each phase time to return to the form of conditions of production then it could effect only 3 turnovers. In the first case the number of turnovers was = 1 phase 4; or 12 months divided by 3. The maximum value-creation by capital in a given space of time is this space of time divide d by the duration of the production process (by production time). In the second case, the capital would effect only 3 turnovers a year; it would repeat the realization process only 3 times. The sum of its realization process would be, then, = 12/4 = 3. The divisor here is the total circulation time it requires: 4 months; or the circulation time required for one circulation phase, multiplied by the number of times this circulation time is contained in a year. In the first case, the number of turnovers = 12 months, a year, a given time, divided by the time of one production phase, or by the duration of production time itself; in the second case, it equals the same time divided by circulation time. The maximum realization of capital, as also the maximum continuity of the production process, is circulation time posited as = 0; i.e. then, the conditions under which capital produces, its restriction by circulation time, the necessity of going through the different phases of its metamorphosis, are suspended. It is the necessary tendency of capital to strive to equate circulation time to 0; i.e. to suspend itself, since it is capital itself alone which posits circulation time as a determinant moment of production time. It is the same as to suspend the necessity of exchange, of money, and of the division of labour resting on them, hence capital itself. If we ignore for a moment the transformation of surplus value into surplus capital, then a capital of 100 thalers, which produced a surplus value of 4% on the total capital in the production process, would, in the first case, reproduce itself 4 times and would at the end of the year have posited a surplus value of 16. At the end of the year, the capital would be = 116. It would be the same as if a capital of 400 had turned over once a year, likewise with a surplus value of 4%. As regards the total production of commodities and values, these would have quadrupled. In the other case, a capital of 100 thalers only created a surplus value of 12; the total capital at the end of the year = 112. As regards total production in respect of either values or use values the difference still more significant. In the first case e.g. a capital of 100 transformed 400 thalers of leather into boots, in the second only 300 thalers of leather. The total realization of capital is hence determined by the duration of the production phase which we posit as identical with labour time, for the moment multiplied by the number of turnovers, or renewals of this production phase in a given period of time. If the turnovers were determined only by the duration of one production phase, then the total realization would be simply determined by the number of production phases contained in a given period of time; or, the turnovers would be absolutely determined by production time itself. This would be the maximum of realization. It is clear, therefore, that circulation time, regarded absolutely, is a deduction from the maximum of realization, is < absolute realization. It is therefore impossible for any velocity of circulation or any abbreviation of circulation to create a realization > that posited by the production phase itself. The maximum that the velocity of circulation could effect, if it rose to , would be to posit circulation time = 0, i.e. to abolish itself. It can therefore not be a positive, value-creating moment, since its abolition circulation without circulation time would be the maximum of realization; its negation = to the highest position of the productivity of capital. * The total productivity of capital is = the duration of one production phase multiplied by the number of times it is repeated in a certain period of time. But this number is determined by circulation time. Let us assume a capital of 100 turned over 4 times a year; posited the production process 4 times; then, if the surplus value = 5% each time, at the end of the year the surplus value created by the capital of 100 would = 20; then, for a capital of 400, which turned over once a year at the same percentage, would likewise = 20. So that a capital of 100, circulating 4 times, would give a gain of 20% a year, while a 4 times greater capital with a single turnover would give a profit of only 5%. (We shall see shortly, in more detail, that the surplus value is exactly the same.) It seems, therefore, that the magnitude of the capital can be replaced by the velocity of turnover, and the velocity of turnover by the magnitude of the capital. This is how it comes to appear as though circulation time were in itself productive. We must therefore clarify the matter by discussing this case. Another question which arises: If the turnover of 100 thalers 4 times a year brings 5% each time, say, then at the beginning of the second turnover, the production process could be begun with 105 thalers, and the product would be 110 1/4; at the beginning of the third turnover, 110 1/4, of which the product would be 115 61/80 at the beginning of the fourth turnover, 115 61/80, and at its end, 121 881/1600. The number itself here is beside the point. The point is that, in the case of a capital of 400 which turns over once a year at 5%, the total gain can only be 20; while, by contrast, a 4 times smaller capital turning over 4 times at the same percentage makes a gain of 1 + 881/1600 more. In this way it appears as if the mere moment of turnover repetition i.e. a moment determined by circulation time, or rather a moment determined by circulation, not only realized value, but brought about an absolute growth of value. This also to be examined. Circulation time only expresses the velocity of circulation; the velocity of circulation only the barrier to circulation. Circulation without circulation time i.e. the transition of capital from one phase to the next at the speed of thought would be the maximum, i.e. the identity of the renewal of the production process with its termination. The act of exchange and the economic operations through which circulation proceeds are reducible to a succession of acts of exchange up to the point at which capital does not relate as commodity to money or as money to commodity, but as value to its specific use value, labour the act of the exchange of value in one form for value in the other, money for commodity, commodity for money (and these are the moments of simple circulation), posits the value of one commodity in the other, and thus realizes it as exchange; or, also, posits the commodities as equivalents. The act of exchange is thus value-positing in so far as values are presupposed to it; it realizes the value-character of the subjects of exchange. But an act which posits a commodity as value, or, what is the same, which posits another commodity as its equivalent or, again the same, posits the equivalence of both commodities, obviously for its part adds nothing to value, as little as the sign increases or decreases the number coming after it. If I posit 4 as plus or as minus through this operation, 4, independently of the sign, remains equal to itself, 4, becomes neither 3 nor 5. Likewise, if I exchange a lb. of cotton with an exchange value of 6d. for 6d., then it is posited as value; and it can equally be said that the 6d, are posited as value in the lb. of cotton; i.e. the labour time contained in the 6d. (here 6d. regarded as value) is now expressed in another materialization of the same amount of labour time. But, since through this act of exchange the lb. of cotton as well as the 6d. of copper are each posited at = to their value, it is impossible that through this exchange the value either of the cotton, or of the 6d. or of the sum of both values should increase quantitatively. As the positing of equivalents, exchange only changes the form; realizes the potentially existing values; realizes the prices, if you like. To posit equivalents, e.g. A and B as equivalents, cannot raise the value of A, for it is the act in which A is posited as = to its own value, hence not as unequal to it; unequal only where the form is concerned, in so far as it was previously not posited as value; it is at the same time the act by means of which the value of A is posited as = to the value of B, and the value of B as = the value of A. The sum of the values transposed in the exchange = value A + value B. Each remains = to its own value; hence their sum remains equal to the sum of their values. Exchange as the positing of equivalents cannot therefore by its nature increase the sum of values, nor the value of the commodities exchanged. (The fact that it is different with the exchange with labour arises because the use value of labour is itself value-positing, but is not directly connected with its exchange value.) And if a single operation of exchange cannot increase the value of the thing exchanged, neither can a sum of exchanges do it. * Whether I repeat an act which creates no value once or an infinite number of times, the repetition cannot change its nature. The repetition of a non-value-creating act can never become an act of value-creation. E.g. 1/4 expresses a specific proportion. If I transform this 1/4 into a decimal fraction, i.e. posit it = 0.25, then its form has been changed. This transformation leaves the value the same. Similarly, when I transform a commodity into the form of money, or money into the form of the commodity, then the value remains the same, but the form is changed. It is clear, therefore, that circulation since it consists of a series of exchange operations with equivalents cannot increase the value of circulating commodities. Therefore, if labour time is required to undertake this operation, i.e. if values have to be consumed, for all consumption of values reduces itself to the consumption of labour time or of objectified labour time, products; i.e. if circulation entails costs, and if circulation time costs labour time, then this is a deduction from, a relative suspension of the circulating values; their devaluation by the amount of the circulation costs. If one imagines two workers who exchange with each other, a fisherman and a hunter; then the time which both lose in exchanging would create neither fish nor game, but would be rather a deduction from the time in which both of them can create values, the one fish, the other hunt, objectify their labour time in a use value. If the fisherman wanted to get compensation for this loss from the hunter: demand more game, or give him fewer fish, then the latter would have the same right to compensation. The loss would be common to both of them. These costs of circulation, costs of exchange, could appear only as a deduction from the total production and value-creation of both of them. If they commissioned a third, C, with these exchanges, and thus lost no labour time directly, then each of them would have to cede a proportional share of his product to C. What they could gain thereby would only be a greater or lesser loss. But if they worked as joint proprietors, then no exchange would take place, only communal consumption. The costs of exchange would therefore vanish. Not the division of labour; but the division of labour founded on exchange. It is wrong, therefore, for J. St. Mill to regard the cost of circulation as necessary price of the division of labour. It is the cost only of the [not-] spontaneous division of labour resting not on community of property, but on private property. Circulation costs as such, i.e. the consumption of labour time or of objectified labour time, of values, in connection with the operation of exchange and a series of exchange operations, are therefore a deduction either from the time employed on production, or from the values posited by production. They can never increase the value. They belong among the faux frais de production, and these faux frais de production belong to the inherent costs of production resting on capital. The merchant s trade and still more the money trade proper in so far as they do nothing but carry on the operations of circulation as such, e.g. the determination of prices (measurement of values and their calculation), these exchange operations generally, as a function which has gained independence through the division of labour, in so far as they represent this function of the total process of capital represent merely the faux frais de production of capital. In so far as they reduce these faux frais, they add to production, not by creating value, but by reducing the negation of created values. If they operate purely as such a function, then they would always only represent the minimum of faux frais de production. If they enable the producers to create more values than they could without this division of labour, and, more precisely, so much more that a surplus remains after the payment of this function, then they have in fact increased production. Values are then increased, however, not because the operations of circulation have created value, but because they have absorbed less value than they would have done otherwise. But they are a necessary condition for capital s production. The time a capitalist loses during exchange is as such not a deduction from labour time. He is a capitalist i.e. representative of capital, personified capital, only by virtue of the fact that he relates to labour as alien labour, and appropriates and posits alien labour for himself. The costs of circulation therefore do not exist in so far as they take away the capitalist s time. His time is posited as superfluous time: not-labour time, not-value-creating time, although it is capital which realizes the created value. The fact that the worker must work surplus labour time is identical with the fact that the capitalist does not need to work, and his time is thus posited as not-labour time; that he does not work the necessary time, either. The worker must work surplus time in order to be allowed to objectify, to realize the labour time necessary for his reproduction. On the other side, therefore, the capitalist s necessary labour time is free time, not time required for direct subsistence. Since all free time is time for free development, the capitalist usurps the free time created by the workers for society, i.e. civilization, and Wade is again correct in this sense, in so far as he posits capital = civilization. Circulation time to the extent that it takes up the time of the capitalist as such concerns us here exactly as much as the time he spends with his mistress. If time is money, then from the standpoint of capital it is only alien labour time, which is of course in the most literal sense the capitalist s money. In regard to capital as such, circulation time can coincide with labour time only in so far as it interrupts the time during which capital can appropriate alien labour time, and it is clear that this relative devaluation of capital cannot add to its realization, but can only detract from it; or, in so far as circulation costs capital objectified alien labour time, values. (For example because it has to pay someone who takes over this function.) In both cases, circulation time is of interest only in so far as it is the suspension, the negation of alien labour time; either because it interrupts capital in the process of its appropriation; or because it forces it to consume a part of the created value, to consume it in order to accomplish the operations of circulation, i.e. to posit itself as capital. (Very much to be distinguished from the private consumption of the capitalist.) Circulation time is of interest only in its relation as barrier, negation to the production time of capital; this production time, however, is the time during which it appropriates alien labour, the alien labour time posited by it. To regard the time the capitalist spends in circulation as value-creating time or even surplus-value-creating time is to fall into the greatest confusion. Capital as such has no labour time apart from its production time. The capitalist absolutely does not concern us here except as capital. And he functions as such only in the total process we are examining. Otherwise, it could still be imagined that the capitalist draws compensation for the time during which he does not earn money as another capitalist s wage labourer or that he loses this time. [Or] that it belongs together with the costs of production. The time which he employs or loses as capitalist is lost time altogether, sunk and unrecoverable from this standpoint. We will later look at the capitalist s so-called labour time as distinct from the worker s labour time, which former is alleged to form the basis of his profits, as a wage of its own type. Nothing is more common than to bring transport etc., to the extent that they are connected with trade, into the pure circulation costs. In so far as trade brings a product to market, it gives it a new form. True, all it does is change the location. But the mode of the transformation does not concern us. It gives the product a new use value (and this holds right down to and including the retail grocer, who weighs, measures, wraps the product and thus gives it a form for consumption), and this new use value costs labour time, is therefore at the same time exchange value. Bringing to market is part of the production process itself. The product is a commodity, is in circulation only when it is on the market. Simple circulation consisted of a great number of simultaneous or successive exchanges. Their unity, regarded as circulation, was actually present only from the observer s standpoint. (The exchange can be accidental, and it more or less has this character where it is restricted to the exchange of the excess product, and has not seized upon the totality of the production process.) In the circulation of capital we have a series of exchange operations, acts of exchange, each of which represents a qualitatively different moment towards the other, a moment in the reproduction and growth of capital. A system of exchanges, changes of substance, from the standpoint of value as such. Changes of form, from the standpoint of use value. The product relates to the commodity as use value to exchange value; thus the commodity to money. Here one series attains its peak. Money relates to the commodity into which it is retransformed as exchange value to use value; even more so, money to labour. In so far as capital in every moment of the process is itself the possibility of going over into its other, next phase, and is thus the possibility of the whole process, which expresses capital s act of life, to that extent each of the moments appears potentially as capital hence commodity capital, money capital along with the value positing itself in the production process as capital. The commodity can represent money as long as it can transform itself into money, i.e. can buy wage labour (surplus labour); this in respect of the formal side, which emerges from the circulation of capital. On the material, physical side, it remains capital as long as it consists of raw material (proper or semi-fabricated), instrument, or necessaries for the workers. Each of these forms is potential capital. Money is in one respect the realized capital, capital as realized value. In this respect (regarded as a terminal point of circulation, where it then has to be regarded as a point of departure as well), it is capital, . It is then especially capital again in regard to the part of the production process in which it exchanges itself for living labour. By contrast, in its exchange for the commodity (new purchase of raw material etc.) by the capitalist, it appears not as capital, but as medium of circulation; merely a vanishing mediation, through which the capitalist exchanges his product for the latter s original elements. Circulation is not merely an external operation for capital. Just as it only becomes capital through the production process, in that value immortalizes and increases itself through that process, so does it become retransformed into the pure form of value in which the traces of its becoming, as well as its specific presence in use value, have been extinguished only through the first act of circulation; while the repetition of this act, i.e. the life process [of capital] is made possible only through the second act of circulation, which consists of the exchange of money for the conditions of production and forms the introduction to the act of production. Circulation therefore belongs within the concept of capital. Just as, originally, money or stockpiled labour appeared as presupposition before the exchange with free labour; the seeming independence of the objective moment of capital towards labour, however, was suspended, and objectified labour, become independent as value, appeared on all sides as the product of alien labour, the alienated product of labour itself; so does capital only now appear as presupposed to its circulation (capital as money was presupposed to its becoming capital; but capital as the result of value which has absorbed and assimilated living labour appeared as the point of departure not of circulation generally, but of the circulation of capital), so that it would exist independently and indifferently, even without this process. However, the movement of the metamorphoses through which it must pass now appears as a condition of the production process itself; just as much as its result. Capital, in its reality, therefore appears as a series of turnovers in a given period. It is no longer merely one turnover, one circulation; but rather the positing of turnovers; positing of the whole process. Its value-positing therefore appears as conditioned (and value is capital only as self-immortalizing and self-multiplying value) (1) qualitatively; in that it cannot renew the production phase without passing through the phases of circulation; (2) quantitatively; in that the mass of the values it posits depends on the number of its turnovers in a given period; (3) in that circulation time appears in both respects as limiting principle, as barrier of production time, and vice versa. Capital is therefore essentially circulating capital. While in the workshop of the production process capital appears as proprietor and master, in respect of circulation it appears as dependent and determined by social connections, which, from our present standpoint, make it enter into and figure in simple circulation alternately as C towards M and M towards C. But this circulation is a haze under which yet another whole world conceals itself, the world of the interconnections of capital, which binds this quality originating in circulation in social intercourse to itself, and robs it of the independence of self-sustaining property, as well as of its character. Two vistas into this presently still distant world have already opened up, at the two points at which the circulation of capital pushes the value posited and circulated by it in the form of the product out of its path, and, secondly, the point at which it pulls another product out of circulation into its own orbit; transforms this product itself into one of the moments of its presence [Dasein]. At the second point it presupposes production; not its own immediate production; at the first point it may presuppose production, if its product is itself raw material for other production; or consumption if it has obtained the final form for consumption. This much is clear, that consumption need not enter into its circle directly. The actual circulation of capital, as we shall see later, is still circulation between dealers and dealers. The circulation between dealers and consumers, identical with the retail trade, is a second circle which does not fall within the immediate circulation sphere of capital. An orbit which it describes after the first is described, and simultaneously alongside it. The simultaneity of the different orbits of capital, like that of its different aspects, becomes clear only after many capitals are presupposed. Likewise, the course of human life consists of passing through different ages. But at the same time all ages exist side by side, distributed among different individuals. Considering that the production process of capital is at the same time a technological process production process absolutely namely [the process] of the production of specific use values through specific labour, in short, in a manner determined by this aim itself; considering that the most fundamental of these production processes is that through which the body reproduces its necessary metabolism, i.e. creates the necessaries of life in the physiological sense; considering that this production process coincides with agriculture; and the latter also at the same time directly (as with cotton, flax etc.) or indirectly, through the animals it feeds (silk, wool, etc.), furnishes a large part of the raw materials for industry (actually all except those belonging to the extractive industries); considering that reproduction in agriculture in the temperate zone (the home of capital) is bound up with general terrestrial circulation; i.e. harvests are mostly annual; it follows that the year (except that it is figured differently for various productions) has been adopted as the general period of time by which the sum of the turnovers of capital is calculated and measured; just as the natural working day provided such a natural unit as measure of labour time. In the calculation of profit, and even more of interest, we consequently see the unity of circulation time and production time capital posited as such, and as its own measure. Capital itself as in process hence, as accomplishing one turnover is regarded as working capital, and the fruits, which it is supposed to yield, are calculated according to its working time the total circulation time of one turnover. The mystification which thereby takes place lies in the nature of capital. Firstly, in the sense used by us above, of fixated capital, John St. Mill (Essays on some Unsettled Questions of Political Econ., Lond., 1844, p. 55), [speaks of it] as tied-down, not disposable, not available capital. Stuck in one phase of its total circulation process. In this sense he says correctly, like Bailey in the above quotations, that a great part of the capital of a nation always lies idle. The difference between fixed and circulating capital is more apparent than real; e.g. gold is fixed capital; floating only in so far as it is consumed for gilding etc. Ships are fixed capital, although literally floating. Foreign railway shares are articles of commerce in our markets; so may our railways be in the markets of the world; and so far they are floating capital, on a par with gold. (Anderson, The Recent Commercial Distress etc., London, 1847, p. 4.) (Notebook I, 27.) According to Say: capital so much involved in one kind of production that it can no longer be diverted from it to be devoted to another kind of production . The identification of capital with a specific use value, use value for the production process. This quality of capital, being tied down as value to a particular use value use value within production is, however, an important aspect. This expresses more than the inability to circulate, which actually only says that fixed capital is the opposite of circulating capital. In his Logic of Political Economy (p. 114) (Notebook X, 4), de Quincey says: Circulating capital, in its normal idea, means any agent whatever (beautiful logician) used productively which perishes in the very act of being used. (According to this, coal would be circulating capital, and oil, but not cotton etc. It cannot be said that cotton perishes by being transformed into twist or calico, and such transformation certainly means using it productively); capital is fixed when the thing serves repeatedly always for the same operation, and by how much larger has been the range of iterations, by so much more intensely is the tool, engine, or machinery entitled to the denomination of fixed. (p. 114.) (Notebook X, 4.) According to this, the circulating capital would die out, be consumed in the act of production; the fixed capital which, for greater clarity, is characterized as tool, engine, or machinery (thus improvements incorporated in the soil are, for instance, excluded) would serve repeatedly, always for the same operation. The distinction here concerns only technological differences in the act of production, not in the least the form-relation; circulating and fixed capital, in the differences here indicated, do have distinguishing features by means of which one particular agent is fixed and the other circulating, but neither of them any qualification which would entitle it to the denomination of capital. According to Ramsay (IX, 84) only the approvisionnement is circulating capital, because the capitalist must part with it immediately, and it does not enter into the reproduction process at all, but is rather exchanged directly for living labour, for consumption. All other capital (including raw material) remains in the possession of its owner or employer until the produce is completed. (loc. cit. p. 21.) Circulating capital consists only of subsistence and other necessaries advanced to the workman, previous to the completion of the produce of his labour. (loc. cit. p. 23.) In regard to approvisionnement he is correct in so far as it is the only part of capital which circulates during the production phase itself, and which is in this respect circulating capital par excellence. In another respect it is false to say that fixed capital remains in the possession of its owner or employer until the produce is completed and no longer than that. He consequently also later explains fixed capital as any portion of that labour (bestowed upon any commodity) in a form in which, though assisting to raise the future commodity, it does not maintain labour . (But how many commodities do not maintain labour! I.e. do not belong among the workers articles of consumption. These, according to Ramsay, are all fixed capital.) (If the interest on 100 at the end of the first year or of the first 3 months is 5, then the capital at the end of the first year 105 or 100(1 + 0.05); at the end of the 4th year = 100(1 + 0.05)4 = 121. 55/100 and 1/1600 = 121 11s. 3/20 farthing or 121 11s. 0.15 farthing. Hence 1 11s. 3/20 farthing more than 20.) (In the question posed above, assume that a first capital of 400 turns over only once a year, a second [capital of 100,] 4 times, both at 5%. In the first case the capital would make 5% once a year, = 20 on 400; in the second case 4 5%, likewise = 20 per year on 100. The velocity of turnover would substitute for the size of the capital; just as in simple money circulation 100,000 thalers which circulate 3 times a year = 300,000, while 3,000 which circulate 100 times = 300,000 also. But if the capital circulates 4 times a year, then it is possible that the surplus gain itself is ploughed into the capital for the second turnover, and turned over with it, producing thereby the difference of 1 11s. 0.15 farthing. But this difference in no way follows from the presupposition. All that is there is the abstract possibility. What would follow, rather, from the presupposition is that 3 months are required for the turnover of a capital of 100. E.g. therefore, if the month = 30 days, then for 105 with the same turnover relation, with the same relation between the turnover time and the size of the capital not 3 months are required, * but rather 105:x = 100:90; x = (90 105)/100 = 9450/100 = 94 5/10 days = 3 months, 4 1/2 days. With that, the first difficulty is completely solved.) (From the fact that a larger capital with a slower turnover does not create more surplus value than a smaller with a relatively more rapid turnover, it does not in the least automatically follow that a smaller capital turns over more rapidly than a larger. This is indeed the case in so far as the larger capital consists of more fixed capital and in so far as it has to search out more distant markets. The size of the market and the velocity of turnover are not necessarily inversely related. This occurs only as soon as the present, physical market is not the economic market; i.e. as the economic market becomes more and more distant from the place of production. To the extent, by the way, that [this relation] does not arise purely from the distinction between fixed and circulating capital, the moments which determine the circulation of different capitals cannot be at all developed yet here. An incidental remark: to the extent that trade posits new points of circulation, i.e. brings different countries into intercourse, discovers new markets etc., this is something entirely different from the mere costs of circulation required to carry out a given mass of exchange operations; it is the positing not of the operations of exchange, but of the exchange itself. Creation of markets. This point will have to be examined in particular before we have done with circulation.) Now let us continue with our review of the opinions about fixed and circulating capital . Depending on whether capital is more or less transitory, hence must be more or less frequently reproduced in a given time, it is called circulating or fixed capital. Furthermore, capital circulates or returns to its employer in very unequal times; e.g. wheat which the farmer buys to sow is relatively fixed capital compared to the wheat a baker buys to make bread. (Ricardo VIII, 19.) Then he remarks also: Different proportions of fixed capital and circulating capital in different trades; different durability of fixed capital itself. (Ricardo, loc. cit.) Two kinds of commerce can employ a capital of equal value, but which may be divided in a very different way as regards the fixed part and the circulating part. They may even employ an equal value of fixed capital and circulating capital, but the durability of the fixed capital may be very unequal. For example, one a steam engine of 10,000, the other, ships. (This out of Say s translation of Ricardo, Vol. I, p. 29, 30.) The error from the outset is that, according to Ricardo, capital is supposed to be more or less transitory . Capital as capital value is not transitory. But the use value in which the value is fixated, in which it exists, is more or less transitory , and must therefore be more or less frequently reproduced in a given time . The difference between fixed capital and circulating capital is therefore reduced here to the greater or lesser necessity for reproducing the given capital in a given time. This is one distinction made by Ricardo. The other distinction concerns the different degrees of durability, or different degrees of fixed capital, i.e. different degrees, relative durability of the relatively fixed. So that fixed capital is itself more or less fixed. The same capital appears in the same business in the two different forms, the particular modes of existence of fixed and circulating, hence exists doubly. To be fixed or circulating appears as a particular aspect of capital apart from that of being capital. It must, however, proceed to this particularization. Finally, as for the third distinction, that capital circulates or returns in very unequal times , what Ricardo means by this, as his example of the baker and the farmer shows, is nothing more than the difference in the time during which capital is fixed, tied up in the production phase as distinct from the circulation phase, in different branches of business. Hence, fixed capital occurs here in the same way as we had it previously, as being fixated in each phase; except that the specifically longer or shorter fixation in the production phase, this phase in particular, is regarded as a peculiarity, particularity of capital [as value-] positing. Money attempted to posit itself as imperishable value, as eternal value, by relating negatively towards circulation, i.e. towards the exchange with real wealth, with transitory commodities, which, as Petty describes very prettily and very na vely, dissolve in fleeting pleasures. Capital posits the permanence of value (to a certain degree) by incarnating itself in fleeting commodities and taking on their form, but at the same time changing them just as constantly; alternates between its eternal form in money and its passing form in commodities; permanence is posited as the only thing it can be, a passing passage process life. But capital obtains this ability only by constantly sucking in living labour as its soul, vampire-like. The permanence the duration of value in its form as capital is posited only through reproduction, which is itself double, reproduction as commodity, reproduction as money, and unity of both these reproduction processes. In its reproduction as commodity, capital is fixated in a particular form of use value, and is thus not general exchange value, even less realized value, as it is supposed to be. The fact that it has posited itself as such in the act of reproduction, the production phase, is proved only through circulation. The greater or lesser perishability of the commodity in which value exists requires a slower or faster reproduction; i.e. repetition of the labour process. The particular nature of use value, in which the value exists, or which now appears as capital s body, here appears as itself a determinant of the form and of the action of capital; as giving one capital a particular property as against another; as particularizing it. As we have already seen in several instances, nothing is therefore more erroneous than to assert that the distinction between use value and exchange value, which falls outside the characteristic economic form in simple circulation, to the extent that it is realized there, falls outside it in general. We found, rather, that in the different stages of the development of economic relations, exchange value and use value were determined in different relations, and that this determination itself appeared as a different determination of value as such. Use value itself plays a role as an economic category. Where it plays this role is given by the development itself. Ricardo, e.g., who believes that the bourgeois economy deals only with exchange value, and is concerned with use value only exoterically, derives the most important determinations of exchange value precisely from use value, from the relation between the two of them: for instance, ground rent, wage minimum, distinction between fixed capital and circulating capital, to which he imputes precisely the most significant influence on the determination of prices (through the different reaction produced upon them by a rise or fall in the rate of wages); likewise in the relation of demand and supply etc. One and the same relation appears sometimes in the form of use value and sometimes in that of exchange value, but at different stages and with a different meaning. To use is to consume, whether for production or consumption. Exchange is the mediation of this act through a social process. Use can be posited as, and be, a mere consequence of exchange; then again, exchange can appear as merely a moment of use, etc. From the standpoint of capital (in circulation), exchange appears as the positing of its use value, while on the other side its use (in the act of production) appears as positing for exchange, as positing its exchange value. Likewise with production and consumption. In the bourgeois economy (as in every economy), they are posited in specific distinctions and specific unities. The point is to understand precisely these specific, distinguishing characteristics. Nothing is accomplished by the [assertions of] Mr Proudhon or of the social sentimentalists that they are the same. The good thing in Ricardo s explanation is that it begins by emphasizing the moment of the necessity of quicker or slower reproduction; hence that the greater or lesser durability consumption (in the sense of self-consumption), slower or more rapid is regarded in connection with capital itself. Hence a relation of use value for capital itself. Sismondi by contrast immediately introduces a determinant initially exoteric to capital; direct or indirect human consumption: whether the article is a direct or an indirect necessary of life for the human consumer; he thereby joins this with the quicker or slower consumption of the object itself. The objects which serve directly as necessaries of life are more perishable, because designed to perish, than those which help to produce the necessaries of life. With the latter, their duration is their character; their transitoriness fate. He says: Fixed, indirect capital is slowly consumed, in order to assist in consuming that which man destines for his use; circulating capital does not cease to be directly applied to the use of man Whenever a thing is consumed, it never returns for him who consumes it; while a thing consumed for reproduction is there for him at the same time. (Sismondi VI.) He also presents the relation in such a way that: the first transformation of annual consumption into durable foundations, suitable for increasing the productive powers of future labour fixed capital; this first labour always accomplished by labour, represented by a wage, exchanged for necessaries which the worker consumes during labour. Fixed capital is consumed slowly (i.e. is slowly worn out). Second transformation: Circulating capital consists of labour-seeds (raw material) and of the worker s consumption. (loc. cit.) This is more concerned with the origin. Firstly the transformation, that fixed capital is itself only circulating capital which has assumed a stationary form, fixated circulating capital; second, the destination: the one destined to be consumed as means of production, the other as product; or the different mode of its consumption, determined by its role among the conditions of production in the production process. Cherbuliez simplifies the matter to the point where circulating capital is the consumable, fixed capital the not consumable part of capital. (One you can eat, the other not. A very easy method of taking the thing.) In a quotation already given above (29 in the Notebook), Storch vindicates for circulating capital generally the circulating nature of capital. He contradicts himself by saying: all fixed capital comes originally from a circulating capital, and needs continually to be maintained at the latter s expense (hence comes out of circulation, or is itself circulating in its first moment and constantly renews itself through circulation; thus although it does not go into circulation, circulation goes into it). As for what Storch adds further: NO fixed capital can give a revenue EXCEPT by means of a circulating capital (26a. Notebook), we shall return to that later. < Reproductive consumption is not properly an expense, but only an advance, because it is reimbursed to its agent ; p. 54 in Storch s polemic against Say (p. 5b. Second notebook on Storch). (The capitalist gives the worker a part of the latter s own surplus labour in the form of advance, as something for which he must reimburse the capitalist not merely with an equivalent, but with surplus labour as well.)> (The formula for computing compound interest is: S = c(1 + i)n. (S, the total magnitude of capital c after n years at an interest rate i.) The formula for computing an annuity is:

Grundrisse 12

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch12.htm

We assume for the time being that production time and labour time coincide. The case where interruptions take place within the production phase itself, owing to the technological process, will be looked at later. Suppose the production phase of a capital equal to 60 working days; of which 40 are necessary labour time. Then, according to the law developed earlier, the surplus value, or the value newly posited by capital, i.e. appropriated alien labour time = 60 40; = 20. Let us call this surplus value (=20) S; the production phase or the labour time employed in production p. In a period of time which we shall call T e.g. 360 days the total value can never be greater than the number of production phases contained in, say, 360. The highest coefficient of S i.e. the maximum of surplus value which capital can create on the given presuppositions equals the number of times the creation of S is repeated in 360 days. The outer limit of this reproduction the reproduction of capital, or rather, now, the reproduction of its production process is determined by the relation of the production period to the total period of time in which the former can be repeated. If the given period = 360 days, and the duration of production = 60 days, then 360/60, or T/p, i.e. 6, is the coefficient indicating how many times p is contained in T, or how often, given its own inherent limits, the reproduction process of the capital can be repeated within 360 days. It goes without saying that the maximum of the creation of S, i.e. the positing of surplus value, is given by the number of processes in which S can be produced, in a given period of time. This relation is expressed by T/p. The quotient of T/p, or q, is the highest coefficient of S in the period of 360 days, in T generally. ST/p or Sq is the maximum of value. If T/p = q, then T = pq; i.e. the entire duration of T would be production time; the production phase, p, would be repeated as often as it is contained in T. The total value created by capital in a certain time would be = to the surplus labour it appropriates in one production phase, multiplied by the number of times this production phase is contained in the given time. Thus in the above example, = 20 360/60 = 20 6 = 120 days. q, i.e. T/p, would express the number of turnovers of the capital; but since T = pq, therefore p = T/q; i.e. the duration of one production phase would be equal to the total time divided by the number of turnovers. Thus one production phase of capital would be equal to one of its turnovers. Turnover time and production time would be completely identical; the number of turnovers therefore [would be] exclusively determined by the relation of one production phase to the total time. However, on this assumption, circulation time is posited as = 0. Yet circulation time has a definite magnitude, which can never become = 0. Now assume additionally that there are 30 days for circulation for every 60 days of production time; call this circulation time added to p, c. In this case, one turnover of capital, i.e. the total time it requires before it can repeat the realization process the positing of surplus value would be = 30 + 60 = 90 days (= p + c) (1R (turnover) = p + c). One turnover of 90 days can be repeated in 360 days only 360/90 times, i.e. 4 times. The surplus value of 20 could therefore be posited only 4 times; 20 4 = 80. In 60 days the capital produces 20 surplus days; but it has to circulate for 30 days; i.e. during these 30 days it can posit no surplus labour, no surplus value. This is the same for it (as regards the result) as if it had posited a surplus value of only 20 in the period of 90 days. While previously the number of turnovers was determined by T/p, it is now determined by T/(p + c) or T/R; the maximum of value was ST/(p + c); (20 (300/(60 + 30)) = 20 (360/90) = 20 4 = 80). The number of turnovers hence = the total time divided by the sum of production time and circulation time, and the total value = S multiplied by the number of turnovers. But this formulation does not yet suffice for us to express the relations of surplus value, production time and circulation time. The maximum of value creation contained in the formula ST/p; value creation restricted by circulation, ST/(p + c) (or ST/R); when we subtract the second amount from the first, then As difference we then obtain STc / p(p + c) or ST/p c/(p + c); ST/(p + c) or S , as we may call this value in the second form, S = ST/p (ST/p c/(p + c)). But before we develop this formula further, there are still others to be introduced. If we call the quotient of T/(p + c) q , then q expresses the number of times R = (p + c) is contained in T, the number of turnovers. T/(p + c) = q ; hence T = pq + cq . pq then expresses the total production time and cq the total circulation time. Let us call total circulation time C (hence cq = C). (T(360) = 4 60 (240) + 4 30 (120).) With our presupposition, q = 4, C = cq = 4c; 4 being = to the number of turnovers. We saw previously that the maximum of value-creation = ST/p; but in this case T was posited as = to production time. But the real production time is now T q; as indeed follows from the equation. T = pq (total production time) + cq (total circulation time, or C ). Hence T C = cq . Hence S(T C) / p the maximum value creation. Because production time not 360 days, but 360 cq , i.e. 4 30 [=] 120; hence 20((360 120)/60); (20 240)/60 = 80. Now, finally, as regards the formula S = ST/p (ST/p c/(c + p)) = (360 20)/60 20(360/60 30/(30 + 60)) = 120 (120 30/90) = 6 20 (6 20 3/9) = 20 6 (20 6 1/3) or = 120 (120 1/3) = 120 40 = 80, it signifies that value is equal to the maximum of value, i.e. to value determined only by the relation of production time to total time, minus the number which expresses how often the circulation time is contained in this maximum, plus c/(c + p) = c/R; c/R expresses the relation of circulation time to one turnover of capital. If we multiply numerator and denominator by q then cq / (c + p)q = C/T; c/(c + p) = 30/(30 + 60) = 1/3. c/(c + p) or 1/3 expresses the relation of circulation time to total time, for 360/3 = 120. The turnover (c + p) is contained in C, c/(c + p) or 1/3 times (or c/T times), and this number is the maximum itself multiplied by the number of times a turnover is contained in c, in the circulation time added to one turnover, or divided by the number which expresses how often c is contained in c + p or C in T. If c = 0, then S would be ST/p and would be at its maximum. S becomes smaller in the same degree as C grows, is inversely related to it, for the factor c/(c + p) and ST/p grows to the same degree. The number to be subtracted [from] the maximum value, ST/p c/(c + p) or ST/p c/R. We have, then, the three equations: (1) S = ST/(p + c) = ST/R; (2) S = S(T C) / p; (3) S = ST/p (ST/p c/(c + p)) = S[T/p (T/p c/(c + p))]. Hence: S:S = ST/p: S(T C) / p; or S:S = T:(T C). The maximum of value is to the real value as a given period of time is to this period of time minus total circulation time. Or, as well, S:S = pq :(pq q c), i.e. = p:(p c). On (3) S = ST/p (ST/p c/(c + p)) = S[T/p (T/p c/(c + p))] or, since T/p = q, S = S (q q c/(c + p)) = S(q qc/R). The total surplus value, therefore, = to the surplus value posited in one production phase, whose coefficient is the number of times the production time is contained in the total time minus the number of times the circulation time of one turnover is contained in this latter number. S(q qc/R) = Sq(1 1c/R) = Sq((R c)/R) = Sqp/R = ST/(p + c), which is the first equation. Thus equation 3 means equation 1: the total surplus value equals the surplus value of one production phase multiplied by the total time, divided by turnover time or multiplied by the number of times the sum of production time and circulation time is contained in total time. Equation 2: The total value equals surplus value multiplied by total time minus the total circulation time, divided by the duration of one production phase.> The contradiction of labour time and circulation time contains the entire doctrine of credit, to the extent, namely, that the history of currency etc. enters here. Now, of course, later, where circulation time is not the only deduction from possible production time, there also appear real costs of circulation, i.e. values which have already been really posited must be spent on circulation. But these are all in fact only costs deductions from already created surplus values which capital undertakes in order to increase the sum of surplus values possible e.g. in a year, i.e. to increase the proportion of production time out of a given total time i.e. to abbreviate circulation time. Of course, in practice, production time does not really appear interrupted by circulation time (except in crises and depressions of trade). But this is only because every capital is divided into parts, one part in the production phase, the other in the circulation phase. Thus, for example, it is not the entire capital that is active (depending on the relation of circulation time to production time), but only 1/3, 1/x of it; the other is engaged in circulation. Or the matter can further take the form that a given capital doubles (through credit, e.g.). For this capital the original capital it is then the same as if circulation time did not exist at all. But then the capital borrowed by it is in this plight. And if ownership is disregarded, again exactly the same as if one capital were divided in two. Instead of a dividing into two and b dividing into two, a absorbs b and divides into a and b. Illusions about this process frequent among credit-mystics (who are rarely creditors, but rather debtors). We already pointed out above that the double and contradictory condition of capital, the continuity of production and the necessity of circulation time, and also the continuity of circulation (not circulation time) and the necessity of production time, can be mediated only by capital dividing itself into parts, of which one circulates as finished product, and the other reproduces itself in the production process. These parts alternate; when one part returns into phase P (production process), the other departs. This process takes place daily, as well as at longer intervals (dimensions of time). The whole capital and the total value are reproduced as soon as both parts have passed through the production process and circulation process, or as soon as the second part enters anew into circulation. The point of departure is thereby the terminal point. The turnover therefore depends on the size of the capital, or rather, here, still on the total sum of these two parts. Only when the total sum is reproduced has the entire turnover been completed; otherwise only 1/2, 1/3, 1/x, depending on the relation of the constantly circulating part. It has further been emphasized that each part can be regarded as fixed or as circulating in contrast to the other, and that they really relate to each other in this alternating way. The simultaneity of the process of capital in different phases of the process is possible only through its division and break-up into parts, each of which is capital, but capital in a different aspect. This change of form and matter is like that in the organic body. If one says e.g. the body reproduces itself in 24 hours, this does not mean it does it all at once, but rather the shedding in one form and renewal in the other is distributed, takes place simultaneously. Incidentally, in the body the skeleton is the fixed capital; it does not renew itself in the same period of time as flesh, blood. There are different degrees of speed of consumption (self-consumption) and hence of reproduction. (Here, then, already transition to many capitals.) The important thing here above all is to examine capital as such for itself first of all; since the aspects being developed here are those which make value in general into capital; which constitute the specific distinguishing characteristics of capital as such. Before we go further, let us call attention once more to the important point that circulation time i.e. the time during which capital is separated from the process in which it absorbs labour, i.e. the labour time of capital as capital is only the transposition of previously created value from one form into the other, but not a value-creating, value-increasing element. The transformation of a value of 4 working days existing in the form of twist into the form of 4 working days existing as money, or of a symbol recognized as the representative of 4 working days as such, 4 working days in general, transposes the previously created and measured value from one form into another, but that value is not increased. The exchange of equivalents leaves the working days after the exchange just as they were before, qua amounts of value. If one thinks of one capital, or one thinks of the various capitals of a country as one capital (national capital) as distinct from that of other countries, then it is clear that the time during which this capital does not act as productive capital, i.e. posits no surplus value, is a deduction from the realization time available to this capital. In this abstract conception, still without any regard to the costs of circulation itself, it appears as the negation not of the really posited realization time, but of the possible realization time, i.e. possible if circulation time = 0. It is clear, now, that the national capital cannot regard the time during which it does not multiply itself as time in which it does multiply itself, no more than e.g. an isolated peasant can regard the time during which he can neither harvest nor sow, during which his labour generally is interrupted, as time which makes him rich. The fact that capital regards itself, and necessarily so, as productive and fruit-bearing independently of labour, of the absorption of labour, assumes itself as fertile at all times, and calculates its circulation time as value-creating time as production cost is quite another thing. In this way one can see what is wrong when e.g. Ramsay says: the use of fixed capital modifies to a considerable extent the principle that value depends on quantity of labour. For some commodities on which the same quantity of labour has been expended require very different periods before they are fit for consumption. But as during this time the capital brings no return, in order that the employment in question should not be less lucrative than others in which the produce is sooner ready for use, it is necessary that the commodity, when at last brought to market, should be increased in value by all the amount of profit withheld. (This already assumes that capital as such regularly brings profit, like a healthy tree brings fruit.) This shews how capital may regulate value independently of labour. E.g. wine in the cellar. (Ramsay, IX, 84.) Here as if circulation time as well as labour time or on the same level with it produced value. Capital, of course, contains both moments in itself. (1) Labour time as a value-creating moment. (2) Circulation time as a moment which restricts labour time and thus restricts the total value creation of capital; as necessary, because value, or capital, as an immediate result of the production process, is indeed value, but value not posited in its adequate form. The time which is required for these changes of form i.e. which elapses between production and reproduction is time which devalues capital. Thus, like continuity, so is the interruption of continuity contained in the character of capital as circulating, in process. The economists who correctly characterize circulation, the revolution which capital must go through to fire itself up for new production, as a series of exchanges thereby admit that this circulation time is not time which increases the quantity of values hence it cannot be time which posits new values because a series of exchanges, no matter how many exchanges it may include, and how much time the completion of these operations may cost, is merely the exchange of equivalents. The positing of values the extremes of the mediation as equivalents naturally cannot posit them as non-equivalents. Regarded quantitatively, they can have neither increased nor diminished through the exchange. The surplus value of a production phase is determined by the surplus labour set in motion (appropriated) by capital during it; the sum of the surplus values a capital can create in a given period of time is determined by the repetition of the production phase in this period of time; or by the turnover of capital. The turnover, however, equals the duration of the production phase plus the duration of circulation, equals the sum of circulation time and production time. The turnover approaches production time as circulation time diminishes, i.e. the time which elapses between capital s departure from production and its return to it. Surplus value is in fact determined by the labour time objectified during one production phase. The more frequent the reproduction of capital, the more often does the production of surplus value take place. The number of reproductions = the number of turnovers. Hence the total surplus value = S nR (if n is the number of turnovers). S = S nR; hence S = S /nR. If the production time required by a capital of 100 in a certain branch of industry equals 3 months, then it could turn over 4 times a year, and if the S-value created each time = 5, then the total surplus value = 5 (the S created in one production phase) 4 (the number of turnovers, determined by the relation of production time to the year) = 20. But if circulation time = e.g. 1/4 of production time, then 1 turnover would = 3 + 1 months, equals 4 months, and the capital of 100 could turn over only 3 times a year = 15. Hence, although the capital posits an S-value of 5 in 3 months, it is the same for it as if it posited a value of 5 in only 4 months, because it can only posit 5 3 per year. It is the same for it as if it produced an S of 5 every 4 months; hence produced only 15/4 or 3 3/4 in 3 months, and in the one circulation month, 1 1/4. In so far as turnover is distinct from the duration posited by the conditions of production, it is = to circulation time. The latter, however, is not determined by labour time. In this way the sum of surplus values which capital posits in a given period of time appears determined not simply by labour time, but by labour time as well as circulation time, in the relations indicated above. But, as shown above, the determination which capital here brings into the positing of value is negative, limiting. If e.g. a capital of 100 needs 3 months for production, say 90 days, then, if circulation time = 0, the capital could turn over 4 times a year; and it would be entirely active as capital the whole time, i.e. positing surplus labour, multiplying its value. If 80 of the 90 days represented necessary labour, then 10, surplus labour. Now posit that circulation time amounts to 33 1/3% of production time, or 1/3 of it. Hence 1 month for every 3. Circulation time then = 90/3; a third of production time = 30 days, c = 1/3 p; (c = p/3). Well. The question is, what part of the capital can now continuously be occupied in production (during the whole year)? If the capital of 100 had worked 90 days, and then circulated as a product of 105 for one month, then during this month it could employ no labour at all. (The 90 working days can of course equal 3, 4, 5, x times 90, depending on the number of workers employed during the 90 days. These would be = to only 90 days if only 1 worker were employed. But this is beside the point for now.) (In all these calculations it is presupposed that the surplus value is not in turn capitalized, but that capital rather continues to work with the same number of workers; but at the same time as the surplus is realized, the entire capital is only then realized as money.) That is, during one month the capital could not be employed at all. (The capital of 100 employs e.g. 5 workers continuously; this contains their surplus labour, and the product which is circulated is never the original capital, but rather that which has absorbed this surplus labour and hence has a surplus value. Hence the circulation of a capital of 100 actually means e.g. circulation of the capital of 105; i.e. of capital together with the profit posited in one act of production. But this error irrelevant here, particularly in the above question.) (Posit that at the end of 3 months 100 worth of twist have been produced.) Now it will be 1 month before the money comes in and I can begin production again. Now, in order to set the same number of workers to work during the I month while the capital is circulating, I would have to have a surplus capital of 33 1/3; for if 100 set a given quantity of labour in motion for 3 months, then 1/3 of 100 would set it in motion for 1 month. At the end of the fourth month, the capital of 100 would return to the production phase, and that of 33 1/3 would enter the circulation phase. The latter would require 1/3 of a month for circulation, given the same relations; would hence return into production after 10 days. The first capital could enter into circulation again only at the end of the seventh month. The second, which entered into circulation at the beginning of the fifth month, would have returned say on the 10th of the fifth month, would re-enter circulation on the 10th of the sixth month and would return on the 20th of the sixth month, to re-enter circulation on the 20th of the seventh month; at the end of the seventh month it would be back again, at which time the first capital would just be beginning its course again at the same moment when the second was returning. Beginning of the eighth month, and return on the etc. Beginning of the ninth etc. In a word: if the capital were 1/3 larger just the amount the circulation time adds up to then it could continuously employ the same number of workers. Or, alternately, it could continuously remain in the production phase if it continuously employed 1/3 less labour. If the capitalist began with a capital of only 75, then production would finish at the end of the third month; then the capital would circulate for one month; but during this month he could continue production because he would have retained a capital of 25, and, if he needs 75 to set a given mass of labour in motion during 3 months, he needs 25 to set the same in motion for 1 month. He would continuously have the same number of workers at work. Each of his commodities requires 1/12 of a year before it is sold. If he always needs 1/3 of the production time to sell his commodities, then etc. This matter must be reducible to a very simple equation, to which we shall return later. It does not actually belong here. But the question is important because of the credit questions later. This much is clear, however. Call production time pt, circulation time ct. Capital, C. C cannot be in its production phase and its circulation phase at the same time. If it is to continue to produce while it circulates, then it must break into two parts, of which one in the production phase, while the other in the circulation phase, and the continuity of the process is maintained by part a being posited in the former aspect, part b in the latter. Let the portion which is always in production be x; then x = C b (let b be the part of the capital always in circulation). C = b + x. If ct, circulation time, were = 0, then b likewise would be = 0, and x = C. b (the part of the capital in circulation):C (the total capital) = ct (circulation time):pt (production time); b:C = ct:pt; i.e. the relation of circulation time to production time is the relation of the part of capital in circulation to the total capital. If a capital of 100 at a profit of 5% turns over every 4 months, so that there is 1 month of circulation time for every 3 months of production time, then the total surplus value, as we saw, will be = (5 12)/4 M (month) = 5 3 = 15; instead of 20 as when c = 0; for then S = (5 12)/3 = 20. But now 15 is the gain on a capital of 75 at 5% whose circulation time = 0; which turned over 4 times a year; was continuously occupied. At the end of the first quarter 3 3/4; at the end of the year 15. (But only a total capital of 300 would turn over; while one of 400 if in the above case ct = 0.) Hence a capital of 100, with respect to which circulation time amounts to 1 month on every 3 M production time, can constantly employ productively a capital of 75; a capital of 25 is constantly circulating and unproductive. 75:25 = 3 M:1 M, or, if we call the part of the capital occupied in production p, the part in circulation c, and the corresponding times c and p , then p:c = p :c (p:c = 1:1/3). The part of the C in production constantly relates to the part in circulation as 1:1/3; this 1/3 constantly represented by changing component parts. But p:C = 75:100 = 3/4; c = 1/4; p:C = 1:4/3 and c:C = 1:4. The total turnover = 4 M, p:R = 3 M:4 M = 1:4/3. (In the human body, as with capital, the different elements are not exchanged at the same rate of reproduction, blood renews itself more rapidly than muscle, muscle than bone, which in this respect may be regarded as the fixed capital of the human body.) As means of speeding up circulation, Storch lists: (1) formation of a class of workers who busy themselves only with trade; (2) easy means of transport; (3) money; (4) credit. (See above.) This motley combination reveals the whole confusion of the political economists. Money and money circulation what we called simple circulation is the presupposition, condition, of capital itself, as well as of the circulation of capital. Money as it exists, hence, as a relation of intercourse belonging to a stage of production preceding capital, money as money, in its immediate form, can therefore not be said to speed up the circulation of capital, but is rather its presupposition. When we speak of capital and of its circulation, we stand on a stage of social development where the introduction of money does not enter as a discovery etc., but is rather a presupposition. To the extent that money in its immediate form itself has value, and is not merely the value of other commodities, the symbol of their value for, if something which is itself immediate is supposed to be something else which is also immediate, then it can only represent the latter, in one way or another, as symbol but rather, itself has value, is itself objectified labour in a specific use value, to that extent, money, so far from speeding up the circulation of capital, rather delays it. Regarded in both of the aspects in which it occurs in the circulation of capital, both as medium of circulation and as the realized value of capital, money belongs among the costs of circulation in so far as it is itself labour time employed to abbreviate circulation time on the one hand, and, on the other hand, to represent a qualitative moment of circulation the retransformation of capital into itself as value-for-itself. In neither aspect does it increase the value. In one aspect it is a precious form of representing value, i.e. a costly form, costing labour time, hence representing a deduction from surplus value. In the other aspect it can be regarded as a machine which saves circulation time, and hence frees time for production. But, in so far as it itself, as such a machine, costs labour and is a product of labour, it represents for capital faux frais de production. It figures among the costs of circulation. The original cost of circulation is circulation time itself as opposed to labour time. The real costs of circulation are themselves objectified labour time machinery for the purpose of abbreviating the original costs of circulation. Money in its immediate form, as it belongs to a historic stage of production preceding capital, thus appears to capital as a cost of circulation, and the efforts of capital hence tend in the direction of transforming it into a form adequate for its own ends; hence attempting to make it into a representative of one moment of circulation which does not itself cost labour, and has itself no value. Capital hence tends in the direction of suspending money in its inherited, immediate reality, and transforming it into something merely posited and at the same time suspended by capital, into something purely ideal. It cannot be said, therefore, as does Storch, that money as such is a means of speeding up the circulation of capital; it must rather be said to the contrary that capital attempts to transform money into a merely ideal moment of its circulation, and first to raise it into the adequate form corresponding to it. Suspension of money in its immediate form appears as a demand made by money circulation once it has become a moment of the circulation of capital; because in its immediate, presupposed form it is a barrier to the circulation of capital. The tendency of capital is circulation without circulation time; hence also the positing of the instruments which merely serve to abbreviate circulation time as mere formal aspects posited by it, just as the different moments through which capital passes in its circulation are qualitative aspects of its own metamorphosis. As regards the formation of a special mercantile estate i.e. a development of the division of labour which has transformed the business of exchanging into a particular kind of work for which, of course, the sum of exchange operations must already have reached a certain height (if the exchange among 100 people occupied the 100th part of their labour time, then each man is 1/100 of an exchanger; 100/100 exchangers would represent one single man. Then one merchant could arise per 100. The separation of commerce from production itself, or the development of exchange itself as a representation opposite the exchangers, requires as such that exchange and intercourse have developed to a certain degree. The merchant represents all buyers to the seller, all sellers to the buyer and vice versa, hence he is not an extreme, but rather the middle of the exchange itself; appears hence as mediator, middleman) the formation of the merchant estate, which presupposes that of money, even if not developed in all its moments, is likewise a presupposition for capital, and hence cannot be listed as being a mediator of its specific circulation. Since commerce is both historically as well as conceptually a presupposition for the rise of capital, we shall have to return to it before concluding this chapter, since it belongs before or in the section on the origin of capital. The facilitation of the means of transport, to the extent that it means facilitation of the physical circulation of commodities, does not belong here, where we are examining merely the characteristic forms of the circulation of capital. The product becomes a commodity, leaves the production phase, only when it is on the market. On the other side, the means of transportation do belong here in so far as the returns of capital i.e. circulation time must grow with the distance of the market from the point of production. Its abbreviation by means of transport thus appears as belonging directly, in this respect directly, to the examination of the circulation of capital. But this actually belongs to the doctrine of the market, which itself belongs to the section on capital. Finally, credit. This form of circulation etc. directly posited by capital which arises, hence, specifically from the nature of capital, this specific characteristic of capital is mixed up here by Storch etc. together with money, mercantile estate, etc., which belong generally with the development of exchange and of the production more or less founded on it. The presentation of the specific, distinguishing characteristics is here both the logical development and the key to the understanding of the historical development. Thus we find in history, too, e.g. in England (likewise in France), [attempts] to replace money by paper; then also to give capital, in so far as it exists in the form of value, a form purely posited by itself; finally attempts to found credit directly with the rise of capital. (E.g. Petty, Boisguillebert.) The circulation of the part of capital which is posited as wages accompanies the production process, appears as an economic form-relation alongside it, and is simultaneous and interwoven with it. This circulation alone posits capital as such; is the condition of its realization process, and posits not only the latter s characteristic form, but also its substance. This is the constantly circulating part of capital, which at no time enters into the production process itself, [but] constantly accompanies it. It is the part of capital which does not even for a single instant enter into its reproduction process, which is not the case with raw material. The worker s approvisionnement arises out of the production process, as product, as result; but it never enters as such into the production process, because it is a finished product for individual consumption, enters directly into the worker s consumption, and is directly exchanged for it. This, therefore, as distinct from raw material as well as instrument, is the circulating capital . Here is the only moment in the circulation of capital where consumption enters directly. At the point where the commodity becomes exchanged for money, it may be acquired by another capital as raw material for new production. Further, given the presuppositions, capital encounters not the individual consumer but rather the merchant; someone who buys the commodity itself in order to sell it for money. (This presupposition is to be developed in connection with the merchant estate in general. The circulation among dealers thereby different from that between dealers and consumers.) Thus the circulating capital here appears directly as that which is specified for the workers individual consumption; specified for direct consumption generally, and hence existing in the form of finished product. Thus, while in one respect capital appears as the presupposition of the product, the finished product also at the same time appears as the presupposition of capital which means, historically, that capital did not begin the world from the beginning, but rather encountered production and products already present, before it subjugated them beneath its process. Once in motion, proceeding from itself as basis, it constantly posits itself ahead of itself in its various forms as consumable product, raw material and instrument of labour, in order constantly to reproduce itself in these forms. They appear initially as the conditions presupposed by it, and then as its result. In its reproduction it produces its own conditions. Here, then through the relation of capital to living labour capacity and to the natural conditions of the latter s maintenance we find circulating capital specified in respect of its use value as well, as that which enters directly into individual consumption, to be directly used up by the latter. It is a mistake to conclude from this, as has been done, that circulating capital is therefore consumable capital generally, as if coal, oil, dye etc., instruments etc., improvements of the land etc. factories etc. were not all consumed likewise, if by consumption is meant the suspension of their use value and of their form; however, one could just as well say that none of them is consumed, if this is taken to mean individual consumption, i.e. consumption in the proper sense. In this circulation, capital constantly expels itself as objectified labour, in order to assimilate living labour power, its life s breath. Now, as regards the worker s consumption, this reproduces one thing namely himself, as living labour capacity. Because this, his reproduction, is itself a condition for capital, therefore the worker s consumption also appears as the reproduction not of capital directly, but of the relations under which alone it is capital. Living labour capacity belongs just as much among capital s conditions of existence as do raw material and instrument. Thus it reproduces itself doubly, in its own form, [and] in the worker s consumption, but only to the extent that it reproduces him as living labour capacity. Capital therefore calls this consumption productive consumption productive not in so far as it reproduces the individual, but rather individuals as labour capacities. If Rossi is offended that wages are allegedly counted twice, first as the worker s revenue, then as reproductive consumption of capital, then the objection holds only against those who let wages enter directly into the production process of capital as value. For the payment of wages is an act of circulation which proceeds simultaneously with and alongside the act of production. Or, as Sismondi says from this perspective the worker consumes his wages unreproductively; but the capitalist consumes them productively, since he gets labour in the exchange, which reproduces the wages and more than the wages. This concerns capital itself regarded merely as an object. But in so far as capital is a relation, and, specifically, a relation to living labour capacity, [to that extent] the worker s consumption reproduces this relation; or, capital reproduces itself doubly, as value through purchase of labour as a possibility of beginning the realization process anew, of acting as capital anew and as a relation through the worker s consumption, which reproduces him as labour capacity exchangeable for capital wages as part of capital. This circulation between capital and labour, then, yields the characterization of one part of capital as constantly circulating, the approvisionnement; constantly consumed; constantly to reproduce. This circulation strikingly reveals the difference between capital and money; the circulation of capital and the circulation of money. Capital pays wages e.g. weekly; the worker takes his wages to the grocer etc.; the latter directly or indirectly deposits them with the banker; and the following week the manufacturer takes them from the banker again, in order to distribute them among the same workers again, etc. and so forth. The same sum of money constantly circulates new portions of capital. The sum of money itself, however, does not determine the portions of capital which are thus circulated. If the money value of wages rises, then the circulating medium will increase, but the mass of the medium does not determine the rise. If the production costs of money did not fall, then no increase of money would exercise an influence on the portion of it entering into this circulation. Here money appears as mere medium of circulation. Since many workers are to be paid at the same time, a certain sum of money is required at one time, which grows with the number of workers. Then, however, the velocity of the circulation of the money makes a lesser sum necessary than in situations where there are fewer workers but the machinery of monetary circulation is not so arranged. This circulation is a condition of the production process and thereby of the circulation process as well. On the other hand, if capital does not return from circulation, then this circulation between worker and capital could not begin anew; hence it is itself conditional upon capital passing through the various moments of its metamorphosis outside the production process. If this did not happen, it would be not because there was not enough money as medium of circulation, but rather either because capital was not available in the form of products, because this part of circulating capital was lacking, or because capital did not posit itself in the form of money, i.e. did not realize itself as capital, which in turn, however, would arise not from the quantity of the medium of circulation, but because capital did not posit itself in the qualitative aspect of money, which in no way requires that it posit itself in the form of hard cash, in the immediate money form; and whether or not it posited itself in that form would again depend not on the quantity of money circulating as medium of circulation, but rather on the exchange of capital for value as such; again a qualitative, not a quantitative, moment, as we shall point out in more detail when we speak of capital as money. (Interest etc.) (2) Small-scale circulation between capital and labour capacity. This accompanies the production process and appears as contract, exchange, form of intercourse; these things are presupposed before the production process can be set going. The part of capital entering into this circulation the approvisionnement is circulating capital . It is specified not only in respect to its form; in addition to this, its use value, i.e. its material character as a consumable product entering directly into individual consumption, itself constitutes a part of its form. (3) Large-scale circulation; the movement of capital outside the production phase, where its time appears in antithesis to labour time, as circulation time. The distinction between fluid and fixed capital is the product of this opposition between the capital engaged in the production phase and the capital which issues from it. Fixed is that which is fixated in the production process and is consumed within it; comes out of large-scale circulation, certainly, but does not return into it, and, in so far as it circulates, circulates only in order to be consumed in, confined to, the consumption process. The three different distinctions in the circulation of capital yield the three distinctions between circulating and fixated capital; they posit one part of capital as circulating , because it never enters into the production process, but constantly accompanies it; and thirdly, [they yield] the distinction between fluid and fixed capital. Circulating capital in form No. 3 also includes No. 2, since the latter is also in antithesis to the fixed; but No. 2 does not include No. 3. The part of capital which belongs as such to the production process is the part of it which serves, materially, only as means of production; forms the link between living labour and the material to be worked on. A part of the liquid capital, such as coal, oil etc., also serves merely as means of production. Everything which serves merely as a means to keep the machine, or the engine, running. This distinction will have to be examined yet more closely. First of all, this does not contradict aspect 1, since the fixed capital as value also circulates in proportion as it is worn out. Precisely in this aspect as fixed capital i.e. in the character in which capital has lost its fluidity and become identified with a specific use value, which robs it of its ability to transform itself does developed capital to the extent we know it so far, as productive capital most strikingly manifest itself, and it is precisely in this seemingly inadequate form, and in the latter s increasing relation to the form of circulating capital in No. 2, that the development of capital as capital is measured. This contradiction pretty. To be developed. The different kinds of capital, which, in economics, fall out of the sky, here appear as so many precipitates of the movements arising out of the nature of capital itself, or rather of this movement itself in its different moments. Circulating capital constantly parts from the capitalist, in order to return to him in the first form. Fixed capital does not (Storch). Circulating capital is that portion of the capital which does not yield profit till it is parted with; fixed etc. yields such profit, while it remains in the possession of the owner. (Malthus.) Circulating capital gives its master no revenue or profit, so long as it remains in his possession; fixed capital gives this profit without changing masters, and without requiring circulation. (A. Smith.) In this respect, since capital s departure on a voyage away from its owner ( partir de son possesseur ) means nothing more than the sale of property or possessions which takes place in the act of exchange, and since it is the nature of all exchange value, hence all capital, to become value for its owner by means of sale, the definition in its above formulation cannot be correct. If fixed capital were [capital] for its owner without the mediation of exchange and of the use value included in it, then, in fact, fixed capital would be a mere use value, hence not capital. But the basis of the above definition is this: fixed capital circulates as value (even if only in portions, successively, as we shall see). It does not circulate as use value. As far as its material aspect is concerned, as a moment of the production process, fixed capital never leaves its boundaries; is not sold by its possessor; remains in his hand. It circulates as capital only in its formal aspect, as self-eternalizing value. This distinction between form and content, use value and exchange value, does not take place in circulating capital. In order to circulate, to exist, as the latter, it has to step into circulation as the former, must be sold. Use value for capital as such is only value itself. Circulating capital realizes itself as value for capital as such only when it is sold. As long as it remains in its hand, it only has value in itself; but it is not posited; only in potency but not in act. Fixed capital, by contrast, realizes itself as value only as long as it remains in the capitalist s hand as a use value, or, expressed as an objective relation, as long as it remains in the production process, which may be regarded as the inner organic movement of capital, its relation to itself, as opposed to its animal movement, its presence for another. Hence, since fixed capital, once it has entered the production process, remains in it, it also passes away in it, is consumed in it. The duration of this consumption does not yet concern us here. In this respect, then, fixed capital also includes what Cherbuliez calls the mati res instrumentales, such as coal, oil, wood, grease etc., which are completely destroyed in the production process, which only have a use value for the process of production itself. The same materials, however, also have a use value outside production, and can also be consumed in another way, just as buildings, houses, etc. are not necessarily specified for production. They are fixed capital not because of the specific mode of their being, but rather because of their use. They become fixed capital as soon as they step into the production process. They are fixed capital, as soon as they are posited as moments of the production process of capital; because they then lose their property of being potentially circulating capital. Therefore, just as the part of capital entering into the small-scale circulation of capital or capital, in so far as it enters into this movement circulation between capital and labour capacity, the part of capital circulating as wages never leaves the circulation process and never enters into the production process of capital, as regards its material aspect, as use value, but rather is always ejected from a previous production process as its product, result, so, inversely, does the part of capital specified as fixed capital, as a use value, as regards its material presence, never leave the production process and never go back into circulation. While the latter only enters into circulation as value (as part of the value of the finished product), the former only enters into the production process as value, in that necessary labour is the reproduction of wages, of the part of the capital s value which circulates as wages. This, then, is the first characteristic of fixed capital, and in this respect it also includes the mati res instrumentales. Secondly: Fixed capital can enter into circulation as value, however, only to the extent that it passes away as use value in the production process. It passes, as value, into the product i.e. as labour time worked up or stored up in it in so far as it passes away in its independent form as use value. In being used, it is used up, but in such a way that its value is carried over from its form into the form of the product. If it is not used, not consumed in the production process itself if the machinery stands still, the iron rusts, the wood rots then of course its value passes away together with its transitory presence as use value. Its circulation as value corresponds to its consumption in the production process as use value. Its total value is completely reproduced, i.e. is fully returned via circulation only when it has been completely consumed as use value in the production process. As soon as it is completely dissolved into value, and hence completely absorbed into circulation, it has completely passed away as use value and hence must be replaced, as a necessary moment of production, by a new use value of the same kind, i.e. must be reproduced. The necessity of reproducing it, i.e. its reproduction time, is determined by the time in which it is used up, consumed within the production process. With circulating capital, reproduction is determined by circulation time; with fixed capital, circulation is determined by the time in which it is consumed as use value, in its material presence, within the act of production, i.e. by the period of time within which it must be reproduced. A thousand pounds of twist can be reproduced as soon as they are sold and the money obtained for them is again exchanged for cotton, in short, for the elements of the production of twist. Their reproduction is determined, hence, by circulation time. A machine of a value of 1,000 which lasts 5 years, which is used up in 5 years and then becomes nothing more than scrap iron, is used up, say, by 1/5 per year, if we take the average consumption in the production process. Hence every year only 1/5 of its value enters into circulation, and only with the passing of the 5 years has it completely gone into circulation and returned from it. Its entry into circulation is thus purely determined by the time of its wearing out; and the time which its value needs to enter totally into circulation and to return from it is determined by its total reproduction time, the time in which it must be reproduced. Fixed capital enters into the product only as value; while the use value of circulating capital has remained in the product as the latter s substance, and has merely obtained another form. This distinction essentially modifies the turnover time of a total capital divided into circulating and fixed capital. Let total capital = S; its circulating part = c; its fixed part = f; let the fixed capital form 1/x S; the circulating capital S/y. Let the circulating capital turn over 3 times a year, the fixed capital only twice every 10 years. In 10 years, f or S/x will turn over twice; while in the same 10 years S/y will turn over 3 10 = 30 times. If S were = S/y, i.e. circulating capital only, then R, its turnover, would be = 30; and the total capital turned over = 30 S/y; the total capital turned over in 10 years. But the fixed capital turns over only twice in 10 years. Its R = 2; and the total fixed capital turned over = 2S/x. But S = S/y + S/x and its total turnover time = the total turnover time of both these parts. If the fixed capital turns over twice in 10 years, then in one year 2/10 or 1/5 of it turns over; while in one year the circulating capital turns over 3 times. S/5x turns over once a year. The question simply this: if a capital of 1,000 thalers = 600 circulating capital and 400 fixed capital; thus 3/5 circulating and 2/5 fixed capital; if the fixed capital lasts 5 years, hence turns over once in 5 years and the circulating turns over 3 times a year, then what is the average turnover or turnover time of the total capital? If it were circulating capital only, then it would turn over 5 3, 15 times; the total capital turned over in the 5 years would be 15,000. But 2/5 of it turn over only once in 5 years. Hence, of the 400 thalers, 400/5 = 80 thalers turn over in one year. Of the 1,000 thalers, 600 annually turn over 3 times, 80 once; or, in one year, only 1,880 would turn over; hence in 5 years 5 1,880 = 9,400 turn over; i.e. 5,600 less than if the total capital consisted only of circulating capital. If the entire capital consisted only of circulating capital, then it would turn over once in 1/3 of a year. If the capital = 1,000; c = 600, turns over twice a year; f = 400, turns over once a year; then 600 (3/5 S) turns over in half a year; 400/2 or 2S/(5 2) likewise in half a year. Hence in half a year, 600 + 200 = 800 (i.e. c + f/2) turns over. IN A WHOLE YEAR, hence, 2 800 or 1,600 turn over; 1,600 thalers in 1 year; hence 100 in 12/16 months, hence 1,000 in 120/16 months = 7 1/2 months. The total capital of 1,000 thus turns over in 7 1/2 months, while it would turn over in 6 months if it consisted of circulating capital only. 7 1/2: 6 = 1:1 1/4 or as 1:5/4. If the capital = 100, circulating = 50, fixed = 50; the former turns over twice a year, the latter once; then 1/2 100 turns over once in 6 months; and 1/4 100 likewise once in 6 months; hence in 6 months 3/4 of the capital turns over, 3/4 100 in 6 months; or 75 in 6 months, and 100 in 8 months. If 2/4 100 turn over in 6 months, and in the same 6 months 1/4 100 (1/2 of the fixed capital), then 3/4 100 turn over in 6 months. Hence 1/4 in 6/3 = 2 [months]; hence 4/4 100 or 100 in 6 + 2, in 8 months. The total turnover time of the capital = 6 (the turnover time of the entire circulating capital and 1/2; of the fixed capital or 1/4 of the total capital) + 6/3 i.e. + this turnover time divided by the number expressing the ratio of the remaining fixed capital to the capital turned over in the turnover time of circulating capital. Thus in the above example: 3/5 100 turns over in 6 months; ditto 1/5 100; hence 4/5 100 in 6 months; hence the remaining 1/5 100 in 6/4 months; hence the total capital in 6 + 6/4 months = 6 + 1 1/2 or 7 1/2 months. Thus, expressed in general terms: Average turnover time = the turnover time of circulating capital + this turnover time divided by the number which expresses how often the remaining part of the fixed capital is contained in the total sum of the capital which was circulated in this turnover time. If there are two capitals of 100 thalers, one of them entirely composed of circulating capital, the other half fixed capital, each at 5% profit, the one turning over twice a year, and in the other the circulating capital likewise twice, but the fixed capital only once; then the total capital turning over would be = 200 in the first case, and the profit = 10; in the second = 3 turnovers in 8 months, 1 1/2 in 4; or 150 would turn over in 12 months; profit then = 7 1/2. This kind of calculation has strengthened the common prejudice that circulating capital or fixed capital through some mysterious innate power brings a gain, as even in Malthus s phrase the circulating capital brings a gain when its possessors part with it etc. ; likewise, in the above-quoted lines from his Measure of Value etc., the way in which he makes fixed capital accumulate profits. The greatest confusion and mystification has arisen because the doctrine of surplus profit has not been examined in its pure form by previous economists, but rather mixed in together with the doctrine of real profit, which leads up to distribution, where the various capitals participate in the general rate of profit. The profit of the capitalists as a class, or the profit of capital as such, has to exist before it can be distributed, and it is extremely absurd to try to explain its origin by its distribution. According to the above, profit declines because the turnover time of capital increases * in proportion as the component part of it which is called fixed capital increases. A capital of the same size, 100 in the above case, would turn over entirely twice a year if it consisted only of a circulating capital. But it turns over only twice in 16 months, or only 150 thalers are turned over in one year, because half of it consists of fixed capital. As the number of its reproductions in a given period declines, or the amount of it reproduced in this given time declines, so does the production of surplus time or surplus value decline, since capital posits value at all only in so far as it posits surplus value. (This at least is its tendency, its adequate action.) Fixed capital, as we saw, circulates as value only to the degree that it is used up or consumed as use value in the production process. But the time in which it is consumed and in which it must be reproduced in its form as use value depends on its relative durability. Hence its durability, or its greater or lesser perishability the greater or smaller amount of time during which it can continue to perform its function within the repeated production processes of capital this aspect of its use value here becomes a form-determining moment, i.e. a determinant for capital as regards its form, not as regards its matter. The necessary reproduction time of fixed capital, together with the proportion of the total capital consisting of it, here modify, therefore, the turnover time of the total capital, and thereby its realization. The greater durability of capital (the diminution (duration) of its necessary reproduction time) and the proportion of fixed capital to the total capital, then, here influence realization just as does a slower turnover due either to a greater distance in space of the market from which the capital returns as money, so that a longer time is required to complete the path of circulation (as e.g. capitals working in England for the East India market return more slowly than those working for nearer foreign markets or for the domestic market), or to the production phase being itself interrupted by natural conditions, as in agriculture. Ricardo, who was the first to emphasize the influence of fixed capital on the realization process, throws all these aspects into one motley heap, as one can see from the excerpts quoted above. In the first case (fixed capital), the turnover of capital is reduced because the fixed capital is consumed slowly within the production process; or the cause lies in the duration of the time required for its reproduction. In the second case the reduced turnover arises from the prolongation of circulation time (in the first case the fixed capital necessarily always circulates as rapidly as the product, in so far as it circulates, enters circulation at all, because it circulates not in its material existence, but only as value, i.e. as an ideal component part of the total value of the product) and, specifically, from the circulation time of the second half of the circulation process proper, the retransformation into money; in the third case the reduced turnover arises from the longer time the capital requires, not, as in the first case, to pass away in the production process, but rather to emerge from it as product. The first case is peculiar specifically to fixed capital; the other belongs to the category of capital which is not liquid, but fixated, fixated in one or another phase of the total circulation process (fixed capital of a considerable degree of durability, or circulating capital returnable at distant periods. McCulloch, Principles of Political Economy. Notebook, p. 15.) Thirdly: We have regarded fixed capital so far only from the aspect in which its particular relation, its specific relation, distinguishes it from the circulation process proper. Still further distinctions will arise in this respect. Firstly, the return of its value in successive parts, whereas each part of circulating capital is exchanged in its entirety; this because in the former, the existence of the value coincides with that of the use value. Secondly, not merely [because of] its influence on the average turnover time of a given capital, as we have indicated up to now, but also [because of] its own turnover time. The latter circumstance becomes important where the fixed capital appears not as a mere instrument of production within the production process, but rather as an independent form of capital, e.g. in the form of railways, canals, roads, aqueducts, improvements of the land, etc. This latter aspect becomes notably important for the proportion in which the total capital of a country is divided into these two forms. Then, the way in which it is renewed and maintained; which the economists formulate in the form that it can bring revenue only by means of circulating capital etc. This last is basically nothing but the examination of the moment where it appears, not as a particular independent existence alongside and outside circulating capital, but rather as circulating capital transformed into fixed capital. But what we want to examine here first of all is the relation of fixed capital not towards the outside, but rather the extent to which the relation is given through its continued enclosure within the production process. It is thereby posited that it is a definite moment of the production process itself. <It is not necessarily the case that fixed capital is capital which in all its aspects serves not for individual consumption, but only for production. A house can serve for production as well as for consumption; likewise all vehicles, a ship and a wagon, for pleasure outings as well as a means of transport; a street as a means of communication for production proper, as well as for taking walks etc. Fixed capital in this second aspect does not concern us here at all, since we regard capital here only as process of realization and process of production. The second aspect will enter when we study interest. Ricardo can have only this aspect in mind when he says: Depending on whether the capital is more or less perishable, hence must be more or less frequently reproduced in a given time, it is called circulating or fixed capital. (Ricardo, VIII, 19.) According to this, a coffee-pot would be fixed capital, but coffee circulating capital. The crude materialism of the economists who regard as the natural properties of things what are social relations of production among people, and qualities which things obtain because they are subsumed under these relations, is at the same time just as crude an idealism, even fetishism, since it imputes social relations to things as inherent characteristics, and thus mystifies them. (The difficulty of defining a thing as fixed capital or circulating capital on the basis of its natural qualities has here, by way of exception, led the economists to the discovery that things in themselves are neither fixed nor circulating, hence not capital at all, any more than it is a natural quality of gold to be money.)> (Also included in the points listed above, so that it is not forgotten, is the circulation of fixed capital as circulating capital, i.e. transactions through which it changes its owners.) Fixed capital tied up: capital so tied up in one kind of production that it can no longer be diverted to another kind of production. (Say, 24.) Fixed capital is consumed in order to help produce the things useful to man it consists of durable foundations which increase the productive powers of future labour. (Sismondi, VI) Fixed capital the capital necessary to maintain the instruments, machines etc. of labour. (Smith, Vol. II, p. 226.) Floating capital is consumed, fixed capital merely used in the great work of production. (Economist, Notebook VI, p. 1.) We shall show that the first stick or the first stone which he took in his hand to assist him in the pursuit of these objects, by accomplishing a part of his labour, performed precisely the function of the capitals presently employed by the commercial nations. (Lauderdale, p. 120. Notebook, 8a.) It is one of the characteristic and distinguishing traits of the human species to replace labour in this way with a capital transformed into machines. (p. 120.) (p. 9, Notebook Lauderdale.) It may now be seen that the profit of capitals always arises either because they replace a portion of the work which man must do by hand, or because they accomplish a portion of work which is beyond the personal effort of man, and which he could not perform by himself. (p. 119 loc. cit.) Lauderdale polemicizes against Smith and Locke, whose view that labour is the creator of profit, has the following result, according to him: if this idea of capital s benefits were rigorously correct, then it would follow that it would not be an original source of wealth, but rather a derived one; and one could not consider capital as one of the principles of wealth, its profit being nothing more than a transfer from the worker s pocket to that of the capitalist. (loc. cit. 116, 117.) The profit of capitals always arises either because they replace a portion of the work which man must do by hand, or because they accomplish a portion of work which is beyond the personal effort of man, and which he could not perform by himself. (p. 119, loc. cit., p. 9b.) It is well to remark that while the capitalist, with the use he makes of his money, saves the class of consumers a certain amount of labour, he does not substitute for it an equal portion of his own; which proves that his capital performs it, and not he himself. (10, Notebook, loc. cit., p. 132.) If Adam Smith, instead of imagining that the effect of a machine is to facilitate labour, or, as he expresses it, to increase the productive power of labour (it is only through a strange confusion of ideas that Mr Smith has been able to assert that the effect of capital is to increase the productive power of labour. With the same logic one could very well claim that to shorten by half a roundabout path between two points is to double the walker s speed) had perceived that the money spent on machinery brings a profit by replacing labour, he would have attributed the origin of profit to the same circumstance. (p. 11, p. 137.) Capitals in domestic commerce, whether fixed or circulating, far from serving to set labour in motion, far from increasing its productive power, are, on the contrary, useful and profitable only in two circumstances, either when they obviate the necessity of a portion of the work which man would otherwise have to do with his hands; or when they perform a particular piece of work which man does not have the power to do unaided. This, says Lauderdale, is not merely a semantic difference. The idea that capital sets labour into action, and adds to its productive power, gives rise to the opinion that labour is everywhere proportional to the quantity of existing capitals; that a country s industry is always in proportion to the funds employed: from which it would follow that the increase of capital is the sovereign and unlimited means of increasing wealth. Instead of that, if one admits that capital can have no profitable or useful employment other than to replace a certain work, or to perform it, then one will draw the natural conclusion that the State would gain no benefit whatever from the possession of more capitals than it can employ in doing the work or in substituting for it in the production and fabrication of the things the consumer demands. (p. 151, 152, pp. 11, 12.) To prove his view that capital is a source sui generis of profit and hence of wealth, independently of labour, he points to the surplus profits which the owner of a newly invented machine has before his patent runs out and competition presses down the prices, and concludes then with the words: This change of rule for the price does not prevent the benefit (as regards use value) of the machine from coming from a fund of the same nature as that from which it came before the expiration of the patent: this fund is always that part of a country s revenues which was formerly destined to pay the wages of the labour which the new invention replaces. (loc. cit. 125, p. 10b.) By contrast, Ravenstone (IX, 32): Machinery can seldom be applied with success to abridge the labours of an individual; more time would be lost in its construction than could be saved by its application. It is only really useful when it acts on great masses, when a single machine can assist the labours of thousands. It is accordingly in the most populous countries where there are most idle men that it is always most abundant. It is not called into action by a scarcity of men, but by the facility with which they are brought together. (loc. cit.) Division of machines into (1) machines employed to produce power; (2) machines whose purpose is simply to transmit power and to perform the work. (Babbage, Notebook, p. 10.) Factory signifies the cooperation of several classes of workers, adults and non-adults, watching attentively and assiduously over a system of productive mechanisms, continually kept in action by a central force excludes any workshop whose mechanism does not form a continuous system, or which does not depend on a single source of power. Examples of this latter class among textile factories, copper foundries etc. In its most rigorous sense, this term conveys the idea of a vast automaton, composed of numerous mechanical and intellectual organs operating in concert and without interruption, towards one and the same aim, all these organs being subordinated to a motive force which moves itself. (Ure, 13.) But the determination that the use value of fixed capital is that which eats itself up in the production process is identical to the proposition that it is used in this process only as a means, and itself exists merely as an agency for the transformation of the raw material into the product. As such a means of production, its use value can be that it is merely the technological condition for the occurrence of the process (the site where the production process proceeds), as with buildings etc., or that it is a direct condition of the action of the means of production proper, like all mati res instrumentales. Both are in turn only the material presuppositions for the production process generally, or for the employment and maintenance of the means of labour. The latter, however, in the proper sense, serves only within production and for production, and has no other use value. Originally, when we examined the development of value into capital, the labour process was simply included within capital, and, as regards its physical conditions, its material presence, capital appeared as the totality of the conditions of this process, and correspondingly sorted itself out into certain qualitatively different parts, material of labour (this, not raw material, is the correct expression of the concept), means of labour and living labour. On one side, capital was divided into these three elements in accordance with its material composition; on the other, the labour process (or the merging of these elements into each other within the process) was their moving unity, the product their static unity. In this form, the material elements material of labour, means of labour and living labour appeared merely as the essential moments of the labour process itself, which capital appropriates. But this material side or, its character as use value and as real process did not at all coincide with its formal side. In the latter, (1) the three elements in which it appears before the exchange with labour capacity, before the real process, appeared merely as quantitatively different portions of itself, as quantities of value of which it, itself, as sum, forms the unity. The physical form, the use value, in which these different portions existed did not in any way alter their formal identity from this side. As far as their formal side was concerned, they appeared only as quantitative subdivisions of capital; (2) within the process itself, as regards the form, the elements of labour and the two others were distinct only in so far as the latter were specified as constant values, and the former as value-positing. But as far as their distinctness as use values, their material side was concerned, this fell entirely outside the capital s specific character as form. Now, however, with the distinction between circulating capital (raw material and product) and fixed capital (means of labour), the distinctness of the elements as use values is posited simultaneously as a distinction within capital as capital, on its formal side. The relation between the factors, which had been merely quantitative, now appears as a qualitative division within capital itself, and as a determinant of its total movement (turnover). Likewise, the material of labour and the product of labour, this neutral precipitate of the labour process, are already, as raw material and product, materially specified no longer as material and product of labour, but rather as the use value of capital itself in different phases. As long as the means of labour remains a means of labour in the proper sense of the term, such as it is directly, historically, adopted by capital and included in its realization process, it undergoes a merely formal modification, by appearing now as a means of labour not only in regard to its material side, but also at the same time as a particular mode of the presence of capital, determined by its total process as fixed capital. But, once adopted into the production process of capital, the means of labour passes through different metamorphoses, whose culmination is the machine, or rather, an automatic system of machinery (system of machinery: the automatic one is merely its most complete, most adequate form, and alone transforms machinery into a system), set in motion by an automaton, a moving power that moves itself; this automaton consisting of numerous mechanical and intellectual organs, so that the workers themselves are cast merely as its conscious linkages. In the machine, and even more in machinery as an automatic system, the use value, i.e. the material quality of the means of labour, is transformed into an existence adequate to fixed capital and to capital as such; and the form in which it was adopted into the production process of capital, the direct means of labour, is superseded by a form posited by capital itself and corresponding to it. In no way does the machine appear as the individual worker s means of labour. Its distinguishing characteristic is not in the least, as with the means of labour, to transmit the worker s activity to the object; this activity, rather, is posited in such a way that it merely transmits the machine s work, the machine s action, on to the raw material supervises it and guards against interruptions. Not as with the instrument, which the worker animates and makes into his organ with his skill and strength, and whose handling therefore depends on his virtuosity. Rather, it is the machine which possesses skill and strength in place of the worker, is itself the virtuoso, with a soul of its own in the mechanical laws acting through it; and it consumes coal, oil etc. (mati res instrumentales), just as the worker consumes food, to keep up its perpetual motion. The worker s activity, reduced to a mere abstraction of activity, is determined and regulated on all sides by the movement of the machinery, and not the opposite. The science which compels the inanimate limbs of the machinery, by their construction, to act purposefully, as an automaton, does not exist in the worker s consciousness, but rather acts upon him through the machine as an alien power, as the power of the machine itself. The appropriation of living labour by objectified labour of the power or activity which creates value by value existing for-itself which lies in the concept of capital, is posited, in production resting on machinery, as the character of the production process itself, including its material elements and its material motion. The production process has ceased to be a labour process in the sense of a process dominated by labour as its governing unity. Labour appears, rather, merely as a conscious organ, scattered among the individual living workers at numerous points of the mechanical system; subsumed under the total process of the machinery itself, as itself only a link of the system, whose unity exists not in the living workers, but rather in the living (active) machinery, which confronts his individual, insignificant doings as a mighty organism. In machinery, objectified labour confronts living labour within the labour process itself as the power which rules it; a power which, as the appropriation of living labour, is the form of capital. The transformation of the means of labour into machinery, and of living labour into a mere living accessory of this machinery, as the means of its action, also posits the absorption of the labour process in its material character as a mere moment of the realization process of capital. The increase of the productive force of labour and the greatest possible negation of necessary labour is the necessary tendency of capital, as we have seen. The transformation of the means of labour into machinery is the realization of this tendency. In machinery, objectified labour materially confronts living labour as a ruling power and as an active subsumption of the latter under itself, not only by appropriating it, but in the real production process itself; the relation of capital as value which appropriates value-creating activity is, in fixed capital existing as machinery, posited at the same time as the relation of the use value of capital to the use value of labour capacity; further, the value objectified in machinery appears as a presupposition against which the value-creating power of the individual labour capacity is an infinitesimal, vanishing magnitude; the production in enormous mass quantities which is posited with machinery destroys every connection of the product with the direct need of the producer, and hence with direct use value; it is already posited in the form of the product s production and in the relations in which it is produced that it is produced only as a conveyor of value, and its use value only as condition to that end. In machinery, objectified labour itself appears not only in the form of product or of the product employed as means of labour, but in the form of the force of production itself. The development of the means of labour into machinery is not an accidental moment of capital, but is rather the historical reshaping of the traditional, inherited means of labour into a form adequate to capital. The accumulation of knowledge and of skill, of the general productive forces of the social brain, is thus absorbed into capital, as opposed to labour, and hence appears as an attribute of capital, and more specifically of fixed capital, in so far as it enters into the production process as a means of production proper. Machinery appears, then, as the most adequate form of fixed capital, and fixed capital, in so far as capital s relations with itself are concerned, appears as the most adequate form of capital as such. In another respect, however, in so far as fixed capital is condemned to an existence within the confines of a specific use value, it does not correspond to the concept of capital, which, as value, is indifferent to every specific form of use value, and can adopt or shed any of them as equivalent incarnations. In this respect, as regards capital s external relations, it is circulating capital which appears as the adequate form of capital, and not fixed capital. Further, in so far as machinery develops with the accumulation of society s science, of productive force generally, general social labour presents itself not in labour but in capital. The productive force of society is measured in fixed capital, exists there in its objective form; and, inversely, the productive force of capital grows with this general progress, which capital appropriates free of charge. This is not the place to go into the development of machinery in detail; rather only in its general aspect; in so far as the means of labour, as a physical thing, loses its direct form, becomes fixed capital, and confronts the worker physically as capital. In machinery, knowledge appears as alien, external to him; and living labour [as] subsumed under self-activating objectified labour. The worker appears as superfluous to the extent that his action is not determined by [capital s] requirements. Thus the quantitative extent and the effectiveness (intensity) to which capital is developed as fixed capital indicate the general degree to which capital is developed as capital, as power over living labour, and to which it has conquered the production process as such. Also, in the sense that it expresses the accumulation of objectified productive forces, and likewise of objectified labour. However, while capital gives itself its adequate form as use value within the production process only in the form of machinery and other material manifestations of fixed capital, such as railways etc. (to which we shall return later), this in no way means that this use value machinery as such is capital, or that its existence as machinery is identical with its existence as capital; any more than gold would cease to have use value as gold if it were no longer money. Machinery does not lose its use value as soon as it ceases to be capital. While machinery is the most appropriate form of the use value of fixed capital, it does not at all follow that therefore subsumption under the social relation of capital is the most appropriate and ultimate social relation of production for the application of machinery. To the degree that labour time the mere quantity of labour is posited by capital as the sole determinant element, to that degree does direct labour and its quantity disappear as the determinant principle of production of the creation of use values and is reduced both quantitatively, to a smaller proportion, and qualitatively, as an, of course, indispensable but subordinate moment, compared to general scientific labour, technological application of natural sciences, on one side, and to the general productive force arising from social combination [Gliederung] in total production on the other side a combination which appears as a natural fruit of social labour (although it is a historic product). Capital thus works towards its own dissolution as the form dominating production. While, then, in one respect the transformation of the production process from the simple labour process into a scientific process, which subjugates the forces of nature and compels them to work in the service of human needs, appears as a quality of fixed capital in contrast to living labour; while individual labour as such has ceased altogether to appear as productive, is productive, rather, only in these common labours which subordinate the forces of nature to themselves, and while this elevation of direct labour into social labour appears as a reduction of individual labour to the level of helplessness in face of the communality [Gemeinsamkeit] represented by and concentrated in capital; so does it now appear, in another respect, as a quality of circulating capital, to maintain labour in one branch of production by means of co-existing labour in another. In small-scale circulation, capital advances the worker the wages which the latter exchanges for products necessary for his consumption. The money he obtains has this power only because others are working alongside him at the same time; and capital can give him claims on alien labour, in the form of money, only because it has appropriated his own labour. This exchange of one s own labour with alien labour appears here not as mediated and determined by the simultaneous existence of the labour of others, but rather by the advance which capital makes. The worker s ability to engage in the exchange of substances necessary for his consumption during production appears as due to an attribute of the part of circulating capital which is paid to the worker, and of circulating capital generally. It appears not as an exchange of substances between the simultaneous labour powers, but as the metabolism [Stoffwechsel] of capital; as the existence of circulating capital. Thus all powers of labour are transposed into powers of capital; the productive power of labour into fixed capital (posited as external to labour and as existing independently of it (as object [sachlich]); and, in circulating capital, the fact that the worker himself has created the conditions for the repetition of his labour, and that the exchange of this, his labour, is mediated by the co-existing labour of others, appears in such a way that capital gives him an advance and posits the simultaneity of the branches of labour. (These last two aspects actually belong to accumulation.) Capital in the form of circulating capital posits itself as mediator between the different workers. Fixed capital, in its character as means of production, whose most adequate form [is] machinery, produces value, i.e. increases the value of the product, in only two respects: (1) in so far as it has value; i.e. is itself the product of labour, a certain quantity of labour in objectified form; (2) in so far as it increases the relation of surplus labour to necessary labour, by enabling labour, through an increase of its productive power, to create a greater mass of the products required for the maintenance of living labour capacity in a shorter time. It is therefore a highly absurd bourgeois assertion that the worker shares with the capitalist, because the latter, with fixed capital (which is, as far as that goes, itself a product of labour, and of alien labour merely appropriated by capital) makes labour easier for him (rather, he robs it of all independence and attractive character, by means of the machine), or makes his labour shorter. Capital employs machinery, rather, only to the extent that it enables the worker to work a larger part of his time for capital, to relate to a larger part of his time as time which does not belong to him, to work longer for another. Through this process, the amount of labour necessary for the production of a given object is indeed reduced to a minimum, but only in order to realize a maximum of labour in the maximum number of such objects. The first aspect is important, because capital here quite unintentionally reduces human labour, expenditure of energy, to a minimum. This will redound to the benefit of emancipated labour, and is the condition of its emancipation. From what has been said, it is clear how absurd Lauderdale is when he wants to make fixed capital into an independent source of value, independent of labour time. It is such a source only in so far as it is itself objectified labour time, and in so far as it posits surplus labour time. The employment of machinery itself historically presupposes see above, Ravenstone superfluous hands. Machinery inserts itself to replace labour only where there is an overflow of labour powers. Only in the imagination of economists does it leap to the aid of the individual worker. It can be effective only with masses of workers, whose concentration relative to capital is one of its historic presuppositions, as we have seen. It enters not in order to replace labour power where this is lacking, but rather in order to reduce massively available labour power to its necessary measure. Machinery enters only where labour capacity is on hand in masses. (Return to this.) Lauderdale believes himself to have made the great discovery that machinery does not increase the productive power of labour, because it rather replaces the latter, or does what labour cannot do with its own power. It belongs to the concept of capital that the increased productive force of labour is posited rather as the increase of a force [Kraft] outside itself, and as labour s own debilitation [Entkr ftung]. The hand tool makes the worker independent posits him as proprietor. Machinery as fixed capital posits him as dependent, posits him as appropriated. This effect of machinery holds only in so far as it is cast into the role of fixed capital, and this it is only because the worker relates to it as wage-worker, and the active individual generally, as mere worker.

Grundrisse 13

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch13.htm

The division within the production process, originally between means of labour and material of labour, and finally product of labour, now appears as circulating capital (the last two) and fixed capital [the first]. The split within capital as regards its merely physical aspect has now entered into its form itself, and appears as differentiating it. From a viewpoint such as Lauderdale s etc., who would like to have capital as such, separately from labour, create value and hence also surplus value (or profit), fixed capital namely that whose physical presence or use value is machinery is the form which gives their superficial fallacies still the greatest semblance of validity. The answer to them, e.g. in Labour Defended, [is] that the road-builder may share [profits] with the road-user, but the road itself cannot do so. Circulating capital presupposing that it really passes through its different phases brings about the decrease or increase, the brevity or length of circulation time, the easier or more troublesome completion of the different stages of circulation, a decrease of the surplus value which could be created in a given period of time without these interruptions either because the number of reproductions grows smaller, or because the quantity of capital continuously engaged in the production process is reduced. In both cases this is not a reduction of the initial value, but rather a reduction of the rate of its growth. From the moment, however, when fixed capital has developed to a certain extent and this extent, as we indicated, is the measure of the development of large industry generally hence fixed capital increases in proportion to the development of large industry s productive forces it is itself the objectification of these productive forces, as presupposed product from this instant on, every interruption of the production process acts as a direct reduction of capital itself, of its initial value. The value of fixed capital is reproduced only in so far as it is used up in the production process. Through disuse it loses its use value without its value passing on to the product. Hence, the greater the scale on which fixed capital develops, in the sense in which we regard it here, the more does the continuity of the production process or the constant flow of reproduction become an externally compelling condition for the mode of production founded on capital. In machinery, the appropriation of living labour by capital achieves a direct reality in this respect as well: It is, firstly, the analysis and application of mechanical and chemical laws, arising directly out of science, which enables the machine to perform the same labour as that previously performed by the worker. However, the development of machinery along this path occurs only when large industry has already reached a higher stage, and all the sciences have been pressed into the service of capital; and when, secondly, the available machinery itself already provides great capabilities. Invention then becomes a business, and the application of science to direct production itself becomes a prospect which determines and solicits it. But this is not the road along which machinery, by and large, arose, and even less the road on which it progresses in detail. This road is, rather, dissection [Analyse] through the division of labour, which gradually transforms the workers operations into more and more mechanical ones, so that at a certain point a mechanism can step into their places. (See under economy of power.) Thus, the specific mode of working here appears directly as becoming transferred from the worker to capital in the form of the machine, and his own labour capacity devalued thereby. Hence the workers struggle against machinery. What was the living worker s activity becomes the activity of the machine. Thus the appropriation of labour by capital confronts the worker in a coarsely sensuous form; capital absorbs labour into itself as though its body were by love possessed . Nature builds no machines, no locomotives, railways, electric telegraphs, self-acting mules etc. These are products of human industry; natural material transformed into organs of the human will over nature, or of human participation in nature. They are organs of the human brain, created by the human hand; the power of knowledge, objectified. The development of fixed capital indicates to what degree general social knowledge has become a direct force of production, and to what degree, hence, the conditions of the process of social life itself have come under the control of the general intellect and been transformed in accordance with it. To what degree the powers of social production have been produced, not only in the form of knowledge, but also as immediate organs of social practice, of the real life process. <The creation of a large quantity of disposable time apart from necessary labour time for society generally and each of its members (i.e. room for the development of the individuals full productive forces, hence those of society also), this creation of not-labour time appears in the stage of capital, as of all earlier ones, as not-labour time, free time, for a few. What capital adds is that it increases the surplus labour time of the mass by all the means of art and science, because its wealth consists directly in the appropriation of surplus labour time; since value directly its purpose, not use value. It is thus, despite itself, instrumental in creating the means of social disposable time, in order to reduce labour time for the whole society to a diminishing minimum, and thus to free everyone s time for their own development. But its tendency always, on the one side, to create disposable time, on the other, to convert it into surplus labour. If it succeeds too well at the first, then it suffers from surplus production, and then necessary labour is interrupted, because no surplus labour can be realized by capital. The more this contradiction develops, the more does it become evident that the growth of the forces of production can no longer be bound up with the appropriation of alien labour, but that the mass of workers must themselves appropriate their own surplus labour. Once they have done so and disposable time thereby ceases to have an antithetical existence then, on one side, necessary labour time will be measured by the needs of the social individual, and, on the other, the development of the power of social production will grow so rapidly that, even though production is now calculated for the wealth of all, disposable time will grow for all. For real wealth is the developed productive power of all individuals. The measure of wealth is then not any longer, in any way, labour time, but rather disposable time. Labour time as the measure of value posits wealth itself as founded on poverty, and disposable time as existing in and because of the antithesis to surplus labour time; or, the positing of an individual s entire time as labour time, and his degradation therefore to mere worker, subsumption under labour. The most developed machinery thus forces the worker to work longer than the savage does, or than he himself did with the simplest, crudest tools.> If the entire labour of a country were sufficient only to raise the support of the whole population, there would be no surplus labour, consequently nothing that could be allowed to accumulate as capital. If in one year the people raises enough for the support of two years, one year s consumption must perish, or for one year men must cease from productive labour. But the possessors of [the] surplus produce or capital employ people upon something not directly and immediately productive, e.g. in the erection of machinery. So it goes on. (The Source and Remedy of the National Difficulties, p. 4.) <As the basis on which large industry rests, the appropriation of alien labour time, ceases, with its development, to make up or to create wealth, so does direct labour as such cease to be the basis of production, since, in one respect, it is transformed more into a supervisory and regulatory activity; but then also because the product ceases to be the product of isolated direct labour, and the combination of social activity appears, rather, as the producer. As soon as the division of labour is developed, almost every piece of work done by a single individual is a part of a whole, having no value or utility of itself. There is nothing on which the labourer can seize: this is my produce, this I will keep to myself. (Labour Defended, p. 25, 1, 2, XI.) In direct exchange, individual direct labour appears as realized in a particular product or part of the product, and its communal, social character its character as objectification of general labour and satisfaction of the general need as posited through exchange alone. In the production process of large-scale industry, by contrast, just as the conquest of the forces of nature by the social intellect is the precondition of the productive power of the means of labour as developed into the automatic process, on one side, so, on the other, is the labour of the individual in its direct presence posited as suspended individual, i.e. as social, labour. Thus the other basis of this mode of production falls away.> The labour time employed in the production of fixed capital relates to that employed in the production of circulating capital, within the production process of capital itself, as does surplus labour time to necessary labour time. To the degree that production aimed at the satisfaction of immediate need becomes more productive, a greater part of production can be directed towards the need of production itself, or the production of means of production. In so far as the production of fixed capital, even in its physical aspect, is directed immediately not towards the production of direct use values, or towards the production of values required for the direct reproduction of capital i.e. those which themselves in turn represent use value in the value-creation process but rather towards the production of the means of value creation, that is, not towards value as an immediate object, but rather towards value creation, towards the means of realization, as an immediate object of production the production of value posited physically in the object of production itself, as the aim of production, the objectification of productive force, the value-producing power of capital to that extent, it is in the production of fixed capital that capital posits itself as end-in-itself and appears active as capital, to a higher power than it does in the production of circulating capital. Hence, in this respect as well, the dimension already possessed by fixed capital, which its production occupies within total production, is the measuring rod of the development of wealth founded on the mode of production of capital. The number of workers depends as much on circulating capital as it depends on the quantity of products of co-existing labour, which labourers are allowed to consume. (Labour Defended, p. 20.) In all the excerpts cited above from various economists fixed capital is regarded as the part of capital which is locked into the production process. Floating capital is consumed; fixed capital is merely used in the great process of production. (Economist, VI, 1.) This wrong, and holds only for the part of circulating capital which is itself consumed by the fixed capital, the mati res instrumentales. The only thing consumed in the great process of production , if this means the immediate production process, is fixed capital. Consumption within the production process is, however, in fact use, wearing-out. Furthermore, the greater durability of fixed capital must not be conceived as a purely physical quality. The iron and the wood which make up the bed I sleep in, or the stones making up the house I live in, or the marble statue which decorates a palace, are just as durable as iron and wood etc. used for machinery. But durability is a condition for the instrument, the means of production, not only on the technical ground that metals etc. are the chief material of all machinery, but rather because the instrument is destined to play the same role constantly in repeated processes of production. Its durability as means of production is a required quality of its use value. The more often it must be replaced, the costlier it is; the larger the part of capital which would have to be spent on it uselessly. Its durability is its existence as means of production. Its duration is an increase of its productive force. With circulating capital, by contrast, in so far as it is not transformed into fixed capital, durability is in no way connected with the act of production itself and is therefore not a conceptually posited moment. The fact that among the articles thrown into the consumption fund there are some which are in turn characterized as fixed capital because they are consumed slowly, and can be consumed by many individuals in series, is connected with further determinations (renting rather than buying, interest etc.) with which we are not yet here concerned. Since the general introduction of soulless mechanism in British manufactures, people have with rare exceptions been treated as a secondary and subordinate machine, and far more attention has been given to the perfection of the raw materials of wood and metals than to those of body and spirit. (p. 31. Robert Owen: Essays on the Formation of the Human Character, 1840, London.) As the system of bourgeois economy has developed for us only by degrees, so too its negation, which is its ultimate result. We are still concerned now with the direct production process. When we consider bourgeois society in the long view and as a whole, then the final result of the process of social production always appears as the society itself, i.e. the human being itself in its social relations. Everything that has a fixed form, such as the product etc., appears as merely a moment, a vanishing moment, in this movement. The direct production process itself here appears only as a moment. The conditions and objectifications of the process are themselves equally moments of it, and its only subjects are the individuals, but individuals in mutual relationships, which they equally reproduce and produce anew. The constant process of their own movement, in which they renew themselves even as they renew the world of wealth they create.> The producers of developed wealth can be divided into workers in soft and workers in hard materials, under the immediate direction generally of masters whose object it is to make money through the labour of those they employ. Before the introduction of the chemical and mechanical manufacturing system, operations were carried out on a limited scale; there were many small masters, each with a few day-labourers, who expected in due time to become small masters themselves. They usually ate at the same table and lived together; a spirit and feeling of equality reigned among them. Since the period when scientific power began by and large to be employed in the business of manufacturing, a gradual change has taken place in this regard. Almost all manufactures, to be successful, must now be carried out extensively and with a great capital; small masters with small capitals have only little chance of success, particularly in the manufactures of soft materials, such as cotton, wool, flax etc.; and it is indeed evident now, that so long as the present classification of society and the mode of directing business life should endure, the small masters will be increasingly displaced by those who possess great capitals, and that the former relatively happier equality among the producers must give way to the greatest inequality between master and worker, such as has never before occurred in the history of mankind. The large capitalist is now elevated to the position of a commanding lord, treating the health, the life and death, indirectly, of his slaves, as he likes. He obtains this power through combination with other great capitalists, engaged in the same interest with himself, and thus effectively bends to his purpose those he employs. The large capitalist now swims in wealth, whose proper use he has not been taught and does not know. Through his wealth, he has gained power. His wealth and his power blind his reason; and when he oppresses altogether grievously, he believes he is bestowing favours His servants, as they are called, his slaves in fact, are reduced to the most hopeless degradation; the majority robbed of health, of domestic comfort, of the leisure and healthy open-air pleasures of earlier days. Through excessive exhaustion of their powers, brought about by lengthy, drawn-out monotonous occupations, they are seduced into habits of intemperance, and made unfit for thinking or reflection. They can have no physical, intellectual or moral amusements other than of the worst sort; all real pleasures of life are far distant from them. The life which a very large part of the workers lead under the present system is, in a word, not worth having. But the individuals are not to blame for the changes of which these are the result; they proceed in the regular order of nature and are preparatory and necessary stages towards the great and important social revolution now in progress. Without great capitals no great establishments can be founded; men cannot be brought to understand the practicability of effecting new combinations, in order to ensure a superior character to all and the production of more annual wealth than can be consumed by all; and that wealth, too, should be of a higher kind than that hitherto generally produced. (loc. cit. 56, 57.) It is this new chemical and mechanical manufacturing system which now expands human abilities, and prepares men to understand and to adopt other principles and practices, and thus to effect the most beneficial change in affairs which the world has yet known. And it is this new manufacturing system which now creates the necessity for another and higher classification of society. (loc. cit. 58.)) Since fixed capital, in the sense of a produced production force, as agency of production, increases the mass of use values created in a given time, it cannot grow without the raw material it works on also growing (in manufacturing industry. In the extractive industries, such as fishery, mining, labour merely consists in overpowering the obstacles in the way of the seizure and appropriation of the raw products or primary products. There is no raw material to be worked up for production; rather, the existing raw product is appropriated. By contrast, in agriculture the raw material is the earth itself; seed the circulating capital etc.). Its employment on a larger scale thus presupposes expansion of the part of circulating capital consisting of raw materials; hence growth of capital generally. It likewise presupposes (relative) decrease of the portion of capital exchanged for living labour. In fixed capital, capital exists materially, too, not only as objectified labour, destined to serve as the means of new labour, but rather as value, whose use value is to create new values. The existence of fixed capital is therefore its existence as productive capital. Hence the stage of development reached by the mode of production based on capital or the extent to which capital itself is already presupposed as the condition of its own production, has presupposed itself is measured by the existing scope of fixed capital; not only by its quantity, but just as much by its quality. Finally: in fixed capital, the social productivity of labour [is] posited as a property inherent in capital; including the scientific power as well as the combination of social powers within the production process, and finally, the skill transposed from direct labour into the machine, into the dead productive force. In circulating capital, by contrast, it is the exchange of labours, of the different branches of labour, their interlacing and system-forming quality, the co-existence of productive labour, which appear as property of capital. * Fourthly: We have now to examine the other relations of fixed capital and circulating capital. We said above that the social relation between different labours is posited as a property of capital in circulating capital, as the social productive power of labour in fixed capital. The circulating capital of a nation is: money, necessaries of life, raw materials, and finished products. (Adam Smith, tome II, p. 218.) Smith is in a quandary whether he should call money circulating or fixed capital. In so far as it always serves merely as instrument of circulation, which is itself a moment of the total reproduction process, it is fixed capital as instrument of circulation. But its use value itself is only to circulate and never to be absorbed either into the production process proper nor into individual consumption. It is the part of capital constantly fixed in the circulation phase, and in this respect it is the most perfect form of circulating capital; in the other respect, because it is fixed as an instrument, it is fixed capital. In so far as a distinction between fixed capital and circulating capital enters in from the perspective of individual consumption, this is already given in the fact that fixed capital does not enter into circulation as use value. (A part of the seed in agriculture does enter into circulation as use value, because it multiplies itself.) This non-entry-into-circulation supposes that it does not become the object of individual consumption. But the issue here is this. In the above example, the circulating capital of 5,000 first returns in the middle of the first year; then at the end of the second half; in the middle of the second; in the second half of the second (in the first 4 months) 3,333 2/6 of it have returned and the rest will have come back at the end of this half year. But, of the fixed capital, only 1/5 was returned in the first year, 1/5 in the second. At the end of the first year, the owner has on hand 6,000; at the end of the second, 7,000; the third, 8,000; the fourth, 9,000; the fifth, 10,000. Only at the end of the fifth is he again in possession of his total capital, with which he began the production process; although in the creation of surplus value his capital acted as if it had wholly turned over in 20 months; thus the total capital itself is only reproduced in 5 years. The former aspect of turnover important for the relation of its realization; the latter, however, brings in a new relation which does not take place with circulating capital at all. Since circulating capital is completely absorbed into circulation and returns from it as a whole, it follows that it is reproduced as capital as many times as it is realized as surplus value or as surplus capital. But since fixed capital never enters circulation as a use value, and enters it as value only to the extent that it is consumed as a use value, it follows that it is by no means reproduced as soon as the surplus value determined by the average turnover time of the total capital is posited. The turnover of the circulating capital must take place 10 times in the 5 years before the fixed capital is reproduced; i.e. the period of the revulsions of circulating capital must be repeated 10 times while that of fixed capital is repeated once, and the total average turnover of the capital 20 months has to be repeated 2 times before the fixed capital is reproduced. Hence, the larger is the part of the capital consisting of fixed capital i.e. the more capital acts in the mode of production corresponding to it, with great employment of produced productive force and the more durable the fixed capital is, i.e. the longer its reproduction time, the more its use value corresponds to its specific economic role the more often must the part of capital which is determined as circulating repeat the period of its turnover, and the longer is the total time the capital requires for the achievement of its total circulation. Hence the continuity of production becomes an external necessity for capital with the development of that portion of it which is determined as fixed capital. For circulating capital, an interruption, if it does not last so long as to ruin its use value, is only an interruption in the creation of surplus value. But with fixed capital, the interruption, in so far as in the meantime its use value is necessarily destroyed relatively unproductively, i.e. without replacing itself as value, is the destruction of its original value itself. Hence the continuity of the production process which corresponds to the concept of capital is posited as conditio sine qua [non] for its maintenance only with the development of fixed capital; hence likewise the continuity and the constant growth of consumption. This is No. I. But No. II, the formal side, even more important. The total time in which we measured the return of capital was the year, while the time unit in which we measure labour is the day. We did [so] firstly because the year is more or less the natural reproduction time, or duration of the production phase, for the reproduction of the largest part of the vegetable raw materials used in industry. The turnover of circulating capital was determined, therefore, by the number of turnovers in the total time of a year. In fact, the circulating capital begins its reproduction at the end of each turnover, and while the number of turnovers during the year affects the total value, and the fate it encounters during each turnover appears as a determinant of the conditions under which it begins reproduction anew, yet each of them for itself is a complete lifespan for the circulating capital. As soon as capital is transformed back into money, it can transform itself e.g. into conditions of production other than the original ones, throw itself from one branch of production into another one, so that reproduction, regarded materially, is not repeated in the same form. The introduction of fixed capital changes this; and neither the turnover time of capital, nor the unit in which their number is measured, the year, henceforth appear as the measure of time for the motion of capital. This unit is now determined, rather, by the reproduction time required for fixed capital, and hence the total circulation time it needs to enter into circulation as value, and to come back from it in the totality of its value. The reproduction of the circulating capital must also proceed in the same material form during this whole time, and the number of its necessary turnovers, i.e. the turnovers necessary for the reproduction of the original capital, is distributed over a longer or shorter series of years. Hence a longer total period is posited as the unit in which its turnovers are measured, and their repetition is now not merely externally, but rather necessarily connected with this unit. According to Babbage, the average reproduction of machinery in England 5 years; the real one hence perhaps 10 years. There can be no doubt whatever that the cycle which industry has passed through since the development of fixed capital on a large scale, at more or less 10-yearly intervals, is connected with this total reproduction phase of capital. We shall find other determinant causes as well. But this is one of them. There were good and bad times for industry before, too, as well as for harvests (agriculture). But the industrial cycle of a number of years, divided into characteristic periods, epochs, is peculiar to large-scale industry. Now the new distinction, No. III, appears. Circulating capital was ejected from the production process in the form of the product, of the newly created use value, and thrown wholly into circulation; when transformed back into money, the entire value of the product (the entire labour time objectified in it, necessary and surplus labour time) was realized, and thereby the surplus value realized and all conditions of reproduction fulfilled. With the realization of the price of the commodity, all these conditions were fulfilled, and the process could begin anew. This holds, however, only for that part of the circulating capital which entered into large-scale circulation. As to the other portion of it, which continuously accompanies the process of production itself, the circulation of that part of it which is transformed into wages, it naturally depends on whether the labour is used for the production of fixed capital or of circulating capital whether these wages themselves are replaced by a use value entering into circulation or not. Fixed capital, by contrast, does not itself circulate as a use value, but rather enters as value into the manufactured raw material (in manufactures and agriculture) or into the directly extracted raw material (mining industry etc.) only to the extent that it is used up as use value in the production process. Fixed capital in its developed form hence only returns in a cycle of years which embraces a series of turnovers of circulating capital. It is not at once exchanged as product for money, in such a way that its reproduction process might coincide with the turnovers of circulating capital. It enters into the price of the product only in successive bits, and hence returns as value only successively. It returns fragmentarily over longer periods, while circulating capital circulates wholly in shorter periods. To the extent that fixed capital remains as such, [it] does not return, because it does not enter into circulation; to the extent that it enters into circulation, it no longer remains as fixed capital, but rather forms an ideal value-component of the circulating capital. It returns in principle only to the extent that it transposes itself directly or indirectly into the product, hence into circulating capital. Because it is not a direct use value for consumption, it does not enter into circulation as use value. This different kind of return of fixed and circulating capital will appear significant later as the difference between selling and renting, annuity, interest and profit, rent in its different forms, and profit; and the incomprehension of this merely formal distinction has led Proudhon and his gang to the most confused conclusions; as we shall see. In its observations on the last crisis, the Economist reduces the whole difference between fixed capital and circulating capital to the resale of articles within a short period and at a profit (Economist No. 754, 6 Feb. 1858) and production of a revenue large enough to provide for expenses, risk, wear and tear, and the market rate of interest . * The shorter return through the sale of the whole article, and the merely annual return of a part of the fixed capital, analysed above. As to profit merchant s profit does not concern us here each part of the circulating capital which leaves and returns to the production process, i.e. contains objectified labour (the value of the advances), necessary labour (the value of wages) and surplus labour brings profit as soon as it passes fully through circulation, because the surplus labour which the product contains is realized with it. But it is neither the circulating capital nor the fixed capital which create the profit, but rather the appropriation of alien labour which both of them mediate, hence at bottom only the part of circulating capital which enters into small-scale circulation. This profit is realized in practice, however, only through the entry of capital into circulation, hence only in its form as circulating capital, never in its form as fixed capital. But what the economist here understands by fixed capital is as far as revenues from it are concerned the form of fixed capital in which it does not directly enter into the production process as machinery, but rather in railways, buildings, agricultural improvements, drainings etc., where, hence, the realization of the value and surplus value contained in it appears in the form of an annuity, where interest represents the surplus value and the annuity the successive return of the value advanced. This is therefore not in fact a case (although it is the case with agricultural improvements) of fixed capital entering into circulation as value by forming a part of the product, but rather of the sale of fixed capital in the form of its use value. It is here sold not all at once, but as an annuity. Now, it is clear, firstly, that some forms of fixed capital figure initially as circulating capital, and become fixed capital only when they become fixed in the production process; e.g. the circulating products of a machine-maker are machines just as those of a cotton-weaver are calico, and they enter into circulation in just the same way, for him. For him they are circulating capital; for the manufacturer who uses them in the production process, fixed capital; because product for the former, and instrument of production only for the latter. Likewise even houses, despite their immovability, are circulating capital for the building-trade; for him who buys them to rent them out again, or to use them as buildings for production, they are fixed capital. Now in so far as fixed capital itself circulates as use value, i.e. is sold, changes hands, we shall speak of it further, below. But the viewpoint that capital is sold as capital whether as money or in the form of fixed capital is obviously not relevant here, where we are considering circulation as the movement of capital in which it posits itself in its various conceptually specific moments. Productive capital becomes product, commodity, money, and is transformed back into the conditions of production. It remains capital in each of these forms, and it becomes capital only by realizing itself as such. So long as it remains in one of these phases, it is fixed as commodity capital, money capital, or industrial capital. But each of these phases forms only one moment of its movement, and in the form from which it must propel itself to pass over into another phase it ceases to be capital. If it rejects itself as commodity and becomes money, or vice versa, then it does not exist as capital in the rejected form, but rather in the newly reached one. Of course, the rejected form can in turn become the form of another capital, or it can be the direct form of the consumable product. But this does not concern us and does not concern capital as far as the course it traces out in its internal circulation is concerned. Rather, it rejects each of the forms as its not-capital-being, so as to assume them again later. But if capital is lent out as money, as land and soil, house etc., then it becomes a commodity as capital, or, the commodity put into circulation is capital as capital. This to be further pursued in the next section. What is paid for in the transposition of the commodity into money, as far as the part of the price which is the value of part of the fixed capital is concerned, is the part required for its partial reproduction, the part worn out and used up in the production process. What the buyer pays, then, is the use or wear of the fixed capital, in so far as it is itself value, objectified labour. Since this wear takes place successively, he pays it in portions in the product, whereas in the price he pays for the product he replaces the whole value of the fractional part of the raw material contained in the product. The worn-out, used-up fractional part of fixed capital is paid for not only successively, but also by a mass of buyers simultaneously, in relation as they buy products. Since capital appears in the first half of its circulation as C and the buyer as M, since its aim is value while the buyer s is use (whether in turn productive, no matter here, where we are examining only the formal aspect such as it appears towards capital in its circulation), it follows that the relation of the buyer to the product is that of the consumer generally. Indirectly, then, in all commodities the buyer successively and bit by bit pays for the wear and use of fixed capital, even though the latter does not enter into circulation as use value. But there are forms of fixed capital where he pays directly for its use value as with means of communication, transport etc. In all these cases the fixed capital in fact never leaves the production process, as with railways etc. But while it serves for some as means of communication within the production process itself, to bring the product to market, and for the producers themselves [as] means of circulation, it can serve others as means of consumption, as use value, for holiday travel, etc. Regarded as a means of production, it distinguishes itself from machinery etc. here in that it is used up by various capitals at the same time, as a common condition for their production and circulation. (We are not yet concerned with consumption as such here.) It does not appear as locked within a particular production process, but rather as the connecting artery of a mass of such production processes of particular capitals, who use it up only in portions. In contrast to all these particular capitals and their particular production processes, then, fixed capital is here cast as the product of a particular branch of production separate from them, in which, however, it is not sold by one producer as circulating capital and bought by another as fixed capital, as with machinery, but, rather, in which it can be sold only in the form of fixed capital itself. Then its successive return, hidden in the commodity, becomes apparent. But this fixed capital then also includes the surplus value, since it is itself a sold product (for the industrialist, the machine he uses is not a product), hence the return of interest and profit, if any. Since it can be consumed in the same common and successive form, can be use value for direct consumption, it follows that its sale not as an instrument of production but as a commodity generally also appears in the same form. But in so far as it is sold as an instrument of production a machine is sold as a mere commodity and only becomes an instrument of production in the industrial process i.e. as its sale directly coincides with its use in the general social production process, this is a determination which has no place within the examination of the simple circulation of capital. In the latter, fixed capital, in so far as it enters as an agency of production, appears as a presupposition of the production process, not as its result. It can therefore only be a matter of the replacement of its value, in which no surplus value for the user is included. What is rather the case is that he has paid this surplus value to the machine-maker. Railways, however, or buildings rented for production, are simultaneously instruments of production, and are simultaneously realized by their seller as product, as capital. Since each moment which appears as presupposition of production is at the same time its result in that it reproduces its own conditions the original division of the capital within the production process now appears in such a way that the production process divides into three production processes, in which different portions of the capital which now also appear as particular capitals are at work. (Here we can still assume a form in which one capital is at work, because we are examining capital as such, and this way of looking at it simplifies what needs to be said about the proportion of these different kinds.) The capital is annually reproduced in different and changing portions as raw material, as product, and as means of production; in a word, as fixed capital and as circulating capital. The minimum presupposition which appears in all of these production processes is the part of circulating capital destined for exchange with labouring capacity and for the maintenance and consumption of the machinery or the instrument, and the means of production. In purely extractive industries, e.g. mining, the mine itself exists as the material of labour, but not as raw material passing over into product, which latter must, in the manufacturing industry, by contrast, have a particular existence in all forms. In agriculture, seed, fertilizer, cattle etc., may be regarded as raw material as well as mati res instrumentales. Agriculture forms a mode of production sui generis, because the organic process is involved, in addition to the mechanical and chemical process, and the natural reproduction process is merely controlled and guided; extractive industry (mining the most important) is likewise an industry sui generis, because no reproduction process whatever takes place in it, at least not one under our control or known to us. (Fishery, hunting etc. can involve a reproduction process; likewise forestry; this is therefore not necessarily purely extractive industry.) Now, in so far as the means of production, fixed capital as the product of capital and hence containing objectified surplus time, is itself constituted in such a way that it can be ejected by its producer as circulating capital, e.g. like machinery by the machine builder, before it becomes fixed capital, i.e. first enters into circulation as use value, [to that extent] its circulation contains no new aspect whatever. But in so far as it can never be sold while it serves at the same time as instrument of production, as e.g. railways, or in proportion as it is used up as such, it shares with fixed capital generally the quality that its value returns only successively; but there is also the addition that this return of its value includes the return of its surplus value, of the surplus labour objectified in it. It then has a special form of return. The important thing now is that the production of capital thus appears as the production in definite portions of circulating capital and fixed capital, so that capital itself produces its double way of circulating as fixed capital and circulating capital. Floating capital assumes an infinite variety of forms, fixed capital has only one. (Economist, VI, p. 1.) This infinite variety of forms , as regards the production process of capital itself, is much more correctly reduced by Adam Smith to a mere change of form. Fixed capital is of use to its master so long as it continues to remain in the same form . That means it remains within the production process as use value, in a specific material presence. Circulating capital, by contrast (A. Smith, tome II, p. 197, 198) constantly passes out of his hands in a specific form (as product) to return in another (as condition of production) and brings profit only by means of this circulation and successive changes . Smith does not speak here of the infinite variety of forms in which circulating capital appears. Regarded materially, fixed capital also assumes an infinite variety of forms ; but this proceeds from the metamorphoses which circulating capital passes through as itself a use value, and the infinite variety of forms reduces itself, therefore, to the qualitative differences of the various phases of circulation. Regarded within a specific production process, circulating capital always returns in the same form of raw materials and money for wages., The material presence is the same at the end of the process as at the beginning. Incidentally, elsewhere the Economist itself reduces the infinite variety of forms to the conceptually determined change of forms in circulation. The commodity is wholly consumed in the shape in which it is produced (i.e. enters into circulation as use value and is ejected from it) and replaced in his hands in a new shape (as raw material and wages), ready to repeat a similar operation (rather, the same operation). (loc. cit. VI, p. 1.) Smith also says explicitly that fixed capital requires no circulation . (tome II, 197, 198.) With fixed capital, the value is imprisoned within a specific use value; with circulating capital, value takes the form of various different use values, likewise assumes as well as rejects the independent form distinct from every particular use value (as money); hence constant change of matter and form goes on. Circulating capital supplies him (the entrepreneur) with the materials and wages of the workers, and sets industry into activity. (A. Smith, tome II, p. 226.) Every fixed capital comes originally from a circulating capital, and needs to be continually maintained by means of a circulating capital. (loc. cit. p. 207.) Since so great a part of the circulating capital is being withdrawn continuously to be spent in the other two branches of the general social fund, this capital needs in turn to be renewed by continual replenishment, otherwise it would soon be reduced to nothing. These replenishments are drawn from three principal sources: the produce of the soil, of mines, and of fisheries. (loc. cit. p. 208.) <We have already developed one distinction emphasized by the Economist: Every production the whole cost of which is returned to the producer out of the current income of the country is floating capital; but every production, in respect of which only an annual sum is paid for the use, is fixed capital. (Notebook VI, p. 1.) In the first case, the producer is entirely dependent on the country s current income. (loc. cit.) We have seen that only part of the fixed capital returns in the time determined by circulating capital, which serves as the unit of its turnovers because it is the natural unit for the reproduction of the greatest part of food products and raw materials, just as, and because, it appears as the natural epoch in the life process (cosmic process) of the earth. This unit is the year, whose bourgeois calculation deviates more or less, but insignificantly, from its natural magnitude. The more the material presence of fixed capital corresponds to its concept, the more adequate its material mode of existence is, the more does its turnover time span a cycle of years. Since circulating capital is wholly exchanged first for money, secondly for its elements, it presupposes that a countervalue has been produced equal to its whole value (including the surplus value). It cannot be said that it enters or can enter into consumption entirely; since it must also in part serve in turn as raw material, or as an element for fixed capital; in short itself, in turn, as an element of production a counter-production. A part of the use value ejected by capital as the product, as the result of the production process, becomes an object of consumption and thus drops out of the circulation of capital altogether; another part enters into another capital as a condition of production. This is itself posited in the circulation of capital as such, since it ejects itself from itself in the first half of circulation, as commodity, i.e. as use value; i.e. dismisses itself with respect to itself in this form from its own circulation as use value, article of consumption; but exchanges itself as money for commodity as condition of production, in the second half of its circulation. Thus, as circulating use value itself, it posits its material presence both as an article of consumption and as a new element of production, or rather an element of reproduction. But in both cases the whole of its countervalue must be on hand; i.e. it must have been wholly produced during the year. For example, the sum of manufactured products which can be exchanged during a year for agricultural products is determined by the mass of the raw products produced in a year, counted from harvest to harvest. Since we speak here of capital as such, capital in the process of becoming, we are not yet concerned with anything else in addition in that the many capitals are not yet present for us nothing but it itself and simple circulation, out of which it absorbs value in the double form of money and commodity and into which it throws it in the double form of money and commodity. When an industrial people producing on the foundation of capital, such as the English, e.g., exchange with the Chinese, and absorb value in the form of money and commodity from out of their production process, or rather absorb value by drawing the latter within the sphere of the circulation of their capital, then one sees right away that the Chinese do not therefore need to produce as capitalists. Within a single society, such as the English, the mode of production of capital develops in one branch of industry, while in another, e.g. agriculture, modes of production predominate which more or less antedate capital. Nevertheless, it is (1) its necessary tendency to conquer the mode of production in all respects, to bring them under the rule of capital. Within a given national society this already necessarily arises from the transformation, by this means, of all labour into wage labour; (2) as to external markets, capital imposes this propagation of its mode of production through international competition. Competition is the mode generally in which capital secures the victory of its mode of production. Still, this much is clear: quite regardless of whether it is another capital or whether it is capital itself as another which stands on both sides of the successive exchanges, each time in the opposite aspect, both aspects are already posited before we proceed to examine this double movement from the circulation of capital as such itself. In the first phase it ejects itself out of the movement of capital as use value, as commodity, and exchanges itself for money. The commodity expelled from the circulation of capital is no longer the commodity as a moment of self-perpetuating value, as the presence of value. It is, thus, its presence as use value, its being for consumption. Capital is transposed out of the form of commodity into the form of money only because an exchanger appears opposite it in ordinary circulation as consumer, who transposes M into C; [completes] this transposition in its material aspect, so that he relates to the use value as use value, as consumer, and only in this way is the use value replaced for capital as value. Thus, capital creates articles of consumption, but ejects them from itself in this form, ejects them from its circulation. On the basis of the aspect developed so far, no other relations exist. The commodity which is ejected as such from the circulation of capital loses its character as value and fulfills the role of use value for consumption, as distinct from fulfilling it for production. But in the second phase of circulation, capital exchanges money for commodity, and its transformation into commodity now itself appears as a moment of value-positing, because the commodity is accepted as such into the circulation process of capital. While it presupposes consumption in the first phase, in the second it presupposes production, production for production; for value in the form of the commodity is here taken into the circulation of capital from the outside, or, the inverse process is undertaken in the first phase. The commodity, as use value for capital itself, can only be the commodity as an element, use value, for its production process. In its double form, the process presents itself in this way: capital a exchanges its product as C for capital b s M in the first phase; in the second, capital b as C exchanges for capital a s M. Or, in the first phase, capital b as M exchanges for capital a s C, in the second, a as M for capital b s C. That is, capital is simultaneously posited in each of the two circulation phases as M and C; but in two different capitals, which are always in the opposite phase of their circulation process. In the simple circulation process, the acts of exchange, C M or M C appear either as directly coinciding or as directly divided. Circulation is not only the succession of both forms of exchange, but it is at the same time each of them distributed to two different sides. But we are not yet concerned here with exchange among many capitals. This belongs to the theory of competition or to that of the circulation of capitals (of credit). What concerns us here is the presupposition of consumption on one side of the commodity ejected from the movement of value as use value and the presupposition of production for production of value, posited as use value, as a condition of its reproduction posited externally to the circulation of capital on the other side so that these two sides arise out of the examination of the simple form of the circulation of capital. This much is clear: Since the entire circulating capital exchanges as C for M in the first phase, and as M for C in the second, then, if we regard the year as the unit of time of its evolutions, its transformations are limited both by the annual reproduction of raw materials etc. (the commodity for which it exchanges as money must have been produced, a simultaneous production must correspond to it), and by the constant creation of an annual revenue (the part of M which exchanges for commodity as use value) to consume the product of capital which is ejected as use value. Since further-developed relations are not present yet, such revenues are only those of the capitalists themselves and those of the workers. The examination of the exchange of capital and revenue, by the way, another form of the relation of production and consumption, does not belong here yet. In another respect, since fixed capital is exchanged only to the extent it enters as value into circulating capital, since it is, thus, realized only in part during the year, it presupposes only a partial counter-value, i.e. only the partial production of this counter-value during the course of the year. It is paid for only in proportion to its wear. This much clear, then, which already follows from the difference introduced by fixed capital into the industrial cycle, namely that it engages the production of subsequent years, and, just as it contributes to the creation of a large revenue, it anticipates further labour as a counter-value. The anticipation of future fruits of labour is therefore in no way a consequence of the state debt etc., in short, not an invention of the credit system. It has its roots in the specific mode of realization, mode of turnover, mode of reproduction of fixed capital.> Since we are essentially concerned here with grasping the pure, specific economic forms, hence with not joining together things that do not belong, it has thus become clear from the above that the different forms in which circulating capital and fixed capital bring revenue as well as the examination of revenue generally do not yet belong here at all; but only the different ways in which they return and affect the total turnover of capital, the movement of its reproduction generally. Nevertheless, the incidental points made here are important in that they reject the economists motley compilations, which have no place yet in the examination of the simple distinction between fixed capital and circulating capital and because they showed us that the differences in revenue etc. have their basis in the difference of form between the reproduction of fixed and circulating capital. The issue here is still only the simple return of the value. Only later will it be found how the latter becomes the return of revenue, and that in turn becomes the difference in the determination of revenue. Now as to Smith, his view becomes clearer for us when he says that circulating capital must be annually replaced and constantly renewed by constantly drawing it from the sea, the soil, and from mines. Here, then, circulating capital becomes purely material for him; it is fished out by the hairs, chipped out, harvested; they are the movable primary products which are released from their connection with the earth, isolated, made movable thereby, or separated from their element in their ready-made individuality, like fish etc. Still regarded as pure material, it is further certain that, if Smith presupposes the production of capital and does not suppose himself at the beginning of the world, then every circulating capital likewise comes originally from a fixed capital. Without nets he can catch no fish; without a plough, till no fields; and without a hammer, etc., drive no mines. If he uses even so little as a stone for a hammer etc., then this stone is certainly no circulating capital, no capital of any sort, but rather a means of labour. As soon as he has to produce, man possesses the resolve to use a part of the available natural objects directly as means of labour, and, as Hegel correctly said it, subsumes them under his activity without further process of mediation. The place where all capital, circulating as well as fixed, not only originally but continually comes from is the appropriation of alien labour. But this process presupposes, as we have seen, a continuous small-scale circulation, the exchange of wages for labour capacity, or approvisionnement. Assuming the production process of capital: All capital returns only in the form of a circulating capital; hence fixed capital can be renewed only by a process in which a part of circulating capital becomes fixed; hence, by the employment of part of the raw materials produced, and a part of labour consumed (hence also a part of the approvisionnement exchanged for living labour) for the production of fixed capital. In agriculture, e.g., part of the product is consumed by labour to build irrigation systems or a part of the grain is exchanged for guano, chemical substances etc., which are incorporated into the earth, but also in fact have no use value except in so far as they are surrendered to the chemical process of the soil. A part of the circulating capital has a use value only for the reproduction of the fixed capital, and is produced (even if its production consisted only of the labour time spent in changing its location) only for fixed capital. But fixed capital itself can be renewed as capital only by becoming a value-component of circulating capital, and its elements are thus reproduced through the transformation of circulating capital into fixed capital. Fixed capital is as much a presupposition for the production of circulating capital as circulating capital is for the production of fixed capital. Or, the reproduction of fixed capital requires: (1) the return of its value in the form of a circulating capital, for only in this way can it in turn be exchanged for the conditions of its production; (2) that a part of living labour and of the raw material be used to produce instruments of production, direct or indirect ones, instead of producing exchangeable products. Circulating capital enters as use value into fixed capital, just as does labour, while fixed capital enters as value into circulating capital; and, as movement (where it is direct machinery), as static motion, as form, into the use value. <Wages again regulated in 1514, almost like the previous time. Hours of work again fixed. Whoever will not work upon application, arrested. Hence still compulsory labour by free workers at the given wages. They must first be forced to work within the conditions posited by capital. The propertyless are more inclined to become vagabonds and robbers and beggars than workers. The last becomes normal only in the developed mode of capital s production. In the prehistory of capital, state coercion to transform the propertyless into workers at conditions advantageous for capital, which are not yet here forced upon the workers by competition among one another.> (Very bloody means of coercion of this sort employed under Henry VIII et. al.) (Suppression of the monasteries under Henry VIII likewise frees many hands.) (Under Edward VI still sharper laws against able-bodied labourers who do not want to work. 1 Edw. VI, 3: Who is able to work, refuses to labour, and lives idle for 3 days, shall be branded with redhot iron on the breast with the letter V and shall be adjudged the slave for two years of the person who should inform against such idler etc. If he runs away from his master for 14 days he shall become his slave for life and be branded on forehead or cheek with letter S, and if he runs away a second time and shall be convicted thereof by two sufficient witnesses, he shall be taken as a felon and suffer pains of death. (1376 first mention of the vagrants, sturdy rogues, 1388 the paupers.) (Similar cruel statute 1572 under Elizabeth.) Circulating capital, then, is transformed into fixed capital, and fixed capital reproduces itself in circulating capital; both, only in so far as capital appropriates living labour. Every saving in fixed capital is an increase in the net revenue of society. (A. Smith.) The final and last distinction cited by economists is that between movable and immovable; not in the sense that the former enters into the movement of circulation, the latter does not; rather in the sense that the former is physically fixed, immovable, in the same way as movable and immovable property is distinguished. For example, improvements sunk in the soil, aqueducts, buildings; and machinery itself in great part, since it must be physically fixed, to act; railways; in short, every form in which the product of industry is welded fast to the surface of the earth. This basically adds nothing to the determination of fixed capital; but it is indeed part of this character that it becomes fixed capital in a more eminent sense the more its use value, its material presence, corresponds to its specific economic form. The immovable use value, such as house, railway etc., is therefore the most tangible form of fixed capital. Of course, it can then still circulate in the same sense as immovable property generally as title; but not as use value; it cannot circulate in the physical sense. Originally, the growth of movable property, its increase as against immovable, indicates the ascendant movement of capital as against landed property. But once the mode of production of capital is presupposed, the level to which it has conquered the conditions of production is indicated in the transformation of capital into immovable property. It thereby establishes its residence on the land itself, and the seemingly solid presuppositions given by nature, themselves [appear], in landed property, as merely posited by industry. (Originally, life in the community and, through its mediation, the relationship to the earth as property, are basic presuppositions of the reproduction both of the individual and of the community. Among pastoral peoples, land and soil appear merely as precondition of the migratory life, hence appropriation does not take place. Fixed settlements with soil cultivation follow thus landed property is initially held in common, and even where it advances to private property the individuals connection to it appears as posited by his relation to the community. It appears as a mere fief of the community; etc. etc. The transformation of the latter into mere exchangeable value its mobilization is the product of capital and of the complete subordination of the state organism to it. Land and soil, even where they have become private property, are therefore exchange value only in a restricted sense. Exchange value begins in the isolated natural product, separated from the earth and individualized through industry (or mere appropriation). Individual labour first arises here too. Exchange as such does not begin within the original communes, but on their boundaries, where they cease to be. Of course, to exchange the land, their residence, to pawn it to alien communes, would be treason. Exchange can expand only little by little from its original realm, movable property, to immovable property. Only through expansion of the former does it little by little gain control over the latter. Money is the chief agent in this process.) A. Smith at first distinguishes circulating capital and fixed capital by their role in the production process. Only later does he adopt the expression: One can gainfully lay out a capital in different ways, (1) as circulating capital, (2) as fixed capital. This second expression obviously does not belong to the examination of this distinction as such, since fixed capital and circulating capital first have to be presupposed as two kinds of capital before we can speak about how to lay out capital gainfully in both forms. The total capital of each entrepreneur is necessarily divided into his fixed capital and his circulating capital. If the sum is equal, then the one becomes larger as the other diminishes. (A. Smith, tome II, p. 226.) Since capitals are (1) divided into fixed and circulating capital in unequal portions; (2) [have] an interrupted or uninterrupted production phase and return from more distant or nearer markets, hence, unequal circulation time; it follows that the determination of the surplus value created in a given time, e.g. annually, must be unequal because the number of reproduction processes in the given period is unequal. The amount of value created appears determined not simply by the labour employed during the immediate production process, but by the degree to which this exploitation of labour can be repeated within a given period of time. Finally, then: While, in the examination of the simple production process, capital appeared to realize itself as value only in connection with wage labour, and circulation lay alongside, without connection to it, here, in its reproduction process, circulation is included in it in both the moments of circulation, C M M C (as a system of exchanges through which it must pass, and to which the same number of qualitative changes within it correspond). In so far as its form as money is the point of departure and hence of return, circulation appears included in it as M C C M. It contains both circular courses, and not merely as either change of form or change of substance, but rather as both of them included within the determination of value itself. The production process, as containing within itself the conditions of its renewal, is a reproduction process whose speed is determined by various relations developed above, which all arise from differences of circulation. The reproduction of capital also contains the reproduction of the use values in which it is realized or the constant renewal and reproduction by human labour of the use values which enter human consumption and are themselves perishable. The change of substance and of form subordinated to human need through human labour appears from the viewpoint of capital as its own reproduction. It is at bottom the constant reproduction of labour itself. Capital values perpetuate themselves by reproduction: the products which compose a capital are consumed just like any others; but their value, at the same time as it is destroyed by consumption, is reproduced in other materials or in the same one. (Say, 14.) Exchange and a system of exchanges, and, included in that, the transformation into money as independent value, appears as condition and barrier for the reproduction of capital. With capital, production itself is on all sides subordinate to exchange. These exchange operations, circulation as such, produce no surplus value, but are conditions for its realization. They are conditions of the production of capital itself, in so far as its form as capital is posited only to the extent that it passes through them. The reproduction of capital is at the same time the production of specific formal conditions; of specific modes of relationship in which personified objectified labour is posited. Circulation is thus not merely the exchange of the product for the conditions of production i.e. of produced wheat, e.g., for seed, new labour etc. The worker must exchange his product for the conditions of production, so as to begin anew, in every form of production. The peasant producing for immediate consumption also transforms part of the product into seed, instrument of labour, beasts of burden, fertilizer etc., and begins his labour anew. The transformation into money is necessary for the reproduction of capital as such, and its reproduction is necessarily the production of surplus value. * Although labour must merely maintain the value of what we earlier called constant capital in one production process, it must constantly reproduce it in another, since what appears as presupposition of material and instrument in one production process is product in the other, and this renewal, reproduction, must constantly proceed simultaneously.

Grundrisse 14

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch14.htm

The general laws developed previously here briefly summarized thus: The real surplus value is determined by the relation of surplus labour to necessary labour, or by the portion of the capital, the portion of objectified labour, which exchanges for living labour, relative to the portion of objectified labour by which it is replaced. But surplus value in the form of profit is measured by the total value of the capital presupposed to the production process. Presupposing the same surplus value, the same surplus labour in proportion to necessary labour, then, the rate of profit depends on the relation between the part of capital exchanged for living labour and the part existing in the form of raw material and means of production. Hence, the smaller the portion exchanged for living labour becomes, the smaller becomes the rate of profit. Thus, in the same proportion as capital takes up a larger place as capital in the production process relative to immediate labour, i.e. the more the relative surplus value grows the value-creating power of capital the more does the rate of profit fall. We have seen that the magnitude of the capital already presupposed, presupposed to reproduction, is specifically expressed in the growth of fixed capital, as the produced productive force, objectified labour endowed with apparent life. The total value of the producing capital will express itself in each of its portions as a diminished proportion of the capital exchanged for living labour relative to the part of capital existing as constant value. Take e.g. manufacturing industry. In the same proportion as fixed capital grows here, machinery etc., the part of capital existing in raw materials must grow, while the part exchanged for living labour decreases. Hence, the rate of profit falls relative to the total value of the capital presupposed to production and of the part of capital acting as capital in production. The wider the existence already achieved by capital, the narrower the relation of newly created value to presupposed value (reproduced value). Presupposing equal surplus value, i.e. equal relation of surplus labour and necessary labour, there can therefore be an unequal profit, and it must be unequal relative to the size of the capitals. The rate of profit can rise although real surplus value falls. Indeed, the capital can grow and the rate of profit can grow in the same relation if the relation of the part of capital presupposed as value and existing in the form of raw materials and fixed capital rises at an equal rate relative to the part of the capital exchanged for living labour. But this equality of rates presupposes growth of the capital without growth and development of the productive power of labour. One presupposition suspends the other. This contradicts the law of the development of capital, and especially of the development of fixed capital. Such a progression can take place only at stages where the mode of production of capital is not yet adequate to it, or in spheres of production where it has assumed predominance only formally, e.g. in agriculture. Here, natural fertility of the soil can act like an increase of fixed capital i.e. relative surplus labour can grow without the amount of necessary labour diminishing. (E.g. in the United States.) The gross profit, i.e. the surplus value, regarded apart from its formal relation, not as a proportion but rather as a simple magnitude of value without connection with any other, will grow on the average not as does the rate of profit, but as does the size of the capital. Thus, while the rate of profit will be inversely related to the value of the capital, the sum of profit will be directly related to it. However, even this statement is true only for a restricted stage of the development of the productive power of capital or of labour. A capital of 100 with a profit of 10% yields a smaller sum of profit than a capital of 1,000 with a profit of 2%. In the first case the sum is 10, in the second 20, i.e. the gross profit of the larger capital is twice as large as that of the 10 times smaller capital, although the rate of the smaller capital s profit is 5 times greater than that of the larger. But if the larger capital s profit were only 1%, then the sum of its profit would be 10, like that for the 10 times smaller capital, because the rate of profit would have declined in the same relation as its size. If the rate of profit of the capital of 1,000 were only 1/2%, then the sum of its profit would be only half as large as that of the smaller capital, only 5, because the rate of profit would be 20 times smaller. Thus, expressed in general terms: if the rate of profit declines for the larger capital, but not in relation with its size, then the gross profit rises although the rate of profit declines. If the profit rate declines relative to its size, then the gross profit remains the same as that of the smaller capital; remains stationary. If the profit rate declines more than its size increases, then the gross profit of the larger capital decreases relative to the smaller one in proportion as its rate of profit declines. This is in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law which, despite its simplicity, has never before been grasped and, even less, consciously articulated. Since this decline in the rate of profit is identical in meaning (1) with the productive power already produced, and the foundation formed by it for new production; this simultaneously presupposing an enormous development of scientific powers; (2) with the decline of the part of the capital already produced which must be exchanged for immediate labour, i.e. with the decline in the immediate labour required for the reproduction of an immense value, expressing itself in a great mass of products, great mass of products with low prices, because the total sum of prices is = to the reproduced capital + profit; (3) [with] the dimension of capital generally, including the portion of it which is not fixed capital; hence intercourse on a magnificent scale, immense sum of exchange operations, large size of the market and all-sidedness of simultaneous labour; means of communication etc., presence of the necessary consumption fund to undertake this gigantic process (workers food, housing etc.); hence it is evident that the material productive power already present, already worked out, existing in the form of fixed capital, together with the population etc., in short all conditions of wealth, that the greatest conditions for the reproduction of wealth, i.e. the abundant development of the social individual that the development of the productive forces brought about by the historical development of capital itself, when it reaches a certain point, suspends the self-realization of capital, instead of positing it. Beyond a certain point, the development of the powers of production becomes a barrier for capital; hence the capital relation a barrier for the development of the productive powers of labour. When it has reached this point, capital, i.e. wage labour, enters into the same relation towards the development of social wealth and of the forces of production as the guild system, serfdom, slavery, and is necessarily stripped off as a fetter. The last form of servitude assumed by human activity, that of wage labour on one side, capital on the other, is thereby cast off like a skin, and this casting-off itself is the result of the mode of production corresponding to capital; the material and mental conditions of the negation of wage labour and of capital, themselves already the negation of earlier forms of unfree social production, are themselves results of its production process. The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone and to give room to a higher state of social production. It is not only the growth of scientific power, but the measure in which it is already posited as fixed capital, the scope and width in which it is realized and has conquered the totality of production. It is, likewise, the development of the population etc., in short, of all moments of production; in that the productive power of labour, like the application of machinery, is related to the population; whose growth in and for itself already the presupposition as well as the result of the growth of the use values to be reproduced and hence also to be consumed. Since this decline of profit signifies the same as the decrease of immediate labour relative to the size of the objectified labour which it reproduces and newly posits, capital will attempt every means of checking the smallness of the relation of living labour to the size of the capital generally, hence also of the surplus value, if expressed as profit, relative to the presupposed capital, by reducing the allotment made to necessary labour and by still more expanding the quantity of surplus labour with regard to the whole labour employed. Hence the highest development of productive power together with the greatest expansion of existing wealth will coincide with depreciation of capital, degradation of the labourer, and a most straitened exhaustion of his vital powers. These contradictions lead to explosions, cataclysms, crises, in which by momentaneous suspension of labour and annihilation of a great portion of capital the latter is violently reduced to the point where it can go on. These contradictions, of course, lead to explosions, crises, in which momentary suspension of all labour and annihilation of a great part of the capital violently lead it back to the point where it is enabled [to go on] fully employing its productive powers without committing suicide. Yet, these regularly recurring catastrophes lead to their repetition on a higher scale, and finally to its violent overthrow. There are moments in the developed movement of capital which delay this movement other than by crises; such as e.g. the constant devaluation of a part of the existing capital: the transformation of a great part of capital into fixed capital which does not serve as agency of direct production; unproductive waste of a great portion of capital etc. (Productively employed capital is always replaced doubly, as we have seen, in that the positing of value by a productive capital presupposes a counter-value. The unproductive consumption of capital replaces it on one side, annihilates it on the other. * That the fall of the rate of profit can further be delayed by the omission of existing deductions from profit, e.g. by a lowering of taxes, reduction of ground rent etc., is actually not our concern here, although of importance in practice, for these are themselves portions of the profit under another name, and are appropriated by persons other than the capitalists themselves. The fall [in the rate of profit] likewise delayed by creation of new branches of production in which more direct labour in relation to capital is needed, or where the productive power of labour is not yet developed, i.e. the productive power of capital.) (Likewise, monopolies.) Profit is a term signifying the increase of capital or wealth; so failing to find the laws which govern the rate of profit, is failing to find the laws of the formation of capital. (William Atkinson, Principles of Political Economy etc., London, 1840, p. 55.) He has however failed to understand even what the rate of profit is. A. Smith explained the fall of the rate of profit, as capital grows, by the competition among capitals. To which Ricardo replied that competition can indeed reduce profits in the various branches of business to an average level, can equalize the rate, but cannot depress this average rate itself. A. Smith s phrase is correct to the extent that only in competition the action of capital upon capital are the inherent laws of capital, its tendencies, realized. But it is false in the sense in which he understands it, as if competition imposed laws on capital from the outside, laws not its own. Competition can permanently depress the rate of profit in all branches of industry, i.e. the average rate of profit, only if and in so far as a general and permanent fall of the rate of profit, having the force of a law, is conceivable prior to competition and regardless of competition. Competition executes the inner laws of capital; makes them into compulsory laws towards the individual capital, but it does not invent them. It realizes them. To try to explain them simply as results of competition therefore means to concede that one does not understand them. Ricardo, for his part, says: No accumulation of capitals can permanently reduce profits unless an equally permanent cause raises wages. (p. 92, tome II, Paris 1835, translated by Constancio.) He finds this cause in the growing, relatively growing unproductivity of agriculture, the growing difficulty of increasing the quantity of subsistence , i.e. in the growth of proportionate wages, so that labour s real wage is no greater, but the product obtains more labour; in a word, a greater portion of necessary labour is required for the production of agricultural products. The falling rate of profit hence corresponds, with him, to the nominal growth of wages and real growth of ground rent. His one-sided mode of conceiving it, which seizes on only one single case, just as the rate of profit can fall because wages momentarily rise etc., and which elevates a historical relation holding for a period of 50 years and reversed in the following 50 years to the level of a general law, and rests generally on the historical disproportion between the developments of industry and agriculture in and for itself it was strange that Ricardo, Malthus, etc. constructed general and eternal laws about physiological chemistry at a time where the latter hardly existed this method that Ricardo has of conceiving the matter has therefore been attacked from all sides, partly because of an instinct that it is wrong and unsatisfactory; but mostly for its true rather than for its false aspects. A. Smith thought that accumulation or increase of stock in general lowered the rate of profits in general, on the same principle which makes the increase of stock in any particular trade lower the profits of that trade. But such increase of stock in a particular trade means an increase in a greater proportion than stock is at the same time increased in other trades. It is relative. (p. 9, An Inquiry into those Principles respecting the Nature of Demand and the Necessity of Consumption, lately advocated by Mr Malthus. London, 1821.) The competition among the industrial capitalists can level profits which rise particularly above the level, but cannot lower this ordinary level. (Ramsay, IX, 88.) (Ramsay and other economists correctly distinguish between whether productivity grows in the branches of industry which make fixed capital, and naturally wages, or in other industries, e.g. luxury-goods industries. The latter cannot diminish necessary labour time. This they can do only through exchange for agricultural products of other countries, which is then the same as if productivity had increased in agriculture. Hence the importance of free trade in grain for the industrial capitalists.) Ricardo says (English edition On the Principles of Political Economy and Taxation. 3rd edition, London, 1821): The farmer and manufacturer can no more live without profits, than the labourer without wages. (p. 23 loc. cit.) There is a natural tendency for profits to fall, because in the progress of society and of wealth, the additional food requires more and more labour. This tendency, this gravitation of profits, is delayed in repeated intervals by improvement of the machinery involved in the production of necessaries, as well as by discoveries in the science of agriculture, which reduce the costs of production. (loc. cit. p. 121.) Ricardo at once identifies profit directly with surplus value; he did not make this distinction at all. But whereas the rate of surplus value is determined by the relation of surplus labour employed by the capital to necessary labour, the rate of profit is nothing but the relation of the surplus value to the total value of the capital presupposed to production. Its proportion falls and rises, hence, in relation with the part of the capital exchanged for living labour relative to the part existing as material and fixed capital. Under ALL circumstances, the surplus value regarded as profit must express a smaller proportion of the gain than the real proportion of the surplus value. For, under all circumstances, it is measured by the total capital, which is always larger than that employed for wages and exchanged for living labour. Since Ricardo simply mixes surplus value and profit together in this way, and since the surplus value can constantly decline, can tendentially decline only if the relation of surplus labour to necessary labour, i.e. to the labour required for the reproduction of labouring capacity, declines, but since the latter is possible only if the productive force of labour declines, Ricardo assumes that the productive force of labour decreases in agriculture, although it grows in industry, with the accumulation of capital. He flees from economics to seek refuge in organic chemistry. We have demonstrated the necessity of this tendency without any reference to ground rent, nor did we have to refer e.g. to rising demand for labour etc. The connection between ground rent and profit is to be treated only in the examination of ground rent itself, does not belong here. But modern chemistry has demonstrated that Ricardo s physiological postulate, expressed as a general law, is false. As for Ricardo s disciples, in so far as they are more than his pious echoes, they have quietly let drop whatever is unpleasant to them in their master s principles, as has the newer economics generally. To drop the problem is their general method of solving it. Other economists, such as e.g. Wakefield, seek refuge in the examination of the field of employment for the growing capital. This belongs in the examination of competition, and is rather the difficulty for capital to realize the growing profit, hence denial of the inherent tendency towards the fall of the rate of profit. But the need for capital to seek a constantly more extensive field of employment is itself again a consequence. One cannot count Wakefield and similar people among those who have posed the question itself. (Is in certain respects a reproduction of A. Smith s view.) Finally, the harmonists among the most modern economists, at their head the American, Carey, whose most obnoxious adherent was the Frenchman Bastiat (by the way, it is the nicest irony of history that the Continental free-traders worship Mr Bastiat, who, for his part, gets his wisdom from the protectionist, Carey), accept the fact of the tendency of the rate of profit to fall in measure as productive capital grows. But they explain it simply and entirely as due to growth in the value of labour s share; growth of the proportion of the total product obtained by the worker, while the capital is allegedly compensated for this by the growth of gross profits. The unpleasant contradictions, antagonisms within which classical economics moves, and which Ricardo emphasizes with scientific ruthlessness, are thus watered down into well-to-do harmonies. In Carey s development, it sometimes seems as if he still had a mind of his own. This concerns a law which we need look at only in the doctrine of competition, where we will then settle accounts with him. We can finish up here with the witlessness of Bastiat, who expresses commonplaces in a paradoxical way, grinds and polishes them into facets, and hides an utter poverty of ideas under a cover of formal logic. * In the Gratuit du Cr dit. Discussion entre M. Fr. Bastiat et M. Proudhon, Paris, 1850 (Proudhon, by the way, cuts a highly ridiculous figure in this polemic, where he hides his dialectical feebleness under a great show of rhetoric), it says in Bastiat s letter No. VIII (where this noble spirit, by the way, simply transforms, with his conciliatory dialectic, the gain resulting from the simple division of labour both for the road-builder and for the road-user into a gain owed to the road (i.e. to capital) itself): To the degree that capitals increase (and the products with them), the absolute part returning to capital increases, and its proportional part diminishes. To the degree that capitals increase (and the products with them), labour s proportional part and its absolute part increase Since capital s absolute part grows even while it successively obtains only 1/2, 1/3, 1/4, 1/5 of the total product, it follows that labour, which successively obtains 1/2, 2/3, 3/4, 4/5, evidently receives a progressively increasing share of the whole, both in the proportional and in the absolute sense. He gives as illustration: The same joke is repeated (p. 288) in the form of increasing gross profit with declining rate of profit, but increasing mass of products sold at lower prices, and weighty words are spoken on that occasion about the law of unlimited decline which never reaches zero, a law well known to mathematicians . (p. 288.) Here we have (hawking his wares) an endlessly decreasing multiplier, because the multiplicand is ever growing. (p. 288 loc. cit.) Ricardo had anticipated his Bastiat. Emphasizing that the sum of profit grows as capital grows despite the decline of the rate of profit thus anticipating Bastiat s whole profundity he does not fail to note that this progression is true only for a certain time . He says, word for word: Regardless of how the rate of profit on stock may decline in consequence of the accumulation of capital on the land and of a rise of wages (by which Ricardo understands, N.B., the rise of the cost of production of the agricultural products necessary for the maintenance of labour capacity), the aggregate amount of profits must nevertheless grow. Supposing, then, that in repeated accumulations of 100,000 the rate of profits fell from 20 to 19, 18, 17%, we should expect that the whole amount of profits received by the successive owners of capital would be always progressive; that it would be greater with the capital of 200,000 than with that of 100,000; yet greater with 300,000; and so on, increasing, although at a decreasing rate, with every increase of capital. However, this progress is true only for a certain time: thus 19% on 200,000 is more than 20 on 100,000; 18% on 300,000 more than 19% on 200,000; but after capital has accumulated to a large amount and profits have fallen, further accumulation diminishes the sum of profits. Thus, supposing the accumulation of 1,000,000 and profits of 7%, then the total amount of profit will be 70,000; now if an addition of 100,000 is made to the million, and profits fall to 6%, then 66,000 or a decrease of 4,000 will be received by the owners of the stock, although the amount of capital will be increased from 1,000,000 to 1,100,000. (loc. cit. p. 124, 125.) Of course this does not prevent Mr Bastiat from undertaking the operation of making a growing multiplicand grow in such a way that, with the declining multiplier, it produces a growing product, in true elementary-school pupil style, just as the laws of production did not prevent Dr Price from constructing his compound interest calculations. Because the rate of profit declines, it declines relative to wages, which must consequently grow proportionally and absolutely. So reasons Bastiat. (Ricardo observed this tendency towards the decline of the profit rate with the growth of capital; and since he confuses profit with surplus value, he was forced to make wages rise in order to let profits fall. But since he saw at the same time that wages really declined more than they rose, he let the value of wages grow, i.e. the quantity of necessary labour, without letting its use value grow. Thus in fact he only let ground rent increase. The harmonic Mr Bastiat discovers, however, that, with the accumulation of capitals, wages rise proportionally and absolutely.) He assumes what he has to prove, that the decline of the profit rate is identical with the increase in the rate of wages, and then illustrates his presupposition with an arithmetical example which appears to have amused him greatly. If the decline of the profit rate expresses nothing more than the decline of the relation in which the total capital requires living labour for its reproduction, then it is another matter. Mr Bastiat overlooks the trifling circumstance that, in his presupposition, while the profit rate on capital declines, the capital itself increases, the capital presupposed to production. Now even Mr Bastiat ought to have had an inkling that the value of the capital cannot grow without appropriating surplus labour. The misery of agricultural overproduction, recorded in French history, could have shown him that the mere increase of products does not increase their value. The question would then revolve simply around an investigation of whether the fall of the profit rate is identical with the growth of the rate of surplus labour relative to necessary labour, or, instead, with the fall of the total rate of living labour employed relative to the reproduced capital. Mr Bastiat also therefore divides the product simply between capitalist and worker, instead of dividing it into raw material, instrument of production and labour, and asking himself in what proportional parts its value in exchange is applied against these different portions. The part of the product exchanged for raw material and instrument of production is obviously none of the workers business. What they divide with capital, as wages and profit, is nothing other than the newly added living labour itself. But what particularly worries Bastiat is who, after all, is to eat up the increased product? Since the capitalist eats up a relatively small part, does not the worker have to eat up a relatively large one? Particularly in France, whose total production is sufficient only in Bastiat s fantasy to give anyone at all very much to eat, Mr Bastiat could have found convincing testimony that a mass of parasitic bodies come to cluster around capital, and, under one or another title, they lay hands on so much of the total production as to leave little danger of the workers being overwhelmed by abundance. It is clear, of course, that with large-scale production the total mass of labour employed can increase although the proportion of labour employed relative to capital decreases, and that there is no obstacle, therefore, which prevents an increasing working population from requiring a greater mass of products as capital increases. Incidentally, Bastiat in whose harmonic brain all cows are grey (see above, wages), confuses the decline of interest with the increase of wages, since this is rather an increase of industrial profit, which concerns the workers not at all, but concerns only the relation in which different species of capitalists divide up the total profit among themselves. When capital is posited as profit-creating, as a source of wealth independently of labour, each part of the capital is thereby assumed to be equally productive. Just as surplus value in the form of profit is measured against the total value of the capital, so does it appear to be created by its different components to an equal degree. Thus its circulating part (the part consisting of raw materials and approvisionnement) brings no more profit than the component which consists of the fixed capital, and, more particularly, profit accrues to these component parts in proportion to their magnitude. Since the profit of capital is realized only in the price which is paid for it, for the use value created by it, profit is determined by the excess of the price obtained over the price which covers outlays. Since, furthermore, this realization proceeds only through exchange, the individual capital s profit is not necessarily restricted by its surplus value, by the surplus labour contained in it; but is relative, rather, to the excess of price obtained in exchange. It can exchange more than its equivalent, and then its profit is greater than its surplus value. This can be the case only to the extent that the other party to the exchange does not obtain an equivalent. The total surplus value, as well as the total profit, which is only surplus value itself, computed differently, can neither grow nor decrease through this operation, ever; what is modified thereby is not it, but only its distribution among the different capitals. However, this examination belongs only with that of the many capitals, it does not yet belong here. In relation to profit, the value of the capital presupposed in production appears as advances production costs which must be replaced in the product. After deduction of the part of the price which replaces them, the excess forms the profit. Since surplus labour of which profit and interest are, both, only portions costs capital nothing, hence does not figure as part of the value advanced by it not as part of the value which it possessed before the production process and the realization of the product it follows that this surplus labour, which is included in the production costs of the product and forms the source of surplus value and hence of profit as well, does not figure as part of the production costs of capital. The latter are equal only to the values actually advanced by it, not including the surplus value appropriated in production and realized in circulation. The production costs from the standpoint of capital are therefore not the real production costs, precisely because surplus labour does not cost it anything. The excess of the price of the product over the price of the production costs gives it its profit. Thus profit can exist for capital even without the realization of the real production costs i.e. the whole surplus labour set to work by capital. Profit the excess over the advances made by capital may be smaller than surplus value the surplus of living labour gained in exchange by capital in excess of the objectified labour it has given in exchange for labour capacity. However, through the separation of interest from profit which we will look at immediately a part of the surplus value is posited as production cost even for productive capital itself. The confusion of production costs from the standpoint of capital with the amount of labour objectified in capital s product, surplus labour included, has given rise to statements such as that profit is not included in the natural price . It is allegedly absurd to call the excess, or profit, a part of the expenditure . (Torrens, IX, 30.) This then leads to a mass of confusion; either by having profit not realized in, but rather arising from, exchange (which can always be the case only relatively, if one of the parties to the exchange does not obtain his equivalent), or by ascribing to capital some magic power which makes something out of nothing. Since the value posited in the production process realizes its price through exchange, the price of the product appears in fact determined by the sum of money which expresses an equivalent for the total quantity of labour contained in raw material, machinery, wages and in unpaid surplus labour. Thus price still appears here merely as a formal modification of value; as value expressed in money; but the magnitude of this price is presupposed in the production process of capital. Capital thereby appears as a determinant of price, so that price is determined by the advances made by capital + the surplus labour realized by it in the product. We shall see later that price, on the contrary, appears as determining profit. And, while here the total real production costs appear as determining price, price appears later as determining the production costs. So as to impose the inherent laws of capital upon it as external necessity, competition seemingly turns all of them over. Inverts them. To repeat once more: the profit of capital does not depend on its magnitude; but rather, given an equal magnitude, on the relation between its component parts (the constant and the variable part); and then on the productivity of labour (which is expressed, however, in the above proportion, since, with diminished productivity, the same capital could not work up the same material with the same portion of living labour); on the turnover time, which is determined by the different proportions between fixed and circulating capital, different durability of fixed capital, etc. etc. (see above). The inequality of profit in different branches of industry with capitals of equal magnitudes is the condition and presupposition for their equalization through competition. In so far as capital obtains raw material, instrument, labour, through exchange, buys them, its elements are themselves already present in the form of prices; already posited as prices; presupposed to it. The comparison of the market price of its product with the prices of its elements then becomes decisive for it. But this belongs only in the chapter on competition. Thus the surplus value which capital posits in a given turnover period obtains the form of profit in so far as it is measured against the total value of the capital presupposed to production. While surplus value is measured directly by the surplus labour time which capital gains in the exchange with living labour. Profit is nothing but another form of surplus value, a form developed further in the sense of capital. Surplus value no longer regarded here as exchanged for capital itself in the production process; not for labour. Hence capital appears as capital, as presupposed value relating to itself, through the mediation of its own process, as posited, produced value, and the value posited by it is called profit. The two immediate laws which this transformation of surplus value into the shape of profit yields for us are these: (1) Surplus value expressed as profit always appears as a smaller proportion than surplus value in its immediate reality actually amounts to. For, instead of being measured by a part of the capital, the part exchanged for living labour (a relation which turns out to be that of necessary to surplus labour), it is measured against the whole. Whatever may be the surplus value which a capital A posits, and whatever may be the proportion within A of c and v, the constant and the variable part of the capital, the surplus value s must appear smaller when measured against c + v than when measured against its real measure, v. Profit, or if it is regarded not as an absolute sum but rather, as is usually done, as a proportion (the rate of profit is profit expressed as the relation in which capital has posited surplus value) the rate of profit never expresses the real rate at which capital exploits labour, but always a much smaller relation, and the larger the capital, the more false is the relation it expresses. The rate of profit could express the real rate of surplus value only if the entire capital were transformed solely into wages; if the entire capital were exchanged for living labour, i.e. if the approvisionnement alone existed, and if it not only existed not in the form of already produced raw material (which has happened in extractive industry), hence if not only the raw material were = 0, but if the means of production, also, whether in the form of instruments or in the form of developed fixed capital, were = 0. The latter case cannot occur on the basis of the mode of production corresponding to capital. If A = c + v, whatever the numerical value of s, then s/(c + v) < s/v. (2) The second great law is that the rate of profit declines to the degree that capital has already appropriated living labour in the form of objectified labour, hence to the degree that labour is already capitalized and hence also acts increasingly in the form of fixed capital in the production process, or to the degree that the productive power of labour grows. The growth of the productive power of labour is identical in meaning with (a) the growth of relative surplus value or of the relative surplus labour time which the worker gives to capital; (b) the decline of the labour time necessary for the reproduction of labour capacity; (c) the decline of the part of capital which exchanges at all for living labour relative to the parts of it which participate in the production process as objectified labour and as presupposed value. The profit rate is therefore inversely related to the growth of relative surplus value or of relative surplus labour, to the development of the powers of production, and to the magnitude of the capital employed as [constant] capital within production. In other words, the second law is the tendency of the profit rate to decline with the development of capital, both of its productive power and of the extent in which it has already posited itself as objectified value; of the extent within which labour as well as productive power is capitalized. Other causes which additionally act upon the rate of profit, which can depress it for longer or shorter periods, do not yet belong here. It is quite correct, as regards the production process as a whole, that the capital acting as material and as fixed capital not only is objectified labour, but must also be reproduced, and continuously reproduced, by new labour. Its presence assumes, therefore the extent which its presence has attained assumes, therefore, the extent of the labouring population, population on a large scale, which in and for itself is the condition of all productive power but this reproduction everywhere proceeds on the presupposition of the action of fixed capital and of raw material and of scientific power, both as such, and as appropriated within production and already realized within it. This point is to be developed in more detail only in the examination of accumulation. It is clear, further, that although the part of capital exchanged for living labour declines in relation to the total capital, the total mass of living labour employed can increase or remain the same if capital grows in the same or a larger relation. Hence a constant growth in the population may accompany a relative decline in necessary labour. If capital A lays out 1/2 in c and 1/2 in v, while capital A lays out 3/4 in c and 1/4 in v, then capital A could employ 2/4 v for 6/4 c. But if it was originally = 3/4 c + 1/4 v, then it is now = 6/4 c + 2/4 v, or it grew by 4/4; i.e. it doubled. However, this relation also is to be examined more closely only in connection with the theory of accumulation and population. All in all we must not at this point be sidetracked by drawing the consequences which follow from the laws, and by turning them over in the mind from one angle or another. The rate of profit is determined, then, not only by the relation of surplus labour to necessary labour, or by the relation in which objectified labour is exchanged for living labour, but by the overall relation of living labour employed to objective labour; by the portion of capital exchanged for living labour relative to the part which participates in the production process as objectified labour. This portion, however, declines in the same relation as surplus labour increases in relation to necessary labour. Profit as we still regard it here, i.e. as the profit of capital as such, not of an individual capital at the expense of another, but rather as the profit of the capitalist class, concretely expressed, can never be greater than the sum of the surplus value. As a sum, it is the sum of the surplus value, but it is this same sum of values as a proportion relative to the total value of the capital, instead of to that part of it whose value really grows, i.e. is exchanged for living labour. In its immediate form, profit is nothing but the sum of the surplus value expressed as a proportion of the total value of the capital. If we look at a single worker s day, then the decrease of necessary labour relative to surplus labour expresses itself in the appropriation of a larger part of the working day by capital. The living labour employed here remains the same. Suppose that an increase of the force of production, e.g. employment of machinery, made 3 workers superfluous out of 6, each of whom worked 6 days a week. If these 6 workers themselves possessed the machinery, then each of them would thereafter work only half a day. Now, instead, 3 continue to work a whole day every day of the week. If capital were to continue to employ the 6, then each of them would work only half a day, but perform no surplus labour. Suppose that necessary labour amounted to 10 hours previously, the surplus labour to 2 hours per day, then the total surplus labour of the 6 workers was 2 6 daily, equal to a whole day, and was equal to 6 days a week = 72 hours. Each one worked one day a week for nothing. Or it would be the same as if the sixth worker had worked the whole week long for nothing. The 5 workers represent necessary labour, and if they could be reduced to 4, and if the one worker worked for nothing as before then the relative surplus value would have grown. Its relation previously was = 1:6, and would now be 1:5. The previous law, of an increase in the number of hours of surplus labour, thus now obtains the form of a reduction in the number of necessary workers. If it were possible for this same capital to employ the 6 workers at this new rate, then the surplus value would have increased not only relatively, but absolutely as well. Surplus labour time would amount to 14 2/5 hours. 2 2/5 hours [each] performed by 6 workers is of course more than 2 2/5 performed by 5. If we look at absolute surplus value, it appears determined by the absolute lengthening of the working day above and beyond necessary labour time. Necessary labour time works for mere use value, for subsistence. Surplus labour time is work for exchange value, for wealth. It is the first moment of industrial labour. The natural limit is posited presupposing that the conditions of labour are on hand, raw material and instrument of labour, or one of them, depending on whether the work is merely extractive or formative, whether it merely isolates the use value from nature or whether it shapes it the natural limit is posited by the number of simultaneous work days or of living labour capacities, i.e. by the labouring population. At this stage the difference between the production of capital and earlier stages of production is still merely formal. With kidnapping, slavery, the slave trade and forced labour, the increase of these labouring machines, machines producing surplus product, is posited directly by force; with capital, it is mediated through exchange. Use values grow here in the same simple relation as exchange values, and for that reason this form of surplus labour appears in the slave and serf modes of production etc., where use value is the chief and predominant concern, as well as in the mode of production of capital, which is oriented directly towards exchange value, and only indirectly towards use value. This use value may be purely imaginary, as e.g. with the Egyptian pyramids, in short, with the works of religious ostentation which the mass of the nation in Egypt, India etc. was forced [to undertake]; or may be directed at immediate utility as e.g. with the ancient Etruscans. In the second form of surplus value, however, as relative surplus value, which appears as the development of the workers productive power, as the reduction of necessary labour time relative to the working day, and as the reduction of the necessary labouring population relative to the population (this is the antithetical form), in this form there directly appears the industrial and the distinguishing historic character of the mode of production founded on capital. The forcible transformation of the greater part of the population into wage labourers, and the discipline which transforms their existence into that of mere labourers, correspond to the first form. Throughout a period of 150 years, e.g. from Henry VII on, the annals of English legislation contain the bloody handwriting of coercive measures employed to transform the mass of the population, after they had become propertyless and free, into free wage labourers. The dissolution of the monastic orders, the confiscation of church lands, the abolition of the guilds and confiscation of their property, the forcible ejection of the population from the land through the transformation of tillage into pasture, enclosures of commons etc., had posited the labourers as mere labour capacities. But they now of course preferred vagabondage, beggary etc. to wage labour, and had still to be accustomed forcibly to the latter. This is repeated in a similar fashion with the introduction of large industry, of factories operating with machines. Cf. Owen. Only at a certain stage of the development of capital does the exchange of capital and labour become in fact formally free. One can say that wage labour is completely realized in form in England only at the end of the eighteenth century, with the repeal of the law of apprenticeship. The tendency of capital is, of course, to link up absolute with relative surplus value; hence greatest stretching of the working day with greatest number of simultaneous working days, together with reduction of necessary labour time to the minimum, on one side, and of the number of necessary workers to the minimum, on the other. This contradictory requirement, whose development will show itself in different forms as overproduction, over-population etc., asserts itself in the form of a process in which the contradictory aspects follow closely upon each other in time. A necessary consequence of them is the greatest possible diversification of the use value of labour or of the branches of production so that the production of capital constantly and necessarily creates, on one side, the development of the intensity of the productive power of labour, on the other side, the unlimited diversity of the branches of labour, i.e. thus the most universal wealth, in form and content, of production, bringing all sides of nature under its domination. Capital pays nothing for the increase of the productive force arising by itself, in large-scale production, from division and combination of labour, from savings on certain expenses conditions for the labour process which remain the same or diminish when labour is done in common, such as heating etc., industrial buildings etc.; it obtains this increased productive power of labour free of charge. If the force of production increased simultaneously in the production of the different conditions of production, raw material, means of production and means of subsistence, and in the [branches of production] determined [by them], then their growth would bring about no change in the relation between the different component parts of the capital. If e.g. the productive force of labour grows simultaneously in the production of flax and of looms and of weaving itself (by division of labour), then a greater quantity of raw material etc. would correspond to the greater quantity woven in a day. In extractive work, e.g. the mining industry, it is not necessary for raw materials to increase when labour becomes more productive, since no raw material is used. To make harvests more productive, it is not even necessary for the number of instruments to have grown, but rather merely for them to be concentrated and for the work, previously done fragmentarily by hundreds, to be done communally. However, what is required for all forms of surplus labour is growth of population; of the labouring population for the first form; of population generally for the second, since it requires the development of science etc. Population, however, appears here as the basic source of wealth. The following distinctions must be drawn: (1) Labour, increasing (or intensity, speed of labour), requires no greater advance in material or instrument of labour. E.g. the same 100 workers with instruments of the same value catch more fish, or till the soil better, or draw more ores from the mines or coal from the pits, or beat more leaf from the same amount of gold as a result of greater skill, better combination and division of labour etc., or waste less raw material, hence get further with the same value of raw materials. In this case then, if we assume either that their products enter into their own consumption, then their necessary labour time diminishes; they perform a greater amount of work at the same maintenance costs. Or, a smaller part of their labour is necessary for the reproduction of labour capacity. The necessary part of labour time diminishes relative to surplus labour time, and, although the value of the product remains the same 100 working days, the part going to capital, the surplus value, increases. If the total surplus worker was = 1/10, i.e. = 10 working days, and if it is now 1/5, then surplus labour time has grown by 10 days. The workers work 80 days for themselves and 20 for the capitalists, whereas in the first case 90 for themselves and only 10 for the capitalist. (This calculation by working days, and labour time as the only substance of value, shows itself in this open way where relations of bondage exist. With capital, covered up by money.) Of the newly created value, a greater portion accrues to capital. But the relations between the various component parts of the invariable capital remain the same, on this presupposition. That is, although the capitalist employs a greater mass of surplus labour, because he pays less wages, he does not employ more capital in raw materials and instruments. He gives a smaller part of objectified labour in exchange for the same amount of living labour, or the same amount of objectified for a greater amount of living labour. This possible only in extractive industry; in manufacturing, only in so far as there is greater economy in use of raw materials; further, where chemical processes increase the material, in agriculture; in the transporting industry. (2) Productivity increases at the same time not only in the given branch of production, but also in its conditions; in the case, namely, where raw material or instrument or both must be increased along with an increase in the intensity of labour, the increase of the number of products produced by labour in the same time. (The raw material need not cost anything, e.g. reeds for basket-making; free wood etc.) In this case the relation of capital remains the same. That is, with the growing productivity of labour the capital need not lay out a greater value in raw material and instruments. (3) The increased productivity of labour requires a greater outlay of capital for raw material and instrument. If an unchanged number of workers has become more productive merely through division of labour etc., then the instrument remains the same; the raw material alone must grow; since the same labour time processes a greater amount of it in the same time; and, according to the presupposition, the productivity arose only from greater skill on the part of the workers, division and combination of labour etc. In this case the part of the capital exchanged for living labour not only diminishes (it remains the same if absolute labour time alone increases; decreases, if relative time grows) relative to the other component parts of capital, which remain the same, by an amount equal to its own decline, but likewise by an amount equal to their growth. If it was While the growth of the surplus value in all cases presupposes growth of the population, in this case [it presupposes] additionally accumulation, or a greater capital entering into production. (This ultimately comes down to a larger population of workers occupied in the production of raw material.) In the first case the total part of the capital employed for labour forms 1/4 of the total capital, and relates to the constant part of the capital as = 1:3; in the second case capital employed for labour forms less than 1/6 of the total capital, and the total part of the capital employed for labour relates as less than 1:5 to the constant part of the capital. Hence, although the increase of productive power resting on division and combination of labour rests on absolute increase of the labour power employed, it is necessarily linked with a decrease of the latter, relative to the capital which sets it in motion. And while, in the first form, the form of absolute surplus labour, the mass of labour employed must grow in the same relation as the capital employed, in the second case it grows in a lesser relation, and, more precisely, in inverse relation to the growth of the force of production. If the productivity of the soil doubled owing to employment of the latter method of agricultural labour, if the same amount of labour yielded 1 quarter of wheat instead of 1/2, then necessary labour would fall by 1/2, and capital could employ twice the number for the same wages. (This, if expressed in grain only.) But the capitalist would not need additional workers to work his land. Hence he will employ the same labour with half the previous wages; a part of his capital, the part earlier laid out in money, becomes free; the labour time employed has remained the same relative to the capital employed, but its surplus part has risen relative to the necessary part. If the relation of necessary labour to the total working day was = 3/4 of the working day or 9 hours, before, then it will now be equal to 3/8 or = 4 1/2 hours. In the first case the surplus value was 3 hours; in the second = 7 1/2. The course of the process is this: With a given population of workers and length of the working day, i.e. length of the working day multiplied by the number of simultaneous working days, surplus labour can be increased only relatively, by means of greater productive power of labour, the possibility of which is already posited in the presupposed growth of the population and [its] training for labour (including thereby also a certain amount of free time for non-labouring, not directly labouring population, hence development of mental capacities etc.; mental appropriation of nature). Given a certain stage of the development of the productive forces, surplus labour can be absolutely increased only through transformation of a greater part of the population into workers, and increase of the number of simultaneous working days. The first process is decrease of the relative working population, although it remains the same in absolute terms; the second is its increase. Both tendencies necessary tendencies of capital. The unity of these contradictory tendencies, hence the living contradiction, only with machinery, which we will discuss in a moment. The first form obviously allows only a small non-labouring population relative to the labouring one. The second, since the quota of living labour required in it increases more slowly than the quota of capital employed, allows a larger non-labouring population relative to the labouring one. During the formative stages of capital, where it obtains raw material and instrument, the conditions of the product, from circulation, it relates to these component parts and to their relations as given presuppositions. Although this appearance vanishes on closer examination, since all these moments appear as equally the products of capital, and since it would otherwise not have conquered the total conditions of its production, they nevertheless remain always in the same relation for the individual capital. Hence, one part of it can always be regarded as constant value, and only the part laid out in labour varies. These component parts do not develop evenly, but, as will be seen in competition, [it is] the tendency of capital to distribute the force of production evenly. Since the growing productivity of labour would lead capital to encounter a barrier in the not-growing mass of raw material and machinery, industrial development takes the following course: the introduction of labour on a large scale, as well as the employment of machinery, begins in the branches which are closest to being production of raw materials for industry, raw material both for the material of labour and [for the] instrument, where the material of labour most closely approaches mere raw material. Thus, in spinning before in weaving, in weaving before printing etc. First of all in the production of metals, which are the chief raw material for the instruments of labour themselves. If the actual raw product which makes up the raw material for industry at the lowest stage cannot itself be rapidly increased then refuge is sought in more rapidly increasable substitutes. (Cotton for linen, wool and silk.) The same happens for the necessaries of life in the substitution of potatoes for grain. The higher productivity in the latter case through production of a worse article containing fewer nourishing substances and hence cheaper organic conditions of the worker s reproduction. The latter belongs in the examination of wages. In the discussion of the minimum wage, not to forget Rumford. Now we come to the third case of relative surplus labour as it presents itself in the employment of machinery. <It has become apparent in the course of our presentation that value, which appeared as an abstraction, is possible only as such an abstraction, as soon as money is posited; this circulation of money in turn leads to capital, hence can be fully developed only on the foundation of capital, just as, generally, only on this foundation can circulation seize hold of all moments of production. This development, therefore, not only makes visible the historic character of forms, such as capital, which belong to a specific epoch of history; but also, [in its course] categories such as value, which appear as purely abstract, show the historic foundation from which they are abstracted, and on whose basis alone they can appear, therefore, in this abstraction; and categories which belong more or less to all epochs, such as e.g. money, show the historic modifications which they undergo. The economic concept of value does not occur in antiquity. Value distinguished only juridically from pretium, against fraud etc. The concept of value is entirely peculiar to the most modern economy, since it is the most abstract expression of capital itself and of the production resting on it. In the concept of value, its secret betrayed.> What distinguishes surplus labour founded on machinery is the reduction of necessary labour time, which takes the form that fewer simultaneous working days are employed, fewer workers. The second moment, that the increase in productive power must be paid for by capital itself, is not free of charge. The means by which this increase in the force of production is set to work is itself objectified direct labour time, value, and, in order to lay hands upon it, capital must exchange a part of its value for it. It is easy to develop the introduction of machinery out of competition and out of the law of the reduction of production costs which is triggered by competition. We are concerned here with developing it out of the relation of capital to living labour, without reference to other capitals. If a capitalist annually employed 100 workers at spinning cotton, which annually cost him 2,400, and if he replaced 50 workers with a machine costing 1,200, but in such a way that the machine would likewise be worn out within the year and have to be replaced again at the beginning of the second year, then he would obviously have gained nothing; nor could he sell his product more cheaply. The remaining 50 workers would do the same work as 100 did earlier; each individual worker s surplus labour would have increased in the same relation as their number had diminished, hence would have remained the same. If previously it was = 200 hours of work daily, i.e. 2 hours for each of the 100 working days, then it would now likewise be = 200 hours of work, i.e. = 4 for each of the 50 working days. Relative to the worker, his surplus time would have increased; for capital the matter would be unchanged, since it would now have to exchange 50 working days (necessary and surplus time together) for the machine. The 50 days of objectified labour which it exchanged for machinery would only give him an equivalent, hence no surplus time, as if it had exchanged 50 days of objectified labour for 50 living ones. This would be replaced, however, by the surplus labour time of the remaining 50 workers. If the form of exchange is stripped off, the matter would be the same as if the capitalist employed 50 workers whose entire working day were necessary labour only, and 50 additional ones whose working day made good this loss . But posit now that the machine cost only 960, i.e. only 40 working days, and that the remaining workers produce 4 hours of surplus labour time each, as before, i.e. 200 hours or 16 days, 4 hours (16 1/3 days), then the capitalist would have saved 240 on outlays. While he gained only 16 days 4 hours with his previous outlay of 2,400, he would now likewise gain 200 hours of work on an outlay of 960. 200 is to 2,400 as 1:12; while 200:2,160 = 20:216 = 1:10 4/5. Expressed in days of work, in the first case he would gain 16 days 4 hours per 100 working days, in the second, the same amount on 90; in the first, on 1,200 hours of work daily, 200; in the second, on 1,080. 200:1,200 = 1:6, 200:1,080 = 1:5 2/3. In the first case the individual worker s surplus time = 1/6 working day = 2 hours. In the second case = 2 6/27 hours per worker. Furthermore, with the employment of machinery, the part of the capital which was previously employed in instruments must be deducted from the additional cost caused by the machinery. < A cotton spinner, with a capital of 100,000, who laid out 95,000 for his mill and machinery, would soon find he wanted means to buy cotton and pay wages. His trade would be hampered and his finances deranged. And yet men expect that a nation, which has recklessly sunk the bulk of its available means in railways, should nevertheless be able to conduct the infinite operations of manufacture and commerce. (loc. cit. p. 1271.)> < In the old times to make mankind labour beyond their wants, to make one part of a state work, to maintain the other gratuitously, to be brought about only through slavery If mankind be not forced to labour, they will only labour for themselves; and if they have few wants, there will be few [who] labour. But when states come to be formed and have occasion for idle hands to defend them against the violence of their enemies, food at any rate must be procured for those who do not labour; and as, by the supposition, the wants of the labourers are small, a method must be found to increase their labour above the proportion of their wants. For this purpose slavery was calculated Here then was a violent method of making men laborious in raising food; men were then forced to labour because they were slaves of others; men are now forced to labour because they are slaves to their own wants. (Steuart, Vol. I, p. 38 40.) It is the infinite variety of wants, and of the kinds of commodities necessary to their gratification, which alone renders the passion for wealth indefinite and insatiable. (Wakefield on A. Smith, p. 64 note.)> Machines I consider as a method of augmenting (virtually) the number of industrious, without the expense of feeding an additional number. (Steuart, Vol. I, p. 123.) When manufacturers get together in bodies, they depend not directly upon consumers, but upon merchants. (Steuart, Vol. I, p. 154.) The abusive agriculture is no trade, because it applies no alienation, but is purely a method of subsisting. (loc. cit. p. 156.) Trade is an operation, by which the wealth, or work, either of individuals, or of societies, may be exchanged, by a set of men called merchants, for an equivalent, proper for supplying every want, without any interruption to industry, or any check upon consumption. (Steuart, I, p. 166.) While wants continue simple and few, a workman finds time enough to distribute all his work; when wants become more multiplied, men must work harder: time becomes precious; hence trade is introduced. The merchant as mediator between the workman and consumer. (loc. cit. p. 171.) Money the common price of all things. (loc. cit. p. 177.) Money represented by the merchant. To the consumers, the merchant represents the totality of manufacturers, towards the latter, the totality of consumers, and to both classes his credit supplies the use of money. He represents wants, manufacturers and money by turns. (loc. cit. p. 177, 178.) (Steuart, see Vol. I, p. 181 3, regards profit as distinct from real value, which he defines very confusedly (has production costs in mind) as the amount of objectified labour (what a workman can perform in a day etc.), necessary expense of the workmen, price of the raw material, as profit upon alienation fluctuating with demand.) (With Steuart the categories still vary greatly; they have not yet become fixed, as with A. Smith. We just saw that real value identical with production costs, in which, besides the labour of the workmen and the value of the material, wages, also, confusingly, figure as a separate component part. At another point he takes the intrinsic value of a commodity to mean the value of its raw material or the raw material itself, while, by useful value, he understands the labour time employed on it. The first is something real in itself; e.g. the silver in a silver lattice-work. The intrinsic worth of a silk, woollen or linen manufacture is less than the primitive value employed, because it is rendered almost unserviceable for any other use but that for which the manufacture is intended; the useful value by contrast must be estimated according to the labour it has cost to produce it. The labour employed in the modification represents a portion of a man s time, which having been usefully employed, has given a form to some substance which has rendered it useful, ornamental, or in short, fit for man, mediately or immediately. (p. 361, 362, Vol. I loc. cit.) (The real use value is the form given to the substance. But this form itself is only static labour.) When we suppose a common standard on the price of any thing, we must suppose the alienation of it to be frequent and familiar. In countries where simplicity reigns, it is hardly possible to determine any standard for the price of articles of first necessity in such states of society the articles of food and necessaries are hardly found in commerce: no person purchases them; because the principal occupation of everybody is to procure them for himself Sale alone can determine prices, and frequent sale can only fix a standard. Now the frequent sale of articles of the first necessity marks a distribution of inhabitants in labourers and free hands etc. (Vol. I, p. 395 seq. loc. cit.) (The doctrine of the determination of prices by the mass of the circulating medium first advanced by Locke, repeated in the Spectator, 19 October 1711, developed and elegantly formulated by Hume and Montesquieu, its basis raised to its formal peak by Ricardo, and with all its absurdities in practical application to the banking system, by Loyd, Colonel Torrens etc.). Steuart polemicizes against it, and his development materially anticipates more or less everything later advanced by Bosanquet, Tooke, Wilson. (Notebook, p. 26.) (He says among other things as historic illustration: It is a fact that at the time when Greece and Rome abounded in wealth, when every rarity and the work of choicest artists was carried to an excessive price, an ox was bought for a mere trifle and grain was cheaper perhaps than ever it was in Scotland The demand is proportioned, not to the number of those who consume, but of those who buy; now those who consume are all the inhabitants, but those who buy are only the few industrious who are free In Greece and Rome, slavery: Those who were fed by the labour of their own slaves, the slaves of the state, or by grain distributed free of charge among the people, had no occasion to go to the market: they did not enter into competition with the buyers The few manufacturers then known made wants in general less extensive; consequently, the number of the industrious free was small, and they were the only persons who could have occasion to purchase food and necessaries: consequently, the competition of the buyers must have been small in proportion, and price low; further the markets were supplied partly from the surplus produced on the lands of the great men, laboured by slaves; who being fed from the lands, the surplus cost in a manner nothing to the proprietors; and since the number of those who had occasion to buy, very small, this surplus was sold cheap. Also, the grain distributed to the people free of charge must necessarily have held the market down, etc. By contrast, for a fine mullet or an artist, etc. great competition and hence prices rising extraordinarily. The luxury of those times, though excessive, was confined to a few, and as money, in general, circulated but slowly through the hands of the multitude, it was constantly stagnating in those of the rich who found no measure, but their own caprice, in regulating the prices of what they wished to possess. ) (26, 27, Notebook. Steuart.) Money of account is nothing but an arbitrary scale of equal parts, invented for measuring the respective value of things vendible. Money of account quite different from money-coin, which is price, and could exist, even if there were no substance in the world which was the proportional equivalent for all commodities. (Vol. II, p. 102.) Money of account does the same service for value as things like minutes, seconds etc. do for angles, or scales for geographical maps etc. In all these inventions some denomination is always taken for the unit. (loc. cit.) The usefulness of all those inventions being solely confined to the marking of proportion. Just so, the unit in money can have no invariable determinate proportion to any part of value, i.e. it cannot be fixed to any particular quantity of gold, silver or any other commodity whatsoever. The unit once fixed, we can, by multiplying it, ascend to the greatest value etc. (p. 103.) So money a scale for measuring value. (p. 102.) The value of commodities, therefore, depending upon a general combination of circumstances relative to themselves and to the fancies of men, their value ought to be considered as changing only with respect to one another; consequently, any thing which troubles or perplexes the ascertaining those changes of proportion by the means of a general, determinate and invariable scale, must be hurtful to trade and a clog upon alienation. (loc. cit.) It is absolutely necessary to distinguish between price (i.e. coin) considered as a measure and price considered as an equivalent for value. The metals do not perform both functions equally well Money is an ideal scale of equal parts. If it be demanded what ought to be the standard of value of one part? I answer by putting another question: What is the standard length of a degree, a minute, a second? It has none but so soon as one part becomes determined, by the nature of a scale, all the rest must follow in proportion. (p. 105.) Examples of this ideal money are the bank money of Amsterdam and the Angola money on the African coast. The bank money stands invariable like a rock in the sea. According to this ideal standard are the prices of all things regulated. (p. 106, 107 seq.) In Custodi s anthology of the Italian economists, Parte Antica, Tomo III: Montanari (Geminiano), Della moneta, written about 1683, says of the invention of money: Intercourse between nations spans the whole globe to such an extent that one may almost say all the world is but a single city in which a permanent fair comprising all commodities is held, so that by means of money all the things produced by the land, the animals and human industry can be acquired and enjoyed by any person in his own home. A wonderful invention! (p. 40.) But, since it is another peculiarity of measures that they enter into such a relation with the things measured that in a certain manner the thing measured becomes the measure of the measuring unit, it follows that, just as motion is the measure of time, time may be the measure of the motion itself; hence it occurs that not only are the coins measures of our wants, but also our wants are, reciprocally, the measure of the coins themselves and of value. (p. 41, 42.) It is quite clear that the greater the number of coins circulating in commerce within the confines of a given district, in proportion to the marketable goods there are in that place, the more expensive will they be. Can a thing be said to be expensive because it is worth a large quantity of gold in countries where gold is abundant? Should not the gold itself, which is estimated as of the same quantity as another thing which comes to be considered elsewhere as cheap, be rather described as cheap in that case? (p. 48.) 100 years earlier the chief feature in the commercial policy of nations was the amassing of gold and silver, as a kind of wealth par excellence. (p. 67.) (Gouge, Wm. A Short History of Paper Money and Banking in the United States. Philadelphia, 1833.) (Barter in United States (see Gouge Notebook VIII, p. 81 seq.): In Pennsylvania as in the other colonies, significant traffic was carried on by barter as late as 1723 in Maryland, an act was passed making tobacco a legal tender at one penny a pound, and Indian corn at 20d. a bushel. (p. 5.) (Part II.) Soon however, their trade with the West-Indies and a clandestine commerce with the Spanish made silver so plentiful, that in 1652 a mint was established in New England for coining shillings, sixpences and threepenny pieces. (p. 5.) (loc. cit.) Virginia in 1645 forbade dealings by barter, and established the Spanish piece of 8 to 6s. as the standard currency of the colony (the Spanish dollar) The other colonies affixed different denominations to the dollar The money in account was everywhere nominally the same as in England. The coin of the realm was especially Spanish and Portuguese etc. cf. p. 81 Notebook VIII). (p. 6. By an act of Queen Anne an attempt was made to put an end to this confusion.) Wool manufactures: During Elizabeth s time the clothier occupied the place of the mill-owner or manufacturer; he was the capitalist who brought the wool, and delivered it to the weaver, in portions of about 12 pounds, to be made into cloth. At the beginning, manufacture was confined to cities and corporate and market-towns, the inhabitants of the villages making little more than [sufficed] for the use of their families. Later, in non-corporate towns favoured by local advantages, and also in country places by farmers, graziers and husbandmen, who commenced making cloth for sale, as well as for domestic use. (The cruder sorts.) In 1551 a statute was passed, restricting the number of looms and apprentices which might be held by clothiers and weavers residing out of cities; and that no country weaver should have a tucking mill, nor any tucker a loom. By a law of the same year, all weavers of broad cloth had to undergo an apprenticeship of 7 years. Nevertheless, village manufacture, as an object of mercantile profit, took firm root. 5 and 6 Edward VI, c. 22, a statute, prohibits the use of machinery The Flemish and Dutch thus maintained superiority in this manufacture until the end of the seventeenth century In 1668 the Dutch loom was introduced from Holland. (p. 138 41.) Owing to the introduction of machinery, in 1800 one person could do as much work as 45 in the year 1785. In the year 1800 the capital invested in mills, machinery etc. appropriate for the woollen trade was not less than 6 million pounds sterling and the total number of persons of all ages occupied in England in this branch was 1,500,000. (p. 142 3.) Thus the productive power of labour grew 4,600%. But, firstly, this number only about 1/6 of the fixed capital alone; relative to the total capital (raw material etc.) perhaps only 1/20. Hardly any manufacture had such an advantage from the improvements in science as the art of dyeing cloth through the application of the laws of chemistry. (loc. cit. p. 144.) Silk manufacture. Until the beginning of the eighteenth century, the art of silk throwing most successful in Italy, where machinery of a particular description adopted to this purpose. In 1715 John Lombe, one of three brothers who had a business as throwers and silk-merchants, travelled to Italy and was able to obtain a model in one of the mills A silk mill, with the improved machinery, erected in 1719 in Derby by Lombe and his brothers. This mill contained 26,586 wheels, all turned by one water wheel Parliament gave him 14,000 for throwing open the secret to the trade. This mill came nearer to the idea of a modern factory than any previous establishment of the kind. The machine had 97,746 wheels, movements, and individual parts working day and night, all of which were moved by one large water wheel and were governed by one regulator: and it employed 300 persons to attend and supply it with work. (133 4.) (No spirit of invention showed itself in the English silk trade; first introduced by the weavers of Antwerp, who fled after the sacking of the town by the Duke of Parma; then different branches by the French refugees 1685 92.) In 1740, 1,700 tons of iron were produced by 59 high furnaces; 1827: 690,000 by 284. Furnaces thus increased = 1:4 48/49; less than quintupled; the tons = 1:405 15/17. (Comp. on the relation over a series of years loc. cit. Notebook p. 12.) Glass manufacturing, among other things, best shows how dependent [is] the progress of science on manufactures. On the other side e.g. the invention of quadrants arose from the needs of navigation, parliament offered a prize for inventions. 8 cotton machines, which cost 5,000 in 1825, were sold in 1833 for 300. (On cotton spinning, see loc. cit. p. 13, Notebook.) A first rate cotton spinning factory cannot be built, filled with machinery, and fitted with gas work and steam engine, under 100,000. A steam engine of one hundred horse power will turn 50,000 spindles, which will produce 62,500 miles of fine cotton-thread per day. In such a factory, 1,000 persons will spin as much thread as 250,000 persons could without machinery. McCulloch estimates the number in Britain at 130,000. (p. 218, loc. cit.) Of the produce of the earth, useful to men, 99/100 are the produce of men. (loc. cit. p. 348.) When slavery or life-apprenticeship was abolished, the labourer became his own master and was left to his own resources. But if without sufficient employment etc., men will not starve whilst they can beg or steal; consequently the first character the poor assumed was that of thieves and mendicants. (p. 637 note, Vol. II, loc. cit.) One remarkable distinction of the present state of society, since Elizabeth, is that her poor law was especially a law for the enforcement of industry, intended to meet the mass of vagrancy that grew out of the suppression of the monasteries and the transition from slavery to free labour. As example, the 5th act of Elizabeth, directing households using half a plough of land in tillage, to require any person they might find unemployed, to become their apprentice in husbandry, or in any art or mystery; and, if unwilling, to bring him before a justice, who was almost compelled to commit him to ward until he consented to be bound. Under Elizabeth, out of every 100 people, 85 were required for the production of food. At present, not a lack of industry, but a profitable employment The great difficulty then was to overcome the propensity of idleness and vagabondage, not to procure them remunerative occupation. During this reign there were several acts of the legislature to enforce the idle to labour. (p. 643, 644. Vol. II, loc. cit.) Fixed capital, when once formed, ceases to affect the demand for labour, but during its formation it gives employment to just as many hands as an equal amount would employ, either of circulating capital, or of revenue. (p. 56. John Barton, Observations on the Circumstances which Influence the Condition of the Labouring Classes of Society, London, 1817.) If the circulation of commodities of 400 million required a currency of 40 million, and this proportion of 1/10 were the due level, then, if the value of the commodities to be circulated grows to 450 million, from natural causes, the currency, in order to continue at its level, would have to grow to 45 million, or the 40 million must be made to circulate with such increased rapidity, by banking or other improvements, as to perform the functions of 45 million such an augmentation, or such rapidity, the consequence and not the cause of the increase of prices. (W. Blake. loc. cit., p. 80 seq. cf. Notebook p. 70.) The upper and middle class of Rome gained great wealth by Asiatic conquest, but not being created by commerce or manufactures, it resembled that obtained by Spain from her American colonies. (p. 66 Vol. I, Mackinnon, History of Civilisation, London, 1846, Vol. I.) First of all, money circulation, as the most superficial (in the sense of: driven out onto the surface) and the most abstract form of the entire production process, is in itself quite without content, except in so far as its own formal distinctions, precisely the simple aspects developed in section II, make up its content. It is clear that simple money circulation, regarded in itself, is not bent back into itself, [but] consists of an infinite number of indifferent and accidentally adjacent movements. The coin, e.g., may be regarded as the point of departure of money circulation, but there is no law of any reflux back to the coin except for depreciation through wear and tear, which necessitates melting-down and new issue of coins. This concerns only the material side and does not at all form a moment of circulation itself. Within circulation itself, the point of return may be different from the point of departure; in so far as it bends back into itself, money circulation appears as the mere appearance of a circulation going on behind it and determining it, e.g. when we look at the money circulation between manufacturer, worker, shopkeeper and banker. Furthermore, the factors which affect the mass of commodities thrown into circulation, the rise and fall of prices, the velocity of circulation, the amount of simultaneous payments etc., are all circumstances which lie outside simple money circulation itself. They are relations which express themselves in it; it provides the names for them, as it were; but they are not to be explained by its own differentiation. Different metals serve as money, and they have a different and changing value relation to one another. Thus the question of the double standard etc. enters, which takes on world-historical forms. But it takes them on, and the double standard itself enters, only through external trade, hence, to be usefully examined, supposes the development of much higher relations than that of the simple money relation. Money as the measure of value is not expressed in amounts of bullion, but rather in accounting money, arbitrary names for fractional parts of a specific amount of the money-substance. These names can be changed, the relation of the coin to its metallic substance can be changed, while the name remains the same. Hence counterfeiting, which plays a great role in the history of states. Further, the different kinds of money in various countries. This question [is of] interest only in exchange rate. Money is a measure only because it is labour time materialized in a specific substance, hence itself value, and, more particularly, because this specific materiality counts as its general objective one [allgemeingegenst ndliche], as the materiality of labour time as such, as distinct from its merely particular incarnations; hence because it is an equivalent. But since, in its function as measure, money is only an imagined point of comparison, only needs to exist ideally only the ideal transposition of commodities into their general value-presence takes place ; since, further, in this quality as measure it figures first as accounting coin, and I say a commodity is worth so many shillings, francs etc., when I transpose it into money; this has given rise to the confused notion of an ideal measure, developed by Steuart and refurbished at various periods, even recently, in England, as a profound discovery. Namely in this sense, that the names, pound, shillings, guinea, dollar etc., which count as accounting units are not specific names for specific quantities of gold, silver etc., but merely arbitrary points of comparison which do not themselves express value, no definite quantity of objectified labour time. Hence the whole nonsense about fixing the price of gold and silver price understood here as the name by which fractional parts are called. An ounce of gold now divided into 3 17s. 10d. This is called fixing the price; it is, as Locke correctly remarks, only fixing the name of fractional parts of gold and silver etc. Expressed in itself, gold, silver is naturally equal to itself. An ounce is an ounce, whether I call it 3 or 20. In short, this ideal measure in Steuart s sense means this: if I say commodity A is worth 12, commodity B 6, commodity C 3, then their relation to one another = 12:6:3. Prices express only the relations in which they are exchanged for one another. 2B are exchanged for 1A and 1 1/2B for 3C. Now, instead of expressing the relation of A, B, C in real money, money which itself has value, is value, could I not, instead of the which expresses a specific mass of gold, just as well take any name you like, without content (this means, here, ideally), e.g. mackerels? A = 12 mackerels; B = 6M, C = 3M. This word M is here only a name, without any relation to a content belonging to itself. Steuart s example with a degree, line, second, proves nothing; for although degree, line, second have changing magnitudes, they are not merely names, but rather always express the fractional part of a specific magnitude of space or of time. They thus have in fact a substance. The fact that money in the role of measure functions only as something imagined is here transformed into it supposedly being any imagined thing you like, a mere name, namely a name for the numerical value-relation. In that case, however, it would be correct to express no names at all, but merely a numerical relation, for the whole affair comes down to this: I obtain 6B for 12A, 3C for 6B; this relation can also be expressed in this way, A = 12x, B = 6x, C = 3x, where the x is itself only a name for the relation of A:B and B:C. The mere, unnamed numerical relation would not do. For A:B = 12:6 = 2:1, and B:C = 6:3 = 2:1. Hence C = 1/2. Hence B = 1/2, hence B = C. Hence A = 2 and B = 2; hence A = B. Let me take any price list, e.g. potash, 35s. the ton; cocoa, lb., 60s.; iron (bars) (p. ton) 145s. etc. In order to have the relation of these commodities to one another, not only can I forget the silver in the shilling; the numbers alone, 35, 60, 145 suffice to define the reciprocal value relations of potash, cocoa, iron bars. Undenominated numbers now suffice; and not only can I give their unit, 1, any name, regardless of any value; I need not give it any name at all. Steuart insists that I must give it one or another name, but that this name then, as mere arbitrary name of the unit, as mere marking of proportion itself, cannot be fixed to any portion of the quantity of gold, silver or any other commodity. With every measure, as soon as it serves as point of comparison, i.e. as soon as the different entities to be compared are put into a numerical relation to the measure as unit, and are now related to one another, the nature of the measure becomes irrelevant and vanishes in the act of comparison itself; the unit of measure has become a mere unit of numbers; the quality of this unit has vanished, e.g. that it is itself a specific magnitude of length or of time or of an angle. But is it only when the different entities are already presupposed as measured that the unit of measure marks only proportion between them, thus e.g. in our case the proportion of their values. The accounting unit not only has different names in different countries; but is the name for different fractional parts of an ounce of gold, e.g. But the exchange rate reduces all of them to the same unit of weight of gold or silver. Thus if I presuppose the various magnitudes of commodities, e.g. as above, = 35s., 60s., 145s., then, to compare them, since the 1 is presupposed as equal in all of them, since they have been made commensurable, it is wholly superfluous to bring in the observation that s. is a specific quantity of silver, the name for a specific amount of silver. But, as mere numerical magnitudes, as amounts of any unit of the same name, they only become comparable to one another, and only express proportions towards one another, when each individual commodity is measured with the one which serves as unit, as measure. But I can only measure them against one another, only make them commensurable, if they have a unit the latter is the labour time contained in both. The measuring unit must therefore [be] a certain quantity of a commodity in which a quantity of labour is objectified. Since the same quantity of labour is not always expressed in the same quantity of e.g. gold, it follows that the value of this measuring unit itself variable. But, in so far as money is regarded only as measure, this variability is no obstacle. Even in barter, to the extent that it is somewhat developed as barter, i.e. is a repeated, normal operation, not merely an isolated act of exchange, some other commodity appears as measuring unit, e.g. cattle with Homer. Among the savage Papuans of the coast, who, in order to obtain a foreign article, barter 1 or 2 of their children, and if they are not to hand, borrow those of their neighbours, promising to give their own in exchange, when they come to hand, this request being rarely refused , there exists no measure for exchange. The only side of exchange which exists for the Papuan is that he can obtain the alien thing only by dispossessing himself of something he possesses. This dispossession [Ent usserung] itself is regulated for him by nothing but his fancy on one side, and the scope of his movable possessions on the other. In the Economist of 13 March 1858, we read, in a letter addressed to the editor: As the substitution in France of gold for silver in the coinage (which has been the principal means hitherto of absorbing the new discoveries of gold) must be approaching its completion, particularly as less coinage will be wanted for a stagnant trade and reduced prices, we may expect ere long that our fixed price of 3 17s. 10 1/2d. an ounce will attract the gold here. Now what does this, our fixed price of an ounce of gold, mean? Nothing other than that a certain aliquot part of an ounce is called pence, a certain multiple of this penny-weight of gold a shilling, and a certain multiple of this shilling-weight of gold a pound? Does the gentleman imagine that in other countries the golden Guilder, the Louis d or etc. do not likewise signify a specific quantity of gold, i.e. that a specific quantity has a fixed name? and that this is an English privilege? or a speciality? That, in England, a monetary coin expressed in gold is more than a monetary coin, and in other countries, less? It would be interesting to know what this noble spirit imagines the exchange rate to be. What leads Steuart astray is this: the prices of commodities express nothing but the relations in which they are exchangeable for one another, the proportions in which they exchange for one another. These proportions given, I can call the unit any name whatever, because the undenominated abstract number would suffice, and instead of saying that this commodity = 6 stivers, the other = 3 etc., I could say this one = 6 ones, the other = 3; I would not have to give the unit any name at all. Since the numerical relation is all that matters at that point, I can give it any name whatever. But it is already presupposed here that these proportions are given, that the commodities have previously become commensurable magnitudes. As soon as magnitudes have once been posited as commensurable, their relations become simple numerical relations. Money appears as measure, and a specific quantity of the commodity in which it represents itself appears as measuring unit, precisely in order to find the proportions, and to articulate and to handle commodities as commensurable ones. This real unit is the labour time relatively objectified in them. However, it is labour time itself posited as general. The process by which values within the money system are determined by labour time does not belong in the examination of money itself, and falls outside circulation; proceeds behind it as its effective base and presupposition. The question here could only be this: instead of saying this commodity is = to one ounce of gold, why does one not say directly it is = to x labour time, objectified in the ounce of gold? Why is labour time, the substance and measure of value, not at the same time the measure of prices, or, in other words, why are price and value different at all? Proudhon s school believe it a great deed to demand that this identity be posited and that the price of commodities be expressed in labour time. The coincidence of price and value presupposes the equality of demand and supply, exchange solely of equivalents (hence not of capital for labour) etc.; in short, formulated economically, it reveals at once that this demand is the negation of the entire foundation of the relations of production based on exchange value. But if we suppose this basis suspended, then on the other side the problem disappears again, which exists only of it and with it. That the commodity in its unmediated presence as use value is not value, is not the adequate form of value = that it is [the adequate form of value] as an objective other, or that it is this as equated to another object; or, that value possesses its adequate form in a specific object as distinct from another. Commodities, as values, are objectified labour; the adequate value must therefore itself appear in the form of a specific thing, as a specific form of objectified labour. Steuart illustrates this drivel about an ideal standard with two historic examples, of which the first, the bank money of Amsterdam, shows just the opposite, since it is nothing but the reduction of circulating coins to their bullion content (metal content); the second one has been repeated after him by all the moderns who follow the same tendency. For example, Urquhart cites the example of the Barbary Coast, where an ideal bar, an iron bar, a merely imaginary iron bar, counts as standard which neither rises nor falls. If e.g. the real iron bar falls, say by 100%, then the bar is worth 2 iron bars; if it rises again by 100%, then only one. Mr Urquhart claims to have observed at the same time that the Barbary Coast knows neither commercial nor industrial crises, but least of all monetary crises, and ascribes this to the magical effects of this ideal standard of value. This ideal imaginary standard is nothing but an imagined real value; an imagined notion, however, which, because the monetary system has not developed its further determinants a development depending on quite different relations achieves no objective reality. It is the same as if, in mythology, one were to consider as the higher religions those whose god-figures are not worked out in visible form but remain stuck in the imagination, i.e. where they obtain at most an oral, but not a graphic presence; The bar rests on a real iron bar, which was later transformed into a fantasy-creature and fixated as such. An ounce of gold, expressed in English accounting money, = 3 17s. 10 1/2d. Well. Well. Say a pound of silk had had exactly this price; but that it had later fallen to where Milanese raw silk stood on 12 March 58 in London, the lb. at 1 8s. It is the imaginary conception of an amount of iron, an iron bar, which keeps the same value (1) relative to all other commodities, (2) relative to the labour contained in it. This iron bar is of course purely imaginary, but it is not so fixed and standing like a rock in the sea as Steuart, and nearly a 100 years later Urquhart, believes. The only thing fixed in the iron bar is the name; in one case the real iron bar contains 2 ideal ones, in the other, only 1. This is expressed in such a way that the same, unchangeable ideal one is first = 2, then = 1 real bar. Thus, this posited, only the relation of the real iron bar has changed, not the ideal one. But in fact the ideal iron bar is twice as long in one case as in the other, and only its name is unchanged. In one case 100 lb. of iron are called e.g. a bar, in the other, 200 a bar. Suppose money were issued which represented labour time, e.g. time-chits; this time-chit itself could be baptized any name one wished, e.g. one pound, a twentieth of an hour 1s., 1/240th of an hour 1d. Gold and silver, like all other commodities, depending on the production time they cost, would express different multiples or fractional parts of pounds, shillings, pence etc., and an ounce of gold could just as well be = 8 6s. 3d. as 3 17s. 10 1/2d. These numbers would always be the expression of the proportion in which a specific quantity of labour is contained in the ounce. Instead of saying that 3 17s. 10 1/2d. = one ounce of gold, now cost only 1/2 lb. of silk, one can imagine that the ounce is now = 7 15s. 9d. or that 3 17s. 10 1/2d. are now only equal to half an ounce, because they are now only half the value. If we compare prices in England in e.g. the fifteenth century with those of the eighteenth, then we may find that two commodities had e.g. entirely the same nominal money value, e.g. 1 pound sterling. In this case the pound sterling is the standard, but expresses four or five times as much value in the first case as in the second, and we could say that, if the value of this commodity is = 1 ounce in the fifteenth century, then it was = 1/4 ounce of gold in the eighteenth; because in the eighteenth, 1 ounce of gold expresses the same labour time as 1/4 ounce in the fifteenth century. It could be said, therefore, that the measure, the pound, had remained the same, but in one case = four times as much gold as in the other. This is the ideal standard. The comparison we make here could have been made by the people of the fifteenth century themselves, if they had lived on into the eighteenth; they would say that 1 ounce of gold, which is now worth 1, was only worth 1/4 before. 4 pounds of gold now worth no more than 1 in the fifteenth century. If this pound previously had the name of livre, then I can imagine that one livre had been = 4 pounds at that time, and is now = to only 1; the value of gold had changed but that the standard, the livre, had remained the same. In fact, one livre in France and England originally meant 1 pound of silver, and now only 1/x. It can be said, therefore, that the name, livre, the standard, had remained nominally the same always, but that silver had changed its value in comparison to it. A Frenchman who had lived from the time of Charlemagne until today could say that the livre of silver had always remained the standard of value, unchanged; it had once been worth 1 pound of silver, but, owing to a variety of misfortunes, had finished up being worth only 1/x of a pennyweight. The ell is the same; only its length is different in different countries. It is in fact the same as if the product of one working day, the gold brought to light in one day of work, were given the name livre; this livre would always remain the same, although it would express very different amounts of gold in different periods. What do we do in fact when we compare 1 of the fifteenth century with 1 of the eighteenth? Both are the same mass of metal (each = 20s.), but of a different value; since the metal was then worth 4 times as much as now. We say therefore that, compared with today, the livre was = 4 times the mass of metal it contains today. And one could imagine that the livre had remained unchanged, but had been = 4 real livres of gold then, only = 1 today. The matter would be correctly comparable not in regard to the quantity of metal contained in a livre, but rather in regard to its value; this value, however, in turn expresses itself quantitatively in such a way that 1/4 livre gold, then, = 1 livre gold today. Well; the livre identical, but at that time = 4 real livres of gold (by today s value) and now only = 1. If gold falls in value, and its relative fall or rise as regards other articles is expressed in their price, then, instead of saying that an object which cost 1 of gold before now costs 2, it could be said that it still costs 1 pound, but 1 pound is now worth 2 real livres of gold etc.; i.e. 1 livre of 2 real gold livres etc. Instead of saying: I sold this commodity yesterday at 1, today I sell it at 4, I might say that I sell it at 1, but yesterday at 1 pound of 1 real pound, today at 1 pound of 4 real pounds. The remaining prices all follow by themselves as soon as the relation of the real bar to the imaginary one is established; but this simply the comparison between the past value of the bar and its present one. The same as if we calculated everything in the of the fifteenth century for instance. This Berber or Negro does the same thing that every historian must do who pursues one kind of coin, one accounting name for a coin of the same metallic content, from one century to the next; if he computes it in contemporary money, he must equate it to more or less gold depending on its changing value in different centuries. It is semi-civilized man s effort to establish an unchanging value for the unit of money, for the mass of metal which counts as measure; to fix this value, also, as a constant measure. But at the same time, the cleverness to know that the bar has changed its real value. With the small number of commodities which this Berber has to measure, and with the vigour of tradition among the uncivilized, this complicated method of calculating is not as difficult as it looks. 1 ounce is = 3 17s. 10 1/2d., i.e. not quite = 4. But for convenience s sake let us assume it to be exactly = 4. Then 1/4 of an ounce of gold therefore obtains the name pound, and serves under this name as accounting coin. But this pound changes its value, partly relative to the value of other commodities which change their value, partly in so far as it is itself the product of more or less labour time. The only firm thing about it is the name, and the quantity, the fractional part of the ounce, of the weight-unit of gold, whose baptismal name it is; which is contained, thus, in one piece of money, called one pound. The savage wants to hold it constant as unchangeable value, and thus the quantity of metal it contains changes for him. If the value of gold falls by 100%, then the pound is the measure of value for him as before; but a pound of 2/4 ounces of gold etc. The pound for him always equals a mass of gold (iron) which has the same value. But since this value changes, it sometimes equals a greater, sometimes a smaller quantity of real gold or iron, depending on whether more or less of them must be given in exchange for other commodities. He compares the contemporary value with the past value, which latter counts as standard for him, and survives only in his imagination. Thus, instead of calculating in 1/4 ounce of gold, whose value changes, he calculates in the value which 1/4 ounce of gold previously had, hence in an imaginary unchanged 1/4 ounce-value, which expresses itself, however, in varying quantities. On one side the effort to establish a fixed value for the value-standard; on the other side, the cleverness of nevertheless avoiding trouble by making a detour. But it is altogether absurd to take this accidental displacement, this way in which semi-savages have assimilated the measurement of values in money, forced on them from the outside, by first displacing it and then getting themselves straight again in the displacement, and to regard this as an organic historical form, or even to erect it as a higher form compared to more developed relations. These savages also take a quantity, the iron bar, as point of departure; but they hold fast to the value which this traditionally had, as accounting unit etc. This question achieved significance in the modern economy chiefly owing to two circumstances: (1) It has been experienced at various times, e.g. in England during the Revolutionary War that the price of raw gold rose above the price of minted gold. This historic phenomenon thus seemed irrefutably to prove that the names which are given to certain fractional weight-parts of gold (precious metal), pound, shilling, pence etc., by some inexplicable process act in an independent way towards the substance of which they are the name. How else could an ounce of gold be worth more than the same ounce of gold minted in 3 17s. 10 1/2d.? Or how could an ounce of gold be worth more than 4 livres of gold, if livre is merely the name for 1/4 ounce? On closer inspection it was found, however, that the coins which circulated under the name pound in fact no longer contained the normal metallic content, so that, for instance, 5 circulating pounds in fact weighed only 1 ounce of gold (of the same refinement). Since a coin which allegedly represented 1/4 ounce of gold (thereabouts) in fact represented only 1/5, it was very simple that the ounce = 5 of this kind of circulating ; hence that the value of the bullion price rose above the mint price, in that in fact no longer 1/4 but merely 1/5 of an ounce of gold was called pound, represented money, had that name; was merely the name, now, for 1/5 of an ounce. The same phenomenon took place when, although the metal content of the circulating coins had not fallen below their normal measure, they circulated at the same time as depreciated paper money, while to melt them down and to export them was prohibited. In that case, the 1/4 ounce of gold circulating in the form of shared in the depreciation of the notes; a fate from which gold in bars was exempt. * The fact was again the same; the accounting name, pound, had ceased to be the name for 1/4 ounce, became the name for a lesser amount. Thus the ounce equalled e.g. 5 of such pounds. This means, then, that the bullion price rose above the mint price. These or analogous historical phenomena, all capable of equally simple solution and all belonging to the same series, led therefore to the notion of the ideal measure, or, that money as measure was only a point of comparison, not a specific quantity. Hundreds of volumes have been written about this case in England in the past 150 years. That a specific sort of coin should rise above its bullion content is not in itself something strange, since new labour (to give it form) is added to the coin. But regardless of that, it happens that the value of a specific sort of coin rises above its bullion content. This is of no economic interest whatever, and has as yet led to no economic studies. It means nothing more than that, for certain purposes, gold and silver was requisite in precisely this form, say of British pounds or of Spanish dollars. The directors of the Bank had, of course, a particular interest in proving that the value of notes had not fallen, but rather that of gold had risen. As to the last question, this can be treated only later. (2) But the theory of the ideal measure was first brought up at the beginning of the eighteenth century and again in the second decade of the nineteenth, where questions were at issue in which money figures not as measure, nor as medium of exchange, but rather as constantly self-identical equivalent, as value for-itself (in the third aspect) and hence as the universal material of contracts. The issue both times was whether or not debts of state, and other debts, contracted in a depreciated money, should be acknowledged and paid back in full-valued money. It was a question simply between the creditors of the state and the mass of the nation. This question itself does not concern us here. Those who demanded a readjustment of claims on the one side, and of payments (obligations) on the other, chose the wrong battlefield in asking whether or not the standard of money ought to be changed. On this occasion, then, crude theories of this type were brought forward about the standard of money, fixing of the price of money, etc. ( Altering the standard like altering the national measures or weights. Steuart. It is clear at the first glance that the mass of grain in a nation does not change by the unit measure of e.g. the bushel being doubled or halved. But the change would be very important for e.g. farmers who had to pay grain rent in a specific number of bushels, if, were the measure doubled, they then had to supply the same number of bushels as before.) In this case, it was the creditors of the state who clung to the name pound , regardless of the fractional weight-unit of gold which it expressed, i.e. to the ideal standard for the latter is in fact only the accounting name for the weight-unit of metal which serves as measure. Strangely enough, however, it was precisely their opponents who advanced this theory of the ideal standard , and they themselves who combated it. Instead of simply demanding a readjustment, or that the creditors of the state ought to be paid back only the amount, in gold, which they had in fact advanced, they demanded that the standard be reduced in accordance with depreciation; thus e.g. if the pound sterling had fallen to 1/5 of an ounce of gold, that this 1/5 ounce should henceforth carry the name pound, or that the pound ought perhaps to be minted in 21 shillings instead of in 20. This reduction of the standard was called raising the value of money; in that the ounce now = 5 instead of = 4 as previously. Thus, they did not say that those who had advanced e.g. 1 ounce of gold in 5 depreciated pounds now ought to get 4 full-valued pounds back; they said, rather, that they should be repaid 5 pounds, but that the pound ought henceforth to express 1/20 of an ounce less than before. When they raised this demand in England after the resumption of cash-payment, the accounting coin had regained its old metal value. On this occasion yet further crude theories about money as the measure of value were constructed, and, on the pretense of refuting these theories, whose falsity was simple to prove, the interests of the creditors of the state were smuggled through. The first battle of this sort between Locke and Lowndes. From 1688 to 1695 the state contracted debts in depreciated money depreciated owing to all full-weighted money having been melted down, and only the light-weight being in circulation. The guinea had risen to 30s. Lowndes (mintmaster?) (secretary to the treasury) wanted to have the reduced by 20%; Locke stood by the old standard of Elizabeth. In 1695 the general recoinage. Locke won the day. Debts contracted at 10 and 14s. the guinea, paid back at the rate of 20s. This equally advantageous for the state and for the landed proprietors. Lowndes posed the question on the wrong basis. First he asserted that his scheme was not a debasement of the old standard. Then he ascribed the rise of the bullion price to the inherent value of silver and not to the lightness of the coin with which it was bought. He always supposed that it was the stamp and not the substance which made the currency For his part, Locke only asked himself whether or not Lowndes s scheme included a debasement, but never inquired into the interests of those who are engaged by permanent contracts. Mr Lowndes s great argument for reducing the standard was that silver bullion was risen to 6s. 5d. per ounce (i.e. that it might have been bought with 77 pence of shillings of 1/77 part of a pound troy) and was therefore of the opinion that the pound troy should be coined into 77s., which was a diminution of the value of the by 20% or 1/5. Locke replied to him that the 77s. were paid in clipped money and that they were not more than 62 pence standard coin, by weight But ought a man who had borrowed 1,000 in this clipped money to be obliged to pay back 1,000 in standard weight? Both Lowndes and Locke developed only quite superficially the influence of a change of standard on the relation of debtors and creditors, the credit system then still little developed in England the landed interest and the interest of the crown, were only attended to. Trade at that time was almost at a stop, and had been raised at a piratical war Restoring the standard was the most favourable, both for the landed interest and the exchequer; and so it was gone in for. (Steuart loc. cit. Vol. II. p. 178, 179.) Steuart ironically remarks on the whole transaction: By this raising of the standard the government gained significantly as regards taxes, and creditors on their capital and interest; and the nation, which was the principal loser, was satisfied (pleased) (quite joyful) because its standard (i.e. the measure of its own value) was not debased; so were all the three parties satisfied. (loc. cit. Vol. II, p. 156.) Compare John Locke. Works. 4 vols. 7th ed., London, 1768; as well as the essay Some Considerations on the Lowering of Interest and Raising the Value of Money (1691); and also: Further Considerations Concerning Raising the Value of Money, wherein Mr Lowndes s arguments for it, in his late Report concerning An Essay for the amendment of the silver coins , are particularly examined , both in Vol. II. In the first monograph it says, among other things: The raising of money, about which so much nonsense is now being uttered, is either raising value of our money, and that you cannot do; or raising the denomination of our coin. (p. 53.) For example, term a crown what previously was called 1/2 a crown. The value remains determined by the metal content. If the abating 1/20 of the quantity of the silver of any coin, does not lessen its value, the abating 19/20 of the quantity of the silver of any coin, will not abate its value. Thus, according to this theory, a single three pence or a single farthing, being called a crown, will buy as much spice or silk, or any other commodity, as a crown-piece which contains 20 or 60 times as much silver. (p. 54.) The raising of money is thus nothing but giving a less quantity of silver the stamp and denomination of a greater. (loc. cit.) The stamp of the coin a guarantee to the public; it must contain so much silver under such a denomination. (57.) It is silver, and not names, that pays debts and purchases commodities. (p. 58.) The mint stamp suffices as guarantee for the weight and the fineness of the piece of money, but lets the thus-coined gold money, find its own rate, like other commodities. (p. 66.) In general one can do nothing with the raising of money but make more money in tale , but not more money in weight and worth . (p. 73.) Silver is altogether a different standard from the others. The ell or the quart with which people measure may remain in the hands of the seller, of the buyer or of a third person: it matters not whose it is. But silver is not only the measure of bargains, it is the thing bargained for, and passes in trade from the buyer to the seller, as being in such a quantity equivalent to the thing sold: and so it not only reassumes the value of the commodity it is applied to, but is given in exchange for it, as of equal value. But this it does only by its quantity, and nothing else. (p. 92.) The raising being but giving of names at pleasure to aliquot parts of any piece, viz. that now the sixtieth part of an ounce still be called a penny, may be done with what increase you please. (118.) The privilege that bullion has, to be exported freely, will give it a little advance above our coin, let the denomination of that be raised, or fall as you please, whilst there is need of its exportation, and the exportation of our coin is prohibited by law. (p. 119, 120.) The same position adopted by Lowndes against Locke, in that the former believed the rise of the bullion price to be due to a rise in the value of bullion, as a result of which the value of the accounting coin had declined (i.e. because the value of bullion rose, the value of a fractional part of it, called , fell), was adopted by the little-shilling-men Attwood and the others of the Birmingham school 1819 seq. (Cobbett had posed the question on the correct ground: non-adjustments of national debts, rents etc.; but spoiled it all by his false theory which condemned paper money as such. (Strangely enough, he came to this conclusion by beginning, like Ricardo, who comes to the opposite conclusion, from the same false premise, the determination of price by the quantity of the medium of circulation).) Their entire wisdom in the following phrases: In his dispute with the Birmingham Chamber of Commerce, Sir R. Peel asks: What will your pound note represent (p. 266. The Currency Question , The Gemini Letters, London, 1844) (namely, the pound note if not paid in gold). Now what is meant by the present standard of value? 3 17s. 10 1/2d., do they signify one ounce of gold or its value? If the ounce itself, why not call things by their names and say, instead of pound, shilling, pence, ounces, pennyweights and grains? Then we go back to a direct system of barter. (p. 269. Not quite. But what would Mr Attwood have gained if people said ounce instead of 3 17s. 10 1/2d., and so many pennyweight instead of shillings? That, for convenience in calculating, the fractional parts are given names which apart from that, also indicates that the metal is here given a social quality alien to itself what witness does it bear either for or against Attwood s doctrine?) Or the value? If an ounce = 3 17s. 10 1/2d., why at different periods money 5 4s., and then again 3,17, 9? the expression pound has reference to value, but not a fixed standard value Labour is the parent of cost, and gives the relative value to gold or iron. (And that is in fact why the value of one ounce and of 3 17s. 10 1/2d. changes.) Whatever denomination or words are used to express the daily or weekly labour of a man, such words express the cost of commodity produced. (p. 270.) The word one pound is the ideal unit . (p. 272.) The last sentence important because it shows how this doctrine of the ideal unit dissolves into the demand for a money which is supposed directly to represent labour. Pound then e.g. the expression for 12 days work. The demand is this, that the determination of value should not lead to that of money as a distinct quantity, or that labour as the measure of values should not compel the labour objectified in a specific commodity to be made the measure of the other values. The important thing is that this demand is here made from the standpoint of the bourgeois economy (thus also by Gray, who actually works out this matter to perfection, and of whom we will speak in a moment), not from the standpoint of the negation of the bourgeois economy, as e.g. with Bray. The Proudhonists (see e.g. Mr Darimon) have indeed succeeded in raising this demand both as one corresponding to the present relations of production and also as a demand which totally revolutionizes them, and a great innovation, since, as crapauds, they are of course not required to know anything of what has been written or thought on the other side of the Channel. At all events, already the simple fact that this demand was raised more than 50 years ago in England by a fraction of bourgeois economists shows to what extent the socialists who pretend thereby to advance something new and anti-bourgeois are on the wrong track. About the demand itself, see above. (Only a few things from Gray can be added here. As to the rest, the matter can be gone into in detail only in the banking system.)

Grundrisse 15

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch15.htm

<Assignats. National Property. Assignat of 100 frs. legal tender They are distinguished from all other notes in not even professing to represent any specified thing. The words national property meant that their value could be obtained by buying confiscated properties with them at the continuous auctions of the latter. But no reason why this value called 100 fr. It depended on the comparative quality of the property so purchasable and the number of assignats issued. (78, 79, Nassau W. Senior, Three Lectures on the Cost of Obtaining Money etc., London, 1830.) The livre de compte, introduced by Charlemagne, almost never represented by a real equivalent coin, retained its name, as well as its divisions into sous and deniers, until the end of the eighteenth century, while real coins have varied infinitely in form, size, value, not only with every change of government, but even under the same reign. The value of the livre de compte nevertheless underwent enormous diminutions but this always an act of force. (p. 76, Vol. I. Garnier, loc. cit.) All coins in antiquity originally weights. (loc. cit. p. 125.) Money is in the first place the universally marketable commodity, or that in which every one deals for the purpose of procuring other commodities. (Bailey: Money and its Vicissitudes etc., London, 1837, p. 1.) It is the great medial commodity. (loc. cit. p. 2.) It is the general commodity of contracts, or that in which the majority of bargains about property, to be completed at a future time, are made. (p. 3.) Finally, it is the measure of value Now, as all articles are exchanged for money, the mutual values of A and B are necessarily shown by their values in money or their prices as the comparative weight of substances are seen by their weight in relation to water, or their specific gravities. (p. 4.) The first essential requisite is that money should be uniform in its physical qualities, so that equal quantities should be so far identical as to present no ground for preferring one to the other For example, grain and cattle already for this reason not useful, because an equal quantity of grain and equal numbers of cattle are not always alike in the qualities for which they are preferred. (p. 5, 6.) The steadiness of value is so desirable in money as medial commodity and a commodity of contract; it is quite unessential to it in its capacity of the measure of value. (p. 9.) Money may continually vary in value, and yet be as good a measure of value as if it remained perfectly stationary. Suppose e.g., it is reduced in value and the reduction in value implies a reduction of value in relation to some one or more commodities, suppose it is reduced in value in relation to corn and labour. Before the reduction, a guinea would purchase three bushels of wheat, or six days labour; subsequently, it would purchase only two bushels of wheat or four days labour. In both cases, the relations of wheat and labour to money being given, their mutual relations can be inferred; in other words, we can ascertain that a bushel of wheat is worth two days labour. This, which is all that measuring value implies, is as readily done after the reduction as before. The excellence of any thing as a measure of value is altogether independent of its own variableness in value One confuses invariableness of value with invariableness in fineness and weight The command of quantity being that which constitutes value, a definite quantity of a substance of some uniform commodity must be used as a unit to measure value; and it is this definite quantity of a substance of uniform quality which must be invariable. (p. 11.) In all money contracts the issue at stake is the quantity of the gold and silver to be lent, not its value. (p. 103.) If someone were to insist that it be a contract for a specified value, he is bound to show in relation to what commodity: thus, he would be maintaining that a pecuniary contract does not relate to a quantity of money as expressed on the face of it, but to a quantity of some commodity of which no mention is made. (p. 104.) It is not necessary to restrict this to contracts where actual money is lent. It holds for all obligations for the future payment of money, whether for articles of any kind sold on credit, or for services, or as rent of land or houses; they are precisely in the same condition as pure loans of the medial commodity. If A sells a ton of iron to B for ten pounds, at twelve months credit, it is just the same in effect as lending the ten pounds for a year and the intents of both contracting parties will in the same way be affected by changes in currency. (p. 110, 111.) The confusion of giving names to specified and unchangeable fractional parts of the money substance which is to serve as unit of measure confusing the denomination of it with fixing the price of money is also displayed, among others, by the high-flown romanticist of political economy, Mr Adam M ller. He says, among other things: Every one can see how much depends on the true determination of the mint price, above all in a country like England, where the government, with generous liberality (i.e. at the country s expense and the profit of the Bank of England bullion dealers) mints without charge, collects no mintage etc., and thus, if it set the mint price significantly higher than the market price, if, instead of paying an ounce of gold at 3 17s. 10 1/2d., as now, it set 3 19s. as the mint price of one ounce of gold, then all gold would flow towards the mint, all the silver there would be changed into the cheap gold here, and thus be brought to the mint anew, and the currency system would become disordered. (p. 280, 281, Vol. II. Die Elemente der Staatskunst, Berlin, 1809.) Herr M ller does not know, then, that pence and shillings here are only names for fractional parts of a gold ounce. Because silver and copper coins which, notabene, are not minted according to the proportion of silver and copper to gold, but are issued as markers for the equivalent parts of gold, and hence need be accepted in payment only in very small amounts circulate under the names of shillings and pence, he imagines that an ounce of gold is divided into pieces of gold, of silver, and of copper (thus triple standard of value). A couple of steps later he suddenly remembers again that there is no double standard in England, hence even less a triple one. Herr M ller s lack of clarity about the common economic relations is the real foundation of his higher conception. From the general law that the total price of commodities in circulation determines the mass of the circulating medium at a given stage of the velocity of circulation, it follows that at a given stage of growth of the values thrown into circulation, the more precious metal the metal of greater specific value, i.e. which contains more labour time in a smaller amount takes the place of the less precious as the predominant medium of circulation; hence, copper, silver, gold, each one replacing the previous one as the predominant medium of circulation. The same aggregate sum of prices can be circulated e.g. with 14 times as few gold coins as silver coins. Copper or even iron coin as predominant medium of circulation supposes weak circulation. Just as the more powerful but more valuable means of transport and means of circulation takes the place of the less valuable to the degree that the mass of circulating commodities, and circulation generally, grows. On the other side it is clear that the small retail traffic of everyday life requires exchange on a very diminutive scale the smaller, the poorer the country and the weaker is circulation as such. It is in this retail traffic, where very small amounts of commodities on the one side, hence also very small values circulate, that money appears in the most proper sense of the word merely as vanishing medium of circulation, and does not congeal as realized price. Consequently, a subsidiary medium of circulation enters for this traffic, which is merely the symbol of the fractional parts of the predominant media of circulation. These are silver and copper markers, which are therefore not minted in the relation of the value of their substance to the value of e.g. gold. Here money appears still only as symbol, even if itself still in a relatively valuable substance. Gold e.g. would have to be divided into excessively small fractions to serve as equivalent of the division of commodities required by this retail traffic. This is why these subsidiary media of circulation need be accepted in payment, by law, in only very small amounts, so that they can never solidify as realization of price. For example, in England, copper in the amount of 6d., silver in the amount of 20s. The more developed circulation is generally, the greater the mass of prices of the commodities entering into circulation, the more does their wholesale exchange separate off from their retail exchange, and they require different sorts of coin for their circulation. The velocity of the circulation of these markers is inversely related to the magnitude of their value. In the early stage of society, when nations are poor, and their payments trifling, copper has frequently been known to answer all the purposes of currency and it is coined into pieces of very low denominations in order to facilitate the inconsiderable exchanges which then take place. So in the early age of the Roman Republic and of Scotland. (p. 3.) (David Buchanan, Observations on the Subjects, treated of in Dr Smith s Inquiry etc., Edinburgh, 1814.) The general wealth of a country is very accurately measured by the nature of its payments and the state of its coin; and the decided prevalence of a coarse metal in its currency, joined to the use of coins of very low denomination, marks a rude state of society. (p. 4.) Later the business of currency becomes divided into two distinct departments; the duty of effecting the main payments for the more precious metals; the inferior metals by contrast retained for some trivial exchanges, and thus purely subservient to the main currency. Between the first introduction of a precious metal into the currency of a country, and its exclusive use in the main payments, a wide interval; and the payments of the retail trade must in the interval have become so considerable, owing to the increase of wealth, that at least in part they could be conveniently managed by the new and more valuable coin; since no coin can be used for the main payments (this is false, as the notes show) which is not suited, at the same time, to the transactions of the retail trade, since every trade ultimately obtains from the consumer the return of its capital Silver has maintained itself everywhere on the continent in the main payments In Britain the quantity of silver in circulation does not exceed what is necessary for the smaller payments in fact few payments to the amount of 20s. made in silver Before the reign of William III silver was brought in large bags to the treasury in payment of the national revenue. At this period the great change took place The exclusive introduction of gold in the main payments of England was a clear proof that the returns of the retail trade at this time were made mainly in gold; this possible without a single payment ever exceeding or even equalling any of the gold coins; because, in the general abundance of gold, and scarcity of silver, gold coins naturally offered for small sums and a balance of silver demanded in return; so that gold, by thus assisting in the retail trade and in economizing the use of silver, even for the small payments, would prevent its accumulation by the retail trader At the same time, as in England gold was substituted for silver (1695) for the main payments, silver for copper in Sweden Clear, that the coin used for the larger payments can only pass current at its intrinsic worth But intrinsic worth not necessary for a subsidiary currency In Rome, so long as copper the prevailing coin, current only for its intrinsic value 5 years before the beginning of the first Punic war, silver introduced, little by little displaced copper in the main payments 62 years after the silver, gold, but it never seems to have excluded silver from the main payments In India, copper not a subsidiary currency; passes therefore for its intrinsic worth. The rupee, a silver coin of 2s. 3d., is the money of account; in relation to which the mohour, a gold coin, and the pice, a copper coin, are allowed to find their value in the market; the number of pice currently exchanged for a rupee constantly varies with the weight and value of the coin, while here 24 halfpence always = 1s. without reference to their weight. In India the retail dealer must still take considerable quantities of copper for his goods, and he cannot afford to take it therefore but for its intrinsic value In the currencies of Europe, copper passes for whatever value is fixed upon it, without examination of its weight and fineness. (p. 4 18.) In England an excess of copper spent 1798 by private traders; and although copper only legal payment for 6d., found its way (the surplus) to the retail traders; they sought to put it in circulation again; but ultimately returned to them. When this currency was stopped, copper accumulated with the retail traders in sums of 20, 30, even 50, which they finally had to sell at their intrinsic value. (p. 31.) In the subsidiary currency, the medium of circulation takes on a particular form as such, as a merely vanishing medium, alongside the medium of circulation which is at the same time equivalent, which realizes prices, and accumulates as independent value. Thus, here, pure symbol. Thus it may be issued only in the quantity absolutely required for the small retail trade, so that it can never thereby accumulate. The quantity must be determined by the mass of prices which it circulates, divided by its velocity. Because the mass of the circulating medium, of a certain value, is determined by prices, it follows automatically that if a greater quantity than required by circulation itself were artificially thrown into it and could not run off (which is not the case here, because, as medium of circulation, it is above its intrinsic worth), then it would be depreciated; not because the quantity determines prices, but because prices determine the quantity, and hence only a specific amount can remain in circulation at a specific value. Thus, if there are no openings by which circulation can throw out the superfluous quantity, if the circulating medium cannot change from that form into the form of value for itself, then the value of the medium of circulation must fall. But this can only take place, apart from artificial hindrances, prohibition of melting-down, of export etc., if the circulating medium is merely a symbol, and does not itself possess a real value corresponding to its nominal value, hence cannot make the transition from the form of circulating medium into that of the commodity in general, and shed its stamp; if it is imprisoned in its existence as coin. It follows on the other side that the symbol, the money marker, can circulate at the nominal value of the gold it represents without possessing any value whatever of its own in so far as it represents the medium of circulation only in that quantity in which it would itself circulate. But then [it becomes] at the same time a condition either that it is itself then on hand only in such a small quantity that it circulates only in the subsidiary form, hence does not cease for an instant to be a medium of circulation (where it constantly serves partly in the exchange with small amounts of commodities, partly merely to make exchange for the real medium of circulation), hence can never accumulate; or it must possess no value whatever, so that its nominal value can never be compared with its intrinsic value. In the latter case it is posited as mere symbol, which, by means of itself, points to value as something existing outside itself. In the other case it never comes to a comparison between its intrinsic value and its nominal value. Which is why counterfeits of money show an effect immediately; while total destruction of its value does not damage it. It might otherwise appear paradoxical that money can be replaced by worthless paper; but that the slightest alloying of its metallic content depreciates it. The double function of money in circulation contradicts itself as such; to serve as mere medium of circulation, where it is a vanishing mediation; and at the same time as realization of prices, in which form it accumulates and turns into its third character as money. As medium of circulation it is worn out; thus does not contain the metal content which makes it into objectified labour in a fixed amount. Its correspondence to its value hence always more or less illusory. One example to be presented. It is important to bring in the determination of quantity already at this point in the chapter on money, but deduced in just the opposite way to the usual doctrine. Money can be replaced because its quantity is determined by the prices it circulates. In so far as it, itself, has value as in the subsidiary medium of circulation its quantity must be so determined that it can never accumulate as an equivalent, and in fact always figures as an auxiliary cog of the medium of circulation proper. In so far, however, as it is to replace the latter, it must have no value whatsoever, i.e. its value must exist apart from itself. The variations in circulation determined by the amount and number of transactions. (Economist.) Circulation may rise, prices remaining equal, by increase in the amount of commodities; if the amount remains constant, by increase of their prices; by both together. With the proposition that prices regulate the quantity of currency and not the quantity of currency prices, or in other words that trade regulates currency (the quantity of the medium of circulation), and currency does not regulate trade, [it] is, of course, as our deduction has shown, supposed that price is only value translated into another language. Value, and value determined by labour time, is the presupposition. It is clear, therefore, that this law is not equally applicable to the fluctuations of prices in all epochs; e.g. in antiquity, e.g. in Rome, where the circulating medium does not itself arise from circulation, from exchange, but from pillage, plunder etc. No country may consequently have more than one standard; more than one standard for the measure of value; for this standard must be uniform and unchanging. No article has a uniform and unchanging value relative to others: it only has such with itself. A piece of gold is constantly of the same value as the other, of exactly the same fineness, the same weight and in the same place; but this cannot be said of gold and any other article, e.g. silver. (Econ. Vol. I p. 771.) Pound is nothing but a denomination in account, which has reference to a given and fixed quantity of gold of standard quality. (loc. cit.) To speak of making one ounce of gold worth 5 instead of 3 17s. 10 1/2d. is to say only that it ought henceforth to be minted in 5 sovereigns instead of in 3 420/480 sovereigns. We would not thereby alter the value of the gold, but only the weight and hence the value of the pound or sovereign. An ounce of gold would have the same value relative to wheat and all other commodities as before, but since a pound, although bearing the same name as before, would represent a smaller part of an ounce of gold, it would represent a correspondingly smaller quantity of wheat and other commodities. Just as if we had said that a quarter of wheat should no longer be divided into 8, but rather into 12 bushels; we could not thereby change the value of wheat, but merely diminish the quantity contained in a bushel, and hence the latter s value. (p. 772 loc. cit.) Whatever temporary or permanent change might take place, its price is always expressed in the same amount of money; an ounce of gold will remain 3 17s. 10 1/2d. of our money. The change in its value indicated by the greater or lesser quantity of the commodities it can purchase. (loc. cit. p. 890.) The ideal bar to be compared e.g. with the ideal milrea in Buenos Aires (likewise the pound in England during the depreciation of notes etc.). What is fixed here is the name milrea; what fluctuates is the quantity of gold or silver it expresses. In Buenos Aires the currency is inconvertible paper money (paper dollars); these dollars originally = 4s. 6d. each; now approximately 3 3/4d. and has been as low as 1 1/2d. An ell of cloth formerly worth 2 dollars, now nominally 28 dollars in consequence of the depreciated paper. In Scotland, the medium of exchange, not to be confused with the standard of value, in the amount of 1 and upwards may be said to be exclusively paper, and gold does not circulate at all; yet gold is as much the standard of value as if nothing else circulated, because the paper is convertible into the same fixed quantity of that metal; and it circulates only on the faith of being so convertible. (p. 1275.) Guineas are hoarded in times of distrust. (Thornton, p. 48.) The hoarding principle, in which money functions as independent value, is, apart from the striking forms in which it appears, necessary as one moment of exchange resting on money circulation; since everyone, as A. Smith says, needs, beside his own commodity, the medial quantity, a certain proportion of the general commodity . The man in trade has property in trade. (loc. cit. p. 21.)> Exchangeable value is determined not by the absolute, but by the relative cost of production. If the cost of producing gold remained the same, while the cost of producing all other things doubled, then would gold have a less power of purchasing all other things than before; and its exchangeable value would fall one half; and this diminution in its exchange value precisely the same in effect as if the cost of producing all other things remained unaltered, while that of producing gold had been reduced one half. (p. 56, 57. Torrens, loc. cit.) This important for prices. For determination of value, absolutely not; mere tautology. The value of a commodity is determined by the amount of labour it contains; this means that it exchanges for the same quantity of labour in every other form of use value. It is therefore clear that, if the labour time necessary for the production of object A doubles, then now only 1/2 of it = its earlier equivalent, B. Since equivalence is determined by the equality of labour time or of the amount of labour, the difference of value is of course determined by the inequality of labour time, or, labour time is the measure of value. Abundant reason to believe that the practice of coining originated with individuals and carried on by them before it was seized on and monopolized by governments. Such long the case in Russia. (See Storch.) (loc. cit. p. 195 note.) Hodgskin is of a different opinion from the romantic M ller: The mint stamps only what individuals bring, most injudiciously charging them nothing for the labour of coining; and taxing the nation for the benefit of those who deal in money. (p. 194. Popular Polit. Econ. etc., London, 1827.) Thus e.g. if, as soon as the machine is introduced for 1,200 (50 labour capacities), an earlier expenditure of, say, 240 pounds for instruments of production ceases to be necessary, then the additional expenditure of capital amounts to only 960; the price of 40 workers a year. In this case then, if the remaining 50 workers together produce exactly as much surplus labour as did the 100 previously, then now 200 hours of surplus labour are produced with a capital of 2,160; before, with a capital of 2,400. The number of workers has decreased by half, absolute surplus labour has remained the same, 200 hours of labour as before; the capital invested in material of labour is also the same; but the relation of surplus labour to the invariable part of the capital has increased absolutely. Altogether 9,240. The relationship is this: Since the capital laid out in raw material has remained the same, and that laid out in machinery increased, but not in the same relation as that laid out in labour diminished; it follows that the total outlay of capital diminished; surplus labour remained the same, hence grown relative to the capital, not only at the rate at which surplus labour time must grow to remain the same with half as many workers, but by more than that; namely by the rate at which the [outlay] for the old means of production is deducted from the costs of the new. The introduction of machinery or a general increase in the force of production has objectified labour as its substratum, hence costs something; therefore, if a part of the capital previously laid out for labour is laid out as a component part of the part of the capital which enters into the production process as constant value, then the introduction of machinery can take place only if the rate of surplus labour time does not merely remain the same, i.e. grow relative to the living labour employed, but if it grows at a greater rate than the relation between the value of the machinery and the value of the dismissed workers. This can happen either because the entire expenditure incurred for the previous instrument of production must be deducted. In this case the total sum of the capital laid out diminishes, and, although the relation of the total sum of employed labour relative to the constant part of the capital has diminished, the surplus labour time has remained the same, and has hence grown not only relative to the capital laid out for labour, for necessary labour time, but also relative to the total capital, to the total value of the capital, because the latter has diminished. Or, the value for machinery may be as great as that previously laid out for living labour, which has now become superfluous; but the rate of surplus labour of the remaining capital has increased so that the 50 workers supply not only as much surplus labour as the 100 did before, but a greater amount. Say, e.g. instead of 4 hours each, 4 1/4 hours. But in this case a greater part of the capital is required for raw materials etc., in short, a greater total capital is required. If a capitalist who previously employed 100 workers for 2,400 annually, lets 50 go, and puts a machine costing 1,200 in their place, then this machine although it costs him as much as 50 workers did before is the product of fewer workers, because he pays the capitalist from whom he buys the machine not only the necessary labour, but also the surplus labour. Or, if he had his own workers build the machine, he would have used a part of them for necessary labour only. In the case of machinery, thus, increase of surplus labour with absolute decrease of necessary labour time. It may be accompanied both by absolute diminution of the employed capital, and by its growth. Thus all parts of the capital bear profit simultaneously, both the circulating part (laid out in wages and raw material etc.) and the part laid out in fixed capital. The capital can now reproduce itself either in the form of circulating capital or in the form of fixed capital. Since we saw earlier, in the examination of circulation, that its value returns in a different form depending on in which of these two forms it is presupposed, and since, from the standpoint of profit-producing capital, what returns is not simply the value, but rather the value of the capital plus the profit, value as itself and value as self-realizing, it follows that the capital will be posited as profit-bearing in a different form corresponding to each of these two forms. The circulating capital enters wholly into circulation, with its use value as vehicle of its exchange value; and thus exchanges for money. I.e. then, it is sold, entirely, although each time only a part of it enters into circulation. In one turnover, however, it has entirely gone over into consumption (whether this be merely individual, or in turn productive) as product, and has completely reproduced itself as value. This value includes the surplus value, which now appears as profit. It is sold as use value, in order to be realized as exchange value. This, then, is sale at a profit. On the other side, we have seen that the fixed capital returns only in portions over the course of several years, of several cycles of the circulating capital, and, more specifically, enters into circulation as exchange value and returns as such only to the degree that it is used up (at that time, in the immediate act of production). However, the entry as well as the return of the exchange value is now posited as the entry and return not only of the value of the capital, but also at the same time of the profit, so that a fractional part of profit corresponds to the fractional part of capital. The capitalist expects an equal benefit from all parts of the capital he advances. (Malthus, Principles of Political Economy, 2nd ed. Lond., 1836, p. 267.) Where Wealth and Value are perhaps the most nearly connected, is in the necessity of the latter to the production of the former. (loc. cit. p. 301.) < The fixed capital (in the cotton factories) usually = 1:4 to the circulating, so that if a manufacturer has 50,000, he spends 40,000 in erecting his mill and filling it with machinery, and only 10,000 in the purchase of raw material (cotton, coals etc.) and the payment of wages. (Nassau W. Senior, Letters on the Factory Act etc., 1837, p. 12.) The fixed capital is subject to incessant deterioration, not only through wear and tear, but also through constant mechanical improvements (loc. cit.) Under present laws, no mill in which persons under 18 years of age are employed can be worked more than 11 1/2 hours by day, i.e. 12 hours for 5 days and 9 on Saturday. Now, the following analysis shows that, in a mill so worked, the whole net profit is derived from the last hour. Let a manufacturer invest 100,000 80,000 in his mill and machinery, and 20,000 in raw material and wages. As to the annual return of the mill, supposing the capital to be turned once a year, and gross profits to be 15%, his goods must be worth 115,000, produced by the constant conversion and reconversion of the 20,000 circulating capital, from money into goods and from goods into money (in fact the conversion and reconversion of surplus labour first into commodity and then again into necessary labour etc.) in periods of rather more than two months. Of these 115,000, each of the 23 half hours of work produces 5/115th or 1/23rd. Of the 23/23, constituting the whole 115,000, 20/23, i.e. 100,000 out of the 115,000, only replace the capital; 1/23 (or 5,000 out of the 115,000) makes up for deterioration of the mill and machinery. The remaining 2/23, i.e. the last 2 of the 23 half hours of every day, produce the net profit of 10%. If, therefore (prices remaining the same), the factory could be kept at work for 13 hours instead of 11 1/2, by an addition of about 2,600 to the circulating capital, the net profit would be more than doubled. (I.e. 2,600 would be worked up, without requiring relatively more fixed capital, and without payment to labour at all. The gross and net profit is = to the material which is worked up for the capitalist free of charge, and then of course one hour is = 100% more, if the surplus labour, as Mr Shit falsely presupposes, is only = 1/12 day or only 2/23, as Senior says. On the other side, if the daily hours of work were reduced by 1 hour per day (prices remaining the same), net profit would be destroyed; if reduced by 1 1/2 hours, gross profit as well. The circulating capital would be replaced, but there would be no fund to compensate the progressive deterioration of the fixed capital. (12, 13.) (As false as Mr Senior s data, so important his illustration for our theory.) The relation of fixed capital to circulating grows constantly for two reasons: (1) the tendency of mechanical improvement to throw on machinery more and more the work of production (2) the improvement of the means of transport and the consequent diminution of the stock of raw material in the manufacturer s hands waiting for use. Formerly, when coals and cotton came by water, the incertainty and irregularity of supply forced him to keep on hand 2 or 3 months consumption. Now, a railway brings it to him week by week, or rather day by day, from the port or the mine. Under such circumstances, I fully anticipate that, in a very few years, the fixed capital, instead of its present proportion, will be as 6 or 7 or even 10 to 1 to the circulating; and, consequently, that the motives to long hours of work will become greater, as the only means by which a large proportion of fixed capital can be made profitable. When a labourer , said Mr Ashworth to me, lays down his spade, he renders useless, for that period, a capital worth 18d. When one of our people leaves the mill, he renders useless a capital that has cost 100. (13, 14.)> <This a very nice proof that, under the rule of capital, the application of machinery does not shorten labour; but rather prolongs it. What it abbreviates is necessary labour, not the labour necessary for the capitalist. Since fixed capital becomes devalued to the extent it is not used in production, its growth is linked with the tendency to make labour perpetual. As for the other point raised by Senior, the diminution of the circulating capital relative to the fixed capital would be as great as he assumes if prices remained constant. But if e.g. cotton, on the average, has fallen below its average price, then the manufacturer will purchase as great a supply as his floating capital permits, and vice versa. With coal, however, where production regular and no special circumstances give grounds for anticipating an extraordinary rise in demand, Senior s remark correct. We have seen that transport (and hence means of communication) do not determine circulation, in so far as they concern bringing the product to market or its transformation into commodity. For in this respect they are themselves included as part of the production phase. But they determine circulation in so far as they determine (1) the return; (2) the retransformation of the capital from the money form into that of the conditions of production. The more rapid and uninterrupted the supply of material and mati res instrumentales, the smaller a supply does the capitalist need to buy. He can therefore all the more often turn over or reproduce the same circulating capital in this form, instead of having it lie around as dormant capital. On the other side, as Sismondi already noted, this also has the effect that the retail merchant, the shopkeeper, can all the more rapidly restore his stock, thus also has less need to keep commodities in stock, because he can renew the supply at any instant. All this shows how with the development of production there is a relative decline of accumulation in the sense of hoarding; increases only in the form of fixed capital, while however continuous simultaneous labour (production) increases in regularity, in intensity, and in scope. The speed of the means of transport, together with their all-sidedness, increasingly transforms (with the exception of agriculture) the necessity of antecedent labour, as far as circulating capital is concerned, into that of simultaneous, mutually dependent, differentiated production. This observation important for the section on accumulation.> Our cotton factories, at their commencement, were kept going the whole 24 hours. The difficulty of cleaning and repairing the machinery, and the divided responsibility, arising from the necessity of employing a double staff of overlookers, book-keepers etc. have nearly put an end to this practice, but until Hobhouse s Act reduced them to 69, our factories generally worked from 70 to 80 hours per week. (p. 15, loc cit.) When profits fall, circulating capital is disposed to become to some extent fixed capital. When interest 5%, capital not used in making new roads, canals or railways, until these works yield a corresponding large percentage; but when interest only 4 or 3%, capital would be advanced for such improvements, if it obtained but a proportional lower percentage. Joint-stock companies, to accomplish great improvements, are the natural offspring of a falling rate of profit. It also induces individuals to fix their capital in the form of buildings and machinery. (p. 232. Hopkins (Th.), Great Britain for the last 40 Years etc., London, 1834.) McCulloch thus estimates the numbers and incomes of those engaged in the cotton manufacture: The increase of absolute labour time supposes the same or an increasing number of simultaneous working days; ditto the increase of the force of production by division of labour etc. In both cases the aggregate labour time remains the same or grows. With the employment of machinery, relative surplus labour time grows not only relative to necessary labour time and hence correlative with aggregate labour time; but rather the relation to necessary labour time grows while aggregate labour diminishes, i.e. the number of simultaneous working days diminishes (relative to surplus labour time). A Glasgow manufacturer gave Symons (J.C.), author of Arts and Artisans at Home and Abroad, Edinb., 1839, the following pieces of information (we cite several of them here in order to have examples for the relation of fixed capital, circulating, the part of the capital laid out in wages, etc.): Thus if we take 5% interest on machinery, then the gross profit 1,700 + 900 = 2,600. The capital laid out in wages amounts, however, to only 7,500. Thus profit relates to wages = 26:75 = 5 1/5:15, hence = 34 2/3%. (Thus assuming floating capital of 7,000, since 1,500 5% on 30,000.) The produce of the mill taken at 10,000 lb. weekly. (234 loc. cit.) Here, then, profit = 1,150 + 1,500 = 2,650:5,400 (wages) = 1:2 2/53, = 49 8/108%. Hence gross profit = 2,400; wages 3,800; 2,400:3,800 = 24:38 = 12:19 = 63 3/19%. In the first case 34 2/3%; in the second 49 8/108% and in the last 63 3/19%. In the first case, wages 1/6 of the total price of the product; in the second more than 1/4; in the last, more than 1/6. But in the first case wages related to the value of the capital as = 1:4 8/15; in the second case = 1:5 15/27; in the third = 1:7 2/19. At the same rate as the total ratio of the part of the capital laid out in wages declines relative to the part laid out in machinery and circulating capital (this, together, 34,000 in the first case; 30,000 in the second; 28,000 in the third), the profit on the part laid out in wages must naturally rise, to allow the percentage of profit to remain the same. The absolute decrease of aggregate labour, i.e. of the working day multiplied by the number of simultaneous working days, can appear doubly. In the first-cited form, that one part of the hitherto employed workers is dismissed in consequence of the use of fixed capital (machinery). Or, that the introduction of machinery will diminish the increase of the working days employed, even though productivity grows and, indeed, at a greater rate (of course) than it diminishes in consequence of the value of the newly introduced machinery. In so far as the fixed capital has value, it does not magnify, but rather diminishes the productivity of labour. The surplus hands would enable the manufacturers to lessen the rate of wages; but the certainty that any considerable reduction would be followed by immediate immense losses from turnouts, extended stoppages, and various other impediments which would be thrown in their way, makes them prefer the slower process of mechanical improvement, by which, though they may triple production, they require no new men. (Gaskell, Artisans and Machinery, London, 1836.) (p. 314.) When the improvements not quite displace the workmen, they will render one man capable of producing, or rather superintending, the production of quantity now requiring ten or twenty labourers. (315, loc. cit.) Machines have been invented which enable 1 man to produce as much yarn as 250, or 300 even, could have produced 70 years ago: which enable 1 man and 1 boy to print as many goods as a 100 men and a 100 boys could have printed formerly. The 150,000 workmen in the spinning mills produce as much yarn as 40 millions with the one-thread wheel could have produced. (316, loc. cit.) The immediate market for capital, or field for capital, may be said to be labour. The amount of capital which can be invested at a given moment, in a given country, or the world, so as to return not less than a given rate of profits, seems principally to depend on the quantity of labour, which it is possible, by laying out that capital, to induce the then existing number of human beings to perform. (p. 20. An Inquiry into those Principles respecting the Nature of Demand etc., London, 1821.) (By a Ricardian against Malthus s Principles etc.) The worker s propertylessness, and the ownership of living labour by objectified labour, or the appropriation of alien labour by capital both merely expressions of the same relation from opposite poles are fundamental conditions of the bourgeois mode of production, in no way accidents irrelevant to it. These modes of distribution are the relations of production themselves, but sub specie distributionis. It is therefore highly absurd when e.g. J. St. Mill says (Principles of Political Economy, 2nd ed., London, 1849, Vol. I, p. 240): The laws and conditions of the production of wealth partake of the character of physical truths It is not so with the distribution of wealth. That is a matter of human institutions solely. (p. 239, 240.) The laws and conditions of the production of wealth and the laws of the distribution of wealth are the same laws under different forms, and both change, undergo the same historic process; are as such only moments of a historic process. It requires no great penetration to grasp that, where e.g. free labour or wage labour arising out of the dissolution of bondage is the point of departure, there machines can only arise in antithesis to living labour, as property alien to it, and as power hostile to it; i.e. that they must confront it as capital. But it is just as easy to perceive that machines will not cease to be agencies of social production when they become e.g. property of the associated workers. In the first case, however, their distribution, i.e. that they do not belong to the worker, is just as much a condition of the mode of production founded on wage labour. In the second case the changed distribution would start from a changed foundation of production, a new foundation first created by the process of history. <The money prevalent among the Mexicans (more with barter and oriental landed property), a regulated currency of different values. This consisted of transparent quills of gold dust; of bits of tin, cut in the form of a T; and of bags of cocoa, containing a specified number of grains. O felicem monetam , says Peter Martyr (de Orbe novo), quae suavem utilemque praebet humano generi potum, et a tartarea peste avaritiae suos immunes servat possessores, quod suffodi aut diu servari nequeat . (Prescott.) Eschwege (1823) estimates the total value of the diamond workings in 80 years at a sum hardly exceeding 18 months produce of sugar or coffee in Brazil. (Merivale.) The first (British) settlers (in North America) cultivated the cleared ground about their villages in common this custom prevails until 1619 in Virginia etc. (Merivale, Vol. I. p. 91.) (Notebook, p. 52.) ( In 1593 the Cortes made the following representation to Philip II: The Cortes of Valladolid of the year 48 begged Your Majesty to cease to permit the entry into the kingdom of candles, mirrors, jewellery, knives and similar things from the exterior, these articles, so useless to human life, being exchanged for gold, as if Spaniards were Indians . (Semp r .)) In densely peopled colonies the labourer, although free, is naturally dependent on the capitalist; in thinly peopled ones the want of this natural dependence must be supplied by artificial restrictions. (Merivale, 314, Vol. II. Lectures on Colonization etc., London, 1841, 1842.)> Usury originally unrestricted in Rome. The law of the 12 tables (303 A.U.C.) had fixed the interest on money at 1% per year (Niebuhr says 10). These laws promptly violated. Duilius (398 A.U.C.) again reduced the interest on money to 1%, unciario faenore. Reduced to 1/2% in 408; in 413, lending at interest was absolutely forbidden by a plebiscite engineered by the tribune, Genucius. It is not surprising that, in a republic where industry, where commerce either wholesale or retail were prohibited to citizens, there was also a prohibition against commerce in money. (p. 260, 261 Vol. II, loc. cit.) This situation lasted 3 years, until the capture of Carthage. 12%, then: 6% the average annual rate of interest. (261 loc. cit.) Justinian fixed interest at 4%; usura quincunx under Trajan the legal interest is 5%. Commercial interest in Egypt, 146 years B.C., was 12%. (loc. cit. p. 263.) The involuntary alienation of feudal landed property develops with usury and with money: The introduction of money which buys all things, and hence the advantage for the creditor, who lends money to the land owner, brings in the necessity of legal alienation for the advance. (124. John Dalrymple, An Essay towards a General History of Feudal Property in Great Britain, 4th ed., Lond., 1759.) In medieval Europe: Payments in gold customary with only a few articles of commerce, mostly with precious goods. Most prevalent outside the mercantile sphere, with gifts by the great, certain high obligations, heavy fines, purchase of landed estates. Unminted gold was not infrequently measured to suit in pounds or marks (half pounds) 8 ounces = 1 mark; one [ounce] hence = 2 pennyweight or 3 carats. Of minted gold until the Crusades, familiar only with the Byzantine solidus, the Italian Tari and the Arabian maurabotini (afterwards maravedi). (H llmann, St dtewesen des Mittelalters, 1st Part, Bonn, 1826.) (p. 402 4.) In Frankish laws, the solidus also as mere money of account, in which the value of agricultural products to be paid as fines was expressed. E.g. among the Saxons, a solidus a yearling ox in usual autumn condition In Ripuarian law, a healthy cow represented one solidus 12 denars = 1 gold solidus. (405, 406.) 4 Tari = 1 Byzantine solidus Since the thirteenth century, various gold coins minted in Europe. Augustales (of the emperor Frederick II in Sicily: Brundisium and Messina); florentini or floreni (Florence 1252); ducats or zecchini (Venice since 1285). (409 11, loc. cit.) Larger gold coins minted also in Hungary, Germany and the Netherlands since the fourteenth century; in Germany, were simply called Gulden. (loc. cit. 413.) With payments in silver, the prevailing custom in all larger payments was weighing, usually in marks Even minted silver weighed for such payments, since the coin still of almost wholly pure silver, hence weight the only question. Hence the name pound (livre, lire) * and mark, partly the name of imaginary or accounting coins, partly passed over to real silver coins. Silver coins: denari or kreuzer In Germany these denari were called Pfennige (Penig, Penning, Phennig) since as early as the ninth century. Originally Pending, Penthing, Pfentini from pf ndig, in the old form pf nding the same as full-weighted: hence pf ndige denari, abbreviated pf ndinge Another name for the denari, from the beginning of the twelfth century in France, Germany, Netherlands, England, from the star pictured on them in place of the cross: sternlinge, sterlinge, starlinge Denari sterlings = pfennig sterlings In the fourteenth century, 320 of the Netherlands sterlings made a pound, 20 to the ounce In the earlier Middle Ages, silver solidi not real coins, but rather inclusive name for 12 denari 1 gold solidus = 12 sterling denari, for this was the median relation of gold and silver Oboli, half pfennigs, having circulated as small change With the increasing spread of petty trade, more and more of the small commercial cities and petty princes obtained the right to strike their own local coin, thus for the most part small change. Alloyed it with copper, in increasing proportions Thick pennies, gros deniers, grossi, groschen, groten, first minted in Tours before the middle of the thirteenth century. These groschen originally double pfennigs. (415 33.) The ecclesiastical assessments levied by the popes on nearly all Catholic countries contributed in no small measure, firstly, to the development of the entire money system in commercially active Europe, and then, as a consequence, to the rise of a variety of efforts to circumvent the ecclesiastical prohibition (of interest). The pope made use of the Lombards in the collection of official dues and other obligations from the archbishoprics. These, the chief usurers and pawnbrokers, under papal protection. Already generally known since the middle of the twelfth century. Especially from Siena. Public usurarii. In England they called themselves Roman Pontifical Money-Dealers . Some bishops in Basle and elsewhere pawned the episcopal ring, silken robes, all the ecclesiastical vessels at low rates with Jews, and paid interest. But bishops, abbots, priests themselves also practised usury with the church vessels by lending them for a share of the gain to Tuscan money dealers from Florence, Siena and other cities. etc. (see loc. cit. Notebook, p. 39.) Because money is the general equivalent, the general power of purchasing, everything can be bought, everything may be transformed into money. But it can be transformed into money only by being alienated [alieniert], by its owner divesting himself of it. Everything is therefore alienable, or indifferent for the individual, external to him. Thus the so-called inalienable, eternal possessions, and the immovable, solid property relations corresponding to them, break down in the face of money. Furthermore, since money itself exists only in circulation, and exchanges in turn for articles of consumption etc. for values which may all ultimately be reduced to purely individual pleasures, it follows that everything is valuable only in so far as it exists for the individual. With that, the independent value of things, except in so far as it consists in their mere being for others, in their relativity, exchangeability, the absolute value of all things and relations, is dissolved. Everything sacrificed to egotistic pleasure. For, just as everything is alienable for money, everything is also obtainable by money. Everything is to be had for hard cash , which, as itself something existing external to the individual, is to be catched [sic] by fraud, violence etc. Thus everything is appropriable by everyone, and it depends on chance what the individual can appropriate and what not, since it depends on the money in his possession. With that, the individual is posited, as such, as lord of all things. There are no absolute values, since, for money, value as such is relative. There is nothing inalienable, since everything alienable for money. There is no higher or holier, since everything appropriable by money. The res sacrae and religiosae , which may be in nullius bonis , nec aestimationem recipere, nec obligari alienarique posse , which are exempt from the commercio hominum , do not exist for money just as all men are equal before God. Beautiful that the Roman church in the Middle Ages itself the chief propagandist of money. Since the ecclesiastical law against usury had long lost all significance, in 1425 Martin formally annulled it. (H llmann, part II, loc. cit. Bonn, 1827, p. 55.) No country in the Middle Ages a general rate of interest. Firstly, the priests strict. Uncertainty of the juridical arrangements for securing the loan. Accordingly higher rates in individual cases. The small circulation of money, the necessity to make most payments in cash, since the brokerage business still undeveloped. Hence great variety of views about interest and concepts of usury. In Charlemagne s time it was considered usurious only when 100% was taken. At Lindau on Lake Constance, in 1344, local citizens took 216 2/3%. In Zurich the Council fixed the legal interest at 43 1/3% In Italy, 40% had to be paid during some periods, although from the twelfth to the fourteenth century the usual rate does not exceed 20% Frederick II in his decree 10%, but this only for Jews. He did not wish to speak for the Christians 10% was already usual in the thirteenth century in the Rhineland of Germany. (55 7 loc. cit.) To sell for money shall at all times be made so easy as it is now to buy with money, and production would become the uniform and never failing cause of demand. (John Gray, The Social System etc., Edinburgh, 1831.) (p. 16.) After land, capital, labour, the fourth necessary condition of production is: instant power of exchanging. (loc. cit. 18.) To be able to exchange is for the man in society as important as it was to Robinson Crusoe to be able to produce. (loc. cit. 21.) According to Say, credit only transfers capital, but does not create any. This true only in the one case of a loan to an industrialist by a capitalist but not of credit between producers in their mutual advances. What one producer advances to another is not capital; it is products, commodities. These products, these commodities, can and undoubtedly will become active capital in the hands of the borrower, i.e. instruments of labour, but at the time they are nothing but products for sale in the hands of their owner, and everywhere inactive One must distinguish between product and commodity and instrument of labour and productive capital As long as a product remains in the hands of its producer, it is only a commodity, or, if you like, inactive, inert capital. Far from being of benefit for the industrialist who holds it, it is a burden for him, a ceaseless cause of trouble, of faux frais and of losses: storage costs, maintenance costs, protection costs, interest on capital etc., without counting the waste and spoiling which nearly all commodities suffer when they are inactive for long Thus, if he sells this, his commodity, on credit, to another industrialist who can use the commodities for the kind of work for which they are fit, then, from having been inert commodities, they have become, for the latter, active capital. In this case, therefore, there will be an increase of productive capital on one side without any diminution on the other. Even more: if one takes note that the seller, while furnishing his commodity on credit, has received in exchange a bill which he has the right to negotiate on the spot, is it not clear that by that very fact he too has obtained the means to renew his raw materials and his instruments of labour so as to begin work again? Thus there is here a double growth of productive capital, in other words, a power acquired on both sides. (Charles Coquelin, Du Cr dit et des Banques dans l Industrie , Revue des deux mondes, Vol. 31, 1842, p. 799 seq.) Let the whole mass of commodities for sale pass rapidly from the state of inert product into that of active capital, without delays and obstacles: the country will be filled with so much new activity! this rapid transformation is precisely the advantage which credit allows to be realized This is the activity of circulation Thus credit may increase the industrialists business tenfold In a given period of time, the dealer or producer renews his materials and his products ten times instead of once Credit brings this about by increasing everyone s purchasing power. Instead of reserving this power to those who presently have the ability to pay, it gives it to all those people whose position and whose morality provide the guarantee of a future payment; it gives it to any person who is capable of utilizing these products through labour Hence the first benefit of credit is to increase, if not the sum of values a country possesses, yet at least the sum of active values. This is the immediate effect. Flowing out of it is the increase of the productive powers, hence also of the sum of values etc. (loc. cit.) Letting is a conditional sale, or sale of the use of a thing for a limited time. (Corbet, Th., An Inquiry into the Causes and Modes of the Wealth of Individuals etc., Lond., 1841, p. 81.) Transformations to which capital is subjected in the work of production. Capital, to become productive, must be consumed. (p. 80. S. P. Newman, Elements of Political Economy, Andover and New York, 1835.) Economic cycle the whole course of production, from the time that outlays are made, till returns are received. In agriculture, seed time is its commencement, and harvesting its ending . (81). The basis of the difference between fixed and circulating capital is that during every economic cycle, a part is partially, and another part totally consumed. (loc. cit.) Capital as directed to different employments. (loc. cit.) Belongs in the doctrine of competition. A Medium of Exchange: In undeveloped nations, whatever commodity constitutes the larger share of the wealth of the community, or from any cause becomes more frequently than others an object of exchange, is wont to be used as a circulating medium. So cattle a medium of exchange among pastoral tribes, dried fish in Newfoundland, sugar in the West Indies, tobacco in Virginia. Precious metals advantage : (a) sameness of quality in all parts of the world (b) admit of minute division and exact apportionment; (c) rarity and difficulty of attainment, (d) they admit of coinage. (100 loc. cit.) Money bearing compound interest increases at first slowly. But, the rate of increase being continually accelerated, it becomes in some time so rapid, as to mock all the powers of the imagination. One penny, put out at our Saviour s birth to 5% compound interest, would, before this time, have increased to a greater sum than would be obtained in a 150 millions of Earths, all solid gold. But if put out to simple interest, it would, in the same time, have amounted to no more than 7 shillings 4 1/2d. Our government has hitherto chosen to improve money in the last, rather than the first of these ways. (18, 19. Price, Richard, An Appeal to the Public on the Subject of the National Debt, London, 1772, 2nd ed.) (His secret: the government should borrow at simple interest, and lend out the borrowed money at compound interest.) In his Observations on Reversionary Payments etc., London, 1772, he flies even higher: A shilling put out to 6% compound interest at our Saviour s birth would have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn s orbit. (loc. cit. XIII, note.) A state need never, therefore, be under any difficulties; for, with the smallest savings, it may, in as little time as its interest can require, pay off the largest debts. (p. xiv.) The good Price was simply dazzled by the enormous quantities resulting from geometrical progression of numbers. Since he regards capital as a self-acting thing, without any regard to the conditions of reproduction of labour, as a mere self-increasing number, he was able to believe that he had found the laws of its growth in that formula (see below). Pitt, 1792, in a speech where he proposed to increase the sum devoted to the sinking fund, takes Dr Price s mystification quite seriously. (S = C (1 + i)n.) McCulloch, in his Dictionary of Commerce, 1847, cites, as properties of metallic money: The material must be: (1) divisible into the smallest portions; (2) capable of being stored for an indefinite period without deterioration; (3) easily transportable from place to place owing to great value in small bulk; (4) a piece of money, of a certain denomination, always equal in size and quality to every other piece of the same denomination; (5) its value comparatively steady. (581.) The following pretty demonstration by Mr Proudhon: Since value is nothing more than a proportion, and since all products are necessarily proportional to one another, it follows that from the social viewpoint products are always values and produced values: for society, the difference between capital and product does not exist. This difference is entirely subjective to individuals. (250.) The antithetical nature of capital, and the necessity for it of the propertyless worker, is na vely expressed in some earlier English economists, e.g. the Reverend Mr J. Townsend, the father of population theory, by the fraudulent appropriation of which Malthus (a shameless plagiarist generally; thus e.g. his theory of rent is borrowed from the farmer, Anderson) made himself into a great man. Townsend says: It seems to be a law of nature that the poor should be to a certain degree improvident, that there may be always some to fulfil the most servile, the most sordid, and the most ignoble offices in the community. The stock of human happiness is thereby much increased. The more delicate ones are thereby freed from drudgery, and can pursue higher callings etc. undisturbed. (A Dissertation on the Poor-laws, edition of 1817, p. 39.) Legal constraint to labour is attended with too much trouble, violence, and noise, creates ill will etc., whereas hunger is not only a peaceable, silent, unremitted pressure, but, as the most natural motive to industry and labour, it calls forth the most powerful exertions. (15.) (This the answer to what labour is in fact more productive, the slave s or the free worker s. A. Smith could not raise the question, since the mode of production of capital presupposes free labour. On the other side, the developed relation of capital and labour confirms A. Smith in his distinction between productive and unproductive labours. Lord Brougham s stale jokes against it, and the objections, supposed to be serious, by Say, Storch, MacCulloch and tutti quanti do not make any impact on it. A. Smith misses the mark only by somewhat too crudely conceiving the objectification of labour as labour which fixates itself in a tangible [handgreiflich] object. But this is a secondary thing with him, a clumsiness in expression.) With Galiani, too, the workmen are supplied by a law of nature. Galiani published the book in 1750. God makes sure that the men who exercise occupations of primary utility are born in abundant numbers. (78. Della Moneta, Vol. III, Scrittori Classici Italiani di Economia Politica. Parte Moderna. Milano, 1803.) But he already has the correct concept of value: It is only toil which gives value to things. (74.) Of course, labour is distinct qualitatively as well, not only in so far as it [is performed] in different branches of production, but also more or less intensive etc. The way in which the equalization of these differences takes place, and all labour is reduced to unskilled simple labour, cannot of course be examined yet at this point. Suffice it that this reduction is in fact accomplished with the positing of products of all kinds of labour as values. As values, they are equivalents in certain proportions; the higher kinds of labour are themselves appraised in simple labour. This becomes clear at once if one considers that e.g. Californian gold is a product of simple labour. Nevertheless, every sort of labour is paid with it. Hence the qualitative difference is suspended, and the product of a higher sort of labour is in fact reduced to an amount of simple labour. Hence these computations of the different qualities of labour are completely a matter of indifference here, and do not violate the principle. Metals are used for money because they are valuable, they are not valuable because they are used for money. (loc. cit. 95.) It is the velocity of circulation of money, and not the quantity of metal, which makes more or less money appear. (99.) Money is of two kinds, ideal and real; and is adapted to two uses, to evaluate things and to purchase them. Ideal money is as good as, sometimes better than, real money for evaluating things the other use of money is to buy those things to which its value may be equal prices and contracts are valued in ideal money and executed in real. (p. 112 seq.) The metals have the peculiar and singular quality that in them alone all relations reduce themselves to one only, which is their quantity; nature did not endow them with a varying quality either in their internal constitution or in their external form and shape. (126, 127.) This is very important observation. Value supposes a common substance, and all differences, proportions etc. reduced to merely quantitative ones. This the case with precious metals, which thus appear as the natural substance of value. Money like a law which reduces all things to their necessary proportions is that which articulates all things in a single voice: price. (152.) Only this same ideal money is of account, which is to say, all things are stipulated, contracted and evaluated in it; which came about for the same reason that the moneys which are ideal today are the most ancient moneys of a nation, and all of them were once real, and, because they were real, they were used in accounting. (152.) (This also the formal clarification of Urquhart s ideal money etc. For the blacks etc. the iron bar was originally real money, then changed into ideal; but they tried at the same time to hold onto its previous value. Now, since the value of iron, as becomes apparent to them in commerce, fluctuates relative to gold etc., therefore the ideal bar, so as to preserve its original value, expresses varying proportions of real amounts of iron, a laborious calculation which does honour to these gentlemen s power of abstraction.) (In the debates caused by the Bullion Committee 1810, Castlereagh advanced similar confused notions.) A beautiful statement by Galiani: The infinity which (things) lack in progression, they find in circulation. (156.) About use value, Galiani nicely says: Price is a relation the price of things is their proportion relative to our need, which has as yet no fixed measure. But this will be found. I myself believe it to be man himself. ([159,] 162.) Spain, during the same period when it was the greatest as well as the richest power, counted in reales and in the tiniest maravedis. (172, 173.) It is, rather, he (man) who is the sole and true wealth. (188.) Wealth is a relation between two persons. (221.) When the price of a thing, or rather its proportion relative to others, changes proportionately to all of them, it is a clear sign that it is its value alone, and not that of all the others, which has changed. (154.) (The costs of preserving the capital, of repairing it, also have to be taken into account.) The positive limitation of quantity in paper money would accomplish the only useful purpose that cost of production does in the other. (Opdyke.) The merely quantitative difference in the material of money: Money is returned in kind only (with loans); which fact distinguishes this agent from all other machinery indicates the nature of its service clearly proves the singleness of its office. (267.) With money in possession, we have but one exchange to make in order to secure the object of desire, while with other surplus products we have two, the first of which (securing the money) is infinitely more difficult than the second. (287, 288.) Banker differs from the old usurer that he lends to the rich and seldom or never to the poor. Hence he lends with less risk, and can afford to do it on cheaper terms; and for both reasons, he avoids the popular odium which attended the usurer. (44.) (Newman, F. W., Lectures on Political Economy, London, 1851.) Matter in its natural state is always without value Only through labour does it obtain exchange value, become element of wealth. (MacCulloch, Discours sur l origine de l conomie politique etc. transl. by Pr vost. Geneva and Paris, 1825. p. 57.) Commodities in exchange are each other s measure. (Storch. Cours d conomie Politique avec des notes etc. par J. B. Say, Paris, 1823, Vol. I, p. 81.) In the trade between Russia and China, silver is used to evaluate all commodities; nevertheless, this commerce is carried on by barter. (p. 88.) Just as labour is not the source of wealth, so is it not its measure. (p. 123 loc. cit.) Smith let himself be misled into the opinion that the same cause which made material things exist was also the source and the measure of value. (p. 124.) Interest the price one pays for the use of a capital. (p. 336.) Currency must have a direct value, but be founded on an artificial need. Its material must not be indispensable for human existence; because the whole amount of it which is used for currency cannot be used individually, and must always circulate. (Vol. II, p. 113, 114.) Money takes the place of anything. (p. 133.) T.V. Consid rations sur la nature du revenu national, Paris, 1824: Reproductive consumption is not properly an expense, but only an advance, because it is reimbursed to him who makes it. (p. 54.) Is there not a manifest contradiction in this proposition that a people grows wealthy by its savings, or its privations, that is to say, by voluntarily condemning itself to poverty? (p. 176.) At the time when hides and pelts served as money in Russia, the inconvenience involved in circulating so voluminous and perishable a currency gave rise to the idea of replacing them by small pieces of stamped leather, which thereby became symbols payable in hides and pelts They kept up this usage until 1700 (namely, later, of representing the fractions of silver kopecks), at least in the city of Kaluga and its environs, until Peter I (1700) ordered them to be turned in and exchanged for small copper coins. (Vol. IV, p. 79.) An indication of the marvels of compound interest is already found in the great seventeenth-century champion of the fight against usury: in Jos. Child. Trait s sur le commerce etc. trad. de l anglois (English publication 1669, Amsterdam and Berlin, 1754.) (pp. 115 17.) In point of fact a commodity will always exchange for more labour than has produced it; and it is this excess that constitutes profits. (p. 221. McCulloch, The Principles of Political Economy, London, 1830.) Shows how well Mr McCulloch has understood the Ricardian principle. He distinguishes between exchange value and real value; the former (1) quantity of labour expended in its appropriation or production; (2) the second, buying power of certain quantities of labour of the other commodities. (p. 211.) Man is as much the produce of labour as any [of] the machines constructed by his agency; and it appears to us that in all economical investigations he ought to be considered in precisely the same point of view. (115 loc. cit.) Wages really consist of a part of the produce of the industry of the labourer. (p. 295.) The profits of capital are only another name for the wages of accumulated labour. (p. 291.) A periodical destruction of capital has become a necessary condition of any market rate of interest at all, and, considered in that point of view, these awful visitations, to which we are accustomed to look forward with so much disquiet and apprehension and which we are so anxious to avert, may be nothing more than the natural and necessary corrective of an overgrown and bloated opulence, the vis medicatrix by which our social system, as at present constituted, is enabled to relieve itself from time to time of an ever-recurring plethora which menaces its existence, and to regain a sound and wholesome state. (p. 165. Fullarton (John): On the Regulation of Currency etc. Lond., 1844.) Money General Power of Purchasing. (Chalmers.) Capital services and commodities used in production. Money: the measure of value, the medium of exchange, and the universal equivalent; more practically: the means of obtaining capital; the only means of paying for capital previously obtained for credit; virtually security for obtaining its equivalent value in capital: Commerce is the exchange of capital for capital through the medium of money, and the contract being for the medium, money alone can satisfy the contract and discharge the debt. In selling, one kind of capital is disposed for money for obtaining its equivalent value in any kind of capital. Interest the consideration given for the loan of money. If the money is borrowed for the purpose of procuring capital, then the consideration given is a remuneration for the use of capital (raw materials, labour, merchandise etc.), which it obtains. If borrowed for the purpose of discharging a debt, for paying for capital previously obtained and used (contracted to be paid for in money), then the consideration given is for the use of money itself, and in this respect interest and discount are similar. Discount solely the remuneration for money itself, for converting credit money into real money. A good bill gives the same command over capital as bank notes, minus the charge for discount; and bills are discounted for the purpose of obtaining money of a more convenient denomination for wages and small cash payments, or to meet larger engagements falling due; and also for the advantage to be gained when ready money can be had by discounting at a lower rate than 5%, the usual allowance made for cash. The main object, however, in discounting depends fundamentally upon the supply and demand of legal tender money The rate of interest depends mainly on the demand and supply of capital, and the rate of discount entirely on the supply and demand of money. (13 March 58, Economist, letter to the editor.) Mr K. Arnd, quite in his proper place where he reasons about the dog tax , has made the following interesting discovery: In the natural course of the production of goods, there is only one phenomenon, which in wholly settled and cultivated countries seems destined to regulate the rate of interest to some extent; this is the rate at which the amount of timber in the European forests increases with their annual new growth this growth proceeds, quite independently of its exchange value, at the rate of 3 to 4 per cent. (p. 124, 125. Die naturgem sse Volkswirtschaft etc., Hanau, 1845.) This deserves to be called the forest-primeval [waldurspr ngliche] rate of interest.

Grundrisse 16

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch16.htm

In regard to interest, two things are to be examined: Firstly, the division of profit into interest and profit. (As the unity of both of these the English call it gross profit.) The difference becomes perceptible, tangible as soon as a class of monied capitalists comes to confront a class of industrial capitalists. Secondly: Capital itself becomes a commodity, or the commodity (money) is sold as capital. Thus it is said e.g. that capital, like any other commodity, varies in price according to demand and supply. These then determine the rate of interest. Thus here capital as such enters into circulation. Monied capitalists and industrial capitalists can form two particular classes only because profit is capable of separating off into two branches of revenue. The two kinds of capitalists only express this fact; but the split has to be there, the separation of profit into two particular forms of revenue, for two particular classes of capitalists to be able to grow up on it. The form of interest is older than that of profit. The level of interest in India for communal agriculturists in no way indicates the level of profit. But rather that profit as well as part of wages itself is appropriated in the form of interest by the usurer. It requires a sense of history like that of Mr Carey to compare this interest with that prevailing on the English money market, which the English capitalist pays, and to conclude therefrom how much higher the labour share (the share of labour in the product) is in England than in India. He ought to have compared the interest which English handloom-weavers, e.g. in Derbyshire, pay, whose material and instrument is advanced (lent) by the capitalist. He would have found that the interest is here so high that, after settlement of all items, the worker ends up being the debtor, after not only having made restitution of the capitalist s advance, but also having added his own labour to it free of charge. Historically, the form of industrial profit arises only after capital no longer appears alongside the independent worker. Profit thus appears originally determined by interest. But in the bourgeois economy, interest determined by profit, and only one of the latter s parts. Hence profit must be large enough to allow of a part of it branching off as interest. Historically, the inverse. Interest must have become so depressed that a part of the surplus gain could achieve independence as profit. There is a natural relation between wages and profit necessary labour and surplus labour; but is there any between profit and interest, same [as] that which is determined by the competition between these two classes arranged under these different forms of revenues? But in order that this competition exist, the [existence of the] two classes, the division of the surplus value into profits and interest, is already presupposed. To examine capital in general is not a mere abstraction. If I regard the total capital of e.g. a nation as distinct from total wage labour (or, as distinct from landed property), or if I regard capital as the general economic basis of a class as distinct from another class, then I regard it in general. Just as if I regard man e.g. as physiologically distinct from the animals. The real difference between profit and interest exists as the difference between a moneyed class of capitalists and an industrial class of capitalists. But in order that two such classes may come to confront one another, their double existence presupposes a divergence within the surplus value posited by capital. (Political economy has to do with the specific social forms of wealth or rather of the production of wealth. The material of wealth, whether subjective, like labour, or objective, like objects for the satisfaction of natural or historical needs, initially appears as common to all epochs of production. This material therefore appears initially as mere presupposition, lying quite outside the scope of political economy, and falls within its purview only when it is modified by the formal relations, or appears as modifying them. What it is customary to say about this in general terms is restricted to abstractions which had a historic value in the first tentative steps of political economy, when the forms still had to be laboriously peeled out of the material, and were, at the cost of great effort, fixed upon as a proper object of study. Later, they become leathery commonplaces, the more nauseating, the more they parade their scientific pretensions. This holds for everything which the German economists are in the habit of rattling off under the category goods .) The important thing is that both interest and profit express relations of capital. As a particular form, interest-bearing capital stands opposite, not labour, but rather opposite profit-bearing capital. The relation in which on one side the worker still appears as independent, i.e. not as wage labourer, but on the other side his objective conditions already possess an independent existence alongside him, forming the property of a particular class of usurers, this relation necessarily develops in all modes of production resting more or less on exchange with the development of merchant wealth or money wealth in antithesis to the particular and restricted forms of agricultural or handicraft wealth. The development of this mercantile wealth may itself be regarded as the development of exchange value and hence of circulation and of money relations in the former spheres. Of course, this relation shows us, on one side, the growing independence, the unbinding of the conditions of labour which more and more come out of circulation and depend on it from the worker s economic being. On the other side, the latter is not yet subsumed into the process of capital. The mode of production therefore does not yet undergo essential change. Where this relation repeats itself within the bourgeois economy, it does so in the backward branches of industry, or in such branches as still struggle against their extinction and absorption into the modern mode of production. The most odious exploitation of labour still takes place in them, without the relation of capital and labour here carrying within itself any basis whatever for the development of new forces of production, and the germ of newer historic forms. In the mode of production itself, capital still here appears materially subsumed under the individual workers or the family of workers whether in a handicraft business or in small-scale agriculture. What takes place is exploitation by capital without the mode of production of capital. The rate of interest appears very high, because it includes profit and even a part of wages. This form of usury, in which capital does not seize possession of production, hence is capital only formally, presupposes the predominance of pre-bourgeois forms of production; but reproduces itself again in subordinate spheres within the bourgeois economy itself. Second historic form of interest: Lending of capital to wealth which is engaged in consumption. Appears historically important here as itself a moment in the original rise of capital, in that the income (and often the land, too) of the landed proprietors accumulates and becomes capitalized in the pockets of the usurer. This is one of the processes by which circulating capital or capital in the form of money comes to be concentrated in a class independent of the landed proprietors. The form of realized capital as well as of its realized surplus value is money. Profit (not only interest) thus expresses itself in money; because in that value is realized and measured. The necessity of payments in money not only of money for the purchase of commodities etc. develops wherever exchange relations and money circulation take place. It is by no means necessary that exchange should be simultaneous. With money, the possibility is present that one party cedes his commodity and the other makes his payment only later. The need for money for this purpose (later developed in loans and discounts) a chief historic source of interest. This source does not concern us at all yet at this point; is to be looked at only along with credit relations. Difference between buying (M C) and selling (C M): when I sell, I have (1) added the profit to the commodity and obtained it; (2) an article universally representative or convertible, money, for which, money being always saleable, I can always command every other commodity; the superior saleableness of money being the exact effect or natural consequence of the less saleableness of commodities With buying, different. If he buys to sell again or supply customers, whatever may be the probability, there is no absolute certainty of his selling at a remunerative price But not all buy so as to sell again, but rather for their own use or consumption etc. (p. 117 seq. Corbet, Th. An Inquiry into the Causes and Modes of the Wealth of Individuals, London, 1841.) Economist, 10 April : A parliamentary return moved for by Mr James Wilson, shows that the mint coined in 1857 gold to the value of 4,859,000, of which 364,000 was in half sovereigns. The silver coinage of the year amounted to 373,000, the cost of the metal used being 363,000 The total amount coined in the ten years ending the 31st of December, 1857, was 55,239,000 in gold, and 2,434,000 in silver The copper coinage last year amounted in value to 6,720 the value of the copper being 3,492; of this 3,163 was in pence, 2,464 in half-pence, and 1,120 in farthings The total value of the copper coinage of the last ten years was 141,477, the copper of which it was composed being purchased for 73,503. According to Thomas Culpeper (1641), Josiah Child (1670), Paterson (1694), Locke (1700), wealth depends on the self-enforced reduction of the interest rate of gold and silver. Accepted in England during nearly two centuries. (Ganilh.) When Hume, in antithesis to Locke, developed the determination of the interest rate by the rate of profit, he already had before his eyes a far greater development of capital; even more so Bentham when, towards the end of the eighteenth century, he wrote his defence of usury. (From Henry VIII to Anne, statutory reduction of interest.) In every country: (1) a producing class and (2) a monied class, which lives from the interest on its capital. (p. 110.) (J. St. Mill, Some Unsettled Questions of Political Economy, London, 1844.) It is by frequent fluctuation in a month, and by pawning one article to relieve another, where a small sum is obtained, that the premium for money becomes so excessive. 240 licensed pawn-brokers in London and about 1450 in the country The capital employed is estimated at about 1 million. Turned over at least three times annually Each time on the average for 33 1/3% profit; so that the inferior orders of England pay 1 million annually for a temporary loan of one million, exclusive of what they lose by goods being forfeited. (p. 114.) (Vol. I. J. D. Tuckett, A History of the Past and Present State of the Labouring Population etc., London, 1846.) In earlier times all factories belonged to the crafts, and the merchant remained merely the distributor and promoter of the handicrafts. This was still most strictly observed in the manufacture of cloth and textiles. But, by and by, in many localities the merchants began to set themselves up as masters (of course without the old masters guild prejudices, traditions, relations to the journeymen), and to take journeymen into their employ for day-wages. (Poppe. p. 92, Vol. 1. Geschichte der Technologie, G ttingen, 1807 11.) This was a chief reason why, in England, industry proper struck root and arose in non-incorporated cities. Nevertheless, money as trading wealth as it appears in the most various forms of society and at the most various stages of the development of the forces of social production is merely the mediating movement between two extremes, which it does not dominate, and presuppositions which it does not create. A. Smith, Vol. II (ed. Garnier): The great trade of every civilized society is that which is established between the inhabitants of the town and those of the countryside it consists in the exchange of the raw product for the manufactured product either directly, or by the intervention of money. (p. 403.) Trade always concentrates; production originally on a small scale. The town is a continual fair or marketplace where the inhabitants of the countryside go to exchange their raw product for manufactured products. It is this trade which supplies the inhabitants of the town both with the material of their labour and with the means of their subsistence. The quantity of manufactured goods which they sell to the inhabitants of the countryside necessarily determines the quantity of materials and subsistence they buy. (p. 408 .) So long as means of subsistence and of pleasure the chief aim, use value predominates. It is part of the concept of value that it maintains itself and increases only through exchange. But the existing value, initially, money. This industry, whose aim was something beyond absolute necessity, established itself in the towns long before it could be commonly practised by the cultivators of the countryside. (p. 452.) Although the inhabitants of a town ultimately draw their subsistence and all the means and materials of their industry from the countryside, yet those of a town lying near the shores of the sea or of a navigable river may draw them also from the farthest corners of the world, either in exchange for the manufactured product of their own industry, or by performing the service of carriers alternately between distant countries and exchanging the products of these countries among them. Thus a city may become very wealthy, while not only the land in its immediate environs, but also all lands where it trades, are poor. Each of these countries, taken separately, can offer it only a very small part of subsistence and for business; but all of these countries, taken collectively, can supply it with a great quantity of subsistence and a great variety of employment. (p. [452,] 453.) (Italian cities were the first in Europe to rise by trade; during the crusades Venice, Genoa, Pisa partly by the transport of people and always by that of the supplies which had to be delivered to them. These republics were, in a manner of speaking, the supply commissaries of these armies.) (loc. cit.) Merchant wealth, as constantly engaged in exchange and exchanging for the sake of exchange value, is in fact living money. The inhabitants of mercantile towns imported refined objects and luxury articles from wealthier countries at a high price, thus furnishing new food for the vanity of the great landed proprietors, who bought them with alacrity, by paying great quantities of the raw produce of their estates for them. Thus the commerce of a great part of Europe at this time consisted in exchange of the raw produce of one country for the manufactured produce of a country more advanced in industry. (p. [454,] 455.) When this taste had become sufficiently general to create a considerable demand, the merchants sought, so as to save the costs of transport, to establish similar manufactures in their own country. This the origin of the first manufactures for distant markets. Luxury manufactures, arisen out of foreign commerce, established by merchants (p. 458) (worked up foreign materials). Ad. Smith speaks of a second sort, which arose naturally and by itself through successive refinement of the crude and domestic employments . Worked up home-grown materials. (p. 459.) The trading peoples of antiquity like the gods of Epicurus in the spaces between the worlds, or rather like the Jews in the pores of Polish society. Most of the independent trading peoples or cities attained the magnificent development of their independence through the carrying trade, which rested on the barbarity of the producing peoples, between whom they played the role of money (the mediators). In the preliminary stages of bourgeois society, trade dominates industry; in modern society, the opposite. Trade will naturally react back to varying degrees upon the communities between which it is carried on. It will subjugate production more and more to exchange value; push direct use value more and more into the background; in that it makes subsistence more dependent on the sale than on the immediate use of the product. Dissolves the old relations. Thereby increases money circulation. First seizes hold of the overflow of production; little by little lays hands on the latter itself. However, the dissolving effect depends very much on the nature of the producing communities between which it operates. For example, hardly shook the old Indian communities and Asiatic relations generally. Fraud in exchange is the basis of trade such as it appears independently. But capital arises only where trade has seized possession of production itself, and where the merchant becomes producer, or the producer mere merchant. Opposed to this, the medieval guild system, the caste system etc. But the rise of capital in its adequate form presupposes it as commercial capital, so that production is no longer for use, more or less mediated by money, but for wholesale trade. Commercial wealth as an independent economic form and as the foundation of commercial cities and commercial peoples exists and has existed between peoples on the most diverse stages of economic development, and within the commercial city itself (e.g. the old Asian, the Greek, and the Italian etc. of the Middle Ages) production can continue on in the form of guilds etc. Steuart. Trade is an operation, by which the wealth, or work, either of individuals, or of societies, may be exchanged by a set of men called merchants, for an equivalent, proper for supplying every want, without any interruption to industry, or any check to consumption. Industry is the application to ingenious labour in a free man, in order to procure, by the means of trade, an equivalent, fit for supplying every want. (Vol. I, p. 166.) While wants continue simple and few, a workman finds time enough to distribute all his work; when wants become more multiplied, men must work harder; time becomes precious; hence trade is introduced The merchant as mediator between workmen and consumers. (p. 171.) The collection (of products) into a few hands is the introduction of trade. (loc. cit.) The consumer does not buy so as to sell again. If the merchant buys and sells solely with a view to a gain (p. 174) (i.e. for value). The simplest of all trades is that which is executed by bartering of the most necessary means of subsistence (between the surplus food of the farmers and the free hands). Progress chiefly to be ascribed to the introduction of money. (p. 176.) As long as mutual needs are supplied by barter, there is not the least occasion for money. This the simplest combination. When needs have multiplied, bartering becomes more difficult: upon this, money is introduced. This is the common price of all things. A proper equivalent in the hands of those who want. This operation of buying and selling is somewhat more complex than the first. Thus (1) barter; (2) sale; (3) commerce. The merchant must intervene. What was earlier called wants is now represented by the consumer; industry by the manufacturer, money by the merchant. The merchant represents money by substituting credit in its place; and as money invented for the facilitation of barter, so the merchant, with credit, a new refinement upon the use of money. This operation of buying and selling is now trade; it relieves both parts of the whole trouble of transportation and adjusting wants to needs, or wants to money; the merchant represents by turns the consumer, the manufacturer, and money. Towards the consumer he represents the totality of manufacturers, to the latter the totality of consumers, and to both classes his credit supplies the use of money. (p. 177, 178.) Merchants are supposed to buy and sell not out of necessity, but rather with a view to profit. (p. 203.) First the industrialist produces for others not for his own use; these goods begin to be of use to him only from the moment he exchanges them away. They thus make trade and the art of exchange necessary. They are only appraised by their exchangeable value. (p. 161.) (Sismondi, tudes sur l conomie politique, Vol. II, Brussels, 1837.) Trade has robbed things, pieces of wealth, of their primitive character of usefulness: it is the antithesis between their use value and their exchangeable value to which commerce has reduced all things. (p. 162.) At the beginning, utility is the true measure of values; trade exists then, in the patriarchal state of society; but it has not entirely absorbed the society; it is practised only upon the surplus of each one s production, and not on what constitutes its existence. (p. 162, 163.) By contrast, the character of our economic progress is that trade has taken on the burden of the distribution of the totality of the annually produced wealth and it has consequently suppressed absolutely its character of use value, letting only that of exchangeable value remain. (163.) Before the introduction of trade the increase in the quantity of the product was a direct increase of wealth. Less significant at that time was the quantity of labour by means of which this useful thing was obtained And really, the thing demanded loses none of its usefulness even if no labour at all were needed to obtain it; grain and linen would not be less necessary to their owners even if they fell to them from heaven. This is without a doubt the true estimate of wealth, enjoyment, and usefulness. But from the moment when men made their subsistence dependent on the exchanges they could make, or on commerce, they were forced to adhere to a different estimation, to exchange value, to value which results not from usefulness but rather from the relation between the needs of the whole society and the quantity of labour which was sufficient to satisfy this need, or as well the quantity of labour which might satisfy it in the future. (p. 266, loc. cit.) In the estimation of values, which people endeavoured to measure with the introduction of currency, the concept of usefulness is quite displaced. It is labour, the exertion necessary to procure oneself the two things exchanged for one another, which has alone been regarded. (p. 267.) Gilbart (J. W.): The History and Principles of Banking, London, 1834, has this to say about interest: That a man who borrows money with the intention of making a profit on it, should give a portion of the profit to the lender, is a self-evident principle of natural justice. A man makes a profit usually by means of traffic. But in the Middle Ages the population purely agricultural. And there, like under the feudal government, there can be only little traffic and hence little profit Hence the usury laws in the Middle Ages justified Furthermore: in an agricultural country a person seldom wants to borrow money except he be reduced to poverty or distress by misery. (p. 163.) Henry VIII limited interest to 10%, James I to 8, Charles II to 6, Anne to 5. (164, 165.) In those days, the lenders were, if not legal, still actual monopolists, and thus it was necessary to place them under restraint like other monopolists. (p. 165.) In our time the rate of profit governs the rate of interest; in those days the rate of interest governed the rate of profit. If the money-lender burdened the merchant with a higher rate of interest, then the merchant had to put a higher rate of profit on his goods, hence a greater sum of money taken out of the pockets of the buyers so as to bring it into the pockets of the money-lenders. This additional price put on the goods made capital less able and less inclined to buy them. (p. 165.) (loc. cit.) The positive limitation of quantity on this instrument (i.e. paper money) would accomplish the only useful purpose that cost of production does in the other (metal money). (loc. cit. 300.) The rate of interest depends: (1) on the rate of profit; (2) on the proportion in which the entire profit divided between lender and borrower. (loc. cit.) Abundance or scarcity of the precious metals, the high or low scale of general prices prevailing, determines only whether a greater or less amount of money will be required in effecting the exchanges between borrowers and lenders, as well as every other species of exchange Difference only, that a greater sum of money would be needed to represent and transfer capital lent the relation between the sum paid for the use of capital and the capital expresses the rate of interest as measured in money. (loc. cit.) The only way in which any class of coins can command a premium is that no one is obliged to pay them, while every one is obliged to take them as a legal tender. (Economist.) No country may consequently have more than one standard (more than one standard of the measure of value); for this standard must be uniform and unchanging. No article has a uniform, unchanging value relative to another; it only has such with itself. A gold piece is always of the same value as another, of exactly the same fineness, the same weight, and the same value in the same place; but this cannot be said of gold and any other article, e.g. silver. (Economist, 1844.) The English somewhat less than 1/3 of its original value, the German florin = 1/6, Scotland before the union [reduced] its pound 1/36, to the French livre 1/74, the Spanish maravedi = less than 1/1,000, the Portuguese re still lower. (p. 13, Morrison.) Before the law of 1819, causes in existence in determinating the bullion price apart from the circulation of bank notes: (1) the more or less perfect condition of the coin. If the circulating metallic coin is debased below its standard weight, then the slightest turn of exchange causing a demand for exportation must raise the price of the uncoined bullion by at least the degradation of the coin. (2) penal laws which forbade the melting and exporting of coin, and permitted the traffic in bullion. With intensive demand for export, this gave latitude for variation of bullion price against coin even at times when paper completely convertible. In 1783, 1792, 1795, 1796 1816, the bullion price rose above the mint price, because the bank-creditors, in their anxiety to prepare for the resumption of cash payment, accepted gold considerably above the mint price. (Fullarton.) The standard may be for gold, without one ounce of gold circulating. (Economist.) Under George III (1774) silver legal tender only for 25. And the bank, by statute, now paid only in gold. (Morrison.) Lord Liverpool (beginning of the nineteenth century) made silver and copper into purely representative coins. (loc. cit.) To sell for money ought at all times to be made as easy as to buy with money; production would then become the uniform and never failing cause of demand. (16.) It is the quantity that can be sold at a profit, not the quantity that can be made, that is the present limit to production. (59.) Money should be merely a receipt, an evidence that the holder of it has either contributed a certain value to the national stock of wealth, or that he has acquired a right to the said value from some one who has contributed to it Money should be nothing more or less than portable, transferable, divisible, and inimitable evidences of the existence of wealth in store. (63, 64.) An estimated value being previously put upon produce, let it be lodged in a bank, and drawn out again whenever it is required; merely stipulating, by common consent, that he who lodges any kind of property in the proposed National Bank may take out of it an equal value of whatever it may contain, instead of being obliged to draw out the selfsame thing that he put in The proposed national banker should receive and take charge of every description of valuable, and give back any description of valuable again. (loc. cit. 68.) If money, says Gray, be of equal value with that which it represents, it ceases to be a representative at all. It is one of the chief desideratums in money, that the holder of it should be compelled at one time or other to present it for payment at the place from whence he received it. But if money be of the same intrinsic value as that which is given for it, no such necessity exists. (74.) Interest. As the class of rentiers increases, so also does that of lenders of capital, for they are one and the same. From this cause alone, interest must have had a tendency to fall in old countries. (201, 202 Ramsay.) It is probable that in all ages the precious metals cost more in their production than their value ever repaid. (101, II. Jacob, W. An Historical Enquiry into the Production and Consumption of Precious Metals, London, 1831.) The chief passages in Mill are: Value of money = the proportion in which one exchanges it for other articles, or the quantity of money which one gives in exchange for a specific quantity of other things. (p. 128.) This relation is determined by the total quantity of money existing in a country. If one supposes all the commodities of a country brought together on one side, and all the money on the other, then it is evident that in the exchange between both sides, the value of money, i.e. the quantity of the commodities for which it has been exchanged, entirely depends on its own quantity. (loc. cit.) The case is wholly the same in the actual state of things. The total mass of the commodities of a country is not exchanged at once for the total mass of the money, but rather the commodities are exchanged in portions, and often very small portions, at various periods in the course of the year. The same piece of money which has served today for one exchange may serve tomorrow for another. A part of the money is used for a very great number of exchanges, another part for a very small number, a third is stockpiled and serves for no exchange. Among these variations there will be a median rate, based on the number of exchanges for which each piece of money would be used if all had effected an equal number of exchanges. Let this rate be fixed at some convenient number, e.g. 10. If every piece of money in the country has served for 10 purchases, then it is the same as if the total number of pieces of money had increased tenfold, and each had served for only a single exchange. In this case the value of all commodities is equal to 10 times the value of the money etc. (p. 129, 130.) If, instead of each coin serving for 10 purchases a year, the total mass of money had increased tenfold, and the coin served for only one exchange, then it is evident that every increase of this mass would cause a relative diminution in the value of each of these coins taken separately. Since it is supposed that the mass of all commodities for which the money may exchange remains the same, therefore the value of the total mass of the money has become no greater after the increase of its quantity than before. If one supposes an increase of one-tenth, then the value of each of its parts, e.g. an ounce, must have diminished by one-tenth. (p. 130, 131.) Thus, whatever may be the degree of the increase or decrease of the total mass of money, if the quantity of the other things remains the same, then this total mass and each of its parts experiences inversely a relative diminution or increase. It is clear that this thesis is of absolute truth. Whenever the value of money has experienced a rise or fall, and whenever the quantity of the commodities for which it could be exchanged, and the movement of circulation, remained the same, this change must have had as cause a relative increase or diminution of money, and can be ascribed to no other cause. If the mass of commodities decreases while the quantity of money remains the same, then it is as if the totality of money had increased, and vice versa. Similar changes are the result of every alteration in the movement of circulation. Every increase of the number of purchases produces the same effect as a total increase of money; a decrease of this number produces directly the opposite effect. (p. 131, 132.) If a portion of the annual product has not been exchanged at all, like that which the producers consume, or is not exchanged for money, then this portion must not be put on the account, because whatever does not exchange for money is in the same situation relative to money as if it did not exist. (p. 131, 132.) Whenever the increase or diminution of money can proceed freely, this quantity is governed by the value of the metal Gold and silver, however, are commodities, products The costs of production govern the value of gold and silver, like that of all other products. (p. 136.) The insipidness of this reasoning is quite evident. (1) If one supposes that the mass of commodities remains the same, and the velocity of circulation as well, but that nevertheless a great mass of gold or silver exchanges for this same mass of commodities (without the value, i.e. the amount of labour contained in gold and silver, having changed), then one supposes exactly what one wanted to prove, namely that the prices of commodities are determined by the quantity of the circulating medium and not vice versa. (2) Mill concedes that the commodities not thrown into circulation do not exist for money. It is equally clear that the money not thrown into circulation does not exist for the commodities. Thereby there exists no fixed relation between the value of money generally and the mass of it which enters into circulation. That the mass actually in circulation, divided by the number of its turnovers, is equal to the value of money is merely a tautological circumlocution for saying that the value of the commodity expressed in money is its price; since the money in circulation expresses the value of the commodities it circulates it follows that the value of these commodities is determined by the mass of the circulating money. (3) The confusion of Mill s view is clearly shown in his thesis that the value of money diminishes or increases with every alteration in the movement of circulation . Whether one pound sterling circulates 1 time or 10 times a day, in each exchange it expresses an equivalent for the commodity, exchanges for the same value in commodities. Its own value remains the same in every exchange, and is hence altered neither by slower nor by rapid circulation. The mass of the circulating money is altered; but neither the value of the commodity, nor the value of the money. If it is said: a piece of cloth is worth 5, then it means: it possesses the value of 616,370 grains of standard gold. The reason assigned above may be paraphrased thus: prices must fall because commodities are estimated as being worth so many ounces of gold; and the amount of gold in this country is diminished . (Hubbard, J. G., The Currency and the Country, London, 1843, p. 44.) (4) Mill at first supposes, in theory, that the whole mass of the money in a country is exchanged at once for the whole mass of the commodities which are to be found in it. Says, then, that this is so in reality, namely for the main reason that in practice just the opposite takes place, and only portions of money are exchanged for portions of commodities, the fewest payments arranged by payment on the spot time bargains. Follows, therefore, that the total amount of transactions or purchases, made in a day, is entirely independent of the money circulating on this day, and that the mass of money circulating on any given day is not the cause but the effect of a mass of previous transactions, each of them wholly independent of the money supply at the time. (5) Finally, Mill himself admits that with free circulation of money, and this is our only concern, the value of money is determined by its cost of production, i.e., according to his own admission, by the labour time contained in it. Jacob assumes that in this century, 2/3 of the gold and silver in Europe in other articles, utensils and ornament, not in coin. (In another passage he calculates the precious metal so used in Europe and America at 400 million.) (1) Prices of commodities proportionate to the mass of money in the country; (2) the coin and current money of a country representative of all its labour and commodities, so that the more or less representation, the more or less quantity of the thing represented goes to the same quantity of it; (3) increase commodities, they become cheaper; increase money, they rise in their value. (Steuart.) Just as exchange as such begins where the communities end, and as money, as the measure, medium of exchange and general equivalent created by exchange itself, arose not in internal traffic but rather in that between different communities, peoples, etc., and there obtains its specific importance, so it was also as medium of international payments for the liquidation of international debts that money cast its spell, in the sixteenth century, the period of bourgeois society s infancy, holding the exclusive interest of states and of incipient political economy. The important role which money (gold and silver) in this third form still plays in international traffic has only become fully clear and been again recognized by the economists since the regular succession of money crises in 1825, 1839, 1847 and 1857. The economists try to extricate themselves by pointing out that money is called for here not as medium of circulation, but as capital. This is correct. Only it should not be forgotten that capital is being called for in the specific form of gold and silver, and not in that of any other commodity. Gold and silver appear in the role of absolute medium of international payments, because they are money as value-for-itself, as independent equivalent. This, in fact, is not a question of currency but of capital. (It is rather a question of money, not of currency, nor of capital, because it is not capital which is indifferent to the special form in which it exists, but value in the specific form of money which is requested) all those various causes which, in the existing condition of monetary affairs, are capable of directing the stream of bullion from one country to another (i.e. giving origin to a drain of bullion), resolve themselves under a single head, namely the state of the balance of foreign payments, and the continually recurring necessity of transferring capital (but notabene! capital in the form of money) from one country to another to discharge it. For example failure of crops Whether that capital is transmitted in merchandise or in specie is a point which in no way affects the nature of the transaction (affects it very materially!). Further, war-expenditure. (The case of transmission of capital in order to place it out to greater advantage at interest does not concern us here; nor does that of a surplus quantity of foreign goods imported, which Mr Fullarton cites, although this case certainly belongs here if this surplus importation coincides with crises.) (Fullarton, loc. cit. 130, 131.) Gold is preferred for this transmission of capital (but in cases of violent drains of bullion it is absolutely not a question of preference) only in those cases where it is likely to effect the payment more conveniently, promptly, or profitably, than any other description of stock or capital. (Mr Fullarton falsely treats the transmission of gold or another form of capital as a matter of preference, whereas the question is precisely those cases when gold must be transmitted in the international trade, just as at the same time bills in the domestic trade must be acquitted in the legal money, and not in any substitute.) Gold and silver can always be conveyed to the spot where it is wanted with precision and celerity, and may be counted upon to realize on its arrival nearly the exact sum required to be provided, rather than incur the hazard of sending it in tea, coffee, sugar, or indigo. Gold and silver possess an infinite advantage over all other descriptions of merchandise for such occasions, from the circumstance of their being universally in use as money. It is not in tea, coffee, sugar, or indigo that debts, whether foreign or domestic, are usually contracted to be paid, but in coin; and a remittance, therefore, either in the identical coin designated, or in bullion which can be promptly turned into that coin through the Mint or Market of the country to which it is sent, must always afford to the remitter the most certain, immediate, and accurate means of effecting this object, without risk of disappointment from the failure of demand or fluctuation of price. (132, 133.) Thus he cites precisely its property of being money, general commodity of contracts, standard of values, and with the possibility of being immediately converted at liberty in medium of circulation. The English have the apt expression currency for money as medium of circulation (M nze, coin, does not correspond to this, because it is itself the medium of circulation in a particular form again) and money for it in its third attribute. But since they have not particularly developed the latter, they declare this money to be capital, although they are then in practice forced to distinguish again between this particular form of capital, and capital generally. Ricardo appears to have entertained very peculiar and extreme opinions as to the limited extent of the offices performed by gold and silver in the adjustment of foreign balances. Mr Ricardo had passed his life amid the controversies which grew out of the Restriction Act, and had accustomed himself so long to consider all the great fluctuations of exchange and of the price of gold as the result of the excessive issues of the Bank of England, that at one time he seemed scarcely willing to allow that such a thing could exist as an adverse balance of commercial payments And so slight an account did he set on the functions performed by gold in such adjustments, as to have even anticipated that drains for exportation would cease altogether so soon as cash payments should be resumed, and the currency restored to the metallic level (See Ricardo s Evidence before the Lords Committee of 1819 on the Bank of England, p. 186.) But since 1800, when paper quite displaced gold in England, our merchants did not really want it; for, owing to the unsettled state of continental Europe, and the increased consumption there of imported manufactures, in consequence of the interruption given to industry and to all domestic improvement by the incessant movement of invading armies, together with the complete monopoly of the colonial trade which England had obtained through her naval superiority, the export of commodities from Great Britain to the Continent continued greatly to exceed her imports from thence, so long as the intercourse remained open; and after that intercourse was interrupted by the Berlin and Milan decrees, the transactions of trade became much too insignificant to affect exchanges in one way or the other. It was the foreign military expenditures and the subsidies, and not the necessities of commerce, that contributed in so extraordinary a manner to derange the exchanges and enhance the price of bullion in the latter years of the war. The distinguished economists of that period, therefore, had few or no real opportunities of practically estimating the range of which foreign commercial balances are susceptible. (Believed that with war and over-issue, the international transmission of bullion would cease.) Had Mr Ricardo lived to witness the drains of 1825 and 1839, he would no doubt have seen reason to alter his views. (loc. cit. 133 6.) Price is the money value of commodities. (Hubbard.) Money has the quality of being always exchangeable for what it measures, and the quantity required for the purposes of exchange must vary, of course, according to the quantity of property to be exchanged. (100. J. W. Bosanquet. Metallic, Paper, and Credit Currency etc., London, 1842.) I am ready to admit that gold is a commodity in such general demand that it may always command a market, that it can always buy [all] other commodities; whereas, other commodities cannot always buy gold. The markets of the world are open to it as merchandise at less sacrifice upon an emergency than would attend an export of any other article, which might in quantity or kind be beyond the usual demand in the country to which it is sent. (Th. Tooke. An Enquiry into the Currency Principle etc., 2nd ed., London, 1844, p. 10.) There must be a very considerable amount of the precious metals applicable and applied as the most convenient mode of adjustment of international balances, being a commodity more generally in demand, and less liable to fluctuations in market value than any other. (p. 12, 13.) (Causes, according to Fullarton, of the rise of bullion price above the mint price: Coin debased by wear to the extent of 3 or 4% below its standard weight; penal laws which prohibited the melting and exportation of the coin, while the traffic in the metal of which that coin was composed remained perfectly free. These causes themselves, however, acted only during periods of unfavourable rate of exchange [The market price of money] fell, however, from 1816 to 1821 always to the bank price of bullion, when the exchange in favour of England; never rose higher, when the exchange unfavourable, than to such a rate as would indemnify the melters of the coin for its degradation by wear and for the penal consequences of melting it, but rose no higher. (Fullarton, see his book, p. 8, 9.) From 1819 to the present time, amid all the vicissitudes which the money has undergone during that eventful period, the market-price of gold has on no occasion risen above 78s. per oz., nor fallen below 77s. 6d., an extreme range of only 6 in the ounce. Nor would even that extent of fluctuation be now possible; for it was solely owing to the renewed deterioration of the coin that even so trivial a rise occurred as 1 1/2d. in the ounce, or about 1/6% above the Mint-price; and the fall to 77s. 6d. is entirely accounted for by the circumstance of the Bank having at one time thought proper to establish that rate as the limit for its purchases. Those circumstances, however, exist no longer. For many years the Bank has been in the practice of allowing 77s. 9d. for all the gold brought to it for coinage (i.e. the bank pockets 1 1/2d. mintage, which the coin gives it free of charge); and as soon as the recoinage of sovereigns now in progress shall be completed, there will be an effectual bar, until the coin shall again become deteriorated, to any future fluctuation of the price of gold bullion in our market beyond the small fractional difference between 77s. 9d. allowed by the Bank, and the Mint-price of 77s. 10 1/2d. (loc. cit. p. 9, 10.) Assertion by the currency people that the value of a currency depends on its quantity. (Fullarton, p. 13.) If the value of the currency is given, and prices and the mass of transactions likewise (as well as the velocity of circulation), then of course only a specific quantity can circulate. Given prices and the mass of transactions as well as the velocity of circulation, then this quantity depends exclusively on the value of the currency. Given this value and the velocity of circulation, it depends exclusively on prices and on the mass of transactions. In this way is the quantity determined. If, however, the money in circulation is representative money mere value-symbols then it depends on the standard they represent what quantity of them can circulate. From this it has been wrongly concluded that quantity alone determines its value. For example, paper chits representing pounds cannot circulate in the same quantity as those which represent shillings. Profit-bearing capital is the real capital, value posited as simultaneously self-reproducing and multiplying, and as constantly self-equivalent presupposition, distinguished from itself as surplus value posited by itself. Interest-bearing capital is in turn the purely abstract form of profit-bearing capital. Since capital is posited as profit-bearing, in accordance with its value (presupposing a specific stage of the force of production), the commodity or the commodity posited in its form as money (in its corresponding form as independent value, or, as we may now say, as realized capital) may enter into circulation as capital; it may become a commodity, as capital. In this case, it is capital lent out at interest. The form of its circulation or of the exchange it undergoes then appears as specifically distinct from that examined hitherto. We have seen that capital posits itself both in the role of the commodity and in the role of money; but this happens only in so far as both appear as moments of the circulation of capital, in which it alternately realizes itself. These are only its vanishing and constantly re-created modes of existence, moments of its life s process. But capital as capital, capital itself as commodity, has not itself become a moment of circulation. The commodity has not been sold as capital; nor money as capital. In a word, neither commodity nor money and we need actually regard only the latter as the adequate form have entered into circulation as profit-bearing values. Mr Tooke, Mr Fullarton, and Mr Wilson consider money as possessing intrinsic value as a commodity, and exchanging with goods according to that value, and not merely in accordance with the supply of pieces at the time; and they suppose with Dr Smith that exports of bullion are made quite irrespective of the state of the currency, to discharge balances of international debt, and to pay for commodities such as corn, for which there is a sudden demand, and that they are taken from a fund which forms no part of the internal circulation, nor affects prices, but is set apart for these purposes Difficulty in explaining in what manner the bullion they say is set apart for this purpose, and has no effect on prices, can escape the laws of supply and demand, and though existing in the shape of money lying unemployed and known for the making of purchases, is neither applied for that purpose nor affects prices by the possibility of its being so applied. The reply to this is, that the stock of bullion in question represents surplus-capital, not surplus-income, and is not available, therefore, merely to increase the demand for commodities, except on condition of increasing also the supply. Capital in search of employment is not a pure addition to the demanding power of the community. It cannot be lost in the currency. If it tends to raise prices by a demand, it tends to lower them by a corresponding supply. Money, as the security for capital, is not a mere purchasing power it purchases only in order to sell, and finally goes abroad in exchange for foreign commodities rather than disburse itself in merely adding to the currency at home. Money, as the security for capital, never comes into the market so as to be set off against commodities, because its purpose is to produce commodities; it is only the money which represents consumption that can finally affect prices. (Economist, 15 May 58.) Mr Ricardo maintained that prices depend on the relative amount of the circulating medium and of commodities respectively, and that prices rise only through a depreciation of the currency, that is, from a too great abundance of it in proportion to commodities, that they fall either from a reduction in the amount of the currency, or from a relative increase in the stock of general commodities which it circulates. All the bullion and gold coin in the country is, according to Mr Ricardo, to be reckoned currency, and if this increases without a corresponding increase in commodities, the currency is depreciated, and it becomes profitable to export bullion rather than commodities. On the other hand, if a bad harvest or any other calamity cause a great destruction of commodities, without any corresponding change in the amount of the circulation, the currency, whose amount was proportioned to the estimated rather than to the suddenly reduced market of commodities, again becomes redundant or depreciated , and must be diminished by exportation before its value can be restored. According to this view of the circulation, which is at the root of Lord Overstone s theory, the supply of circulating medium or currency is always capable of being indefinitely increased in amount, and diminishes in value according to that increase; and can be restored to its proper value only by exportation of the superabundant portion. Any issue, therefore, of paper money which might supply the gap caused by the exportation of the bullion, and so prevent the natural fall of prices otherwise certain to ensue, is held by Mr Ricardo s school to be an interference with the economical laws of price, and a departure from the principles which would necessarily regulate a purely metallic currency. (loc. cit.) The first category in which bourgeois wealth presents itself is that of the commodity. The commodity itself appears as unity of two aspects. It is use value, i.e. object of the satisfaction of any system whatever of human needs. This is its material side, which the most disparate epochs of production may have in common, and whose examination therefore lies beyond political economy. Use value falls within the realm of political economy as soon as it becomes modified by the modern relations of production, or as it, in turn, intervenes to modify them. What it is customary to say about it in general terms, for the sake of good form, is confined to commonplaces which had a historic value in the first beginnings of the science, when the social forms of bourgeois production had still laboriously to be peeled out of the material, and, at great effort, to be established as independent objects of study. In fact, however, the use value of the commodity is a given presupposition the material basis in which a specific economic relation presents itself. It is only this specific relation which stamps the use value as a commodity. Wheat, e.g., possesses the same use value, whether cultivated by slaves, serfs or free labourers. It would not lose its use value if it fell from the sky like snow. Now how does use value become transformed into commodity? Vehicle of exchange value. Although directly united in the commodity, use value and exchange value just as directly split apart. Not only does the exchange value not appear as determined by the use value, but rather, furthermore, the commodity only becomes a commodity, only realizes itself as exchange value, in so far as its owner does not relate to it as use value. He appropriates use values only through their sale [Ent usserung], their exchange for other commodities. Appropriation through sale is the fundamental form of the social system of production, of which exchange value appears as the simplest, most abstract expression. The use value of the commodity is presupposed, not for its owner, but rather for the society generally. (Just as a Manchester family of factory workers, where the children stand in the exchange relation towards their parents and pay them room and board, does not represent the traditional economic organization of the family, so is the system of modern private exchange not the spontaneous economy of societies. Exchange begins not between the individuals within a community, but rather at the point where the communities end at their boundary, at the point of contact between different communities. Communal property has recently been rediscovered as a special Slavonic curiosity. But, in fact, India offers us a sample chart of the most diverse forms of such economic communities, more or less dissolved, but still completely recognizable; and a more thorough research into history uncovers it as the point of departure of all cultured peoples. The system of production founded on private exchange is, to begin with, the historic dissolution of this naturally arisen communism. However, a whole series of economic systems lies in turn between the modern world, where exchange value dominates production to its whole depth and extent, and the social formations whose foundation is already formed by the dissolution of communal property, without Carey, however, whose point of departure is the American emancipation of bourgeois society from the state, ends with the call for state intervention, so that the pure development of bourgeois relations is not disturbed by external forces, as in fact happened in America. He is a protectionist, while Bastiat is a freetrader. All over the world, the harmony of economic laws appears as disharmony, and even Carey himself is struck by the beginnings of this disharmony in the United States. What is the source of this strange phenomenon? Carey explains it with the destructive influence of England, with its striving for industrial monopoly, upon the world market. Originally, the English relations were distorted by the false theories of her economists, internally. Now, externally, as the commanding power of the world market, England distorts the harmony of economic relations in all the countries of the world. This disharmony is a real one, not one merely based on the subjective conceptions of the economists. What Russia is, politically, for Urquhart, England is, economically, for Carey. The harmony of economic relations rests, according to Carey, on the harmonious cooperation of town and countryside, industry and agriculture. Having dissolved this fundamental harmony in its own interior, England, by its competition, proceeds to destroy it throughout the world market, and is thus the destructive element of the general harmony. The only defence lies in protective tariffs the forcible, national barricade against the destructive power of large-scale English industry. Hence, the state, which was at first branded the sole disturber of these harmonies conomiques , is now these harmonies last refuge. On the one side, Carey here again articulates the specific national development of the United States, their antithesis to and competition with England. This takes place in the na ve form of suggesting to the United States that they destroy the industrialism propagated by England, so as, by protective tariffs, to develop the same more rapidly themselves. This na vet apart, with Carey the harmony of the bourgeois relations of production ends with the most complete disharmony of these relations on the grandest terrain where they appear, the world market, and in their grandest development, as the relations of producing nations. All the relations which appear harmonious to him within specific national boundaries or, in addition, in the abstract form of general relations of bourgeois society e.g. concentration of capital, division of labour, wage labour etc. appear as disharmonious to him where they appear in their most developed form in their world market form as the internal relations which produce English domination on the world market, and which, as destructive influences, are the consequence of this domination. If patriarchal gives way to industrial production within a country, this is harmonious, and the process of dissolution which accompanies this development is conceived in its positive aspect alone. But it becomes disharmonious when large-scale English industry dissolves the patriarchal or petty-bourgeois or other lower stages of production in a foreign country. The concentration of capital within a country and the dissolving effect of this concentration present nothing but positive sides to him. But the monopoly of concentrated English capital and its dissolving effect on the smaller national capitals of other countries is disharmonious. What Carey has not grasped is that these world-market disharmonies are merely the ultimate adequate expressions of the disharmonies which have become fixed as abstract relations within the economic categories or which have a local existence on the smallest scale. No wonder, then, that he in turn forgets the positive content of these processes of dissolution the only side he recognizes in the economic categories in their abstract form, or in the real relations within the specific countries from which they are abstracted when he comes to their full appearance, the world market. Hence, where the economic relations confront him in their truth, i.e. in their universal reality, his principled optimism turns into a denunciatory, irritated pessimism. This contradiction forms the originality of his writings and gives them their significance. He is equally an American in his assertion of the harmony within bourgeois society, as in his assertion of the disharmony of the same relations in their world-market form. In Bastiat, none of this. The harmony of these relations is a world beyond, which begins just at the point where the boundaries of France end; which exists in England and America. This is merely the imaginary, ideal form of the un-French, the Anglo-American relations, not the real form such as he confronts it on his own land and soil. Hence, as with him the harmony in no way arises out of the abundance of living observation, but is rather the flat, stilted product of a thin, drawn, antithetical reflection, hence the only moment of reality with him is the demand that the French state should give up its economic boundaries. Carey sees the contradictions in the economic relations as soon as they appear on the world market as English relations. Bastiat, who merely imagines the harmony, begins to see its realization only at the point where France ceases, and where all nationally separate component parts of bourgeois society compete among one another liberated from the supervision of the state. This ultimate among his harmonies and the presupposition of all his earlier, imaginary ones is however itself in turn merely a postulate, which is supposed to be realized through free-trade legislation. Thus, while Carey, quite apart from the scientific value of his researches, has at least the merit of articulating in abstract form the large-scale American relations, and, what is more, of doing so in antithesis to the old world, the only real background in Bastiat would be the small scale of the French relations, which everywhere poke their long ears through his harmonies. Still, this meritorious contribution is superfluous, because the relations of so old a country are sufficiently known and least of all require to become known by so negative a detour. Carey is rich, therefore, in, so to speak, bonafide research in economic science, such as about credit, rent, etc. Bastiat is preoccupied merely with pacifying paraphrases of researches ending in contrasts; hypocrisy of contentment. Carey s generality is Yankee universality. France and China are equally close to him. Always the man who lives on the Pacific and the Atlantic. Bastiat s generality is to ignore all countries. As a genuine Yankee, Carey absorbs from all directions the massive material furnished him by the old world, not so as to recognize the inherent soul of this material, and thus to concede to it the right to its peculiar life, but rather so as to work it up for his purposes, as indifferent raw material, as inanimate documentation for his theses, abstracted from his Yankee standpoint. Hence his strayings and wanderings through all countries, massive and uncritical use of statistics, a catalogue-like erudition. Bastiat, by contrast, presents fantasy history, his abstractions sometimes in the form of arguments, another time in the form of supposed events, which however have never and nowhere happened, just as a theologian treats sin sometimes as the law of human existence, then at other times as the story of the fall from grace. Hence both are equally unhistorical and anti-historical. But the unhistoric moment in Carey is the contemporary historic principle of North America, while the unhistoric element in Bastiat is a mere reminiscence of the French eighteenth-century manner of generalizing. Hence Carey is formless and diffuse, Bastiat affected and formally-logical. The most he achieves is commonplaces, expressed paradoxically, ground and polished into facets. With Carey, a couple of general theses, advanced in schoolmasterly form. Following them, a shapeless material, compendium, as documentation the substance of his theses in no way digested. With Bastiat, the only material abstracting from a few local examples, or whimsically refashioned English trivia consists in the general theses of the economists. Carey s chief antithesis, Ricardo, in short, the modern English economists; Bastiat s, the French socialists. As to 1. Suppose everything Bastiat says about the fixity of wages to be correct. Then we would still not know the proper character of wages, its characteristic specificity, simply because wages are subsumed under the fixed revenues. One of its relations which it has in common with other sources of income would be emphasized. Nothing more. This would already be something, admittedly, for the advocate who wishes to plead the advantages of wage labour. It would still be nothing for the economist who wishes to understand the peculiarity of this relation in its entire scope. A one-sided characterization of a relation, of an economic form, so as to make it the object of panegyrics in contrast to the opposite form; this cheap practice of lawyers and apologists is what distinguishes the logician, Bastiat. Thus, in place of wages, put: fixed income. Is a fixed income not a good thing? Does not everyone love to count on a sure thing? Especially every petty-bourgeois, narrow-minded Frenchman? the ever-needy man? Human bondage has been defended in the same way, perhaps on better grounds. The opposite could also be asserted, and has been asserted. Equate wages to non-fixedness, i.e. progression past a certain point. Who does not love to get ahead, instead of standing still? Can a relation be bad which makes possible an infinite bourgeois progress? Naturally, Bastiat himself in another passage asserts wages as non-fixedness. How else, apart from non-fixedness, would it be possible for the worker to stop working, to become a capitalist, as Bastiat wishes? Thus wage labour is good because it is fixedness; it is good because it is non-fixedness; it is good because it is neither one nor the other, but both at the same time. What relation is not good, if it is reduced to a one-sided characterization and the latter is regarded as position, not as negation? All opportunist chattering, all apologetics, all philistine sophistry rests on this sort of abstraction. After this general preface, we come to Bastiat s actual construction. Only, be it noted in passing that his rural sharecropper, this type who combines in himself the misfortune of the wage labourer with the bad luck of the small capitalist, might indeed consider himself fortunate if he were put on fixed wages. Proudhon s descriptive and philosophical history hardly holds a candle to that of his opponent Bastiat. The original form of association, wherein all the associates share all the risks of chance, is followed, as a higher stage of association entered into voluntarily by both sides, by a form in which the worker s remuneration is fixed. We will not call attention here to the genius of a procedure which begins by presupposing a capitalist on one side and a worker on the other, so as then, afterwards, to let the relation of capital and wage labour arise between them by their mutual agreement. The form of association in which the worker is exposed to all the chance risks of the business in which all producers are equally exposed to these risks and which immediately precedes the form of wages, where the remuneration of labour gains fixity, becomes stable, as thesis precedes antithesis is, as Bastiat tells us, the state in which fishing, hunting and herding form the dominant forms of production and society. First the wandering fisherman, hunter, herdsman and then the wage labourer. Where and when has this historic transition from the semi-savage state into the modern taken place? If at all, then only in the burlesque. In real history, wage labour arises out of the dissolution of slavery and serfdom or of the decay of communal property, as with oriental and Slavonic peoples and, in its adequate, epoch-making form, the form which takes possession of the entire social being of labour, out of the decline and fall of the guild economy, of the system of Estates, of labour and income in kind, of industry carried on as rural subsidiary occupation, of small-scale feudal agriculture etc. In all these real historic transitions, wage labour appears as the dissolution, the annihilation of relations in which labour was fixed on all sides, in its income, its content, its location, its scope etc. Hence as negation of the stability of labour and of its remuneration. The direct transition from the African s fetish to Voltaire s supreme being, or from the hunting gear of a North American savage to the capital of the Bank of England, is not so absurdly contrary to history as is the transition from Bastiat s fisherman to the wage labourer. (Furthermore, in all these developments there is no sign of voluntary changes arising from mutual agreement.) This construction in which Bastiat dishonestly conjures up his flat abstraction in the form of a historic event is quite of the same rank as the synthesis in which the English friendly societies and the savings banks appear as the last word of wage labour and as the suspension of all social antinomies. Thus the historic character of wage labour is non-fixity: the opposite of Bastiat s construction. But how did he come at all to construe fixity as the all-compensating aspect of wage labour? What led him to the wish to present wage labour in this form historically in other forms of society and of association, as a higher form of the remuneration of labour? All economists, when they come to discuss the prevailing relation of capital and wage labour, of profit and wages, and when they demonstrate to the worker that he has no legitimate claim to share in the risks of gain, when they wish to pacify him generally about his subordinate role vis- -vis the capitalist, lay stress on pointing out to him that, in contrast to the capitalist, he possesses a certain fixity of income more or less independent of the great adventures of capital. Just as Don Quixote consoles Sancho Panza with the thought that, although of course he takes all the beatings, at least he is not required to be brave. Thus an attribute which the economists attach to wage labour in antithesis to profit is transformed by Bastiat into an attribute of wage labour in antithesis to earlier forms of labour, and as progress relative to the remuneration of labour in these earlier relationships. A commonplace which takes up the standpoint of the prevailing relation, which consoles one of its sides towards the other, is taken out of this relation by Mr Bastiat and turned into the historic foundation of this relation s origin. In the relation of wages to profit, wage labour to capital, say the economists, wages have the advantage of fixity. Mr Bastiat says this fixity, i.e. one of the aspects of the relation of wages to profit, is the historical foundation on which wage labour arose (or, is an attribute of wages in antithesis not to profit, but rather to the earlier forms of the remuneration of labour), hence on which profit, hence the whole relation arose likewise. Thus a truism about one facet of the relation of wages and profit is surreptitiously transformed for him into the historic basis of this whole relation. This happens because he is constantly preoccupied by reflections upon socialism, which latter is then dreamed to be everywhere the first form of association. This an example of the importance assumed in Bastiat s hands by the apologetic commonplaces which accompany the course of development in the economists writings. To return to the economists. Of what does this fixity of wages consist? Are wages immutably fixed? This would altogether contradict the law of demand and supply, the basis of the determination of wages. No economist denies the fluctuations, the rise and fall of wages. Or are wages independent of crises? Or of machines which make wage labour redundant? Or of divisions of labour, which displace it? To assert any of this would be heterodox, and it is not asserted. What is meant is that in a certain average, wages realize a fair average level, i.e. the minimum wage for the whole class, a concept so hateful to Bastiat, and that a certain average continuity of labour takes place, e.g. that wages may continue on even in cases where profit falls or momentarily disappears entirely. Now, what does this mean other than that, if wage labour is presupposed as the dominant form of labour, as the foundation of production, then the working class exists from wages, and that labour individually possesses, on the average, the fixity of working for wages? In other words, a tautology. Where capital and wage labour is the dominant relation of production, there exists an average continuity of wage labour, and, to that extent, a fixity of wages for the worker. Where wage labour exists, it exists. And this is regarded by Bastiat as its all-compensating attribute. Furthermore, that in the state of society where capital is developed, social production as a whole is more regular, continuous, all-sided hence, also, the income of the elements employed in it more fixed than where capital, i.e. production, is not yet developed to this stage, is yet another tautology which is given with the concept of capital itself and of production resting on it. In other words: that the general presence of wage labour presupposes a higher development of the productive forces than in the stages preceding wage labour, who denies this? And what would lead the socialists to the idea of raising higher demands if they did not presuppose this higher development of the forces of social production, brought about by wage labour? The latter is rather the presupposition of their demands. Note. The first form in which wages make their general appearance military pay [Sold], which arises with the decline and fall of national armies and of citizens militias. First, the citizens themselves are paid as soldiers. Soon after that, their place is taken by mercenaries who have ceased to be citizens. (2) (It is impossible to pursue this nonsense any further. We, therefore, drop Mr Bastiat.)

Grundrisse 17

https://www.marxists.org/archive/marx/works/1857/grundrisse/ch17.htm

In both these forms, the relationship of the worker to the objective conditions of his labor is one of ownership: this is the natural unity of labor with its material prerequisites. Hence, the worker has an objective existence independent of his labor. The individual is related to himself as a proprietor, as master of the conditions of his reality. The same relation holds between one individual and the rest. Where this prerequisite derives from the community, the others are his co-owners, who are so many incarnations of the common property. Where it derives from the individual families which jointly constitute the community, they are independent owners co-existing with him, independent private proprietors. The common property which formerly absorbed everything and embraced them all, then subsists as a special ager publicus [common land] separate from the numerous private owners. In both cases, individuals behave not as laborers but as owners and as members of a community who also labor. The purpose of this labor is not the creation of value, although they may perform surplus labor in order to exchange it for foreign labor i.e., for surplus products. Its purpose is the maintenance of the owner and his family as well as of the communal body as a whole. The establishment of the individual as a worker, stripped of all qualities except this one, is itself a product of history. The first prerequisite of this earliest form of landed property appears as a human community, such as emerges from spontaneous evolution [naturw chsig]: the family, the family expanded into a tribe, or the tribe created by the inter-marriage of families or combination of tribes. We may take it for granted that pastoralism, or more generally a migratory life, is the first form of maintaining existence, the tribe not settling in a fixed place but using up what it finds locally and then passing on. Men are not settled by nature (unless perhaps in such fertile environments that they could subsist on a single tree like the monkeys; otherwise they would roam, like the wild animals). Hence the tribal community, the natural common body, appears not as the consequence, but as the precondition of the joint (temporary) appropriation and use of the soil. Once men finally settle down, the way in which to a smaller degree this original community is modified, will depend on various external, climatic, geographical, physical, etc., conditions as well as on their special natural make-up their tribal character. The spontaneously evolved tribal community, or, if you will, the herd the common ties of blood, language, custom, etc. is the first precondition of the appropriation of the objective of life, and of the activity which reproduces and gives material expression to, or objectifies [vergegenst ndlichenden] it (activity as herdsmen, hunters, agriculturalists, etc.). The earth is the great laboratory, the arsenal which provides both the means and the materials of labor, and also the location, the basis of the community. Men s relation to it is naive; they regard themselves as its communal proprietors, and as those of the community which produces and reproduces itself by living labor. Only in so far as the individual is a member in the literal and figurative sense of such a community, does he regard himself as an owner or possessor. In reality, appropriation by means of the process of labor takes place under these preconditions, which are not the product of labor but appears as its natural or divine preconditions. Where the fundamental relationship is the same, this form can realize itself in a variety of ways. For instance, as is the case in most Asiatic fundamental forms, it is quite compatible with the fact that the all-embracing unity which stands above all these small common bodies may appear as the higher or sole proprietor, the real communities only as hereditary possessors. Since the unity is the real owner, and the real precondition of common ownership, it is perfectly possible for it to appear as something separate and superior to the numerous real, particular communities. The individual is then in fact propertyless, or property i.e., the relationship of the individual to the natural conditions of labor and reproduction, the inorganic nature which he finds and makes his own, the objective body of his subjectivity appears to be mediated by means of a grant [Ablassen] from the total unity to the individual through the intermediary of the particular community. The despot here appears as the father of all the numerous lesser communities, thus realizing the common unity of all. It therefore follows that the surplus product (which, incidentally, is legally determined in terms of [infolge] the real appropriation through labor) belongs to this highest unity. Oriental despotism therefore appears to lead to a legal absence of property, in most cases created through a combination of manufacture and agriculture within the small community which thus becomes entirely self-sustaining and contains within itself all conditions of production and surplus production. Part of its surplus labor belongs to the higher community, which ultimately appears as a person. This surplus labor is rendered both as tribute and as common labor for the glory of the unity, in part that of the despot, in part that of the imagined tribal entity of the god. In so far as this type of common property is actually realized in labor, it can appear in two ways. The small communities may vegetate independently side by side, and within each the individual labors independently with his family on the land allotted to him. (There will also be a certain amount of labor for the common store for insurance as it were on the one hand; and on the other for defraying the costs of the community as such, i.e., for war, religious worship, etc. The dominion of lords, in its most primitive sense, arises only at this point, e.g., in the Slavonic and Rumanian communities. Here lies the transition to serfdom, etc.) Secondly, the unity can involve a common organization of labor itself, which in turn can constitute a veritable system, as in Mexico, and especially Peru, among the ancient Celts, and some tribes of India. Furthermore, the communality within the tribal body may tend to appear either as a representation of its unity through the head of the tribal kinship group, or as a relationship between the heads of families. Hence, either a more despotic or a more democratic form of the community. The communal conditions for real appropriation through labor, such as irrigation systems (very important among the Asian peoples), means of communication, etc., will then appear as the work of the higher unity the despotic government which is poised above the lesser communities. Cities in the proper sense arise by the side of these villages only where the location is particularly favorable to external trade, or where the head of the state and his satraps exchange their revenue (the surplus product) against labor, which they expend as labor-funds. The second form (of property) has, like the first, given rise to substantial variations, local, historical, etc. It is the product of a more dynamic [bewegten] historical life, of the fate and modification of the original tribes. The community is here also the first precondition, but unlike our first case, it is not here the substance of which the individuals are mere accidents [Akzidenzen] or of which they form mere spontaneously natural parts. The basis here is not the land, but the city as already created seat (centre) of the rural population (landowners). The cultivated area appears as the territory of the city; not, as in the other case, the village as a mere appendage to the land. However great the obstacles the land may put in the way of those who till it and really appropriate it, it is not difficult to establish a relationship with it as the inorganic nature of the living individual, as his workshop, his means of labor, the object of his labor and the means of subsistence of the subject. The difficulties encountered by the organized community can arise only from other communities which have either already occupied the land or disturb the community in its occupation of it. War is therefore the great all-embracing task, the great communal labor, and it is required either for the occupation of the objective conditions for living existence or for the protection and perpetuation of such occupation. The community, consisting of kinship groups, is therefore in the first instance organized on military lines, as a warlike, military force, and this is one of the conditions of its existence as a proprietor. Concentration of settlement in the city is the foundation of this warlike organization. The nature of tribal structure leads to the differentiation of kinship groups into higher and lower, and this social differentiation is developed further by the mixing of conquering and conquered tribes, etc. Common land as state property, ager publicus is here separate from private property. The property of the individual, unlike our first case, is here not direct communal property, where the individual is not an owner in separation from the community, but rather its occupier. Circumstances arise in which individual property does not require communal labor for its valorization (e.g., as it does in the irrigation systems of the Orient); the purely primitive character of the tribe may be broken by the movement of history or migration; the tribe may remove from its original place of settlement and occupy foreign soil, thus entering substantially new conditions of labor and developing the energies of the individual further. The more such factors operate and the more the communal character of the tribe therefore appears, and must appear, rather as a negative unity as against the outside world the more do conditions arise which allow the individual to become a private proprietor of land of a particular plot whose special cultivation belongs to him and his family. The community as a state is, on the one hand, the relationship of these free and equal private proprietors to each other, their combination against the outside world and at the same time their safeguard. The community is based on the fact that its members consists of working owners of land, small peasant cultivators; but in the same measure the independence of the latter consists in their mutual relation as members of the community, in the safeguarding of the ager publicus for common needs and common glory, etc. To be a member of the community remains the precondition for the appropriation of land, but in his capacity as member of the community the individual is a private proprietor. His relation to his private property is both a relation to the land and to his existence as a member of the community, and his maintenance as a member of the community, and his maintenance of the community, and vice versa, etc. Since the community, though it is here not merely a de facto product of history, but one of which men are conscious as such, has therefore had an origin, we have here the precondition for property in land i.e., for the relation of the working subject to the natural conditions of his labor as belonging to him. But this belonging is mediated through his existence as a member of the state, through the existence of the state hence through a pre-condition which is regarded as divine, etc. [Translator s Note: Marx s habit of occasionally omitting auxiliary verbs makes it impossible always to interpret his meaning unambiguously. An alternative meaning would be: Since the community, though it is here not merely a de facto product of history, but one of which men are conscious as such, has therefore had an origin (and is thus) here the precondition for property in land i.e., for the relation of the working subject to the natural conditions of his labor as belonging to him. But this belonging is, however, mediated by his existence as a member of the state, through the existence of the state hence through a pre-condition which is regarded as divine, etc. ] There is concentration in the city, with the land as its territory; small-scale agriculture producing for immediate consumption; manufacture as the domestic subsidiary, labor of wives and daughters (spinning and weaving) or achieving independent existence in a few craft occupations (fabric, etc.). The precondition for the continued existence of the community is the maintenance of equality among its free self-sustaining peasants, and their individual labor as the condition of the continued existence of their property. Their relation to the natural conditions of labor are those of proprietors; but personal labor must continuously establish these conditions as real conditions and objective elements of the personality of the individual, of his personal labor. On the other hand, the tendency of this small warlike community drives it beyond these limits, etc. (Rome, Greece, Jews, etc.) As Niebuhr says: The individual is placed in such condition of gaining his life as to make not the acquiring of wealth his object, but self-sustenance, its own reproduction as a member of the community; the reproduction of himself as a proprietor of the parcel of ground and, in that quality, as a member of the commune. [Translator Note: This sentence in English in original.] The continuation of the commune is the reproduction of all its members as self-sustaining peasants, whose surplus time belongs precisely to the commune, the labor of war, etc. Ownership of one s labor is mediated through the ownership of the conditions of labor the plot of land, which is itself guaranteed by the existence of the community, which in turn is safeguarded by the surplus labor of its members in the form of military service, etc. The member of the community reproduces himself not through co-operation in wealth-producing labor, but in co-operation in labor for the (real or imaginary) communal interests aimed at sustaining the union against external and internal stress [nach aussen und innen]. Property formally belongs to the Roman citizen, the private owner of land is such only by virtue of being Roman, but any Roman is also a private landowner. Another form of the property of working individuals, self-sustaining members of the community, in the natural conditions of their labor, is the Germanic. Here, the member of the community as such is not, as in the specifically oriental form, co-owner of the communal property. (Where property exists only as communal property, the individual member as such is only the possessor of a particular part of it, hereditary or not, for any fraction of property belongs to no member for himself, but only as the direct part of the community, consequently as someone in direct unity with the community and not as distinct from it. The individual is therefore only a possessor. What exists is only communal property and private possession. Historic and local, etc., circumstances may modify the character of this possession in its relation to the communal property in very different ways, depending on whether labor is performed in isolation by the private possessor or is in turn determined by the community, or by the unity standing above the particular community.) Neither is the land [in the Germanic community] occupied by the community as in the Roman, Greek (in brief, the ancient classical) form as Roman land. Part of it [that is, in classical antiquity] remains with the community as such, as distinct from the members, ager publicus in its various forms; the remainder is distributed, each plot of land being Roman by virtue of the fact that it is the private property, the domain, of a Roman, the share of the laboratory which is his; conversely, he is Roman only in so far as he possesses this sovereign right over part of the Roman soil. [Translator Note: The ensuing passages are noted down by Marx from Niebuhr s Roman History, I, 418, 436, 614, 615, 317 19, 328 31, 333, 335. ] In antiquity urban crafts and trade were held in low, but agriculture in high, esteem; in the Middle Ages their status was reversed. The right of use of common land by possession originally belonged to the Patricians, who later granted it to their clients; the assignment of property out of the ager publicus belonged exclusively to the Plebeians; all assignments in favor of Plebeians and compensation for a share in the common land. Landed property in the strict sense, if we except the area surrounding the city wall, was originally in the hands only of Plebeians (rural communities subsequently absorbed). Essence of the Roman Plebs as a totality of agriculturalists, as described in their quiritarian (citizen) property. The ancients unanimously commended farming as the activity proper to free men, the school for soldiers. The ancient stock [Stamm, which also means tribe ] of the nation is preserved in it; it changes in the towns, where foreign merchants and artisans settle, as the natives migrate there, attracted by the hope of gain. Wherever there is slavery, the freedman seeks his subsistence in such activities, often accumulating wealth; hence in antiquity such occupations were generally in their hands and therefore unsuitable for citizens; hence the view that the admission of craftsmen to full citizenship was a hazardous procedure (the Greeks, as a rule, excluded them from it). No Roman was permitted to lead the life of a petty trader or craftsman. The ancients had no conception of gild pride and dignity, as in medieval urban history; and even there the military spirit declined as the gilds vanquished the (aristocratic) lineages, and was finally extinguished; as, consequently also the respect in which the city was held outside and its freedom. The tribes [St mme] of the ancient states were constituted in one of two ways, either by kinship or by locality. Kinship tribes historically precede locality tribes, and are almost everywhere displaced by them. Their most extreme and rigid form is the institution of castes, separated from one another, without the right of inter-marriage, with quite different status; each with its exclusive, unchangeable occupation. The locality tribes originally corresponded to a division of the area into districts [Gaue] and villages; so that in Attica under Kleisthenes, any man settled in a village was registered as a Demotes [villager] of that village, and as a member of the Phyle [tribe] of the area to which that village belonged. However, as a rule his descendants, regardless of place of domicile, remained in the same Phyle and the same Deme, thereby giving to this division an appearance of ancestral descent. The Roman kin-groups [gentes] did not consist of blood-relatives; Cicero notes, when mentioning the family name, descent from free men. The members of the Roman gens had common shrines [sacra], but this had already disappeared in Cicero s day. The joint inheritance from fellow-kinsmen who died intestate or without close relatives, was retained longest of all. In most ancient times, members of the gens had the obligation to assist fellow-kinsmen in need of assistance to bear unusual burdens. (This occurs universally among the Germans, and persisted longest among the Dithmarschen.) The gentes of a sort of gild. A more general organization than that of kin groups did not exist in the ancient world. Thus among the Gaels, the aristocratic Campbells and their vassals constitute a clan. Since the Patrician represents the community to a higher degree, he is the possessor of the ager publicus, and uses it through the intermediary of his clients, etc. (also gradually appropriates it). The Germanic community is not concentrated in the city; a concentration the city the centre of rural life, the domicile of the land workers, as also the centre of warfare which gives the community as such an external existence, distinct from that of its individual members. Ancient classical history is the history of cities, but cities based on landownership and agriculture; Asian history is a kind of undifferentiated unity of town and country (the large city, properly speaking, must be regarded merely as a princely camp, superimposed on the real economic structure); the Middle Ages (Germanic period) starts with the countryside as the locus of history, whose further development then proceeds through the opposition of town and country; modern (history) is the urbanization of the countryside, not, as among the ancients, the ruralisation of the city. Here begins a new notebook of Marx s manuscript, entitled: True, the ager publicus, the common land or peoples land, occurs among the Germans also, as distinct from the property of individuals. It consists of hunting grounds, common pastures or woodlands, etc., as that part of the land which cannot be partitioned if it is to serve as a means of production in this specific form. However, unlike the Roman case, the ager publicus does not appear as the particular economic being of the state, by the side of the private owners who are, properly speaking, private proprietors as such insofar as they have been excluded from or deprived of the use of the ager publicus, like the Plebeians. The ager publicus appears rather as a mere supplement to individual property among the Germans, and figures as property only insofar as it is defended against hostile tribes as the common property of one tribe. The property of the individual does not appear mediated through the community, but the existence of the community and of communal property as mediated through i.e., as a mutual relation of the independent subjects. At bottom, every individual household contains an entire economy, forming as it does an independent centre of production (manufacture merely the domestic subsidiary labor of the women, etc.). In classical antiquity, the city with its attached territory formed the economic whole. In the Germanic world, the individual home, which itself appears merely as a point in the land belonging to it; there is no concentration of a multiplicity of proprietors, but the family as an independent unit. In the Asiatic form (or at least predominantly so), there is no property, but only individual possession; the community is properly speaking the real proprietor hence property only as communal property in land. In antiquity (Romans as the classic example, the thing in its purest and most clearly marked form), there is a contradictory form of state landed property and private landed property, so that the latter is mediated through the former, or the former exists only in this double form. The private landed proprietor is therefore simultaneously an urban citizen. Economically, citizenship may be expressed more simply as a form in which the agriculturalist lives in a city. In the Germanic form, the agriculturalist is not a citizen i.e., not an inhabitant of cities but its foundation is the isolated, independent family settlement, guaranteed by means of its association with other such settlements by men of the same tribe, and their occasional assembly for purposes of war, religion, the settlement of legal disputes, etc., which establishes their mutual surety. Individual landed property does not here appear as a contradictory form of communal landed property, nor as mediated by the community, but the other way round. The community exists only in the mutual relation of the individual landowners as such. Communal property as such appears only as a communal accessory to the individual kin settlements and land appropriations. The community is neither the substance, of which the individual appears merely as the accident, nor is it the general, which exists and has being as such in men s minds, and in the reality of the city and its urban requirements, distinct from the separate economic being of its members. It is rather on the one hand, the common element in language, blood, etc., which is the premise of the individual proprietor; but on the other hand, it has real being only in its actual assembly for communal purposes; and, insofar as it has a separate economic existence, in the communally-used hunting-grounds, pastures, etc., it is used thus by every individual proprietor as such, and not in his capacity as the representative of the state (as in Rome). It is genuinely the common property of the individual owners, and not of the union of owners, possessing an existence of its own in the city, distinct from that of the individual members. The crucial point here is this: in all these forms, where landed property and agriculture form the basis of the economic order, and consequently the economic object is the production of use values i.e., the reproduction of the individual in certain definite relationships to his community, of which it forms the basis we find the following elements: An isolated individual could no more possess property in land than he could speak. At most, he could live off it as a source of supply, like the animals. The relation to the soil as property always arises through the peaceful or violent occupation of the land by the tribe of the community in some more or less primitive or already historically developed form. The individual here can never appear in the total isolation of the mere free laborer. If the objective conditions of his labor are presumed to belong to him, he himself is subjectively presumed to belong to a community which mediates his relationship to the objective conditions of labor. Conversely, the real existence of the community is determined by the specific form of its ownership of the objective conditions of labor. The property mediated by its existence in a community may appear as communal property, which gives the individual only possession and no private property in the soil; or else it may appear in the dual form of state and private property, which co-exist side by side, but in such a way as to make the former the precondition of the latter, so that only the citizen is and must be a private proprietor, while on the other hand his property qua citizen also has a separate existence. Lastly, communal property may appear as a supplement to private property, which in this case forms the basis; in this case, the community has no existence except in the assembly of its members and in their association for common purposes. These different forms of relationship of communal tribal members to the tribal land to the earth upon which it has settled depend partly on the natural character [Naturanlagen] of the tribe, partly on the economic conditions in which the tribe really exercises its ownership of the land i.e., appropriates its fruits by means of labor. And this in turn will depend on the climate, the physical properties of the soil, the physically conditioned mode of its utilization, the relationships to hostile or neighboring tribes, and such modification as are introduced by migrations, historical events, etc. If the community as such is to continue in the old way, the reproduction of its members under the objective conditions already assumed as given, is necessary. Production itself, the advance of population (which also falls under the head of production), in time necessarily eliminates these conditions, destroying instead of reproducing them, etc., and as this occurs the community decays and dies, together with the property relations on which it was based. The Asiatic form necessarily survives the longest and most stubbornly. This is due to the fundamental principle on which it is based that is, that the individual does not become independent of the community; that the circle of production is self-sustaining, unity of agriculture and craft manufacture, etc. If the individual changes his relation to the community, he modifies and undermines both the community and its economic premise; conversely, the modification of this economic premise produced by its own dialectic, pauperization, etc. Note especially the influence of warfare and conquest. While, e.g., in Rome this is an essential part of the economic condition of the community itself, it breaks the real bond on which the community rests. In all these forms, the basis of evolution is the reproduction of relations between individuals and community assumed as given they may be more or less primitive, more or less the result of history, but fixed into tradition and a definite, predetermined objective existence, both as regards the relation to the conditions of labor and the relation between one man and his co-workers, fellow-tribesmen, etc. Such evolution is therefore from the outset limited, but once the limits are transcended, decay and disintegration ensue. Evolution of slavery, concentration of landed property, exchange, a monetary economy, conquest, etc., as among the Romans. All these appeared nevertheless up to a point to be compatible with the base, and merely innocent extensions of it, or else mere abuses arising from it. Considerable developments are thus possible within a given sphere. Individuals may appear to be great. But free and full development of individual or society is inconceivable here, for such evolution stands in contradiction to the original relationship. Among the ancients, we discover no single enquiry as to which form of landed property, etc., is the most productive, which creates maximum wealth. Wealth does not appear as the aim of production, although Cato may well investigate the most profitable cultivation of fields, or Brutus may even lend money at the most favorable rate of interest. The enquiry is always about what kind of property creates the best citizens. Wealth as an end in itself appears only among a few trading peoples monopolists of the carrying trade who live in the pores of the ancient world like the Jews in medieval society. Wealth is, on the one hand, a thing, realized in things, in material products as against man as a subject. On the other hand, in its capacity as value, it is the mere right to command other people s labor, not for the purpose of dominion, but of private enjoyment, etc. In all its forms, it appears in the form of objects, whether of things or of relationships by means of things, which lie outside of, and as it were accidentally beside, the individual. Thus the ancient conception, in which man always appears (in however narrowly national, religious, or political a definition) as the aim of production, seems very much more exalted than the modern world, in which production is the aim of man and wealth the aim of production. In fact, however, when the narrow bourgeois form has been peeled away, what is wealth, if not the universality of needs, capacities, enjoyments, productive powers etc., of individuals, produced in universal exchange? What, if not the full development of human control over the forces of nature those of his own nature as well as those of so-called nature"? What, if not the absolute elaboration of his creative dispositions, without any preconditions other than antecedent historical evolution which make the totality of this evolution i.e., the evolution of all human powers as such, unmeasured by any previously established yardstick an end in itself? What is this, if not a situation where man does not reproduce in any determined form, but produces his totality? Where he does not seek to remain something formed by the past, but is in the absolute movement of becoming? In bourgeois political economy and in the epoch of production to which it corresponds this complete elaboration of what lies within man, appears as the total alienation, and the destruction of all fixed, one-sided purposes as the sacrifice of the end in itself to a wholly external compulsion. Hence in one way the childlike world of the ancients appears to be superior; and this is so, insofar as we seek for closed shape, form and established limitation. The ancients provide a narrow satisfaction, whereas the modern world leaves us unsatisfied, or, where it appears to be satisfied, with itself, is vulgar and mean [gemein]. What Mr. Proudhon calls the extra-economic origin of property by which he means landed property is the pre-bourgeois relationship of the individual to the objective conditions of labor, and in the first instance to the natural objective conditions of labor. For, just as the working subject is a natural individual, a natural being, so the first objective condition of his labor appears as nature, earth, as an inorganic body. He himself is not only the organic body, but also inorganic nature as a subject. This condition is not something he has produced, but something he finds to hand; something existing in nature and which he presupposed. Before proceeding in our analysis, a further point: poor Proudhon not only could, but ought equally to be obliged, to accuse capital and wage-labor as forms of property of extra-economic origin. For the fact that the worker finds the objective condition of his labor as something separate from him, as capital, and the fact that the capitalist finds the worker propertyless, as abstract laborers the exchange as it takes place between value and living labor assumes a historic process, however much capital and wage-labor themselves reproduce this relationship and elaborate it in objective scope, as well as in depth. And this historic process, as we have seen, is the evolutionary history of both capital and wage-labor. In other words, the extra-economic origin of property merely means the historic origin of the bourgeois economy, of the forms of production to which the categories of political economy give theoretical or ideal expression. But to claim that pre-bourgeois history and each phase of it, has its own economy [Okonomie not clear if Marx means economies or economy ] and an economic base of its movement, is at bottom merely to state the tautology that human life has always rested on some kind of production social production whose relations are precisely what we call economic relations. The original conditions of production cannot initially be themselves produced they are not the results of production. (Instead of original conditions of production we might also say: for if this reproduction appears on one hand as the appropriation of the objects by the subjects, it equally appears on the other as the molding, the subjection, of the objects by and to a subjective purpose; the transformation of the objects into results and repositories of subjective activity.) What requires explanation is not the unity of living and active human beings with the natural, in organic conditions of their metabolism with nature, and therefore their appropriation of nature; nor is this the result of a historic process. What we must explain is the separation of these inorganic conditions of human existence from this active existence, a separation which is only fully completed in the relationship between wage-labor and capital. In the relationship of slavery and serfdom there is no such separation; what happens is that one part of society is treated by another as the mere inorganic and natural condition of its own reproduction. The slave stands in no sort of relation to the objective conditions of his labor. It is rather labor itself, both in the form of the slave as of the serf, which is placed among the other living things [Naturwesen] as inorganic condition of production, alongside the cattle or as an appendage of the soil. In other words: the original conditions of production appear as natural prerequisites, natural conditions of existence of the producer, just as his living body, however reproduced and developed by him, is not originally established by himself, but appears as his prerequisite; his own (physical) being is a natural prerequisite, not established by himself. These natural conditions of existence, to which he is related as to an inorganic body, have a dual character: they are (1) subjective and (2) objective. The producer occurs as part of a family, tribe, a grouping of his people, etc. which acquires historically differing shapes as the result of mixture and conflict with others. It is as such a communal part that he has his relation to a determined (piece of) nature (let us still call it earth, land, soil), as his own inorganic being, the conditions of his production and reproduction. As the natural part of the community he participates in the communal property and takes a separate share in his own possession; just so, as a Roman citizen by birth, he has (at least) ideally a claim to the ager publicus and a real claim to so and so many juggera [units] of land, etc. His property i.e., his relation to the natural prerequisites of his own production as his own is mediated by his natural membership of a community. (The abstraction of a community whose members have nothing in common but language, etc., and barely even that, is plainly the product of much later historical circumstances.) It is, for instance, evident that the individual is related to his language as his own only as the natural member of a human community. Language as the product of an individual is an absurdity. But so also is property. Language itself is just as much the product of a community, as in another respect it is the existence of the community: it is, as it were, the communal being speaking for itself. Communal production and communal ownership, as found, e.g., in Peru, is evidently a secondary form introduced and transmitted by conquering tribes, who amongst themselves [bei sich selbst] had been familiar with common ownership and communal production in the older and simpler forms, such as occurs in India and among the Slavs. Similarly, the form found, e.g., among the Celts in Wales appears to have been introduced there by more advanced conquerors, and thus to be secondary. The completeness and systematic elaboration of these systems under [the direction of] a supreme authority demonstrate their later origins. Just so the feudalism introduced into England was formally more complete than the feudalism which had naturally grown up in France. Among nomadic pastoral tribes and all pastoral people are originally migratory the earth, like all other conditions of nature, appears in its elementary boundlessness, e.g., in the Asian steppes and the Asian high plateaus. It is grazed, etc., consumed by the herds, which provide the nomadic peoples with their subsistence. They regard it as their property, though never fixing that property. This is the case with the hunting grounds of the wild Indian tribes of America: the tribe considers a certain region as its hunting territory and maintains it by force against other tribes, or seeks to expel other tribes from the territory they claim. Among the nomadic pastoral tribes the community is in fact always united, a travelling party, caravan, horde, and the forms of higher and lower rank develop out of the conditions of this mode of life. What is appropriated and reproduced is here only the herd and not the soil, which is always used in temporary commonality wherever the tribe breaks its wanderings. Let us pass on to the consideration of settled peoples. The only barrier which the community can encounter in its relation to the natural conditions of production as its own to the land is some other community, which has already laid claim to them as its inorganic body. War is, therefore, one of the earliest tasks of every primitive community of this kind, both for the defence of property and for its acquisition. (It will be sufficient to speak of original property in land, for among pastoral peoples property in such natural products of the earth as, e.g., sheep, is at the same time property in the pastures they pass through. In general, property in land includes property in its organic products.) Where man himself is captured as an organic accessory of the land and together with it, he is captured as one of the conditions of production, and this is the origin of slavery and serfdom, which soon debase and modify the original forms of all communities, and themselves become their foundation. As a result, the simple structure is determined negatively. Thus originally property means no more than man s attitude to his natural conditions of production as belonging to him, as the prerequisites of his own existence; his attitude to them as natural prerequisites of himself, which constitutes, as it were, a prolongation of his body. In fact, he stands in no relation to his conditions of production, but has a double existence, subjectively as himself and objectively in these natural inorganic conditions of his being. The forms of these natural conditions of production have a double character: (1) his existence as part of a community, which in its original form is a tribal community, more or less modified; (2) his relation to the land as his own [als dem seinigen], in virtue of the community, communal landed property, at the same time individual possession for the individual, or in such a manner that the soil and its cultivation remain in common and only its products are divided. (However, dwellings etc., even if no more than the wagons of the Scythians, nevertheless appear to be always in the possession of individuals.) Membership of a naturally evolved society, a tribe, etc., is a natural condition of production for the living individual. Such membership is, e.g., already a condition of his language, etc. His own productive existence is only possible under this condition. His subjective existence as such is conditioned by it as much as it is conditioned by the relationship to the earth as to his laboratory. (True, property is originally mobile, for in the first instance man takes possession of the ready-made fruits of the earth, including animals and especially those capable of domestication. However, even this situation hunting, fishing, pastoralism, subsistence by collecting the fruit of the trees, etc. always assumes the appropriation of the earth, whether as a place of fixed settlement or a territory for roaming, a pasture for his animals, etc.) Property therefore means belonging to a tribe (community) (to have one s subjective/objective existence within it), and by means of the relationship of this community to the land, to the external primary condition of production for the earth is at the same time raw material, tool, and fruit as the preconditions belonging to his individuality, as its mode of existence. We reduce this property to the relationship to the conditions of production. Why not to those of consumption, since originally the act of producing by the individual is confined to the reproduction of his own body through the appropriation of ready-made objects prepared by nature for consumption? But even where these have merely to be found and discovered, effort, labor as in hunting, fishing, the care of flocks and the production (i.e., the development) of certain capacities by the subject, are soon required. Moreover, conditions in which man need merely reach for what is already available, without any tools (i.e., without products of labor already designed for production), etc., are very transitory, and can nowhere be regarded as normal; not even as normal in the most primitive state. In addition, the original conditions of production automatically include matter directly consumable without labor, such as fruit, animals, etc.; consequently, the fund of consumption itself appears as a part of the original fund of production. The fundamental condition of property based on tribalism (which is originally formed out of the community) is to be a member of the tribe. Consequently, a tribe conquered and subjugated by another becomes propertyless and part of the inorganic conditions of the conquering tribe s reproduction, which that community regards as its own. Slavery and serfdom are therefore simply further developments of property based on tribalism. They necessarily modify all its forms. This they are least able to do in the Asiatic form. In the self-sustaining unity of and agriculture on which this form is based, conquest is not so essential a condition as where landed property, agriculture, predominate exclusively. On the other hand, since the individual in this form never becomes an owner but only a possessor, he is at bottom himself the property, the slave of that which embodies the unity of the community. Here slavery neither puts an end to the conditions of labor, nor does it modify the essential relationship. It is, therefore, now evident that: Insofar as property is merely a conscious attitude to the conditions of production as to one s own an attitude established by the community for the individual, proclaimed and guaranteed as law; insofar as the existence of the producer therefore appears as an existence within the objective conditions belonging to him, it is realized only through production. Actual appropriation takes place not through the relationship to these conditions as expressed in thought, but through the active, real relationship to them; in the process of positing them as the conditions of man s subjective activity. But this also clearly means that these conditions change. What makes a region of the earth into a hunting ground, is being hunted over by tribes; what turns the soil into a prolongation of the body of the individual is agriculture. Once the city of Rome had been built and its surrounding land cultivated by its citizens, the conditions of the community were different from what they had been before. The object of all these communities is preservation i.e., the production of the individuals which constitute them as proprietors, i.e., in the same objective mode of existence, which also forms the relationship of the members to each other, and therefore forms the community itself. But this reproduction is at the same time necessarily new production and the destruction of the old form. For instance, where each individual is supposed to possess so many acres of land, the mere increase in population constitutes an obstacle. If this is to be overcome, colonization will develop and this necessitates wars of conquest. This leads to slavery, etc., also, e.g., the enlargement of the ager publicus, and hence to the rise of the Patricians, who represent the community, etc. Thus the reservation of the ancient community implies the destruction of the conditions upon which it rests, and turns into its opposite. Suppose, for instance, that productivity could be increased without increase in territory, by means of a development of the forces of production (which in agriculture, a most traditional occupation, are the slowest of all). This would imply new methods and combinations of labor, the high proportion of the day which would then have to be devoted to agriculture, etc., and once again the old economic conditions of the community would cease to operate. The act of reproduction itself changes not only the objective conditions e.g., transforming village into town, the wilderness into agricultural clearings, etc. but the producers change with it, by the emergence of new qualities, by transforming and developing themselves in production, forming new powers and new conceptions, new modes of intercourse, new needs, and new speech. The more traditional the mode of production itself, i.e., the more the real process of appropriation remains the same, the more unchanging will the ancient forms of property be and therefore also the community as a whole. (Note that the traditional mode persists for a long time in agriculture and even longer in the oriental combination of agriculture and manufacture.) Where the members of the community have already acquired separate existence as private proprietors from their collective existence as an urban community and owners of the urban territory, conditions already arise which allow the individual to lose his property i.e., the double relationship which makes him both a citizen with equal status, a member of the community, and a proprietor. In the central form this loss is hardly possible, except as a result of entirely external influences, for the individual member of the community never establishes so independent a relation to it as to enable him to lose his (objective, economic) tie with it. He is firmly rooted. This is also an aspect of the union of manufacture and agriculture, of town (in this instance the village) and country. Among the ancients, manufacture already appears as corruption (fit business for freedmen, clients, and foreigners), etc. Productive labor is freed from its pure subordination to agriculture, where it is the domestic labor of free persons, destined only for the purpose of farming, and war or religious observance and communal tasks such as the construction of houses, roads, or temples. This development, which necessarily arises from intercourse with foreigners, from slaves, the desire to exchange the surplus product, etc., dissolves the mode of production upon which the community rests, and with it the objectively individual man i.e., the individual determined as a Greek, a Roman, etc. Exchange has the same effect, and so has indebtedness, etc. We have an original unity between a specific form of community or tribal unit and the property in nature connected with it, or the relation to the objective conditions of production as naturally existing, as the objective being of the individual by means of the community. Now this unity, which in one sense appears as the particular form of property, has its living reality in a specific mode of production itself, and this mode appears equally as the relationship of the individuals to one another and as their specific daily behavior towards inorganic nature, their specific mode of labor (which is always family labor and often communal labor). The community itself appears as the first great force of production; special kinds of conditions of production (e.g., animal husbandry, agriculture) lead to the evolution of a special mode of production and special forces of production, both objective and subjective, the latter appearing as qualities of the individuals. In the last instance, the community and the property resting upon it can be reduced to a specific stage in the development of the forces of production of the laboring subjects to which correspond specific relations of these subjects with each other and with nature. Up to a certain point, reproduction. Thereafter, it turns into dissolution. Property and this applies to its Asiatic, Slavonic ancient classical and Germanic forms therefore originally signifies a relation of the working (producing) subject (or a subject reproducing himself) to the conditions of his production or reproduction as his own. Hence, according to the conditions of production, property will take different forms. The object of production itself is to reproduce the producer in and together with these objective conditions of his existence. This behavior as a proprietor which is not the result but the precondition of labor, i.e., of production assumes a specific existence of the individual as part of a tribal or communal entity (whose property he is himself up to a certain point). Slavery, serfdom, etc., where the laborer himself appears among the natural conditions of production for a third individual or community and where property therefore is no longer the relationship of the independently laboring individual to the objective conditions of labor is always secondary, never primary, although it is the necessary and logical result of property founded upon the community and upon labor in the community. (This character of slavery does not apply to the general slavery of the orient, which is so considered only from the European point of view.) It is of course easy to imagine a powerful, physically superior person, who first captures animals and them captures men in order to make them catch animals for him; in brief, one who uses man as a naturally occurring condition for his reproduction like any other living natural thing; his own labor being exhausted in the act of domination. But such a view is stupid, though it may be correct from the point of view of a given tribal or communal entity; for it takes the isolated man as its starting-point. But man is only individualized through the process of history. He originally appears as a generic being, a tribal being, a herd animal though by no means as a political animal in the political sense. Exchange itself is a major agent of this individualization. It makes the herd animal superfluous and dissolves it. Once the situation is such, that man as an isolated person has relation only to himself, the means of establishing himself as an isolated individual have become what gives him his general communal character [sein Sich-Allgemein-und-Gemeinmachen]. In such a community, the objective existence of the individual as a proprietor say a landed proprietor is presupposed, though he is a proprietor under certain conditions which chain him to the community, or rather constitute a link in his chain. In bourgeois society, e.g., the worker exists purely subjectively, without object; but the thing which confronts him has now become the true common entity which he seeks to devour and which devours him. All the forms in which the community imputes to the subjects a specific objective unity with the conditions of their production, or in which a specific subjective existence imputes the community itself as condition of production, necessarily correspond only to a development of the forces of production which is limited both in fact and in principle. (These forms are of course more or less naturally evolved, but at the same time also the results of a historic process.) The evolution of the forces of production dissolves them, and their dissolution is itself an evolution of the human forces of production. Labor is initially undertaken on a certain basis first primitive then historical. [Es wird erst gearbeitet von gewisser Grundlage aus erst naturwuchsig dann historische Voraussetzung. The sentence is elliptic and open to various possible interpretations.] Later, however, this basis or presupposition is itself cancelled, or tends to disappear, having become too narrow for the development of the progressive human horde. Insofar as the landed property of classical antiquity reappears in modern allotment property, it belongs to political economy and we shall deal with it in the section on landed property. (All this is to be analyzed again more deeply and in greater detail later.) What we are concerned with here is this: the relationship of labor to capital or to the objective conditions of labor as capital, presupposes a historical process which dissolves the different forms, in which the laborer is an owner and the owner labors. This means first and foremost: These, then, on the one hand, are historic prerequisites without which the laborer cannot occur as free laborer, as objectiveless, purely subjective capacity for laboring, confronting the objective conditions of production as his non-property, as someone else s property, as value existing for itself, as capital. On the other hand, we must now ask what conditions are necessary if he is to confront capital.

Pre-Capitalist Economic Formations by Karl Marx

https://www.marxists.org/archive/marx/works/1857/precapitalist/ch01.htm

A second historical step is implied in property in the instrument i.e., in the relation of the laborer to the instruments as to his own, in which he labors as the owner of the instrument (which assumes that the instrument is subsumed in his individual labor, i.e., which assumes a special and limited phase of development of the productive force of labor). We are considering a situation in which the laborer not only owns the instrument, but in which this form of the laborer as proprietor or of the laboring proprietor is already distinct and separate from landed property, and not, as in the first case, an accident of landed property and subsumed under it: in other words, the artisan and urban development of labor. Hence, also, we here find raw material and means of subsistence mediated as the property of the artisan, mediated through his craft, through his property in the instrument. This second historic step now exists distinct and separate from the first, which in turn will appear considerably modified by the mere fact that this second type of property or of working proprietor has established its independent existence. Since the instrument itself is already the product of labor i.e., the element which constitutes property is already established by labor the community can here no longer appear, as it can in the first case, in its primitive form. The community on which this form of property is based already appears as something produced, secondary, something which has come into being, a community produced by the laborer himself. It is clear that where ownership of the instrument is the relationship to the conditions of labor as property, in actual labor the instrument appears merely as a means of individual labor, and the art of really appropriating the instrument, to employ it as a means of labor, appears as a special skill of the laborer, which makes him the owner of his tools. In short, the essential character of gild or corporative systems (artisan labor as its subject and the constituent element of ownership) is analyzable in terms of a relation to the instrument of production: the tool as property. This differs from the relations to the earth, to the land as one s own, which is rather that of the raw material as property. In this historic state No. 2 property is thus constituted by the laboring subject s relation to this single element of the conditions of production, which makes him into a laboring proprietor; and this state may exist only as contradiction of state No. 1, or, if you like, as supplementary to a modified state No. 1. The first formula of capital negates this historic state also. There is a third possible form which is to act as proprietor neither of the land nor of the instrument (i.e., nor of labor itself), but only of the means of subsistence, which are then found as the natural condition of the laboring subject. This is at bottom the formula of slavery and serfdom, which is also negated, or assumed to have been historically dissolved, in the relation of the worker to the conditions of production as capital. The primitive forms of property necessarily dissolve into the relation of property to the different objective elements conditioning production; they are the economic basis of different forms of community, and in turn presuppose forms of community. These forms are significantly modified once labor itself is placed among the objective conditions of production (as in slavery and serfdom), as a result of which the simple affirmative character of all forms of property embraced in No. 1 is lost and modified. All of these include potential slavery, and therefore their own abolition. So far as No. 2 is concerned, in which the particular kind of labor i.e., its craft mastery and consequently property in the instrument of labor equals property in the conditions of production, this admittedly excludes slavery and serfdom. However, it may lead to an analogous negative development in the form of a caste system. The third form, of property in the means of subsistence, cannot contain any relationship of the laboring individual to the conditions of production, and therefore of existence, unless it is dissolved into slavery and serfdom. It can only be the relation of the member of the primitive community founded upon landed property, who happens to have lost his ownership of land without as yet having advanced to property No. 2, as in the case of the Roman plebs at the time of bread and circuses [that is, of a propertyless mass living on a public dole]. The relation of retainers to their lords, or that of personal service, is essentially different. For it (personal service) forms at bottom merely the mode of existence of the landowner, who no longer labors himself, but whose property includes the laborers themselves as serfs, etc., among the conditions of production. What we have here as an essential relation of appropriation is the relationship of domination. Appropriation can create no such relation to animal, the soil, etc., even though the animal serves its master. The appropriation of another s will is presupposed in the relationship of domination. Beings without will, like animals, may indeed render services, but their owner is not thereby lord and master. However, what we see here is, how the relations of domination and servitude also enter into this formula of the appropriation of the instruments of production; and they constitute a necessary ferment of the development and decay of all primitive relations of property and production. At the same time, they express their limitations. To be sure, they are also reproduced in capital, though in an indirect (mediated) form, and hence they also constitute a ferment in its dissolution, and are the emblems of its limitations. On the one hand, we presuppose historical processes which transform a mass of individuals of a nation, if not perhaps immediately into genuine free laborers, then at any rate into potential free laborers, whose property is their labor-power and the possibility of exchanging it for the existing values. Such individuals confront all objective conditions of production as alien property, as their own non-property, but at the same time as something which can be exchanged as values and therefore to some extent appropriated by living labor. Such historic processes of dissolution are the following: Closer analysis will show that what is dissolved in all these processes of dissolution are relations of production in which use-value predominates; production for immediate use. Exchange-value and its production presuppose the predominance of the other form. Thus in all the above circumstances, deliveries in kind and labor services [Naturaldienste] predominate over money payments and services remunerated by money. But this is only incidental [or this could be translated as But this observation is by the way ]. Again, closer examination will also reveal that all the dissolved relations were rendered possible only by a certain degree of development of the material (and therefore also of the mental) productive forces. What concerns us at this point is the following. The process of dissolution which turns a mass of individuals in a nation, etc., into potential free wage-laborers individuals obliged merely by their lack of property to labor and to sell their labor does not presuppose the disappearance of the previous sources of income or (in part) of the previous conditions of property of these individuals. On the contrary, it assumes that only their use has been altered, that their mode of existence has been transformed, that they have passed into other people s hands as a free fund, or perhaps that they have partly remained in the same hands. But this much is evident. The process which has in one way or another separated a mass of individuals from its previous affirmative relations to the objective conditions of labor, which negated these relations and thereby transformed these individuals into free laborers, is also the same process which has liberated these objective conditions of labor potentially from their previous ties to the individuals which are now separated from them. (These conditions of labor comprise land, raw material, means of subsistence, instruments of labor, money or all of these.) They are still present, but present in a different form, as a free fund, one in which all the old political, etc., relations are obliterated, and which now confront those separated, propertyless individuals merely in the form of values, of values maintaining themselves and each other [an sich festhaltenden Werten]. The same process which counterposes the masses of free laborers to the objective conditions of labor, has also counterposed these conditions to them as capital. The historic process was one of the separation of hitherto combined elements; its results is therefore not the disappearance of one of these elements, but a situation in which each of them appears negatively related to the other: the (potentially) free laborer on one hand, (potential) capital on the other. The separation of the objective conditions from the classes which are now transformed into free laborers, must equally appear at the opposite pole as the establishment of independence by these very conditions. Let us consider the relationship of capital and wage labor not as something which has already reached decisive importance, and encroaches on production as a whole (Marx note: For in this case capital, presupposed as the condition of wage-labor, is the product of labor, and established as condition by labor itself, created by labor as its own presupposition), but as something which is still in the process of historical formation. We consider the original transformation of money into capital, the process of exchange between capital existing only potentially on one hand, and the free laborers existing potentially on the other. We then find ourselves naturally making the simple observation, with which the economists make great play namely, that the side which appears as capital must possess raw materials, tools, and food enough to enable the worker to live before production is completed. Moreover, it would appear that accumulation an accumulation prior to labor and not arising from labor must have taken place on the part of the capitalist, which enables him to set the laborer to work and to maintain him in activity, as living labor power. (Marx note: Once capital and wage labor have been established as their own prerequisites, i.e., as a base presupposed for production, the following state of affairs appears to exist: In the first instance, it seems that the capitalist must possess not only a fund of raw materials and means of subsistence sufficient for the laborer to reproduce himself, to produce the necessary means of subsistence, to realize necessary labor; but also a fund of raw material and instruments of production, by means of which the laborer realizes his surplus labor, i.e., the capitalist s profit. Further analysis will reveal that the laborer is constantly creating a double fund for the capitalist, or in the form of capital. One part of this fund constantly fulfils the conditions of his own existence, the other part, the conditions of existence of capital. As we have seen, surplus capital and surplus capital in its relation to its prehistoric relation to labor includes the appropriation of all real, present capital, and of each element of such capital, which is appropriated uniformly as alien labor transformed into an object and appropriated by capital, without exchange, without the transfer of an equivalent for it.) This action of capital, which is independent and not established by labor, is then transferred from this history of its origin into the present, and transformed into a factor of its reality and effectiveness, of its self-creation [Selbstformation]. Finally, the eternal right of capital to the fruit of other men s labor is derived from this state of affairs, or rather what happens is, that the mode of acquisition of capital is derived from the simple and just laws of the exchange of equivalents. Wealth occurring in the form of money can only be realized against the objective conditions of labor, because and if these have been separated from labor itself. We have seen that money can in part be accumulated by the sheer exchange of equivalents; however, this is so insignificant a source that it is not worth mention historically assuming, that is, that we suppose this money to have been earned by the exchange of one s own labor. It is rather money accumulated by usury especially usury on landed property and mobile (monetary) wealth accumulated through mercantile profits, that turns into capital in the strictest sense, into industrial capital. We will have occasion to deal with both forms below that is, insofar as they themselves appear not as forms of capital but as prior forms of wealth which are the prerequisites for capital. As we have seen, the concept the origin of capital implies money as its starting point, and therefore it implies a derivation from circulation; capital appears as the product of circulation. Capital formation does not therefore arise from landed property (though it might arise from the agricultural tenant insofar as he is also a trader in farm products), nor from the gild (though this provides a possibility) but from mercantile and usurious wealth. But the merchant and usurer only encounter the conditions which permit the purchase of free labor, once free labor has been detached from the objective conditions of its existence as a result of a historical process. At this point, it also becomes possible to buy these conditions themselves. Under gild conditions, for instance, mere money (unless it is the money of gild masters) cannot purchase looms in order to put men to work on them; there are regulations determining how many looms a man may employ, etc. In short, the instrument of labor is still so intimately merged with living labor, appearing as the domain of living labor, that it does not truly circulate. What enable monetary wealth to run into capital is, on the one hand, that it finds free laborers, and on the other hand, it finds means of subsistence, materials, etc., which would otherwise be in one form or another the property of the now objectiveless masses, and are also free and available for sale. However, the other condition of labor a certain craft skill, the existence of the instrument as a means of labor, etc. is found ready to hand by capital in this preparatory or first period of capital. This is partly the result of the urban gild system, partly of domestic industry, or such industry as exists as an accessory to agriculture. The historic process is not the result of capital, but its prerequisite. By means of this process, the capitalist then inserts himself as a (historical) middleman between landed property and labor. History ignores the sentimental illusions about capitalist and laborer forming an association, etc.; nor is there a trace of such illusions in the development of the concept of capital. Sporadically, manufacture may develop locally in a framework belonging to quite a different period, as in the Italian cities side by side with the gilds. But if capital is to be the generally dominant form of an epoch, its conditions must be developed not merely locally, but on a large scale. (This is compatible with the possibility that during the dissolution of the gilds individual gild-masters may turn into industrial capitalists; however, in the nature of the phenomenon, this happens rarely. All in all, the entire gild system both master and journeyman dies out, where the capitalist and laborer emerge.) However, it is evident, and borne out by closer analysis of the historic epoch which we are now discussing, that the age of dissolution of the earlier modes of production and relations of the worker to the objective conditions of labor, is simultaneously an age in which monetary wealth has already developed to a certain extent, and also one in which it is rapidly growing and expanding, by means of the circumstances which accelerate this dissolution. Just as it is itself an agent of that dissolution, so that dissolution is the condition of its transformation into capital. But the mere existence of monetary wealth, even its conquest of a sort of supremacy, is not sufficient for this dissolution to result in capital. If it were, then ancient Rome, Byzantium, etc., would have concluded their history with free labor and capital, or rather, would have entered upon a new history. There the dissolution of the old relations of property was also tied to the development of monetary wealth of commerce, etc. However, in fact the result of this dissolution was not industry, but the domination of countryside over city. The original formations of capital does not, as is often supposed, proceed by the accumulation of food, tools, raw materials or in short, of the objective conditions of labor detached from the soil and already fused with human labor. [Marx note: Nothing is more obviously and superficially circular than the reasoning which argues (a) that the workers who must be employed by capital if capital is to exist as such, must first be created and called into life by its accumulation (waiting, as it were, on its Let there be labor ); while (b) capital could not accumulate without alien labor, except perhaps its own labor. I.e., that capital might itself exist in the form of non-capital and non-money, for prior to the existence of capital, labor can only realize its value in the form of handicraft work, of petty agriculture, etc.; in short, of forms, all of which permit little or no accumulation, allow for only a small surplus produce, and consume the greater part of that. We shall have to return to the concept of accumulation later.] Not by means of capital creating the objective conditions of labor. Its original formation occurs simply because the historic process of the dissolution of an old mode of production, allows value, existing in the form of monetary wealth to buy the objective conditions of labor on one hand, to exchange the living labor of the now free workers for money, on the other. All these elements are already in existence. What separates them out is a historical process, a process of dissolution, and it is this which enables money to turn into capital. Insofar as money itself plays a part here, it is only to the extent that it is itself an extremely powerful agent of dissolution which intervenes in the process, and hence contributes to the creation of the plucked, objectiveless, free laborers. It is certainly not by creating the objective conditions of such laborers existence, but rather by accelerating their separation from them i.e., by accelerating their loss of property. For instance, when the great English landowners dismissed their retainers, who had consumed a share of their surplus produce of their land; when their farmers drove out the small cottagers, etc., then a doubly free mass of living labor power was thrown on to the labor market: free from the old relation of clientship, villeinage, or service, but also free from all goods or chattels, from every real and objective form of existence, free from all property. Such a mass would be reduced either to the sale of its labor power or to beggary, vagabondage, or robbery as its only source of income. History records the fact that it first tried beggary, vagabondage, and crime, but was herded off this road on to the narrow path which led to the labor market by means of the gallows, pillory, and whip. (Hence the governments of Henry VII, VIII, etc., also appear as conditions of the historic process of dissolution and as creators of the conditions for the existence of capital.) Conversely, the means of subsistence formerly consumed by the lords and their retainers, were now available for purchase by money, and money wished to purchase them in order through their instrumentality to purchase labor. Money had neither created nor accumulated these means of subsistence. They were already present, consumed, and reproduced, before they were consumed and reproduced through the intervention of money. The only change was that these means of production were now thrown on to the exchange-market. They had now been detached from their immediate connection with the mouths of the retainers, etc., and transformed from use-values into exchange-values, thus falling under the government and sovereignty of monetary wealth. The same applies to the instruments of labor. Monetary wealth neither invented nor manufactured spinning wheel and loom. But once spinners and weavers had been separated from their land, they and their wheels and looms came under the sway of monetary wealth, etc. Capital unites the masses of hands and instruments which are already there. This and only this is what characterizes it. It brings them together under its sway. This is its real accumulation; the accumulation of laborers plus their instruments at given points. We shall have to go into this more deeply when we come to the so-called accumulation of capital. Admittedly, monetary wealth in the form of merchants wealth had helped to accelerate and dissolve the old relations of production, and had, e.g., enabled the landowner to exchange his corn, cattle, etc., for imported use-values, instead of squandering his own production with his retainers, whose number, indeed, was to a large extent taken as the measure of his wealth. (This point has already been neatly made by A. Smith.) Monetary wealth had given greater significance to the exchange-value of his retinue. This was also true of his tenants, who were already semi-capitalists, though in a rather disguised manner. The evolution of exchange-value is favored by the existence of money in the form of a social order of merchants. It dissolves a production whose object is primarily immediate use-value, and the forms of property which correspond to such production the relations of labor to its objective conditions thus giving an impetus to the creation of a labor market (not to be confused with a slave market). However, even this effect of money is possible only if we presuppose the existence of urban craft activity, which rests not on capital and wage-labor, but on the organization of labor in gilds, etc. Urban labor itself had created the means of production, for which the gilds became as great an embarrassment as were the old relations of landed property in an improved agriculture, which was in turn partly the consequence of the greater sale of agricultural products to the cities, etc. Other circumstances assisted the dissolution of the old relations of production, accelerated the separation of the laborer or the non-laborer capable of work, from the objective conditions of his reproduction, and thus advanced the transformation of money into capital. Such were, e.g., the factors which in the 16th century increased the mass of commodities in circulation, the mass of currency in circulation, creating new needs and consequently raising the exchange value of native products, raising prices, etc. Nothing can therefore be more foolish than to conceive the original formation of capital as if it meant the accumulation and creation of the objective conditions of production food, raw materials, instruments which were then offered to the dispossessed workers. What happened was rather that monetary wealth partly helped to detach the labor power of the individuals capable of work from these conditions. The rest of this process of separation proceeded without the intervention of monetary wealth. Once the original formation of capital had reached a certain level, monetary wealth could insert itself as an intermediary between the objective conditions of life, now liberated and the equally liberated, but now also unfettered and footloose, living labor powers, buying the one with the other. As to the formation of monetary wealth itself, before its transformation into capital: this belongs to the prehistory of the bourgeois economy. Usury, trade, the cities and government finance which arise with them, play the chief parts in it. Also hoarding by tenant farmers, peasants, etc., though to a smaller extent. Trade is everywhere the intermediary for exchange value, or alternatively, the transfer of exchange value can be described as trade for just as circulation acquires an independent existence in commerce, so does money in the social stratum of the merchants. We may see that the development of exchange and exchange-value brings about both the dissolution of labor s relations of property in its conditions of existence and also of labor as something which is itself part of the objective conditions of production. All these are relations which express both a predominance of use-value and of production directed towards immediate consumption, and also the predominance of a real community which is still present as an immediate prerequisite of production. Production based on exchange-value and a community based on the exchange of these exchange-values, and labor as the general condition of wealth, all presuppose and produce the separation of labor from its objective conditions. Though, as we saw in the last chapter on money, production for exchange and community based on exchange may appear to posit property as deriving solely from labor, and private property in the production of one s labor as a precondition, this appearance is deceptive. The exchange of equivalents occurs (but it is merely) the surface layer of a production which rests on the appropriation of other people s labor without exchange, but under the guise of exchange. This system of exchange has capital as its basis. If we consider it in isolation from capital, as it appears on the surface, as an independent system, this is mere illusion, though a necessary illusion. It is therefore no longer surprising to find that the system of exchange-values the exchange of equivalents measured in labor turns into the appropriation of other people s labor without exchange, the total separation of labor and property, or rather that it reveals this appropriation as its concealed background. For the rule of exchange-values, and of production producing exchange-values, presupposes alien labor power as itself an exchange-value. I.e., it presupposes the separation of living labor power from its objective conditions; a relationship to these or to its own objectivity as someone else s property; in a word, a relation to them as capital. The golden age of labor emancipating itself occurred only in those periods when feudalism was in decay, but still engaged in internecine conflict as in England in the 14th and the first-half of the 15th centuries. If labor is once again to be related to its objective conditions as to its property, another system must replace that of private exchange, for as we have seen private exchange assumes the exchange of labor transformed into objects against labor-power, and thereby the appropriation of living labor without exchange. Historically, money is often transformed into capital in quite simple and obvious ways. Thus, the merchant sets to work a number of spinners and weavers, who formerly engaged in these activities as subsidiary occupations to their agricultural work, and turns a subsidiary occupation into a principal one, after which he has them under his control and sway as wage-laborers. The next step is to remove them from their homes and to assemble them in a single house of labor. In this simple process, it is evident that the merchant has prepared neither raw materials nor instruments nor means of subsistence for the weaver or the spinner. All he has done is gradually to confine them to one sort of labor, in which they are dependent on the buyer, the merchant, and thus eventually find themselves producing solely for and by means of him. Originally, he has bought their labor merely by the purchase of their product. As soon as they confine themselves to the production of this exchange-value, and are therefore obliged to produce immediate exchange-values, and to exchange their labor entirely for money in order to go on living, they come under his domination. Finally, even the illusion of selling him their products, disappears. He purchases their labor and takes away first their property in the product, soon also their ownership of the instrument, unless he allows them the illusions of ownership in order to diminish his costs of production. The original historical forms in which capital appears at first sporadically or locally, side by side with the old modes of production, but gradually bursting them asunder, make up manufacture in the proper sense of the word (not yet the factory). This arises, where there is mass-production for export hence on the basis of large-scale maritime and overland trade, and in the centres of such trade, as in the Italian cities, Constantinople, the Flemish, Dutch cities, some Spanish ones such as Barcelona, etc. Manufacture does not initially capture the so-called urban crafts, but the rural subsidiary occupations, spinning and weaving, the sort of work which least requires craft skill, technical training. Apart from those great emporia, in which it finds the basis of an export market, and where production is, as it were by its spontaneous nature, directed towards exchange-value i.e., manufactures directly connected with shipping, including shipbuilding itself, etc. The rural subsidiary occupations contain the broad basis of manufactures, whereas a high degree of progress in production is required in order to carry on the urban crafts as factory industries. Such branches of production as glassworks, metal factories, sawmills, etc., which from the start demand a greater concentration of labor-power, utilize more natural power, and demand both mass-production and a concentration of the means of production, etc.: these also lend themselves to manufacture. Similarly, paper mills, etc. The other aspect of this process is the appearance of the tenant farmer and the transformation of the agricultural population into free day-laborers. Though the last place where this transformation triumphs in its purest and most logical forms, is the countryside, some of its earliest developments occur there. Hence the ancients, who never advanced beyond specifically urban craft skill and application, were never able to achieve large-scale industry. For its first prerequisite is the involvement of the entire countryside in the production, not of use-values, but of exchange values. Glassworks, papermills, ironworks, etc., cannot be conducted on gild principles. They require mass-production, sales to a general market, monetary wealth on the part of the entrepreneur. Not that he creates the subjective or objective conditions; but under the old relations of property and production these conditions cannot be brought together. (After this, the dissolution of the relations of serfdom and the rise of manufacture gradually transform all branches of production into branches operated by capital.) However, the towns themselves contain an element for the formation of genuine wage-labor namely, day-laborers outside the gild system, unskilled laborers, etc. We thus see that the transformation of money into capital presupposes a historic process which separates the objective conditions of labor, and makes them independent of and sets them against the laborers. However, once capital and its process have come into being, they conquer all production and everywhere bring about and accentuate the separation between labor and property, labor and the objective conditions of labor. Subsequent development will show in what ways capital destroys artisan labor, small working landownership, etc., and also itself in those forms in which it does not appear in contradiction to labor: petty capital, and intermediate or hybrid types between the classic, adequate mode of production of capital itself, and the old modes of production (in their original form), or as renewed on the basis of capital. The only accumulation which is a prerequisite for the rise of capital, is that of monetary wealth, which, when considered in isolation, is entirely unproductive, emerges only from circulation and belongs only to circulation. Capital rapidly creates itself an internal market by destroying all rural subsidiary crafts i.e., by spinning and weaving for all, providing clothing for all, etc.; in short, by turning the commodities formerly produced as immediate use-values into exchange-values. This process is the automatic result of the separation of the laborers from the soil and from their property (though even only serf property) in the conditions of production. Though urban crafts are based substantially on exchange and the creation of exchange-values, the main object of production is not enrichment or exchange-value as exchange-values, but the subsistence of man as an artisan, as a master-craftsman, and consequently use-value. Production is therefore everywhere subordinate to a presupposed consumption, supply to demand, and its expansion is slow. The production of capitalists and wage-laborers is therefore a major product of the process by which capital turns itself into values. Ordinary political economy, which concentrates only on the objects produced, forgets this entirely. Inasmuch as this process establishes reified labor as what is simultaneously the non-reification of the laborer, as the reification of a subjectivity opposed to the laborer, as the property of someone else s will, capital is necessarily also a capitalist. The idea of some socialists, that we need capital but not capitalists, is completely false. The concept of capital implies that the objective conditions of labor and these are its own product acquire a personality as against labor, or what amounts to the same thing, that they are established as the property of a personality other than the worker s. The concept of capital implies the capitalist. However, this error is certainly no greater than that of, e.g., all philologists who speak of the existence of capital in classical antiquity, and of Roman or Greek capitalists. This is merely another way of saying that in Rome and Greece labor was free, an assertion which these gentlemen would hardly make. If we now talk of plantation-owners in America as capitalists, if they are capitalists, this is due to the fact that they exist as anomalies within a world market based upon free labor. Were the term capital to be applicable to classical antiquity though the word does not actually occur among the ancients (but among the Greeks the word arkhais is used for what the Roman s called the principalis summa reicreditae, the principal of a loan) then the nomadic hordes with their flocks on the steppes of Central Asia would be the greatest capitalists, for the original meaning of the word capital is cattle. Hence the contract of metairie (crop-sharing) which is frequent in the South of France, because of capital shortage, is still sometimes called bail de bestes cheptel (contract of leasing cattle). If we permit ourselves a little bad Latin, then our capitalists or Capitales Homines (headmen) would be those qui debent censum de capite (who pay a head tax). Difficulties which do not arise in the conceptual analysis of money do arise in that of capital. Capital is essentially a capitalist; but at the same time production in general is capital, as an element in the existence of the capitalist quite distinct from him. Thus we shall later find that in the term capital much is subsumed that does not apparently belong to the concept. E.g., capital is loaned. It is accumulated, etc. In all these relations it appears to be a mere object, and entirely to coincide with the matter of which it consists. However, further analysis will clarify this and other problems. (In passing, the following amusing observation: The good Adam Mueller, who takes all figurative phrases in a mystical sense, had also heard about living capital in ordinary life, as opposed to dead capital, and dresses up the notion theosophically. King Athelstan could have taught him a thing or two about this: Money always retains the same form in the same substratum, and is therefore more readily conceived as an object. But the same thing, commodity, money, etc., can represent capital or revenue, etc. Thus even the economists recognize that money is nothing tangible, but that the same thing can be subsumed now under the heading capital, now under some other and quite contrary term, and accordingly that it is or is not capital. It is evidently a relation and can only be a relation of production.

Pre-Capitalist Economic Formations by Karl Marx

https://www.marxists.org/archive/marx/works/1857/precapitalist/ch02.htm

The last mails from Calcutta brought some details, which have made their way to this country through the London journals, from which it is possible to form a judgment as to Sir Colin Campbell s performance at Lucknow. As the British press assert that this feat of arms stands forth in unrivaled glory in the history of warfare, the subject may as well be a little more closely examined. The town of Lucknow is situated on the right bank of the River Goomtee, which at that locality runs in a south-easterly direction. At a distance of from two to three miles from the river a canal runs nearly parallel to it, intersects the town, and below it approaches the river, which it then joins about a mile further down. The banks of the river are not occupied by crowded streets, but by a succession of palaces, with gardens and insulated public buildings. At the junction of the canal and river, but on the right or southern bank of both, are situated, close together, a school, called La Martini re, and a hunting-palace and park, called Dilkhoosha. Crossing the canal, but remaining on the southern side of the river, and close to its bank, the first palace and garden is that of Secunderbagh; further west come barracks and Mess-house, and then the Motee Mahal (Pearl Palace), which is but a few hundred yards from the Residency. 14 This latter building is erected on the only high ground in the neighborhood; it commands the town, and consists of a considerable inclosure with several palaces and out-houses within it. To the south of this line of buildings is the compact portion of the town, and two miles south of this is the park and palace of Alumbagh. The natural strength of the Residency at once explains how it was possible for the English to hold out in it against far superior numbers; but this very fact at once shows also what class of fighters the Oudians are. In fact, men who, partly drilled under European officers and provided plentifully with artillery, have never yet been able to overcome a single miserable inclosure defended by Europeans such men are, militarily speaking, no better than savages, and a victory over them cannot add much to the glory of any army, however great the odds may be in favor of the natives. Another fact which classes the Oudians with the most contemptible opponents to be met with, is the manner in which Havelock forced his way through the very thickest portion of the town, in spite of barricades, loopholed houses, and the like. His loss, indeed, was great; but compare such an engagement with even the worst-fought street-battle of 1848! Not one man of his weak column could have made good his way had there been any real fighting. The houses cannot have been defended at all; it would have required weeks to take as many of them as would have secured a clear passage. As to the judgment displayed by Havelock in thus taking the bull by the horns, we cannot form an opinion; it is said he was compelled to do so from the great strait to which the Residency was reduced, and other motives are mentioned; however, nothing authentic is known. When Sir Colin Campbell arrived he had about 2,000 European and 1,000 Sikh infantry; 350 European and 600 Sikh cavalry; 18 horse-artillery guns, 4 siege guns, and 300 sailors with their heavy shipguns; in all, 5,000 men, among which were 3,000 Europeans. This force was about as strong in numbers as a very fair average of most Anglo-Indian armies that have accomplished great exploits; indeed, the field-force with which Sir C. Napier conquered Sinde was scarcely half as large, and often less. On the other hand, its large admixture of the European element and the circumstance that all its native portion consisted of the best fighting nation of India, the Sikhs, give it a character of intrinsic strength and cohesion far superior to the generality of Anglo-Indian armies. Its opponents, as we have seen, were contemptible, for the most part rough militia instead of trained soldiers. True, the Oudians pass for the most warlike race of Lower Hindostan, but this is the case merely in comparison with the cowardly Bengalees, whose morale is utterly broken down by the most relaxing climate of the world and by centuries of oppression. The way in which they submitted to the filibustering annexation of their country to the Company s dominions, and the whole of their behavior during the insurrection, certainly places them below the level of the Sepoys, as far as courage and intelligence are concerned. We are, indeed, informed that quantity made up for quality. Some letter-writers say there were as many as 100,000 in the town. They were, no doubt, superior to the British in the proportion of four or six to one, perhaps more; but with such enemies that makes little difference. A position can only be defended by a certain number, and if these are determined to run away it matters little whether four or five times that number of similar heroes are within half a mile. There is no doubt that many instances of individual bravery have been seen, even among these Oudians. Some among them may have fought like lions; but of what avail were these in a place which they were too weak to defend after the mere rabble among the garrison had run away? There appears to have never been among them any attempt at bringing the whole under a single command; their local chiefs had no authority except over their own men, and would not submit to anybody else. Sir Colin Campbell advanced first on Alumbagh; then, instead of forcing his way through the town as Havelock had done, he profited by the experience gained by that General and turned toward Dilkhoosha and La Martini re. The ground in front of these inclosures was cleared of the Oudian skirmishers on Nov. 13. On the 15th the attack commenced. So neglectful had the enemy been that the preparations for intrenching the Dilkhoosha were not yet completed even then; it was taken at once, and without much resistance, and so was the Martini re. These two positions secured to the English the line of the canal. The enemy advanced once more across this obstacle to retake the two posts, lost in the morning, but they were soon routed, with heavy loss. On the 16th the British crossed the canal and attacked the Secunderbagh Palace. The intrenchments here were in a little better order, consequently Gen. Campbell wisely attacked the place with artillery. After the defenses had been destroyed, the infantry charged and took the place. The Samuck, another fortified position, was next cannonaded for three hours and then taken, after one of the severest fights ever witnessed, says Sir C. Campbell and, adds a wise correspondent from the seat of war, few men have seen more of hard fighting than he. We should like to know where he saw it. Surely not in the Crimea, where, after the battle of the Alma he had a very quiet life of it at Balaklava, only one of his regiments being engaged at the battle of Balaklava and none at Inkermann. On the 17th the artillery was pointed on the barracks and Mess-house which formed the next position toward the Residency. This cannonade lasted till 3 o clock, after which the infantry took the place by storm. The flying enemy was hotly pursued. One more position remained between the advancing army and the Residency the Motee Mahal. Before dusk this, too, was carried, and the communication with the garrison was fully established. Campbell should be praised for the judgment with which he took the easier route and with which he used his heavy artillery to reduce the intrenched positions before he launched his columns. But the British fought with all the advantages of skilled soldiers obeying one chief over half savages commanded by nobody; and, as we see, they fully availed themselves of these advantages. They did not expose their men more than was absolutely necessary. They used artillery as long as there was anything to be battered down. No doubt they fought with valor; but what they deserve credit for is discretion. The best proof of this is in the number of the killed and wounded. It has not yet been published as far as the men are concerned; but there were five officers killed and thirty-two wounded. The army must have had, with 5,000 men, at least 250 to 300 officers. The English officers are certainly never sparing of their lives. To show an example of bravery to their men is in too many cases the part of their duty which they only know. And when in three days consecutive fighting, under circumstances and in positions which are known to cost more lives than any other to conquer, the loss is only one in eight or nine, it is out of the question to call it hard fighting. To take an example from British history alone, what is all this Indian fighting put together against the single defense of Hougoumont and La Haye Sainte at Waterloo? What would these writers who now turn every little skirmish into a pitched battle say of contests like Borodino, where one army lost one-half and the other one-third of its combatants?

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/01/30.htm

We have at last before us the official dispatch of Sir Colin Campbell on the relief of Lucknow. It confirms in every respect the conclusions we drew from the first non-official reports on this engagement. The contemptible character of the resistance offered by the Oudians is even more apparent from this document, while on the other hand Campbell himself appears to take more pride in his skillful generalship than in any uncommon bravery displayed either by him or his troops. The dispatch states the strength of the British troops at about 5,000, of whom some 3,200 were infantry, and 700 cavalry, the rest artillery, naval brigade, engineers, &c. The operations commenced, as stated, with the attack on Dilkhoosha. This garden was taken after a running fight. The loss was very trifling; the enemy s loss, too, was trifling, owing to the suddenness of retreat. There was, indeed, no chance of displaying heroism on this occasion. The Oudians retreated in such a hurry that they crossed at once through the grounds of La Martini re without availing themselves of the new line of defense offered by this post. The first symptom of a more obstinate resistance was shown at the Secunderbagh, a high-walled, loopholed inclosure 120 yards square, flanked by a loop-holed village about 100 yards distant. There Campbell at once displayed his less dashing but more sensible mode of warfare. The heavy and field artillery concentrated their efforts on the main inclosure, while one brigade attacked the barricaded village, and another drove back whatever bands of the enemy attempted the open field. The defense was lamentable. Two intrenched positions like those described flanking each other by their fire, in. the hands of indifferent soldiers, or even of plucky undisciplined insurgents, would require a deal of fighting to take. But here there appears to have been neither pluck, nor concert, nor even a shadow of sense. We do not hear of any artillery used in the defense. The village (evidently a small cluster of houses) was taken at the first onset. The troops in the field were scattered without an effort. Thus in a few moments the Secunderbagh was quite isolated, and when, after an hour s cannonading, the walls gave way in one point, the Highlanders stormed the breach and killed every soul in the place; 2,000 natives are said by Sir C. Campbell to have been found dead in it. The Shah Nujjeef was the next post a walled inclosure prepared for defense, with a mosque for a reduit; again one of those positions which a commander of brave but half-disciplined troops would exactly wish for. This place was stormed after a three hours cannonade had opened the walls. On the next day, Nov. 17, the Mess-house was attacked. This was a group of buildings inclosed by a mud rampart and a scarped ditch twelve feet wide in other words, a common field redoubt with a slight ditch and a parapet of problematical thickness and bight. For some cause or other, this place appeared rather formidable to Gen. Campbell, for, he at once resolved to give his artillery full time to batter it down before he stormed it. The cannonade accordingly lasted the whole morning, till 3 o clock p. m., when the infantry advanced and took the position with a rash. No sharp fighting here, at all events. The Motee Mahal, the last post of the Oudians on the line toward the Residency, was cannonaded for an hour; several breaches were made and then taken without difficulty, and this ended the fighting for the relief of the garrison. The character of the whole engagement is that of an attack by well-disciplined, well-officered European troops, inured to war and of average courage, upon an Asiatic rabble, possessing neither discipline nor officers, nor the habits of war, nor even adequate arms, and whose courage was broken by the consciousness of the double superiority possessed by their opponents, as soldiers over civilians and as Europeans over Asiatics. We have seen that Sir Colin Campbell nowhere appears to have been opposed by artillery. We shall see, further on, that Brigadier Inglis s report leads to the conclusion that the great bulk of the insurgents must have been without fire-arms; and if it is true that 2,000 natives were massacred in the Secunderbagh, it is evident they must have been very imperfectly armed, otherwise the greatest cowards would have defended the place against one assaulting column. On the other hand, the conduct of the fight by Gen. Campbell deserves the highest praise for tactical skill. From the want of artillery in his opponents, he must have known that his progress could not be resisted; accordingly he used this arm to its full extent, clearing first the way for his columns before he launched them. The attack upon Secunderbagh and its flanking defenses is a very excellent specimen of the mode of conducting such an affair. At the same time, having once ascertained the despicable nature of the defense, he did not treat such opponents with any unnecessary formality; as soon as there was a gap in the walls, the infantry advanced. Altogether, Sir C. Campbell ranks from the day of Lucknow as a general; hitherto he was known as a soldier only. By the relief of Lucknow we are at last put in possession of a document describing the occurrences which took place during the siege of the Residency. Brigadier Inglis, the successor in command of Sir H. Lawrence, has made his report to the Governor-General; and, according to Gen. Outram and the unisono of the British press, here is a conspicuous case of heroism, indeed for such bravery, such perseverance, such endurance of fatigue and hardships, have never been seen at any time, and the defense of Lucknow stands unparalleled in the history of sieges. The report of Brigadier Inglis informs us that on the 30th of June the British made a sortie against the natives, who were then just concentrating, but were repulsed with such heavy loss that they had at once to confine themselves to the defense of the Residency, and even to abandon and blow up another group of buildings in the vicinity, containing 240 barrels of powder and 6,000,000 musket cartridges. The enemy at once invested the Residency, taking possession of and fortifying the buildings in its immediate vicinity, some within 50 yards of the defenses, and which, against the advice of the engineers, Sir H. Lawrence had refused to raze. The British parapets were still partly unfinished, and only two batteries were in working order, but, in spite of the terrific and incessant fire kept up by 8,000 men firing at one time into the position, they were enabled to complete them very soon, and have 30 guns in battery. This terrific fire must have been a very wild and random kind of firing, not at all deserving the name of sharp-shooting with which Gen. Inglis adorns it; how otherwise could a man have lived in the place, defended as it was by perhaps 1,200 men? The instances related to show the terrific nature of this fire, that it killed women and children, and wounded men in places considered well sheltered, are very poor examples, as they occur never oftener than when the enemy s fire, instead of being aimed at different objects, is directed toward the fortification at large, and consequently never hits the actual defenders. On the 1st of July Lawrence was mortally wounded, and Inglis took the command. The enemy had by this time 20 or 25 guns in position, planted all round our post. Very lucky for the defense, for if they had concentrated their fire on one or two places of the ramparts, the position would in all likelihood have been taken. Some of these guns were posted in places where our own heavy guns could not reply to them. Now, as the Residency is on commanding ground, these places can only have been so situated that the guns of the attack could not fire at the rampart, but merely at the tops. of the buildings inside; which was very fortunate for the defense, as that did no great harm, and the same guns might have been far more usefully employed in firing at the parapet or barricades. Upon the whole, the artillery on both sides must have been miserably served, as otherwise a cannonade at such short range must have been very shortly put a stop to by the batteries mutually dismounting each other; and that this did not take place, is still a mystery. On July 20, the Oudians exploded a mine under the parapet, which, however, did no damage. Two main columns immediately advanced to an assault, while sham attacks were attempted at other places; but the mere effect of the garrison s fire drove them back. On the 10th of August another mine exploded, and opened a breach, These few were soon disposed of by the flank fire of the garrison, while at the flank attacks hand-grenades and a little firing drove the undisciplined masses back. The third mine was sprung on the 18th August; a new breach was formed, but the assault was even more spiritless than before, and was easily repelled. The last explosion and assault took place on the 5th September, but again hand-grenades and musketry drove them back. From that time to the arrival of relief, the siege appears to have been converted into a mere blockade, with a more or less sustained fire of muskets and artillery. This is, indeed, an extraordinary transaction. A mob of 50,000 men or more, composed of the inhabitants of Lucknow and the surrounding country, with perhaps 5,000 or 6,000 drilled soldiers among them, blockade a body of some 1,200 or 1,500 Europeans in the Residency of Lucknow and attempt to reduce them. So little order reigned among the blockading body, that the supplies of the garrison appear never to have been completely cut off, though their communications with Cawnpore were. The proceedings of what is called the siege are distinguished by a mixture of Asiatic ignorance and wildness, with here and there a glimpse of some military knowledge introduced by European example and rule. There were evidently some artillerymen and sappers among the Oudians who knew how to construct batteries; but their action appears to have been confined to the construction of shelter from the enemy s fire. They even appear to have brought this art of sheltering themselves to great perfection, so much so that their batteries must have been very safe, not only for the gunners but also for the besieged; no guns could have been worked in them with any effect. Nor were they; or how is this unparalleled fact to be explained, that 30 guns inside and 25 outside worked against each other at exceedingly short ranges, some not more than 50 yards, and yet we hear nothing of dismounted guns or one party silencing the artillery of the other? As to the musketry fire, we first have to ask how it is possible that eight thousand natives could take position within musket range from the British batteries without being sent to the right about by the artillery? And if they did, how is it possible that they did not kill and wound every soul on the place? Still we are told that they did hold their own, and did fire day and night, and that in spite of all this the 32d Regiment, which could at the very outside count 500 men after June 30, and had to bear the brunt of the whole siege, still was 300 strong at its end? If this is not an exact counterpart of the last surviving ten of the Fourth (Polish) Regiment, which marched into Prussia 88 officers and 1,815 rank and file strong, what then is it? The British are perfectly right that such fighting was never seen as there was at Lucknow indeed it was not. In spite of the unassuming, apparently simple tone of Inglis s report, yet his queer observation about guns placed so that they could not he fired, at, about 8,000 men firing day and night, without effect, about 50,000 insurgents blockading him, about the hardships of bullets going into places where they had no business to go, and about assaults carried out with the utmost determination, yet repulsed, without any effort all these observations compel us to acknowledge the whole of this report is full of the most glaring exaggerations, and will not stand cool criticism for a moment. But then surely the besieged underwent uncommon hardships? Listen. Pity the sorrows of a poor Lucknow lady! True, in these times of ups and downs, when dynasties are made and unmade in a day, and revolutions and commercial crashes combine to render the permanency of all creature comforts most splendidly insecure, we are not called upon to show any great sympathy if we hear of some ex-queen having to darn her own stockings, and even to wash them, not to speak of her cooking her own mutton-chop. But an Anglo-Indian lady, one of that vast number of sisters, cousins, or nieces to half-pay officers, Indian Government writers, merchants, clerks, or adventurers, who are, or rather were, before the mutiny, sent out every year, fresh from the boarding-school, to the large marriage-market in India, neither more nor less ceremoniously, and often far less willingly, than the fair Circassians that go to the Constantinople market the very idea of one of these ladies having to wash her own clothes and cook her scanty meals entirely unaided entirely! One s blood boils at it. Completely without native servants ay, having actually to tend their own children! It is revolting Cawnpore would have been preferable! The rabble investing the Residency may have counted 50,000 men; but then the large majority cannot have had any firearms. The 8,000 sharp-shooters may have had firearms; but of what description both arms and men were, the effect of their fire is there to tell. The twenty-five guns in the battery have been proved to have been most despicably served. The mining was as much at random as the firing. The assaults do not deserve the name even of reconnaissances. So much for the besiegers. The besieged deserve full credit for the great strength of character with which they have held out for nearly five months, the greater portion of which time they were without any news whatever from the British forces. They fought, and hoped against hope, as it behooves men to do when they have their lives to sell as dearly as they can, and women and children to defend against Asiatic cruelty. Again, full credit do we give them for their watchfulness and perseverance. But, after the experiences of Wheeler s surrender at Cawnpore, who would not have done the same? As to the attempt to turn the defense of Lucknow into a piece of unparalleled heroism, it is ridiculous, especially after the clumsy report of Gen. Inglis. The privations of the garrison were confined to scanty shelter and exposure to the weather (which, however, did not produce any serious disease), and as to provisions, the very worst they had consisted in coarse beef and still coarser flour! fat. more comfortable fare than besieged soldiers are accustomed to in Europe! Compare the defense of Lucknow against a stupid and ignorant barbarian rabble with that of Antwerp, 1832, and the Fort of MaIghera near Venice, in 1848 and 49, not to speak of Todtleben at Sevastopol, who had far greater difficulties to contend with than Gen. Inglis. MaIghera was attacked by the best engineers and artillerymen of Austria, and defended by a weak garrison of raw levies; four-fifths of them had no bomb-proof shelter; the low soil created malaria more dangerous than an Indian climate; a hundred guns played upon them, and during the last three days of the bombardment, forty rounds were fired every minute; still the fort held out a month, and would have held out longer, if the Austrians had not taken hold of a position necessitating their retreat. Or take Dantzig, where Rapp, with the sic k remnants of the French regiments returned from Russia, held out eleven months. Take in fact any respectable siege of modern days, and you will find that more skill, more spirit, and quite as much pluck and endurance were shown against quite as great odds as in this Lucknow affair. The Oude insurgents, however, though contemptible in the field, proved, immediately after the arrival of Campbell, the strength of a national insurrection. Campbell saw at once that lie could neither attack the City of Lucknow with his forces, nor hold his own. This is quite natural, and will appear so to any one who has attentively read the French invasion of Spain under Napoleon. The strength of a national insurrection does not lie lit pitched battles, but in petty warfare, in the defense of towns, and in the interruption of the enemy s communications. Campbell accordingly prepared for the retreat with the same skill with which he had arranged the attack A few more positions about the Residency were carried. They served to deceive the enemy as to Campbell s intentions, and to cover the arrangements for the retreat. With a daring perfectly justified in front of such an opponent, the whole army, a small reserve excepted, was employed to occupy an extensive line of outposts and pickets, behind which the women, the sick and wounded, and the baggage were evacuated. As soon as this preliminary operation was performed the outlying pickets fell back, concentrating gradually into more solid masses, the foremost of which then retreated through the next line, again to form as a reserve to the rear. Without being attacked, the whole of this maneuver was carried out with perfect order; with the exception of Outram and a small garrison left at Alumbagh (for what purposes we do not at present see), the whole army marched to Cawnpore, thus evacuating the Kingdom of Oude. In the mean time unpleasant events had taken place at Cawnpore. Windham, the hero of the Redan, another of those officers of whose skill we are told that they have proved it by being very brave, had on the 26th defeated the advanced guard of the Gwalior contingent, but on the 27th he had been severely beaten by them, his camp taken and burned, and he himself compelled to retreat into Wheeler s old intrenchment at Cawnpore. On the 28th they attacked this post, but were repulsed, and on the 6th Campbell defeated them with scarcely any loss, taking all their guns and train, and pursuing them for fourteen miles. The details of all these affairs are so far but scanty; but this much is certain, that the Indian Rebellion is as yet far from being quelled, and that, although most or all British re-enforcements have now landed, yet they disappear in an almost unaccountable manner. Some 20,000 men have landed in Bengal, and still the active army is no larger than when Delhi was taken. There is something wrong here. The climate must make terrible havoc among the newcomers.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/02/01.htm

London, Jan. 22, 1858 The buoyancy in the London money market, resulting from the withdrawal of an enormous mass of capital from the ordinary productive investments, and its consequent transfer to the security markets, has, in the last fortnight, been somewhat lessened by the prospects of an impending Indian loan to the amount of eight or ten million pounds sterling. This loan, to be raised in England, and to be authorized by Parliament immediately on its assembling in February, is required to meet the claims upon the East India Company by its home creditors, as well as the extra expenditure for war materials, stores, transport of troops, &c., necessitated by the Indian revolt. In August 1857, the British Government had, before the prorogation of Parliament, solemnly declared in the House of Commons. that no such loan was intended, the financial resources of the Company being more than sufficient to meet the crisis. The agreeable delusion thus palmed on John Bull was, however, soon dispelled when it oozed out that by a proceeding of a very questionable character, the East India Company had laid hold on a sum of about 3,500,000 sterling, intrusted to them by different companies, for the construction of Indian railways; and had, moreover, secretly borrowed 1,000,000 sterling from the Bank of England, and another million from the London joint Stock banks. The public being thus prepared for the worst, the Government did no longer hesitate to drop the mask, and by semi-official articles in The Times, Globe, and other governmental organs, avow the necessity of the loan. It may be asked why a special act on the part of the legislative power is required for launching such a loan, and then, why such an event does create the least apprehension, since, on the contrary, every vent for British capital, seeking now in vain for profitable investment, should, under present circumstances be considered a windfall, and a most salutary, check upon the rapid depreciation of capital. It is generally known that the commercial existence of the East India Company was terminated in 1834, when its principal remaining source of commercial profits, the monopoly of the China trade, was cut off. Consequently, the holders of East India stock having derived their dividends, nominally, at least, from the trade-profits of the Company, a new financial arrangement with regard to them had become necessary. The payment of the dividends, till then chargeable upon the commercial revenue of the Company, was transferred to its political revenue. The proprietors of East India stocks were to be paid out of the revenues enjoyed by the East India Company in its governmental capacity, and, by act of Parliament, the Indian stock, amounting to 6,000,000 sterling, bearing ten per cent interest, was converted into a capital not to be liquidated except at the rate of 200 for every 100 of stock. In other words, the original East India stock of 6,000,000 sterling was converted into a capital of 12,000,000 sterling, bearing five per cent interest, and chargeable upon the revenue derived from the taxes of the Indian people. The debt of the East India Company was thus, by a Parliamentary sleight of hand, changed into a debt of the Indian people. There exists, besides, a debt exceeding 50,000,000 sterling, contracted by the East India Company in India, and exclusively chargeable upon the Stale revenues of that country; such loans contracted by the Company in India itself having always been considered to lay beyond the district of Parliamentary legislation, and regarded no more than the debts contracted by the Colonial Government, in Canada or Australia for instance. On the other hand, the East India Company was prohibited from contracting interest-bearing debts in Great Britain herself, without the especial sanction of Parliament. Some years ago, when the Company set about establishing railways and electric telegraphs in India, it applied for the authorization of Indian Bonds m the London market, request which was granted to the amount of 7,000,000 sterling to be issued in Bonds bearing 4 per cent interest, and secured only on the Indian State revenues At the commencement of the outbreak in India, this bond-debt stood at 3,894,400 sterling, and the very necessity of again applying to Parliament shows the East India Company to have, during the course of the Indian insurrection, exhausted its legal powers of borrowing at home. Now it is no secret that before recurring to this step, the East India Company had opened a loan at Calcutta, which, however, turned out a complete failure. This proves, on the one hand, that Indian capitalists are far from considering the prospects of British supremacy in India in the same sanguine spirit which distinguishes the London press; and, on the other hand, exacerbates the feelings of John Bull to an uncommon pitch, since he is aware of the immense hoardings of capital having gone on for the last seven years in India, whither, according to a statement recently published by Messrs. Haggard & Paxley, there has been shipped in 1856 and 1857, from the port of London alone, bullion to the amount of 21,000,000. The London Times, in a most persuasive strain, has taught its readers that The Indians, however, appear not to understand the beauty of a plan which would not only restore English supremacy at the expense of Indian capital, but at the same time, in a circuitous way, open the native hoards to British commerce. If, indeed, the Indian capitalists were as fond of British rule as every true Englishman thinks. it an article of faith to assert, no better opportunity could have been afforded them of exhibiting their loyalty and getting rid of their silver. The Indian capitalists shutting up their hoards, John Bull must open, his mind to the dire necessity of defraying himself in the first instance, at least, the expenses of the Indian insurrection, without any support on the part of the natives. The impending loan constitutes, moreover, a precedent only, and looks like the first leaf in a book, bearing the title Anglo-Indian Home Debt. It is no secret that what the East India Company wants are not eight millions, or ten millions, but twenty-five to thirty millions pounds, and even these as a first installment only, not for expenses to be incurred, but for debts already due. The deficient revenue for the last three years amounted to 5,000,000; the treasure plundered by the insurgents up to the 15th October last, to 10,000,000, according to the statement of the Phoenix, an Indian governmental paper; the loss of revenue in the North-eastern provinces, consequent upon the rebellion, to 5,000,000, and the war expenses to at least 10,000,000. It is true that successive loans by the Indian Company, in the London Money Market, would raise the value of money and prevent the increasing depreciation of capital; that is to say, the further fall in the rate of interest; but such a fall is exactly required for the revival of British industry and commerce. Any artificial check put upon the downward movement of the rate of discount is equivalent to an enhancement in the cost of production and the terms of credit, which, in its present weak state, English trade feels itself unable to bear. Hence the general cry of distress at the announcement of the Indian loan. Though the Parliamentary sanction adds no imperial guarantee to the loan of the Company, that guarantee, too, must be conceded, if money is not to be obtained on other terms; and despite all fine distinctions, as soon as the East India Company is supplanted by the British Government its debt will be merged into the British debt. A further increase of the large national debt seems, therefore, one of the first financial consequences of the Indian Revolt.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/02/09.htm

While during the Crimean war all England was calling for a man capable of organizing and leading her armies, and while incapables like Raglan, Simpson and Codrington were intrusted with the office, there was a soldier in the Crimea endowed with the qualities required in a general. We mean Sir Colin Campbell, who is now daily showing in India that he understands his profession with a master s mind. In the Crimea, after having been allowed to lead his brigade at the Alma where from the rigid line-tactics of the British army, he had no chance to show his capacities, he was cooped up in Balaklava and never once allowed to participate in the succeeding operations. And yet, his military talents had been clearly established in India long before, by no less an authority than the greatest general England has produced since Marlborough, by Sir Charles James Napier. But Napier was an independent man, too proud to stoop to the reigning oligarchy and his recommendation was enough to make Campbell marked and distrusted. Other men, however, gained distinctions and honors in that war. There was Sir William Fenwick Williams of Kars, who now finds it convenient to rest on the laurels acquired by impudence, self-puffing, and by defrauding Gen. Kmetty of his well-earned fame. A baronetcy, a thousand a year, a comfortable berth at Woolwich, and a seat in Parliament, are quite sufficient to prevent him risking his reputation in India. Unlike him, the hero of the Redan, Gen. Windham, has set out to command a division against the Sepoys, and his very first act has settled him forever. This same Windham, an obscure colonel of good family connections, commanded a brigade at the assault of the Redan, during which operation he behaved extremely phlegmatically, and at last, no re-enforcement arriving, twice left his troops to shift for themselves, while he went to inquire about them himself. For this very questionable act, which in other services would have been inquired into by a court-martial, he was forthwith made a General, and shortly afterward called to the post of Chief of the Staff. When Colin Campbell advanced to Lucknow, he left the old intrenchments, the camp and the town of Cawnpore, together with the bridge over the Ganges, in charge of General Windham and a force sufficient for the purpose. There were five regiments of infantry, whole or in part, many guns of position, 10 field guns and two naval guns, beside 100 horse; the whole force above 2,000. While Campbell was engaged at Lucknow, the various bodies of rebels hovering about the Doab drew together for an attack on Cawnpore. Beside a miscellaneous rabble, collected by insurgent Zemindars, the attacking force counted of drilled troops (disciplined they cannot be called), the remainder of the Dinapore Sepoys and a portion of the Gwalior contingent. These latter were the only insurgent troops, the formation of which can be said to go beyond that of companies, as they had been officered by natives almost exclusively, and thus, with their field-officers and captains, retained something like organized battalions. They were consequently regarded with some respect by the British. Windharn had strict orders to remain on the defensive, but getting no replies to his dispatches from Campbell, the communication being interrupted, he resolved to act on his own responsibility. On the 26th November, he advanced with 1,200 infantry, 100 horse and 8 guns to meet the advancing insurgents. Having easily defeated their vanguard, he saw the main column approaching and retired close to Cawnpore. Here he took up a position in front of the town, the 34th Regiment on the left, the Rifles (5 companies) and two companies of the 82d on the right. The line of retreat lay through the town, and there were some brick-kilns in rear of the left. Within four hundred yards from the front, and on various points still nearer to the flanks, were woods, and jungle, offering excellent shelter to the advancing enemy. In fact, a worse position could not well have been chosen the British exposed in the open plain, while the Indians could approach under shelter to within three or four hundred yards! To bring out Windham s heroism in a still stronger light, there was a very decent position close by, with a plain in front and rear, and with the canal as an obstacle before the front; but, of course, the worse position was insisted on. On the 27th November, the enemy opened a cannonade, bringing up his guns to the edge of the cover afforded by the jungle. Windham, who, with the modesty inherent in a hero, calls this a bombardment, says his troops stood it for five hours; but after this time, there happened some things which neither Windham, nor any man present, nor any Indian or British newspaper, has as yet dared to relate. From the moment the cannonade was turned into a battle, all our direct sources of information cease, and we are left to draw our own conclusions from the hesitating, prevaricating and incomplete evidence before us. Windham confines himself to the following incoherent statement. Gen. Windham, with that instinct shown already at the Redan, moves off to the reserve (the 88th occupying the town, as we must conclude), and finds, not the enemy alive and fighting, but a great number of the enemy bayoneted by, the 88th. This fact leads him to the conclusion that the enemy (he does not say whether dead or alive) has fully penetrated the town! Alarming as this conclusion is both to the reader and to himself our hero does not stop here. He is told that the fort is attacked. A common general would have inquired into the truth of this story, which of course turned out to be false. Not so Windham. He orders a retreat, though his troops could have held the position at least until dark, had not an error been committed in the conveyance of one of Windham s orders! Thus, first you have Windham s heroic conclusion, that where there are many dead Sepoys there must be many live ones; secondly, the false alarm respecting the attack on the fort; and thirdly, the error committed in the conveyance of an order; all of which mishaps combined made it possible tor a very numerous rabble of natives to defeat the hero of the Redan and to beat the indomitable British pluck of his soldiers. Another reporter, an officer present, says: Finally, The Times s Calcutta correspondent states that evidently the British suffered on the 27th what almost amounts to a repulse, but that from patriotic motives the Anglo-Indian press covers the disgrace with the impenetrable vail of charity. Thus much, however, is also admitted, that one of Her Majesty s regiments, composed mostly of recruits, one moment got into disorder, without however giving way, and that at the fort the confusion was extreme, Windham having lost all control over his men, until in the evening of the 28th Campbell arrived and with a few haughty words brought everybody to his place again. Now, what are the evident conclusions from all these confused and prevaricating statements? No other than that, under the incapable direction of Windham, the British troops were completely, though quite unnecessarily defeated; that when the retreat was ordered, the officers of the 34th Regiment, who had not even taken the trouble to get in any way acquainted with the ground they had fought on, could not find the place they were ordered to retreat to; that the regiment got into disorder and finally fled; that this led to a panic in the camp, which broke down all the bounds of order and discipline, and occasioned the loss of the camp equipage and part of the baggage; that finally, in spite of Windham s assertion about the stores, 15,000 Mini cartridges, the Paymaster s chests, and the shoes and clothing for many regiments and new levies, fell into the hands of the enemy. English infantry, when in line or column, seldom run away. In common with the Russians, they have a natural cohesion which generally belongs to old soldiers only, and which is in part explained by the considerable admixture of old soldiers in both services, but it in part also evidently belongs to national character. This quality, which has nothing whatever to do with pluck, but is on the contrary rather a peculiar development of the instinct of self-preservation, is still very valuable, especially in defensive positions. It also, in common with the phlegmatic nature of Englishmen, prevents panic; but it is to be remarked that when Irish troops are once disordered and brought to panic, they are not easy to rally. Thus it happened to Windham on Nov. 27. He will figure henceforth among that not very large but distinguished list of English generals who have succeeded in making their troops run away under a panic. On the 28th the Gwalior contingent were re-enforced by a considerable body from Bithoor, and closed up to within four hundred yards of the British intrenched outposts. There was another engagement, conducted on the part of the assailants without any vigor whatever. During it an example of real pluck occurred on the part of the soldiers and officers of the 64th, which we are glad to relate, although the exploit itself was as foolish as the renowned Balaklava charge. The responsibility of it, too, is shifted upon a dead man Col. Wilson of that regiment. It appears that Wilson advanced with one hundred and eighty men against four guns of the enemy, defended by far superior numbers. We are not told who they were; but the result leads to the conclusion that they were of the Gwalior troops. The British took the guns with a rush, spiked three of them, and held out for some time, when, no re-enforcement arriving, they had to retreat, leaving sixty men and most of their officers on the ground. The proof of the hard fighting is in the loss. Here we have a small force, which, from the loss they suffered, must have been pretty well met, holding a battery till one-third of their numbers are down. This is hard fighting indeed, and the first instance of it we have since the storming of Delhi. The man who planned this advance, however, deserves to be tried by court-martial and shot. Windham says it was Wilson. He fell in it, and cannot reply. In the evening the whole British force was pent up in the fort, where disorder continued to reign, and the position with the bridge was in evident danger. But then Campbell arrived. He restored order, drew over fresh troops in the morning, and so far repelled the enemy as to secure the bridge and fort. Then he made all his wounded, women, children and baggage cross, and held a defensive position until all these had a fair start on the road to Allahabad. As soon as this was accomplished, he attacked the Sepoys on the 6th, and defeated them, his cavalry and artillery following them up for fourteen miles the same day. That there was little resistance offered is shown from Campbell s report; he merely describes the advance of his own troops, never mentioning any resistance or maneuvers on the part of the enemy; there was no check, and it was not a battle, but a battue. Brigadier Hope Grant, with a light division, followed the fugitives, and caught them on the 8th in the act of passing a river; thus brought to bay, they turned round and suffered severe loss. With this event Campbell s first campaign, that of Lucknow and Cawnpore, is brought to a close, and a fresh series of operations must begin, whose first developments we may expect to hear of within a fortnight or three weeks.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/02/20.htm

The second critical period of the Indian insurrection has been brought to a close. The first found its center in Delhi, and was ended by the storming of that city; the second centered in Lucknow, and that place, too, has now fallen. Unless fresh insurrections break out in places hitherto quiet, the revolt must now gradually subside into its concluding, chronic period, during which the insurgents will finally take the character of dacoits or robbers, and find the inhabitants of the country as much their enemies as the British themselves. The details of the storming of Lucknow are not yet received, but the preliminary operations and the outlines of the final engagements are known. Our readers recollect a that after the relief of the residency of Lucknow, Gen. Campbell blew up that post, but left Gen. Outram with about 5,000 men in the Alumbagh, an intrenched position a few miles from the city. He, himself, with the remainder of his troops, marched back to Cawnpore, where Gen. Windham had been defeated by a body of rebels; these he completely beat, and drove them across the Jumma at Calpee. He then awaited at Cawnpore the arrival of re-enforcements and the heavy guns, arranged his plans of attack, gave orders for the concentration of the various columns destined to advance into Oude, and especially turned Cawnpore into an intrenched camp of strength and proportions requisite for the immediate and principal base of operations against Lucknow. When all this was completed, he had another task to perform before he thought it safe to move a task the attempting of which at once distinguishes him from almost all preceding Indian commanders. He would have no women loitering about the camp. He had had quite enough of the heroines at Lucknow, and on the march to Cawnpore; they had considered it quite natural that the movements of the army, as had always been the case in India, should be subordinate to their fancies and their comfort. No sooner had Campbell reached Cawnpore than he sent the whole interesting and troublesome community to Allahabad, out of his way; and immediately sent for the second batch of ladies, then at Agra. Not before they had reached Cawnpore, and not before he had seen them safely off to Allahabad, did he follow his advancing troops toward Lucknow. The arrangements made for this campaign of Oude were on a scale hitherto unprecedented in India. In the greatest expedition ever undertaken by the British there, the invasion of Afghanistan, 534 the troops employed never exceeded 20,000 at a time, and of these the great majority were natives. In this campaign of Oude, the number of Europeans alone exceeded that of all the troops sent into Afghanistan. The main army, led by Sir Colin Campbell personally, consisted of three divisions of infantry, one of cavalry, and one of artillery and engineers. The first division of infantry, under Outram, held the Alumbagh. It consisted of five European and one native regiment. The second (four European and one native regiment) and third (five European and one native regiment), the cavalry division under Sir Hope Grant (three European and four or five native regiments) and the mass of the artillery (forty-eight field-guns, siege trains and engineers), formed Campbell s active force, with which he advanced on the road from Cawnpore. A brigade concentrated under Brigadier Franks at Juanpore and Azimghur, between the Goomtee and the Ganges, was to advance along the course of the former river to Lucknow. This brigade numbered three European regiments and two batteries, beside native troops, and was to form Campbell s right wing. Including it, Campbell s force in all amounted to The concentration of this immense force is the result partly of Gen. Campbell s combinations, but partly also of the suppression of the revolt in various parts of Hindostan, in consequence of which the troops naturally concentrated toward the scene of action. No doubt Campbell would have ventured to act with a smaller force; but while he was waiting for this, fresh resources were thrown, by circumstances, on his hands; and he was not the man to refuse to avail himself of them, even against so contemptible an enemy as he knew he would meet at Lucknow. And it must not be forgotten that, imposing as these numbers look, they still were spread over a space as large as France; and that at the decisive point at Lucknow he could only appear with about 20,000 Europeans, 10,000 Hindoos, and 10,000 Ghoorkas the value of the last, under native command, being at least doubtful. This force, in its European components alone, was certainly more than enough to insure a speedy victory, but still its strength was not out of proportion to its task; and very likely Campbell desired to show the Oudians, for once, a more formidable army of white faces than any people in India had ever seen before, as a sequal to an insurrection which had been based on the small number and wide dispersion of the Europeans over the country. The force in Oude consisted of the remnants of most of the mutinous Bengal regiments and of native levies from the country itself. Of the former, there cannot have been more than 35,000 or 40,000 at the very outside. The sword, desertion and demoralization must have reduced this force, originally 80,060 strong, at least one half; and what was left was disorganized, disheartened, badly appointed, and totally unfit to take the field. The new levies are variously stated at from 100,000 to 150,000 men; but what their numbers may have been is unimportant. Their arms were but in part firearms, of inferior construction; most of them carried arms for close encounter only the kind of fighting they were least likely to meet with. The greater part of this force was at Lucknow, engaging Sir J. Outram s troops; but two columns were acting in the direction of Allahabad and Juanpore. The concentric movement upon Lucknow began about the middle of February. From the 15th to the 26th the main army and its immense train (60,000 camp followers alone) marched from Cawnpore upon the capital of Oude, meeting with no resistance. The enemy, in the mean time, attacked Outram s position, without a chance of success. on February 21 and 24. On the 19th Franks advanced upon Sultanpore, defeated both columns of the insurgents in one day, and pursued them as well as the want of cavalry permitted. The two defeated columns having united, he beat them again on the 23d, with the loss of 20 guns and all their camp and baggage. Gen. Hope Grant, commanding the advanced guard of the main army, had also, during its forced march, detached himself from it, and making a point to the left had, on the 23d and 24th, destroyed two forts on the road from Lucknow to Rohilcund. On March 2 the main army was concentrated before the southern side of Lucknow. This side is protected by the canal, which had to be passed by Campbell in his previous attack on the city; behind this canal strong intrenchments had been thrown up. On the 3d, the British occupied the Dilkhoosha Park, with the storming of which the first attack also had commenced. On the 4th, Brig. Franks joined the main army, and now formed its right flank, his right supported by the River Goomtee. Meantime, batteries against the enemy s intrenchments were erected, and two floating bridges were constructed, below the town, across the Goomtee; and as soon as these were ready. Sir J. Outram, with his division of infantry, 1,400 horse, and 30 guns, moved across to take position on the left or north-eastern bank. From here he could enfilade a great part of the enemy s line along the canal, and many of the intrenched palaces to its rear; he also cut off the enemy s communications with the whole north-eastern part of Oude. He met with considerable resistance on the 6th and 7th, but drove the enemy before him. On the 8th, he was again attacked, but with no better success. In the mean time, the batteries on the right bank had opened their fire; Outram s batteries, along the river-bank, took the position of the insurgents in flank and rear; and on the 9th the 2d division, under Sir E. Lugard, stormed the Martini re, which, as our readers may recollect, is a college and park situated on the south side of the canal, at its junction with the Goomtee, and opposite the Dilkhoosha. On the 10th, the Bank-House was breached and stormed, Outram advancing further up the river, and enfilading with his guns every successive position of the insurgents. On the 11th, two Highland regiments (42d and 93d) stormed the Queen s Palace, and Outram attacked and carried the stone-bridges leading from the left bank of the river into the town. He then passed his troops across and joined in the attack against the next building in front. On March 13, another fortified building, the Imambarrah, was attacked, a sap being resorted to in order to construct the batteries under shelter; and on the following day, the breach being completed, this building was stormed. The enemy, flying to the Kaiserbagh or King s Palace, was so hotly pursued that the British entered the place at the heels of the fugitives. A violent struggle ensued, but by 3 o clock in the afternoon the palace was in the possession of the British. This seems to have brought matters to a crisis; at least, all spirit of resistance seems to have ceased, and Campbell at once took measures for the pursuit and interception of the fugitives. Brigadier Campbell, with one brigade of cavalry and some horse artillery, was sent to pursue them, while Grant took the other brigade round to Seetapore, on the road from Lucknow to Rohilcund, in order to intercept them. While thus the portion of the garrison which took to flight was provided for, the infantry and artillery advanced further into the city, to clear it from those who still held out. From the 15th to the 19th, the fighting must have been mainly in the narrow streets of the town, the line of palaces and parks along the river having been previously carried; but on the 19th, the whole of the town was in Campbell s possession. About 50,000 insurgents are said to have fled, partly to Rohilcund, partly toward the Doab and Bundelcund. In this latter direction they had a chance of escaping, as Gen. Rose, with his column, was still sixty miles at least from the Jumna, and was said to have 30,000 insurgents in front of him. In the direction of Rohilcund there was also a chance of their being able to concentrate again; Campbell would not be in a position to follow them very fast, while of the whereabouts of Chamberl ain we know nothing, and the province is large enough to afford them shelter for a short time. The next feature of the insurrection, therefore, will most likely be the formation of two insurgent armies in Bundelcund and Rohilcund, the latter of which, however, may soon be destroyed by concentric marches of the Lucknow and Delhi armies. The operations of Sir C. Campbell in this campaign, as far as we can now judge, were characterized by his usual prudence and vigor. The dispositions for his concentric march on Lucknow were excellent, and the arrangements for the attack appear to have taken advantage of every circumstance. The conduct of the insurgents, on the other hand, was as contemptible, if not more so, than before. The sight of the redcoats struck them everywhere with panic. Franks s column defeated twenty times its numbers, with scarcely a man lost; and though the telegrams talk of stout resistance and hard fighting, as usual, the losses of the British appear, where they are mentioned, so ridiculously small that we fear there was no more heroism needed and no more laurels to be gathered this time at Lucknow than when the British got there before.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/04/30.htm

At last we are in possession of detailed accounts of the attack and fall of Lucknow. The principal sources of information, in a military point of view, the dispatches of Sir Colin Campbell, have not yet, indeed, been published; but the correspondence of the British press, and especially the letters of Mr. Russell in The London Times, the chief portions of which have been laid before our readers, are quite sufficient to give a general insight into the proceedings of the attacking party. The conclusions we drew from the telegraphic news, as to the ignorance and cowardice displayed in the defense, are more than confirmed by the detailed accounts. The works erected by the Hindoos, formidable in appearance, were in reality of no greater consequence than the fiery dragons and grimacing faces painted by Chinese braves on their shields or on the walls of their cities. Every single work exhibited an apparently impregnable front, nothing but loopholed and embrasured walls and parapets, difficulties of access of every possible description, cannon and small-arms bristling everywhere. But the flanks and rear of every position were completely neglected, a mutual support of the various works was never thought of, and even the ground between the works, as well as in front of them, had never been cleared, so that both front and flank attacks could be prepared without the knowledge of the defense, and could approach under perfect shelter to within a few yards from the parapet. It was just such a conglomerate of intrenchments as might be expected from a body of private sappers deprived of their officers, and serving in an army where ignorance and indiscipline reigned supreme. The intrenchments of Lucknow are but a translation of the whole method of Sepoy warfare into baked clay walls and earthen parapets. The mechanical portion of European tactics had been partially impressed upon their minds; they knew the manual and platoon drill well enough; they could also build a battery and loophole a wall; but how to combine the movements of companies and battalions in the defense of a position, or how to combine batteries and loopholed houses and walls, so as to form an intrenched camp capable of resistance of this they were utterly ignorant. Thus, they weakened the solid masonry walls of their palaces by over-loopholing them, heaped tier upon tier of loopholes and embrasures, placed parapeted batteries on their roofs, and all this to no purpose whatever, because it could all be turned in the easiest possible manner. In the same way, knowing their tactical inferiority, they tried to make up for it by cramming every post as full of men as possible, to no other purpose than to give terrible effect to the British artillery and to render impossible all orderly and systematic defense as soon as the attacking columns fell upon this motley host from an unexpected direction. And when the British, by some accidental circumstance, were compelled to attack even the formidable front of the works, their construction was so faulty that they could be approached, breached and stormed almost without any risk. At the Imambarrah this was the case. Within a few yards from the building stood a pucka (sun-baked clay) wall. Up to this the British made a short sap (proof enough that the embrasures and loopholes on the higher part of the building had no plunging fire upon the ground immediately in front), and used this very wall as a breaching battery, prepared for them by the Hindoos themselves! They brought up two 68-pounders (naval guns) behind this wall. The lightest 68-pounder in the British service weighs 87 cwt., without the carriage; but supposing even that an 8-inch gun for hollow shot only is alluded to, the lightest gun of that class weighs 50 cwt., and with the carriage at least three tuns. That such guns could be brought up at all in such proximity to a palace several stories high, with a battery on the roof, shows a contempt of commanding positions and an ignorance of military engineering which no private sapper in any civilized army could be capable of. Thus much for the science against which the British had to contend. As to courage and obstinacy, they were equally absent from the defense. From the Martini re to the Mousabagh, on the part of the natives, there was but one grand and unanimous act of bolting, as soon as a column advanced to the attack. There is nothing in the whole series of engagements that can compare even with the massacre (for fight it can scarcely be called) in the Secunderbagh during Campbell s relief of the Residency. No sooner do the attacking parties advance, than there is a general helter-skelter to the rear, and where there are but a few narrow exits so as to bring the crowded rabble to a stop, they fall pell-mell, and without any resistance, under the volleys and bayonets of the advancing British. The British bayonet has done more execution in any one of these onslaughts on panic-stricken natives than in all the wars of the English in Europe and America put together. In the East, such bayonet-battles, where one party is active and the other abjectly passive, are a regular occurrence in warfare; the Burmese stockades in every case furnished an example. According to Mr. Russell s account, the chief loss suffered by the British was caused by Hindoos cut off from retreat, and barricaded in the rooms of the palaces, whence they fired from the windows upon the officers in the court-yards and gardens. In storming the Imambarra and the Kaiserbagh, the bolting of the Hindoos was so rapid, that the place was not taken, but simply marched into. The interesting scene, however, was now only commencing; for, as Mr. Russell blandly observes, the conquest of the Kaiserbagh on that day was so unexpected that there was no time to guard against indiscriminate plunder. A merry scene it must have been for a true, liberty-loving John Bull to see his British grenadiers helping themselves freely to the jewels, costly arms, clothes, and all the toggery of his Majesty of Oude. The Sikhs, Ghoorkas and camp-followers were quite ready to imitate the example, and a scene of plunder and destruction followed which evidently surpassed even the descriptive talent of Mr. Russell. Every fresh step in advance was accompanied with plunder and devastation. The Kaiserbagh had fallen on the 14th; and half an hour after, discipline was at an end, and the officers had lost all command over their men. On the 17th, Gen. Campbell was obliged to establish patrols to check plundering, and to remain in inactivity until the present license ceases. The troops were evidently completely out of hand. On the 18th, we hear that there is a cessation of the grosser sort of plunder, but devastation is still going on freely. In the city, however, while the vanguard were fighting against the natives fire from the houses, the rearguard plundered and destroyed to their hearts content. In the evening, there is another proclamation against plundering; strong parties of every regiment to go out and fetch in their own men, and to keep their camp-followers at home; nobody to leave the camp except on duty. On the 20th, a recapitulation of the same orders. On the same day, two British officers and gentlemen, Lieuts. Cape and Thackwell, went into the city looting, and were murdered in a house; and on the 26th, matters were still so bad that the most stringent orders were issued for the suppression of plunder and outrage; hourly roll-calls were instituted; all soldiers strictly forbidden to enter the city; camp-followers, if found armed in the city, to he hanged; soldiers not to wear arms except on duty, and all non-combatants to he disarmed. To give due weight to these orders, a number of triangles for flogging were erected at proper places. This is indeed a pretty state of things in a civilized army in the nineteenth century; and if any other troops in the world had committed one-tenth of these excesses, how would the indignant British press brand them with infamy! But these are the deeds of the British army, and therefore we are told that such things are but the normal consequences of war. British officers and gentlemen are perfectly welcome to appropriate to themselves any silver spoons, jeweled bracelets, and other little memorials they may find about the scene of their glory; and if Campbell is compelled to disarm his own army in the midst of war, in order to stop wholesale robbery and violence, there may have been military reasons for the step; but surely nobody will begrudge these poor fellows a week s holiday and a little frolic after so many fatigues and privations. The fact is, there is no army in Europe or America with so much brutality as the British. Plundering, violence, massacre things that everywhere else are strictly and completely banished are a time-honored privilege, a vested right of the British soldier. The infamies committed for days together, after the storming of Badajos and San Sebastian, in the Peninsular war, are without a parallel in the annals of any other nation since the beginning of the French Revolution; and the medieval usage, proscribed everywhere else, of giving up to plunder a town taken by assault, is still the rule with the British. At Delhi imperious military considerations enforced an exception; but the army, though bought off by extra pay, grumbled, and now at Lucknow they have made up for what they missed at Delhi. For twelve-days and nights there was no British army at Lucknow nothing but a lawless, drunken, brutal rabble, dissolved into bands of robbers, far more lawless, violent and greedy than the Sepoys who had just been driven out of the place. The sack of Lucknow in 1858 will remain an everlasting disgrace to the British military service. If the reckless soldiery, in their civilizing and humanizing progress through India, could rob the natives of their personal property only, the British Government steps in immediately afterward and strips them of their real estate as well. Talk of the first French Revolution confiscating the lands of the nobles and the church! Talk of Louis Napoleon confiscating the property of the Orleans family! Here comes Lord Canning, a British nobleman, mild in language, manners and feelings, and confiscates, by order of his superior, Viscount Palmerston, the lands of a whole people, every rood, perch and acre, over an extent of ten thousand square miles. A very nice bit of loot indeed for John Bull! And no sooner had Lord Ellenborough, in the name of the new Government, disapproved of this hitherto unexampled measure, than up rise The Times and a host of minor British papers to defend this wholesale robbery, and break a lance for the right of John Bull to confiscate everything he likes. But then, John is an exceptional being, and what is virtue in him, according to The Times, would be infamy in others. Meanwhile thanks to the complete dissolution of the British army for the purpose of plunder the insurgents escaped, unpursued, into the open country. They concentrate in Rohilcund, while a portion carry on petty warfare in Oude, and other fugitives have taken the direction of Bundelcund. At the same time, the hot weather and the rains are fast approaching; and it is not to be expected that the season will be so uncommonly favorable to European constitutions as last year. Then, the mass of the European troops were more or less acclimated; this year, most of them are newly arrived. There is no doubt that a campaign in June, July and August will cost the British an immense number of lives, and what with the garrisons that have to be left in every conquered city, the active army will melt down very rapidly. Already are we informed that re-enforcements of 1,000 men per month will scarcely keep up the army at its effective strength; and as to garrisons, Lucknow alone requires at least 8,000 men, over one-third of Campbell s army. The force organizing for the campaign of Rohilcund will scarcely be stronger than this garrison of Lucknow. We are also informed that among the British officers the opinion is gaining ground that the guerrilla warfare which is sure to succeed the dispersion of the larger bodies of insurgents, will be far more harassing and destructive of life to the British than the present war with its battles and sieges. And, lastly, the Sikhs are beginning to talk in a way which bodes no good to the English. They feel that without their assistance the British would scarcely have been able to hold India, and that, had they joined the insurrection, Hindostan would certainly have been lost to England, at least for a time. They say this loudly, and exaggerate it in their Eastern way. To them the English no longer appear as that superior race which beat them at Moodka, Ferozepore and Aliwal. From such a conviction to open hostility there is but a step with Eastern nations; a spark may kindle the blaze. Altogether, the taking of Lucknow has no more put down the Indian insurrection than the taking of Delhi. This Summer s campaign may produce such events that the British will have, next Winter, to go substantially over the same ground again, and perhaps even to reconquer the Punjaub. But in the best of cases, a long and harassing guerrilla warfare is before them not an enviable thing for Europeans under an Indian sun.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/05/25.htm

About eighteen months ago, at Canton, the British Government propounded the novel doctrine in the law of nations that a State may commit hostilities on a large scale against a Province of another State, without either declaring war or establishing a state of war against that other State. Now the same British Government, in the person of the Governor-General of India, Lord Canning, has made another forward move in its task of upsetting the existing law of nations. It has proclaimed that When, after the fall of Warsaw in 1831, the Russian Emperor confiscated the proprietary right in the soil hitherto held by numerous Polish nobles, there was one unanimous outburst of indignation in the British press and Parliament. When, after the battle of Novara, the Austrian Government did not confiscate, but merely sequestered, the estates of such Lombard noblemen as had taken an active part in the war of independence, that unanimous outburst of British indignation was repeated. And when, after the 2d December, 1851, Louis Napoleon confiscated the estates of the Orleans family, which, by the common law of France, ought to have been united to the public domain on the accession of Louis Philippe, but which had escaped that fate by a legal quibble, then British indignation knew no bounds, and The London Times declared that by this act the very foundations of social order were upset, and that civil society could no longer exist. All this honest indignation has now been practically illustrated. England, by one stroke of the pen, has confiscated not only the estates of a few noblemen, or of a royal family, but the whole length and breadth of a kingdom nearly as large as Ireland, the inheritance of a whole people, as Lord Ellenborough himself terms it. But let us hear what pretexts grounds we cannot call them Lord Canning, in the name of the British Government, sets forth for this unheard-of proceeding: First, The army is in possession of Lucknow. Second, The resistance, begun by a mutinous soldiery, has found support from the inhabitants of the city and of the province at large. Third, They have been guilty of a great crime, and have subjected themselves to a just retribution. In plain English: Because the British army have got hold of Lucknow, the Government has the right to confiscate all the land in Oude which they have not yet got hold of. Because the native soldiers in British pay have mutinied, the natives of Oude, who were subjected to British rule by force, have nob. the right to rise for their national independence. In short, the people of Oude have rebelled against the legitimate authority of the British Government, and the British Government now distinctly declares that rebellion is a sufficient ground for confiscation. Leaving, therefore, out of the question all the circumlocution of Lord Canning, the whole question turns upon the point that he assumes the British rule in Oude to have been legitimately established. Now, British rule in Oude was established in the following manner: When, in 1856, Lord Dalhousie thought the moment for action had arrived, he concentrated an army at Cawnpore which, the King of Oude was told, was to serve as a corps of observation against Nepaul. This army suddenly invaded the country, took possession of Lucknow, and took the King prisoner. He was urged to cede the country to the British, but in vain. He was then carried off to Calcutta, and the country was annexed to the territories of the East India Company. This treacherous invasion was based upon article 6 of the treaty of 180 1,a concluded by Lord Wellesley. This treaty was the natural consequence of that concluded in 1798 by Sir John Shore. According to the usual policy followed by the Anglo-Indian Government in their intercourse with native princes, this first treaty of 1798 was a treaty of offensive and defensive alliance on both sides. It secured to the East India Company a yearly subsidy of 76 lacs of rupees ($3,800,000); but by articles 12 and 13 the King was obliged to reduce the taxation of the country. As a matter of course, these two conditions, in open contradiction to each other, could not be fulfilled by the King at the same time. This result, looked for by the East India Company, gave rise to fresh complications, resulting in the treaty of 1801, by which a cession of territory had to make up for the alleged infractions of the former treaty; a cession of territory which, by the way, was at the time denounced in Parliament as a downright robbery, and would have brought Lord Wellesley before a Committee of Inquiry, but for the political influence then held by his family. In consideration of this cession of territory, the East India Company, by article 3, undertook to defend the King s remaining territories against all foreign and domestic enemies; and by article 6 guaranteed the possession of these territories to him and his heirs and successors forever. But this same article 6 contained also a pit-fall for the King, viz: The King engaged that he would establish such a system of administration, to be carried into effect by his own officers, as should be conducive to the prosperity of his subjects, and be calculated to secure the lives and property of the inhabitants. Now, supposing the King of Oude had broken this treaty; had not, by his government, secured the lives and property of the inhabitants (say by blowing them from the cannon s mouth, and confiscating the whole of their lands), what remedy remained to the East India Company? The King was, by the treaty, acknowledged as an independent sovereign, a free agent, one of the contracting parties. The East India Company, on declaring the treaty broken and thereby annulled, could have but two modes of action: either by negotiation, backed by pressure, they might have come to a new arrangement, or else they might have declared war against the King. But to invade his territory without declaration of war, to take him prisoner unawares, dethrone him and annex his territory, was an infraction not only of the treaty, but of every principle of the law of nations. That the annexation of Oude was not a sudden resolution of the British Government is proved by a curious fact. No sooner was Lord Palmerston, in 1831, Foreign Secretary, than he sent an order to the then Governor-General to annex Oude. The subordinate at that time declined to carry out the suggestion. The affair, however, came to the knowledge of the King of Oude, who availed himself of some pretext to send an embassy to London. In spite of all obstacles, the embassy succeeded in acquainting William IV., who was ignorant of the whole proceeding, with the danger which had menaced their country. The result was a violent scene between William IV. and Palmerston, ending in a strict injunction to the latter never to repeat such coups d tat on pain of instant dismissal. It is important to recollect that the actual annexation of Oude and the confiscation of all the landed property of the country took place when Palmerston was again in power. The papers relating to this first attempt at annexing Oude, in 1831, were moved for, a few weeks ago, in the House of Commons, when Mr. Baillie, Secretary of the Board of Control, declared that these papers had disappeared. Again, in 1837, when Palmerston, for the second time, was Foreign Secretary, and Lord Auckland Governor-General of India, the King of Oude was compelled to make a fresh treaty with the East India Company. This treaty takes up article 6 of the one of 1801, because it provides no remedy for the obligation contained in it (to govern the country well); and it expressly provides, therefore, by article 7, By article 8, the treaty further provides: This treaty professes to be concluded between the Governor-General of British India in Council, 150 on one hand, and the King of Oude on the other. It was, as such, duly ratified, by both parties, and the ratifications were duly exchanged. But when it was submitted to the Board of Directors of the East India Company, it was annulled (April 10, 1838) as an infraction of the friendly relations between the Company and the King of Oude, and an encroachment, on the part of the Governor-General, on the rights of that potentate. Palmerston had not asked the Company s leave to conclude the treaty, and he took no notice of their annulling resolution. Nor was the King of Oude informed that the treaty had ever been canceled. This is proved by Lord Dalhousie himself (minute Jan. 5, 1856): In the same minute, sec. 17, it is said: But not only was this treaty inserted in the official collection of 1845, it was also officially adverted to as a subsisting treaty in Lord Auckland s notification to the King of Oude, dated July 8, 1839; in Lord Hardinge s (then Governor-General) remonstrance to the same King, of November 23, 1847, and in Col. Sleeman s (Resident at Lucknow) communication to Lord Dalhousie himself, of the 10th December, 1851. Now, why was Lord Dalhousie so eager to deny the validity of a treaty which all his predecessors, and even his own agents, had acknowledged to be in force in their communications with the King of Oude? Solely because, by this treaty, whatever pretext the King might give for interference, that interference was limited to an assumption of government by British officers in the name of the King of Oude, who was to receive the surplus revenue. That was the very opposite of what was wanted. Nothing short of annexation would do. This denying the validity of treaties which had formed the acknowledged base of intercourse for twenty years; this seizing violently upon independent territories in open infraction even of the acknowledged treaties; this final confiscation of every acre of land in the whole country; all these treacherous and brutal modes of proceeding of the British toward the natives of India are now beginning to avenge themselves, not only in India, but in England.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/05/28.htm

Lord Canning s proclamation in relation to Oude, some important documents in reference to which we published on Saturday, has revived the discussion as to the land tenures of India a subject upon which there have been great disputes and differences of opinion in times past, and misapprehensions in reference to which have led, so it is alleged, to very serious practical mistakes in the administration of those parts of India directly under British rule. The great point in this controversy is, what is the exact position which the zemindars, talookdars or sirdars, so called hold in the economical system of India? Are they properly to be considered as landed proprietors or as mere tax-gatherers? It is agreed that in India, as in most Asiatic countries, the ultimate property in the soil rests [with] the Government; but while one party to this controversy insists that the Government is to be looked upon as a soil proprietor, letting out the land on shares to the cultivators, the other side maintain that in substance the land in India is just as much private property as in any other country whatever this alleged property in the Government being nothing more than the derivation of title from the sovereign theoretically acknowledged in all countries, the codes of which are based on the feudal law and substantially acknowledged in all countries whatever in the power of the Government to levy taxes on the land to the extent of the needs of the Government, quite independent of all considerations, except as mere matter of policy, of the convenience of the owners. Admitting, however, that the lands of India are private property, held by as good and strong a private title as land elsewhere, who shall be regarded as the real owners? There are two parties for whom this claim has been set up. One of these parties is the class known as zemindars and talookdars, who have been considered to occupy a position similar to that of the landed nobility and gentry of Europe; to be, indeed, the real owners of the land, subject to a certain assessment due to the Government, and, as owners, to have the right of displacing at pleasure the actual cultivators, who, in this view of the case, are regarded as standing in the position of mere tenants at will, liable to any payment in the way of rent which the zemindars may see fit to impose. The view of the case which naturally fell in with English ideas, as to the importance and necessity of a landed gentry as the main pillar of the social fabric, was made the foundation of the famous landed settlement of Bengal seventy years ago, under the Governor-Generalship of Lord Cornwallis a settlement which still remains in force, but which, as it is maintained by many, wrought great injustice alike to the Government and to the actual cultivators. A more thorough study of the institutions of Hindostan, together with the inconveniences, both social and political, resulting from the Bengal settlement, has given currency to the opinion that by the original Hindoo institutions, the property of the land was in the village corporations, in which resided the power of allotting it out to individuals for cultivation, while the zemindars and talookdars were in their origin nothing but officers of the Government, appointed to look after, to collect, and to pay over to the prince the assessment due from the village. This view has influenced to a considerable degree the settlement of the landed tenures and revenue made of late years in the Indian provinces, of which the direct administration has been assumed by the English. The exclusive proprietary rights claimed by the talookdars and zemindars have been regarded as originating in usurpations at once against the Government and the Cultivators, and every effort has been made to get rid of them as an incubus on the real cultivators of the soil and the general improvement of the country. As, however, these middlemen, whatever the origin of their rights might be, could claim prescription in their favor, it was impossible not to recognize their claims as to a certain extent legal, however inconvenient, arbitrary and oppressive to the people. In Oude, under the feeble reign of the native princes, these feudal landholders had gone very far in curtailing alike the claims of the Government and the rights of the cultivators; and when, upon the recent annexation of that kingdom this matter came under revision, the Commissioners charged with making the settlement soon got into a very acrimonious controversy with them as to the real extent of their rights. Hence resulted a state of discontent on their part which led them to make common cause with the revolted Sepoys. By those who incline to the policy above indicated that of a system of village settlement looking at the actual cultivators as invested with a proprietary right in the land, superior to that of the middlemen, through whom the Government receives its share of the landed produce the proclamation of Lord Canning is defended as an advantage taken of the position in which the great body of the zemindars and talookdars of Oude had placed themselves, to open a door for the introduction of much more extensive reforms than otherwise would have been practicable the proprietary right confiscated by that proclamation being merely the zemindarree or talookdarree right, and affecting only a very small part of the population, and that by no means the actual cultivators. Independently of any question of justice and humanity, the view taken on the other hand by the Derby Ministry of Lord Canning s proclamation, corresponds sufficiently well with the general principles which the Tory or Conservative party maintain on the sacredness of vested rights and the importance of upholding an aristocratic landed interest. In speaking of the landed interest at home, they always refer rather to the landlords and rent-receivers than to the rent-payers and to the actual cultivators; and it is, therefore, not surprising that they should regard the interests of the zemindars and talookdars, however few their actual number, as equivalent to the interests of the great body of the people. Here indeed is one of the greatest inconveniences and difficulties in the Government of India from England, that views of Indian questions are liable to be influenced by purely English prejudices or sentiments, applied to a state of society and a condition of things to which they have in fact very little real pertinency. The defense which Lord Canning makes in his dispatch, published to-day, of the policy of his proclamation against the objections of Sir James Outram, the Commissioner of Oude, is very plausible, though it appears that he so far yielded to the representations of the Commissioner as to insert into the proclamation the mollifying sentence, not contained in the original draft sent to England, and on which Lord Ellenborough s dispatch was based. Lord Canning s opinion as to the light in which the conduct of landholders of Oude in joining in the rebellion ought to be viewed does not appear to differ much from that of Sir James Outram and Lord Ellenborough. He argues that they stand in a very different position not only from the mutinous Sepoys, but from that of the inhabitants of rebellious districts in which the British rule had been longer established. He admits that they are entitled to be treated as persons having provocation for the course they took; but at the same time insists that they must be made to understand that rebellion cannot be resorted to without involving serious consequences to themselves. We shall soon learn what the effect of the issue of the proclamation has been, and whether Lord Canning or Sir James Outram was nearer right in his anticipation of its results.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/06/07.htm

In spite of the great military operations of the English in the capture first of Delhi and then of Lucknow, the successive headquarters of the Sepoy rebellion, the pacification of India is yet very far from being accomplished. Indeed, it may be almost said that the real difficulty of the case is but just beginning to show itself. So long as the rebellious Sepoys kept together in large masses, so long as it was a question of sieges and pitched battles on a great scale, the vast superiority of the English troops for such operations gave them every advantage. But with the new character which the war is now taking on, this advantage is likely to be in a great measure lost. The capture of Lucknow does not carry with it the submission of Oude; nor would even the submission of Oude carry with it the pacification of India. The whole Kingdom of Oude bristles with fortresses of greater or less pretensions; and though perhaps none would long resist a regular attack, yet the capture of these forts one by one will not only be a very tedious process, but it will be attended with much greater proportional loss than operations against such great cities as Delhi and Lucknow. But it is not alone the Kingdom of Oude that requires to be conquered and pacified. The discomfited Sepoys dislodged from Lucknow have scattered and fled in all directions. A great body of them have taken refuge in the hill districts of Rohilcund to the north, which still remains entirely in possession of the rebels. Others fled into Goruckpore on the east which district, though it had been traversed by the British troops on their march to Lucknow, it has now become necessary to recover a second time. Many others have succeeded in penetrating southward into Bundelcund. Indeed, a controversy seems to have arisen as to the best method of proceeding, and whether it would not have been better to have first subdued all the outlying districts which might have afforded the rebels a shelter, before directing operations against their main body collected at Lucknow. Such is said to have been the scheme of operations preferred by the military; but it is difficult to see how, with the limited number of troops at the disposal of the English, those surrounding districts could have been so occupied as to exclude the fugitive Sepoys, when finally dislodged from Lucknow, from entering into them, and, as in the case of Goruckpore, making their reconquest necessary. Since the capture of Lucknow, the main body of the rebels appear to have retired upon Bareilly. It is stated that Nena Sahib was there. Against this city and district, upward of a hundred miles north-west from Lucknow, it has been judged necessary to undertake a Summer campaign, and at the latest accounts Sir Colin Campbell was himself marching thither. Meanwhile, however, a guerrilla warfare seems to be spreading in various directions. While the troops are drawn off to the North, scattered parties of rebel soldiery are crossing the Ganges into the Doab, interrupting the communication with Calcutta, and by their ravages disabling the cultivators to pay their land tax, or at least affording them an excuse for not doing so. Even the capture of Bareilly, so far from operating to remedy those evils, will be likely, perhaps, to increase them. It is in this desultory warfare that the advantage of the Sepoys lies. They can beat the English troops at marching to much the same extent that the English can beat them at fighting. An English column cannot move twenty miles a day; a Sepoy force can move forty, and, if hard pushed, even sixty. It is this rapidity of movement which gives to the Sepoy troops their chief value, and this, with their power of standing the climate and the comparative facility of feeding them, makes them indispensable in Indian warfare. The consumption of English troops in service, and especially in a Summer campaign, is enormous. Already, the lack of men is severely felt. It may become necessary to chase the flying rebels from one end of India to the other. For that purpose, European troops would hardly answer, while the contact of the wandering rebels with the native regiments of Bombay and Madras, which have hitherto remained faithful, might lead to new revolts. Even without any accession of new mutineers, there are still in the field not less than a hundred and fifty thousand armed men, while the unarmed population fail to afford the English either assistance or information. Meanwhile, the deficiency of rain in Bengal threatens a famine calamity unknown within this century, though in former times, and even since the English occupation, the source of terrible sufferings.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/06/15.htm

Our indiscreet friend, Mr. William Russell of The London Times, has recently been induced, by his love of the picturesque, to illustrate, for the second time, the sack of Lucknow, to a degree which other people will not think very flattering to the British character. It now appears that Delhi, too, was looted to a very considerable extent, and that besides the Kaiserbagh, the city of Lucknow generally contributed to reward the British soldier for his previous privations and heroic efforts. We quote from Mr. Russell: This, then, accounts for the inactivity of the British army after the conquest of Lucknow. The fortnight devoted to plunder was well spent. Officers and soldiers went into the town poor and debt-ridden, and came out suddenly enriched. They were no longer the same men; yet they were expected to return to their former military duty, to submission, silent obedience, fatigue, privation and battle. But this is out of the question. The army, disbanded for the purpose of plunder, is changed for ever; no word of command, no prestige of the General, can make it again what it once was. Listen again to Mr. Russell: Accordingly, we hear that above 150 officers have sent in their resignations to Sir Colin Campbell a very singular proceeding indeed in an army before the enemy, which in any other service would be followed up in twenty-four hours by cashiering and severest punishment otherwise, but which, we suppose, is considered in the British army as a very proper act for an officer and a gentleman who has suddenly made his fortune. As to the private soldiers, with them the proceeding is different. Loot engenders the desire for more; and if no more Indian treasures are at hand for the purpose, why not loot those of the British Government? Accordingly, says Mr. Russell: Very good, indeed. The Hindoo or Sikh is better disciplined, less thieving, less rapacious than that incomparable model of a warrior, the British soldier! But so far we have seen the individual British only employed. Let us now cast a glance at the British army, looting in its collective capacity: The Calmuck hordes of Jenghiz Khan and Timur, falling upon a city like a swarm of locusts, and devouring everything that came in their way, must have been a blessing to a country, compared with the irruption of these Christian, civilized, chivalrous and gentle British soldiers. The former, at least, soon passed away on their erratic course; but these methodic Englishmen bring along with them their prize-agents, who convert loot into a system, who register the plunder, sell it by auction, and keep a sharp look-out that British heroism is not defrauded of a tittle of its reward. We shall watch with curiosity the capabilities of this army, relaxed as its discipline is by the effects of wholesale plunder, at a time when the fatigues of a hot weather campaign require the greatest stringency of discipline. The Hindoos must, however, by this time be still less fit for regular battle than they were at Lucknow, but that is not now the main question. It is far more important to know what shall be done if the insurgents, after a show of resistance, again shift the seat of war, say to Rajpootana, which is far from being subdued. Sir Colin Campbell must leave garrisons everywhere; his field army has melted down to less than one-half of the force he had before Lucknow. If he is to occupy Rohilcund what disposable strength will remain for the field? The hot weather is now upon him, in June the rains must have put a stop to active campaigning, and allowed the insurgents breathing time. The loss of European soldiers through sickness will have increased every day after the middle of April, when the weather became oppressive; and the young men imported into India last Winter must succumb to the climate in far greater numbers than the seasoned Indian campaigners who last Summer fought tinder Havelock and Wilson. Rohilcund is no more the decisive point than Lucknow was, or Delhi. The insurrection, it is true, has lost most of its capacity for pitched battles; but it is far more formidable in its present scattered form, which compels the English to ruin their army by marching and exposure. Look at the many new centers of resistance. There is Rohilcund, where the mass of the old Sepoys are collected; there is North-eastern Oude beyond the Gogra, where the Oudians have taken up position; there is Calpee, which for the present serves as a point of concentration for the insurgents of Bundelcund. We shall most likely hear in a few weeks, if not sooner, that both Bareilly and Calpee have fallen. The former will be of little importance, inasmuch as it will serve to absorb. nearly all, if not the whole of Campbell s disposable forces. Calpee, menaced now by General Whitlock, who has led his column from Nagpoor to Banda, in Bundelcund, and by, General Rose, who approaches from Jhansi, and has defeated the advanced guard of the Calpee forces, will be a more important conquest; it will free Campbell s base of operations, Cawnpore, from the only danger menacing it, and thus perhaps enable him to recruit his field forces to some extent by troops set at liberty thereby. But it is very doubtful whether there will be enough to do more than to clear Oude. Thus, the strongest army England ever concentrated on one point in India is again scattered in all directions, and had more work cut out than it can conveniently do. The ravages of the climate, during the Summer s heats and rains, must be terrible; and whatever the moral superiority of the European over the Hindoos, it is very doubtful whether the physical superiority of the Hindoos in braving the heat and rains of an Indian Summer will not again be the means of destroying the English forces. There are at present but few British troops on the road to India, and it is not intended to send out large re-enforcements before July and August. Up to October and November, therefore, Campbell has but that one army, melting down rapidly as it is, to hold his own with. What if in the mean time the insurgent Hindoos succeed in raising Rajpootana and Mahratta country in rebellion? What if the Sikhs, of whom there are 80,000 in the British service, and who claim all the honor of the victories for themselves, and whose temper is not altogether favorable to the British, were to rise? Altogether, one more Winter s campaign, at least, appears to be in store for the British in India, and that cannot be carried on without another army from England.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/06/26.htm

London, June 18, 1858 In the sitting of the House of Lords on June 17, the question of the slave-trade was introduced by the Bishop of Oxford, who presented a petition against that trade from the Parish of St. Mary in Jamaica. The impression these debates are sure to produce upon every mind not strongly prejudiced is that of great moderation on the part of the present British Government, and its firm purpose of avoiding any pretext of quarrel with the United States. Lord Malmesbury dropped altogether the right of visit, as far as ships under the American flag are concerned, by the following declaration: On the Opposition benches there was also no attempt made at vindicating the right of visit on the part of Great Britain against the United States, but, as Earl Grey remarked, The question then turns exclusively upon the point, and even this point seems abandoned by Lord Malmesbury, whether or not vessels suspected of usurping the American flag may not be called upon to produce their papers. Lord Aberdeen directly denied that any controversy could arise out of such a practice, since the instructions under which the British officers were to proceed on such an occurrence instructions drawn up by Dr. Lushington and Sir G. Cockburn had been communicated at the time to the American Government and acquiesced in by Mr. Webster, on the part of that Government. If, therefore, there had been no change in these instructions, and if the officers had acted within their limits, the American Government could have no ground of complaint. There seemed, indeed, a strong suspicion hovering in the minds of the hereditary wisdom, that Palmerston had played one of his usual tricks by effecting some arbitrary change in the orders issued to the British cruisers. It is known that Palmerston, while boasting of his zeal in the suppression of the slave-trade, had, during the eleven years of his administration of foreign affairs, ending in 1841, broken up all the existing slave-trade treaties, had ordered acts which the British law authorities pronounced criminal, and which actually subjected one of his instruments to legal procedure and placed a slave-dealer under the protection of the law of England against its own Government. He chose the slave-trade as his field of battle, and converted it into a mere instrument of provoking quarrels between England and other States. Before leaving office in 1841 he had given instructions which, according to the words of Sir Robert Peel, must have led, had they not been countermanded, to a collision with the United States. In his own words, he had enjoined the naval officers to have no very nice regard to the law of nations. Lord Malmesbury, although in very reserved language, intimated that by sending the British squadrons to the Cuban waters, instead of leaving them on the coast of Africa, Palmerston removed them from a station where, before the outbreak of the Russian war, they had almost succeeded in extinguishing the slave-trade, to a place where they could be good for little else than picking up a quarrel with the United States. Lord Woodhouse, Palmerston s own late Embassador to the Court of St. Petersburg, concurring, in this view of the case, remarked that, Yet, whatever may have been Palmerston s secret intentions, it is evident that they are baffled by the Tory Government in 1858, as they had been in 1842, and that the war cry so lustily raised in the Congress and in the press is doomed to result in much ado about nothing. As to the question of the slave-trade itself, Spain was denounced by the Bishop of Oxford, as well as Lord Brougham, as the main stay of that nefarious traffic. Both of them called upon the British Government to force, by every means in its power, that country into a course of policy consonant to existing treaties. As early as 1814 a general treaty was entered into between Great Britain and Spain, by which the latter passed an unequivocal condemnation of the slave-trade. In 1817 a specific treaty was concluded, by which Spain fixed the abolition of the slave-trade, on the part of her own subjects, for the year 1820, and, by way of compensation for the losses her subjects might suffer by carrying out the contract, received an indemnity of 400,000. The money was pocketed, but no equivalent was tendered for it. In 1835 a new treaty was entered into, by which Spain bound herself formally to bring in a sufficiently stringent penal law to make it impossible for her subjects to continue the traffic. The procrastinating Spanish proverb, A la ma ana, was again strictly adhered to. It was only ten years later that the penal law was carried; but, by a singular mischance, the principal clause contended for by England was left out, namely, that of making the slave-trade piracy. In one word, nothing was done, save that the Captain-General of Cuba, the Minister at home, the Camarilla, and, if rumor speaks truth, royal personages themselves, raised a private tax upon the slavers, selling the license of dealing in human flesh and blood at so many doubloons per head. Now what shall England do with Spain? Repeat her protests, multiply her dispatches, renew her negotiations? Lord Malmesbury himself states that they could cover all the waters from the Spanish coast to Cuba with the documents vainly exchanged between the two Governments. Or shall England enforce her claims, sanctioned by so many treaties? Here it is that the shoe pinches. In steps the sinister figure of the august ally, now the acknowledged guardian angel of the slave-trade. The third Bonaparte, the patron of Slavery in all its forms, forbids England to act up to her convictions and her treaties. Lord Malmesbury, it is known, is strongly suspected of an undue intimacy with the hero of Satory. Nevertheless, he denounced him in plain terms as the general slave-dealer of Europe as the man who had revived the infamous traffic in its worst features under the pretext of free emigration of the blacks to the French colonies. Earl Grey completed this denunciation by stating that wars had been undertaken in Africa for the purpose of making captives, who were to be sold to the agents of the French Government. The Earl of Clarendon added that both Spain and France were rivals in the African market, offering a certain sum per man; and there was not the least difference in the treatment of these negroes, whether they were conveyed to Cuba or to a French colony. Such, then, is the glorious position England finds herself in by having lent her help to that man in overthrowing the Republic. The second Republic, like the first one, had abolished Slavery. Bonaparte, who acquired his power solely by truckling to the meanest passions of men, is unable to prolong it save by buying day by day new accomplices. Thus he has not only restored Slavery, but has bought the planters by the renewal of the slave-trade. Everything degrading the conscience of the nation, is a new lease of power granted to him. To convert France into a slave-trading nation would be the surest means of enslaving France, who, when herself, had the boldness of proclaiming in the face of the world: Let the colonies perish, but let principles live! One thing at least has been accomplished by Bonaparte. The slave-trade has become a battle-cry between the Imperialist and the Republican camps. If the French Republic be restored to-day, to-morrow Spain will be forced to abandon the infamous traffic.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/07/02.htm

The war in India is gradually passing into that stage of desultory guerrilla warfare, to which, more than once, we have pointed as its next impending and most dangerous phase of development. The insurgent armies, after their successive defeats in pitched battles, and in the defense of towns and entrenched camps, gradually dissolve into smaller bodies of from two to six or eight thousand men, acting, to a certain degree, independently of each other, but always ready to unite for a short expedition against any British detachment which may be surprised singly. The abandonment of Bareilly without a blow, after having drawn the active field force of Sir C. Campbell some eighty miles away from Lucknow, was the turning point, in this respect, for the main army of the insurgents; the abandonment of Calpee had the same significance for the second great body of natives. In either case, the last defensible central base of operations was given up, and the warfare of an army thereby becoming impossible, the insurgents made eccentric retreats by separating into smaller bodies. These movable columns require no large town for a central base of operations. They can find means of existence, of re-equipment, and of recruitment in the various districts in which they move; and a small town or a large village as a center of reorganization may be as valuable to each of them as Delhi, Lucknow, or Calpee to the larger armies. By this change, the war loses much of its interest; the movements of the various columns of insurgents cannot he followed up in detail and appear confused in the accounts; the operations of the British commanders, to a great extent, escape criticism, from the unavoidable obscurity enveloping the premises on which they are based; success or failure remain the only criterion, and they are certainly of all the most deceitful. This uncertainty respecting the movements of the natives is already very great. After the taking of Lucknow, they retreated eccentrically some south-east, some north-east, some north-west. The latter were the stronger body, and were followed by Campbell into Rohilcund. They had concentrated and re-formed at Bareilly; but when the British came up, they abandoned the place without resistance, and again retreated in different directions. Particulars of these different lines of retreat are not known. We only know that a portion went toward the hills on the frontiers of Nepaul, while one or more columns appear to have marched in the opposite direction, toward the Ganges and the Doab (the country between the Ganges and the Jumna). No sooner, however, had Campbell occupied Bareilly, than the insurgents, who had retreated in an easterly direction, effected a junction with some bodies on the Oude frontier and fell upon Shahjehanpore, where a small British garrison had been left; while further insurgent columns were hastening in that direction. Fortunately for the garrison, Brigadier Jones arrived with re-enforcements as early as the 11th of May, and defeated the natives; but they, too, were re-enforced by the columns concentrating on Shahjehanpore, and again invested the town on the 15th. On this day, Campbell, leaving a garrison in Bareilly, marched to its relief; but it was not before the 24th of May that he attacked them and drove them back, the various columns of insurgents which had cooperated in this maneuver again dispersing in different directions. While Campbell was thus engaged on the frontiers of Rohilcund, Gen. Hope Grant marched his troops backward and forward in the South of Oude, without any result, except losses to his own force by fatigue under an Indian Summer s sun. The insurgents were too quick for him. They were everywhere but where he happened to look for them, and when he expected to find them in front, they had long since again gained his rear. Lower down the Ganges, Gen. Lugard was occupied with a chase after a similar shadow in the district between Dinapore, Jugdespore and Buxar. The natives kept him constantly on the move, and, after drawing him away from Jugdespore, all at once fell upon the garrison of that place. Lugard returned, and a telegram reports his having gained a victory on the 26th. The identity of the tactics of these insurgents with those of the Oude and Rohilcund columns is evident. The victory gained by Lugard will, however, scarcely be of much importance. Such bands can afford to be beaten a good many times before they become demoralized and weak. Thus, by the middle of May, the whole insurgent force of Northern India had given up warfare on a large scale, with the exception of the army of Calpee. This force, in a comparatively short time, had organized in that town a complete center of operations; they had provisions, powder and other stores in profusion, plenty of guns, and even founderies and musket manufactories. Though within 25 miles of Cawnpore, Campbell had left them unmolested: he merely observed them by a force on the Doab or western side of the Jumna. Generals Rose and Whitlock had been on the march to Calpee for a long while; at last Rose arrived, and defeated the insurgents in a series of engagements in front of Calpee. The observing force on the other side of the Jumna, in the mean time, had shelled the town and fort, and suddenly the insurgents evacuated both, breaking up this their last large army into independent columns. The roads taken by them are not at all clear, from the accounts received; we only know that some have gone into the Doab, and others toward Gwalior. Thus the whole district from the Himalaya to the Bihar and Vindhya mountains, and from Gwalior and Delhi to Joruckpore and Dinapore, is swarming with active insurgent bands, organized to a certain degree by the experience of a twelve months war, and encouraged, amid a number of defeats, by the indecisive character of each, and by the small advantages gained by the British. It is true, all their strongholds and centers of operations have been taken from them; the greater portion of their stores and artillery are lost; the important towns are all in the hands of their enemies. But on the other hand, the British, in all this vast district, hold nothing but the towns, and of the open country, nothing but the spot where their movable columns happen to stand; they are compelled to chase their nimble enemies without any hope of attaining them; and they are under the necessity of entering upon this harassing mode of warfare at the very deadliest season of the year. The native Indian can stand the mid-day heat of his Summer with comparative comfort, while mere exposure to the rays of the sun is almost certain death to the European; he can march forty miles in such a season, where ten break down his northern opponent; to him even the hot rains and swampy jungles are comparatively innocuous, while dysentery, cholera, and ague follow every exertion made by Europeans in the rainy season or in swampy neighborhoods. We are without detailed accounts of the sanitary condition of the British army; but from the comparative numbers of those struck by the sun and those hit by the enemy in Gen. Rose s army, from the report that the garrison of Lucknow is sickly, that the 38th regiment arrived last Autumn above 1,000 strong, now scarcely numbers 550, and from other indications we may draw the conclusion that the Summer s heat, during April and May, has done its work among the newly-imported men and lads who have replaced the bronzed old Indian soldiers of last year s campaign. With the men Campbell has, he cannot undertake the forced marches of Havelock nor a siege during the rainy season like that of Delhi. And although the British Government are again sending off strong re-enforcements, it is doubtful whether they will be sufficient to replace the wear and tear of this Summer s campaign against an enemy who declines to fight the British except on terms most favorable to himself. The insurgent warfare now begins to take the character of that of the Bedouins of Algeria against the French; with the difference that the Hindoos are far from being so fanatical, and that they are not a nation of horsemen. This latter is important in a flat country of immense extent. There are plenty of Mohammedans among them who would make good irregular cavalry; still the principal cavalry nations of India have not joined the insurrection so far. The strength of their army is in the infantry, and that arm being unfit to meet the English in the field, becomes a drag in guerrilla warfare in the plain; for in such a country the sinew of desultory warfare is irregular cavalry. How far this want may be remedied during the compulsory holiday the English will have to take during the rains, we shall see. This holiday will, altogether, give the natives an opportunity of reorganizing and recruiting their forces. Beside the organization of cavalry, there are two more points of importance. As soon as the cold weather sets in, guerrilla warfare alone will not do. Centers of operation, stores, artillery, intrenched camps or towns, are required to keep the British busy until the cold season is over; otherwise the guerrilla warfare might be extinguished before the next Summer gives it fresh life. Gwalior appears to be, among others, a favorable point, if the insurgents have really got hold of it. Secondly, the fate of the insurrection is dependent upon its being able to expand. If the dispersed columns cannot manage to cross from Rohilcund into Rajpootana and the Mahratta country; if the movement remains confined to the northern central district, then, no doubt, the next Winter will suffice to disperse the bands, and to turn them into dacoits, which will soon be more hateful to the inhabitants than even the palefaced invaders.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/07/21.htm

According to the London journals, Indian stock and railway securities have of late been distinguished by a downward movement in that market, which is far from testifying to the genuineness of the sanguine convictions which John Bull likes to exhibit in regard to the state of the Indian guerrilla war; and which, at all events, indicates a stubborn distrust in the elasticity of Indian financial resources. As to the latter, two opposite views are propounded. On the one hand, it is affirmed that taxes in India are onerous and oppressive beyond those of any country in the world; that as a rule throughout most of the presidencies, and through those presidencies most where they have been longest under British rule., the cultivators, that is, the great body of the people of India, are in a condition of unmitigated impoverishment and dejection; that, consequently, Indian revenues have been stretched to their utmost possible limit, and Indian finances are therefore past recovery. A rather discomfortable opinion this at a period when, according to Mr. Gladstone, for some years to come, the extraordinary Indian expenditure alone will annually amount to about 20,000,000 sterling. On the other hand, it is asserted the asseveration being made good by an array of statistical illustrations that India is the least taxed country in the world; that, if expenditure is going on increasing, revenue may be increased too; and that it is an utter fallacy to imagine that the Indian people will not bear any new taxes. Mr. Bright, who may be considered the most arduous and influential representative of the discomfortable doctrine, made, on the occasion of the second reading of the new Government of India bill, the following statement: Now, it must be admitted that there is something wrong in this method of comparing Indian taxes with British taxes. There is on the one side the Indian population, five times as great as the British one, and there is on the other side the Indian taxation amounting to half the British. But, then, Mr. Bright says, Indian labor is an equivalent for about one-twelfth only of British labor. Consequently 30,000,000 of taxes in India would represent 300,000,000 of taxes in Great Britain, instead of the 60,000,000 actually there raised. What then is the conclusion he ought to have arrived at? That the people of India in regard to their numerical strength pay the same taxation as the people in Great Britain, if allowance is made for the comparative poverty of the people in India, and 30,000,000 is supposed to weigh as heavily upon 150,000,000 Indians as 60,000,000 upon 30,000,000 Britons. Such being his supposition, it is certainly fallacious to turn round and say that a poor people cannot pay so much as a rich one, because the comparative poverty of the Indian people has already been taken into account in making out the statement that the Indian pays as much as the Briton. There might, in fact, another question he raised. It might be asked, whether a man who earns say 12 cents a day can be fairly expected to pay 1 cent with the same ease with which another, earning $12 a day, pays $1? Both would relatively contribute the same aliquot part of their income, but still the tax might bear in quite different proportions upon their respective necessities. Yet, Mr. Bright has not yet put the question in these terms, and, if he had, the comparison between the burden of taxation, borne by the British wages laborer on the one hand, and the British capitalist on the other, would perhaps have struck nearer home than the comparison between Indian and British taxation. Moreover, he admits himself that from the 30,000,000 of Indian taxes, the 5,000,000 constituting the opium revenue must he subtracted, since this is, properly speaking, no tax pressing upon the Indian people, but rather an export duty charged upon Chinese consumption. Then we are reminded by the apologists of the Anglo-Indian Administration that 16,000,000 of income is derived from the land revenue, or rent, which from times immemorial has belonged to the State in its capacity as supreme landlord, never constituted part of the private fortune of the cultivator, and does, in fact, no more enter into taxation, properly so called, than the rent paid by the British farmers to the British aristocracy can be said to enter British taxation. Indian taxation, according to this point of view, would stand thus: Of this 9,000,000, again, it must he admitted that some important items, such as the post-office, the stamp duties, and the customs duties, bear in a very minute proportion on the mass of the people. Accordingly, Mr. Hendriks, in a paper recently laid before the British Statistical Society on the Finances of India, tries to prove, from Parliamentary and other official documents, that of the total revenue paid by the people of India, not more than one-fifth is at present raised by taxation, i. e., from the real income of the people; that in Bengal 27 per cent only, in the Punjaub 23 per cent only, in Madras 21 per cent only, in the North-West Provinces 17 per cent only, and in Bombay 16 per cent only of the total revenue is derived from taxation proper. The following comparative view of the average amount of taxation derived from each inhabitant of India and the United Kingdom, during the years 1855-56, is abstracted from Mr. Hendriks s statement: For a different year the following estimate of the average paid by each individual to the national revenue is made by Gen. Briggs: From these statements it is inferred by the apologists of the British Administration that there is not a single country in Europe, where, even if the comparative poverty of India is taken into account, the people are so lightly taxed. Thus it seems that not only opinions with respect to Indian taxation are conflicting, but that the facts from which they purport to be drawn are themselves contradictory. On the one hand, we must admit the nominal amount of Indian taxation to be relatively small; but on the other, we might heap evidence upon evidence from Parliamentary documents, as well as from the writings of the greatest authorities on Indian affairs, all proving beyond doubt that this apparently light taxation crushes the mass of the Indian people to the dust, and that its exaction necessitates a resort to such infamies as torture, for instance. But is any other proof wanted beyond the constant and rapid increase of the Indian debt and the accumulation of Indian deficits? It will certainly not be contended that the Indian Government prefers increasing debts and deficits because it shrinks from touching too roughly upon the resources of the people. It embarks in debt, because it sees no other way to make both ends meet. In 1805 the Indian debt amounted to 25,626,631; in 1829 it reached about 34,000,000; in 1850 47,151,018; and at present it amounts to about 60,000,000. By the by, we leave out of the count the East Indian debt contracted in England, which is also chargeable upon the East Indian revenue. The annual deficit, which in 1805 amounted to about two and a half millions, had, under Lord Dalhousie s administration, reached the average of five millions. Mr. George Campbell of the Bengal Civil Service, and of a mind strongly biased in favor of the Anglo-Indian administration, was obliged to avow, in 1852, that: In estimating the burden of taxation, its nominal amount must not fall heavier into the balance than the method of raising it and the manner of employing it. The former is detestable in India, and in the branch of the land-tax, for instance, wastes perhaps more produce than it gets. As to the application of the taxes, it will suffice to say that no part of them is returned to the people in works of public utility, more indispensable in Asiatic countries than anywhere else, and that, as Mr. Bright justly remarked, nowhere so extravagant is a provision made for the governing class itself.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/07/23.htm

The latest India bill has passed through its third reading in the House of Commons, and since the Lords swayed by Derby s influence, are not likely to show fight, the doom of the East India Company appears to be sealed. They do not die like heroes, it must be confessed; but they have bartered away their power, as they crept into it, bit by bit, in a business-like way. In fact, their whole history is one of buying and selling. They commenced by buying sovereignty, and they have ended by selling it. They have fallen, not in a pitched battle, but under the hammer of the auctioneer, into the hands of the highest bidder. In 1693 they procured from the Crown a charter for twenty-one years by paying large sums to the Duke of Leeds and other public officers. In 1767 they prolonged their tenure of power for two years by the promise of annually paying 400,000 into the Imperial exchequer. In 1769 they struck a similar bargain for five years; but soon after, in return for the Exchequer s foregoing the stipulated annual payment and lending them 1,400,000 at 4 per cent, they alienated some parcels of sovereignty, leaving to Parliament in the first instance the nomination of the Governor-General and four Councilors, altogether surrendering to the Crown the appointment of the Lord Chief justice and his three judges, and agreeing to the conversion of the Court of Proprietors from a democratic into an oligarchic body. In 1858, after having solemnly pledged themselves to the Court of Proprietors to resist by all constitutional means the transfer to the Crown of the governing powers of the a East India Company, they have accepted that principle, and agreed to a bill penal as regards the Company, but securing emolument and place to its principal Directors. If the death of a hero, as Schiller says, resembles the setting of the sun, the exit of the East India Company bears more likeness to the compromise effected by a bankrupt with his creditors. By this bill the principal functions of administration are intrusted to a Secretary of State in Council, just as at Calcutta the Governor-General in Council manages affairs. But both these functionaries the Secretary of State in England and the Governor-General in India are alike authorized to disregard the advice of their assessors and to act upon their own judgment. The new bill also invests the Secretary of State with all the powers at present exercised by the President of the Board of Control, through the agency of the Secret Committee the power, that is, in urgent cases, of dispatching orders to India without stopping to ask the advice of his Council. In constituting that Council it has been found necessary, after all, to resort to the East India Company as the only practicable source of appointments to it other than nominations by the Crown. The elective members of the Council are to be elected by the Directors of the East India Company from among their own number. Thus, after all, the name of the East India Company is to outlive its substance. At the last hour it was confessed by the Derby Cabinet that their bill contains no clause abolishing the East India Company, as represented by a Court of Directors, but that it becomes reduced to its ancient character of a company of stockholders, distributing the dividends guaranteed by different acts of legislation. Pitt s bill of 1784 virtually subjected their government to the sway of the Cabinet under the name of the Board of Control. The act of 1813 stripped them of their monopoly of commerce, save the trade with China. The act of 1834 destroyed their commercial character altogether, and the act of 1854 annihilated their last remnant of power, still leaving them in possession of the Indian administration. By the rotation of history the East India Company, converted in 1612 into a joint-stock company, is again clothed in its primitive garb, only, that it represents now a trading partnership without trade, and a joint-stock company which has no funds to administer, but only fixed dividends to draw. The history of the Indian bill is marked by greater dramatic changes than any other act of modern Parliamentary legislation. When the Sepoy insurrection broke out, the cry of Indian reform rang through all classes of British society. Popular imagination was heated by the torture reports; the Government interference with the native religion was loudly denounced by Indian general officers and civilians of high standing; the rapacious annexation policy of Lord Dalhousie, the mere tool of Downing street; the fermentation recklessly created in the Asiatic mind by the piratical wars in Persia and China wars commenced and pursued on Palmerston s private dictation the weak measures with which he met the outbreak, sailing ships being chosen for transport in preference to steam vessels, and the circuitous navigation around the cape of Good Hope instead of transportation over the Isthmus of Suez all these accumulated grievances burst into the cry for Indian Reform reform of the Company s Indian administration, reform of the Government s Indian policy. Palmerston caught at the popular cry, but resolved upon turning it to his exclusive profit. Because both the Government and the Company had miserably broken down, the Company was to be killed in sacrifice, and the Government to be rendered omnipotent. The power of the Company was to be simply transferred to the dictator of the day, pretending to represent the Crown as against the Parliament, and to represent Parliament as against the Crown, thus absorbing the privileges of the one and the other in his single person. With the Indian army at his back, the Indian treasury at his command, and the Indian patronage in his pocket, Palmerston s position would have become impregnable. His bill passed triumphantly through the first reading, but his career was cut short by the famous Conspiracy bill, followed by the advent of the Tories to power. On the very first day of their official reappearance on the Treasury benches, they declared that, out of deference for the decisive will of the Commons, they would forsake their opposition to the transfer from the Company to the Crown of the Indian Government. Lord Ellenborough s legislative abortion seemed to hasten Palmerston s restoration, when Lord John Russell, in order to force the dictator into a compromise, stepped in, and saved the Government by proposing to proceed with the Indian bill by way of Parliamentary resolution, instead of by a governmental bill. Then Lord Ellenborough s Oude dispatch, his sudden resignation, and the consequent disorganization in the Ministerial camp, were eagerly seized upon by Palmerston. The Tories were again to be planted in the cold shade of opposition, after they had employed their short lease of power in breaking down the opposition of their own party against the confiscation of the East India Company. Yet it is sufficiently known how these fine calculations were baffled. Instead of rising on the ruins of the East India Company, Palmerston has been buried beneath them. During the whole of the Indian debates, the House seemed to indulge the peculiar satisfaction of humiliating the Civis Romanus. All his amendments, great and small, were ignominiously lost; allusions of the most unsavory kind, relating to the Afghan war, the Persian war, and the Chinese war, were continually flung at his head; and Mr. Gladstone s clause, withdrawing from the Indian Minister the power of originating wars beyond the boundaries of India, intended as a general vote of censure on Palmerston s past foreign policy, was passed by a crushing majority, despite his furious resistance. But although the man has been thrown overboard, his principle, upon the whole, has been accepted. Although somewhat checked by the obstructive attributes of the Board of Council, which, in fact, is but the well-paid specter of the old Court of Directors, the power of the executive has, by the formal annexation of India, been raised to such a degree that, to counterpoise it, democratic weight must be thrown into the Parliamentary scale.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/07/24.htm

London, July 27, 1858 At the beginning of the Anglo-Indian war, two curious questions were mooted the one relating to the respective superiority of steamers or sailing vessels, the other as to the use of the overland route for the transport of troops. The British Government having decided in favor of sailing vessels against steamers, and for the voyage round the Cape of Good Hope against the overland route, the House of Commons, on the motion of Sir De Lacy Evans, ordered, on the 4th of February, 1858, a Committee to be appointed, under the chairmanship of the veteran General, which was to inquire concerning the measures resorted to. The formation of this Committee was completely altered by the intervening change of Ministry, consequent upon which three Palmerstonians were substituted for Lord Stanley and Sir John Pakington. The report of the Committee proving, on the whole, favorable to the late Administration, Gen. Sir De Lacy Evans had a protest printed and circulated, in which he asserts the conclusion arrived at to be at titter variance with the premises from which it pretended to be drawn, and quite inconsistent with the facts and evidence laid before them. An examination of the evidence itself must oblige all impartial persons to fully concur in this view of the case. The decisive importance of a short line of communication between an army in the field and its base of communication needs no demonstration. During the American War of Independence the principal obstacle England had to grapple with was a sea line of 3,000 miles over which she had to convey her troops, stores and re-enforcements. From Great Britain to the mouths of the Indus and Ganges, to Calcutta, Madras, Kurrachee and Bombay, the distance, according to past arrangements, may be reckoned at about 14,000 miles; but the use of steam offered the means of shortening it considerably. Hitherto on all occasions it had been the practice to effect the relief of regiments in India, by this long sea voyage in sailing vessels. This was considered a sufficient reason on the part of the late British Administration, for declaring at the beginning of the Indian troubles, that sailing vessels would still be preferred to steamers for the conveyance of troops. Up to the 10th of July, 1857, of 31 vessels taken up, nearly the whole were sailing ships. Meanwhile, public censure in England and unfavorable news from India effected so much that in the interval from the 10th of July to the 1st of December, among the 59 ships taken up for troops, 29 screw steamers were admitted. Thus a rough test was afforded of the relative qualities of steamers and sailing vessels in accomplishing the transit. According to the return furnished by the Marine Department of the East India Company, giving names of transports and length of passages to the four principal ports of India, the following may be considered the average results as between steamers and sailing vessels. The same official return, dated Feb. 27, 1858, gives the following details: It appears, then, from the above that 27 steamers carried to the four ports of disembarkation in India 14,144 men, averaging, therefore, 548 men in each ship; that in 55 sailing ships were conveyed 16,234 men, averaging 289 men in each. Now, by the same official statement of averages, it appears that the 14,144 men conveyed in steamers arrived at their respective places of destination on an average of 37 days sooner than the 16,234 men embarked on sailing ships. On the part of the British Admiralty and the other ministerial departments no arguments were adduced in favor of the traditionary transport but precedent and routine, both dating from an epoch when steam navigation was utterly unknown. Lord Palmerston s principal plea, however, for the delay was expense, the cost of steamers in most of the above cases amounting to perhaps treble that of sailing ships. Apart from the fact that this great enhancement of charge for steamers must have gradually diminished after the first unusual demand, and that in so vital an emergency expense ought not to be admitted as an element of calculation, it is evident that the increased cost of transport would have been more than compensated for by the lessened chances of the insurrection. Still more important than the question of superiority as between steamers and sailing vessels, seems the controversy respecting the voyage round the Cape on the one hand and the overland route on the other; Lord Palmerston affirming the general impracticability of the latter route. A controversy in regard to it between his Board of Control and the East India Directors, appears to have commenced contemporaneously with the first information of the Indian revolt reaching England. The question had, in fact, been solved as long ago as the beginning of this century. In the year 1801, when there were no steam navigation company s agents to aid the military arrangements, and when no railway existed, a large force under Sir David Baird proceeded from India and landed at Kosseir in May and June; crossed in nine days the desert of Kherie, on the Nile; proceeded down that river, garrisoned Alexandria, and in the following year, 1802, several regiments returned to India by Suez and the Red Sea, in the month of June. That force, amounting to 5,000 men, consisted of a troop of horse-artillery, six guns and small arms, ammunition, camp equipage, baggage, and 126 chests of treasure. The troops generally were very healthy. The march across the Suez Desert, from the lake of St. Pilgrims, near Grand Cairo to Suez, was performed in four days with the greatest ease, marching by night and encamping during the day. In June the ships proceeded to India, the wind at that season blowing down the Red Sea. They made a very quick passage. Again, during the late Russian war, in the summer of 1854, the 10th and 11th regiments of Dragoons (1,400 horses, 1,600 men) arrived in Egypt from India, and were forwarded thence to the Crimea. These corps, though their transfer took place during the hot months, or monsoon, and though they had to remain some time in Egypt, are known to have been remarkably healthy and efficient, and to have continued so throughout their Crimean service. In the last instance there is the experience of the actual Indian war. After the waste of nearly four months, some thousand troops were dispatched by Egypt with extraordinary advantage as to economy of time, and with perfect preservation of health. The first regiment that was conveyed by this line passed from Plymouth to Bombay in thirty-seven days. Of the first regiment sent from Malta, the first wing arrived at Bombay in sixteen and the second wing in eighteen days. An overwhelming mass of evidence, from numerous trustworthy witnesses, attest the peculiar facilities, especially in periods of emergency, afforded by the overland route transport. Col. Poeklington, Deputy Quartermaster-General, appointed in October, 1857, to direct and superintend the transit of the troops, and who, expressly prepared by order of the War Department a report for the Committee of Inquiry, states: The time occupied by troops from England to India is, by the overland route, from 33 to 46 days. From Malta to India, from 16 to 18 or 20 days. Compare these periods with the 83 by steamers, or the 120 by sailing ships, on the long sea route, and the difference will appear striking. Again, during the longer route, Great Britain will have from 15,000 to 20,000 troops, in effect hors de combat, and beyond counter orders for a period annually, of from 3 to 4 months, while, with the shorter line, it will be but for the brief period of some 14 days, during the transit from Suez to India, that the troops will be beyond reach of recall, for any unexpected European contingency. In resorting to the overland route only 4 months after the outbreak of the Indian war, and then only for a mere handful of troops, Palmerston set at naught the general anticipation of India and Europe. The Governor-General in India assumed that the Home Government would dispatch troops by the way of Egypt. The following is a passage from the Governor-General in Council s letter to the Home Government, dated Aug. 7, 1857: On the very day of the arrival at Constantinople of the news of the revolt, Lord Stratford de Redcliffe telegraphed to London to know whether he should apply to the Turkish Government to allow the British troops to pass through Egypt, on their way to India. The Sultan a having meanwhile offered and transmitted a firman to that effect on the 2d of July, Palmerston replied by telegraph, that it was not his intention to send troops by that route. It being in France likewise assumed, as a matter of course, that the acceleration of the military re-enforcements must at that moment form the paramount object of British policy, Bonaparte spontaneously tendered permission for the passage over France of British troops, to enable their being embarked, if deemed desirable, at Marseilles, for Egypt. The Pasha of Egypt lastly, when, at length, Mr. Holton, the Superintendent of the Peninsular and Oriental Company in Egypt, was authorized to reply on the subject, answered immediately, Such were the facilities recklessly thrown away, the proper use of which might have prevented the Indian war from assuming its formidable dimensions. The motives by which Lord Palmerston was prompted in preferring sailing vessels to steamers, and a line of communication extending over 14,000 miles to one limited to 4,000 miles, belong to the mysteries of contemporaneous history.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/08/13.htm

There is, perhaps, no better established fact in British society than that of the corresponding growth of modern wealth and pauperism. Curiously enough, the same law seems to hold good with respect to lunacy. The increase of lunacy in Great Britain has kept pace with the increase of exports, and has outstripped the increase of population. Its rapid progress in England and Wales during the period extending from 1852 to 1857, a period of unprecedented commercial prosperity, will become evident from the following tabular comparison of the annual returns of paupers, lunatics and idiots for the years 1852, 1854 and 1857 : The proportion of acute and curable cases to those of a chronic and apparently incurable kind was, on the last day of 1856, estimated to be somewhat less than 1 in 5, according to the following summary of official returns: There exist in England and Wales, for the accommodation of lunatics and idiots of all sorts and of all classes, 37 public asylums, of which 33 are county and 4 borough asylums; 15 hospitals; 116 private licensed houses, of which 37 are metropolitan and 79 provincial; and lastly, the workhouses. The public asylums, or lunatic asylums properly so called, were, by law, exclusively destined for the reception of the lunatic poor, to be used as hospitals for the medical treatment, not as safe places for the mere custody of the insane. On the whole, in the counties at least, they may be considered well regulated establishments, although of too extensive a construction to be properly superintended, overcrowded, lacking the careful separation of the different classes of patients, and yet inadequate to the accommodation of somewhat more than one-half of the lunatic poor. After all, the space afforded by these 37 establishments, spreading over the whole country, suffices for the housing of over 15,690 inmates. The pressure upon these costly asylums on the part of the lunatic population may be illustrated by one case. When, in 1831, Hanwell (in Middlesex) was built for 500 patients, it was supposed to be large enough to meet all the wants of the county. But, two years later, it was full; after another two years, it had to be enlarged for 300 more; and at this time (Colney Hatch having been meanwhile constructed for the reception of 1,200 lunatic paupers belonging to the same county) Hanwell contains upward of 1,000 patients. Colney Hatch was opened in 1851; within a period of less than five years, it became necessary to appeal to the rate-payers for further accommodation; and the latest returns show that at the close of 1856 there were more than 1,100 pauper lunatics belonging to the county unprovided for in either of its asylums. While the existing asylums are too large to be properly conducted, their number is too small to meet rapid spread of mental disorders. Above all, the asylums ought to be separated into two distinct categories: asylums for the incurable, hospitals for the curable. By huddling both classes together, neither receives its proper treatment and cure. The private licensed houses are, on the whole, reserved for the more affluent portion of the insane. Against these snug retreats, as they like to call themselves, public indignation has been lately raised by the kidnapping of Lady Bulwer into Wyke House, and the atrocious outrages committed on Mrs. Turner in Acomb House, York. A Parliamentary inquiry into the secrets of the trade in British lunacy being imminent, we may refer to that part of the subject hereafter. For the present let us call attention only to the treatment of the 2,000 lunatic poor, whom, by way of contract, the Boards of Guardians and other local authorities let out to managers of private licensed houses. The weekly consideration per head for maintenance, treatment and clothing, allotted to these private contractors, varies from five to twelve shillings, but the average allowance may be estimated from 5s. to 8s. 4d. The whole study of the contractors consists, of course, in the one single point of making large profits out of these small receipts, and consequently of keeping the patient at the lowest possible expense. In their latest report the Commissioners of Lunacy state that even where the means of accommodation in these licensed houses are large and ample, the actual accommodation afforded is a mere sham, and the treatment of the inmates a disgrace. It is true that a power is vested in the Lord Chancellor of revoking a license or preventing its renewal, on the advice of the Commissioners in Lunacy; but, in many instances, where there exists no public asylum in the neighborhood, or where the existing asylum is already overcrowded, no alternative was left the Commissioners but to prevent the license to continue, or to throw large masses of the insane poor into their several workhouses. Yet, the same Commissioners add that great as are the evils of the licensed houses, they are not so great as the danger and evil combined of leaving those paupers almost uncared for in workhouses. In the latter about 7,000 lunatics are at present confined. At first the lunatic wards in workhouses were restricted to the reception of such pauper lunatics as required little more than ordinary accommodation, and were capable of associating with the other inmates. What with the difficulty of obtaining admission for their insane poor into properly regulated asylums, what with motives of parsimony, the parochial boards are more and more transforming the workhouses into lunatic asylums, but into asylums wanting in the attendance, the treatment and the supervision which form the principal safeguard of patients detained in asylums regularly constituted. Many of the larger workhouses have lunatic wards containing from 40 to 120 inmates. The wards are gloomy and unprovided with any means for occupation, exercise or amusement. The attendants for the most part are pauper inmates totally unfitted for the charge imposed upon them. The diet, essential above everything else to the unhappy objects of mental disease, rarely exceeds in any case that allowed for the healthy and able-bodied inmates. Hence, it is a natural result that detention in workhouses not only deteriorates the cases of harmless imbecility for which it was originally intended, but has the tendency to render chronic and permanent cases that might have yielded to early care. The decisive principle for the Boards of Guardians is economy. According to law, the insane pauper should come at first under the care of the district parish surgeon, who is bound to give notice to the relieving officers, by whom communication is to be made to the magistrate, upon whose order they are to be conveyed to the asylum. In fact, these provisions are disregarded altogether. The pauper lunatics are in the first instance hurried into the workhouses, there to be permanently detained, if found to be manageable. The recommendation of the Commissioners in Lunacy, during their visits to the workhouses, of removing to the asylums all inmates considered to be curable, or to be exposed to treatment unsuited to their state, is generally outweighed by the report of the medical officer of the Union, to the effect that the patient is harmless. What the workhouse accommodation is, may be understood from the following illustrations described in the last Lunacy Report as faithfully exhibiting the general characteristics of workhouse accommodation. In the Infirmary Asylum of Norwich the beds of even the sick and feeble patients were of straw. The floors of thirteen small rooms were of stone. There were no water-closets. The nightwatch on the male side had been discontinued. There was a great deficiency of blankets, of toweling, of flannels, of waistcoats, of washing basins, of chairs, of plates, of spoons and of dining accommodation. The ventilation was bad. We quote: Take, as another example, the Blackburn Workhouse: It would be too loathsome even to give extracts from the Commissioners report on the St. Pancras Workhouse at London, a sort of low Pandemonium. Generally speaking, there are few English stables which, at the side of the lunatic wards in the workhouses, would not appear boudoirs, and where the treatment received by the quadrupeds may not be called sentimental when compared to that of the poor insane.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/08/20.htm

The Chinese cannot take both goods and drug; under actual circumstances, extension of the Chinese trade resolves into extension of the opium trade; the growth of the latter is incompatible with the development of legitimate commerce these propositions were pretty generally admitted two years ago. A Committee of the House of Commons, appointed in 1847 to take into consideration the state of British commercial intercourse with China, reported thus: The Friend of China, Of July 28, I 849, generalizing the same proposition, says in set terms: One of the leading American merchants in China reduced, in an article inserted in Hunt's Merchants' Magazine, for January, 1850, the whole question of the trade with China to this point: "Which branch of commerce is to be suppressed, the opium trade or the export trade of American or English produce?" The Chinese themselves took exactly the same view of the case. Montgomery Martin narrates: "I inquired of the Taoutai at Shanghai which would be the best means of increasing our commerce with China, and his first answer to me, in the presence of Capt. Balfour, Her Majesty's Consul, was: 'Cease to send us so much opium, and we will be able to take your manufactures.'" The history of general commerce during the last eight years has, in a new and striking manner, illustrated these positions; but, before analysing the deleterious effects on legitimate commerce of the opium trade, we propose giving a short review of the rise and progress of that stupendous traffic which, whether we regard the tragical collisions forming, so to say, the axis round which it turns, or the effects produced by it on the general relations of the Eastern and Western worlds, stands solitary on record in the annals of mankind. Previous to 1767 the quantity of opium exported from India did not exceed 200 chests, the chest weighing about 133lbs. Opium was legally admitted in China on the payment of a duty of about $3 per chest, as a medicine; the Portuguese, who brought it from Turkey, being its almost exclusive importers into the Celestial Empire. In I773, Colonel Watson and Vice-President Wheeler persons deserving to take a place among the Hermentiers, Palmers and other poisoners of world-wide fame suggested to the East India Company the idea of entering upon the opium traffic with China. Consequently, there was established a depot for opium in vessels anchored in a bay to the southwest of Macao. The speculation proved a failure. In 1781 the Bengal Government sent an armed vessel, laden with opium, to China; and, in I794, the Company stationed a large opium vessel at Whampoa, the anchorage for the port of Canton. It seems that Whampoa proved a more convenient depot than Macao, because, only two years after its selection, the Chinese Government found it necessary to pass a law which threatened Chinese smugglers of opium to be beaten with a bamboo and exposed in the streets with wooden collars around their necks. About 1798, the East India Company ceased to be direct exporters of opium, but they became its producers. The opium monopoly was established in India; while the Company's own ships were hypocritically forbidden from trafficking in the drug, the licences it granted for private ships trading to China containing a provision which attached a penalty to them if freighted with opium of other than the Company's own make. In 1800, the import into China had reached the number of 2,000 chests. Having, during the eighteenth century, borne the aspect common to all feuds between the foreign merchant and the national custom-house, the struggle between the East India Company and the Celestial Empire assumed, since the beginning of the nineteenth century, features quite distinct and exceptional; while the Chinese Emperor, in order to check the suicide of his people, prohibited at once the import of the poison by the foreigner, and its consumption by the natives, the East India Company was rapidly converting the cultivation of opium in India, and its contraband sale to China, into internal parts of its own financial system. While the semi-barbarian stood on the principle of morality, the civilized opposed to him the principle of self. That a giant empire, containing almost one-third of the human race, vegetating in the teeth of time, insulated by the forced exclusion of general intercourse, and thus contriving to dupe itself with delusions of Celestial perfection-that such an empire should at last be overtaken by fate on [the] occasion of a deadly duel, in which the representative of the antiquated world appears prompted by ethical motives, while the representative of overwhelming modern society fights for the privilege of buying in the cheapest and selling in the dearest markets-this, indeed, is a sort of tragical couplet stranger than any poet would ever have dared to fancy.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1858/09/20.htm

Nurtured by the East India Company, vainly combated by the Central Government at Pekin, the opium trade gradually assumed larger proportions, until it absorbed about $2,500,000 in 1816. The throwing open in that year of the Indian commerce, with the single exception of the tea trade, which still continued to be monopolized by the East India Company, gave a new and powerful stimulus to the operations of the English contrabandists. In 1820, the number of chests smuggled into China had increased to 5,147; in 182I to 7,000, and in 1824 to 12,639. Meanwhile, the Chinese Government, at the same time that it addressed threatening remonstrances to the foreign merchants, punished the Hong Kong merchants, known as their abettors, developed an unwonted activity in its prosecution of the native opium consumers, and, at its custom-houses, put into practice more stringent measures. The final result, like that of similar exertions in 1794, was to drive the opium depots from a precarious to a more convenient basis of operations. Macao and Whampoa were abandoned for the Island of Lin-Tin, at the entrance of the Canton River, there to become manned. In the same way, when the Chinese Government temporarily succeeded in stopping the operations of the old Canton houses, the trade only shifted hands, and passed to a lower class of men, prepared to carry it on at all hazards and by whatever means. Thanks to the greater facilities thus afforded, the opium trade increased during the ten years from 1824 to 1834 from 12,639 to 21,785 chests. Like the years 1800, 1816 and 1824, the year 1834 marks an epoch in the history of the opium trade. The East India Company then lost not only its privilege of trading in Chinese tea, but had to discontinue and abstain from all commercial business whatever. It being thus transformed from a mercantile into a merely government establishment, the trade to China became completely thrown open to English private enterprise which pushed on with such vigour that, in 1837, 39,000 chests of opium, valued at $25,000,000, were successfully smuggled into China, despite the desperate resistance of the Celestial Government. Two facts here claim our attention: First, that of every step in the progress of the export trade of China since 1816, a disproportionately large part progressively fell upon the opium-smuggling branch; and secondly, that hand in hand with the gradual extinction of the ostensible mercantile interest of the Anglo-Indian Government in the opium trade grew the importance of its fiscal interest in that illicit traffic. In 1837 the Chinese Government had at last arrived at a point where decisive action could no longer be delayed. The continuous drain of silver, caused by the opium importations, had begun to derange the exchequer, as well as the moneyed circulation of the Celestial Empire. Heu Nailzi, one of the most distinguished Chinese statesmen, proposed to legalize the opium trade and make money out of it; but after a full deliberation, in which all the high officers of the Empire shared, and which extended over a period of more than a year's duration, the Chinese Government decided that, "On account of the injuries it inflicted on the people, the nefarious traffic should not be legalized." As early as 1830, a duty of 25 per cent would have yielded a revenue Of $3,850,000. In 1837, it would have yielded double that sum, but then the Celestial barbarian declined, laying a tax sure to rise in proportion to the degradation of his people. In 1853, Hien Fang, the present Emperor, under still more distressed circumstances, and with the full knowledge of the futility of all efforts at stopping the increasing import of opium, persevered in the stern policy of his ancestors. Let me remark, en Passant, that by persecuting the opium consumption as a heresy the Emperor gave its traffic all the advantages of a religious propaganda. The extraordinary measures of the Chinese Government during the years 1837, 1838 and 1839, which culminated in Commissioner Lin's arrival at Canton, and the confiscation and destruction, by his orders, of the smuggled opium, afforded the pretext for the first Anglo-Chinese war, the results of which developed themselves in the Chinese rebellion, the utter exhaustion of the Imperial exchequer, the successful encroachment of Russia from the North, and the gigantic dimensions assumed by the opium trade in the South. Although proscribed in the treaty with which England terminated a war, commenced and carried on in its defence, the opium trade has practically enjoyed perfect impunity since 1843. The importation was estimated, in 1856, at about $35,000,000, while in the same year, the Anglo-Indian Government drew a revenue Of $25,000,000, just the sixth part of its total State income, from the opium monopoly. The pretexts on which the second opium war has been undertaken are of too recent date to need any commentary. We cannot leave this part of the subject without singling out one flagrant self-contradiction of the Christianity-canting and civilization-mongering British Government. In its imperial capacity it affects to be a thorough stranger to the contraband opium trade, and even to enter into treaties proscribing it. Yet, in its Indian capacity, it forces the opium cultivation upon Bengal, to the great damage of the productive resources of that country; compels one part of the Indian ryots to engage in the poppy culture; entices another part into the same by dint of money advances; keeps the wholesale manufacture of the deleterious drug a close monopoly in its hands; watches by a whole army of official spies its growth, its delivery at appointed places, its inspissation and preparation for the taste of the Chinese consumers, its formation into packages especially adapted to the conveniency of smuggling, and finally its conveyance to Calcutta, where it is put up at auction at the Government sales, and made over by the State officers to the speculators, thence to pass into the hands of the contrabandists who land it in China. The chest costing the British Government about 250 rupees is sold at the Calcutta auction mart at a price ranging from 1,210 to 1,600 rupees. But, not yet satisfied with this matter-of-fact complicity, the same Government, to this hour, enters into express profit and loss accounts with the merchants and shippers, who embark in the hazardous operation of poisoning an empire. The Indian finances of the British Government have, in fact, been made to depend not only on the opium trade with China, but on the contraband character of that trade. Were the Chinese Government to legalize the opium trade simultaneously with tolerating the cultivation of the poppy in China, the Anglo-Indian exchequer would experience a serious catastrophe. While openly preaching free trade in poison. it secretly defends the monopoly of its manufacture. Whenever we look closely into the nature of British free trade, monopoly is pretty generally found to lie at the bottom of its "freedom."

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1858/09/25.htm

The campaign in India has been almost completely suspended during the hot and rainy summer months. Sir Colin Campbell having secured, by a vigorous effort in the beginning of summer, all the important positions in Oude and Rohilcund, very wisely put his troops into quarters, leaving the open country in the possession of the insurgents, and limiting his efforts to maintaining his communications. The only episode of interest which occurred during this period in Oude, was the excursion of Sir Hope Grant to Shahgunge for the relief of Maun Singh, a native chief, who, after a deal of tergiversation, had lately made his peace with the British, and was now blockaded by his late native allies. The excursion proved a mere military promenade, though it must have caused great loss to the British by sun-stroke and cholera. The natives dispersed without showing fight, and Maun Singh joined the British. The easy success of this expedition, though it cannot be taken as an indication of an equally easy subjection of the whole of Oude, shows that the insurgents have lost heart completely. If it was the interest of the British to rest during the hot weather, it was the interest of the insurgents to disturb them as much as possible. But instead of organizing an active guerrilla warfare, intercepting the communications between the towns held by the enemy, of waylaying small parties, harassing the foragers, of rendering impassable the supply of victuals, without which no large town held by the British could live instead of this, the natives have been satisfied with levying revenue and enjoying the leisure left to them by their opponents. Better still, they appear to have squabbled among themselves. Neither do they appear to have profited by the few quiet weeks to reorganize their forces, to refill their ammunition stores, or to replace the lost artillery. The bolt at Shahgunge shows a still greater want of confidence in themselves and their leaders than any previous defeat. In the mean time, a secret correspondence is carried on between the majority of the chiefs and the British Government, who have after all found it rather impracticable to pocket the whole of the soil of Oude, and are quite willing to let the former owners have it again. on reasonable terms. Thus, as the final success of the British is now beyond all doubt, the insurrection in Oude bids fair to die out without passing through a period of active guerrilla warfare. As soon as the majority of the landholders come to terms with the British, the insurgent bodies will be broken up, and those who have too much to fear from the Government will turn robbers (dacoits), in the capture of whom the peasantry will gladly assist. South-west of Oude the Jugdispore jungles appear to offer a center for such dacoits. These impenetrable forests of bamboo and underwood are held by a party of insurgents under Ummer Singh, who shows rather more activity and knowledge of guerrilla warfare; at all events, he attacks the British whenever he can, instead of quietly waiting for them. If, as it is feared, part of the Oude insurgents should join him before he can be expelled from his stronghold, the British may expect rather harder work than they have had of late. These jungles have now for nearly eight months served as a retreat to insurgent parties, who have been able to render very insecure the Grand Trunk Road from Calcutta to Allahabad, the main communication of the British. In Western India, the Gwalior insurgents are still followed up by Gen. Roberts and Col. Holmes. At the time of the capture of Gwalior, it was a question of much consequence, what direction the retreating army might take; for the whole of the Mahratta country and part of Rajpootana appeared ready for a rising as soon as a sufficiently strong body of regular troops arrived there to form a nucleus for the insurrection. A retreat of the Gwalior force in a south-westerly direction then seemed the most likely maneuver to realize such a result. But the insurgents, from reasons which we cannot guess at from the reports before us, have chosen a north-westerly direction. They went to Jeypore, thence turning south toward Oodeypore, trying to gain the road to the Mahratta country. But this roundabout marching gave Roberts an opportunity of coming up with them, and defeating them totally without any great effort. The remnants of this body, without guns, without organization and ammunition, without leaders of repute, are not the men who are likely to induce fresh risings. On the contrary, the immense quantity of plunder which they carry along with them, and which hampers all their movements, appears already to have excited the avidity of the peasantry. Every straggling Sepoy is killed and eased of his load of gold mohurs. If it has come to that, Gen. Roberts may safely leave the final dispersion of these Sepoys to the country population. The loot of Scindiah s treasures by his troops saves the British from a renewal of the insurrection in a quarter more dangerous than Hindostan; for a rising in the Mahratta country would put the Bombay army upon a rather severe trial. There is a fresh mutiny in the neighborhood of Gwalior. A small vassal of Scindiah, Maun Singh (not the Maun Singh of Oude) has joined the insurgents, and got hold of the small fortress of Paoree. This place, is, however, already invested by the British, and must soon be captured. In the mean time, the conquered districts are gradually pacified. The neighborhood of Delhi, it is said, has been so completely tranquillized by Sir J. Lawrence that a European may travel about with perfect safety, unarmed, and without an escort. The secret of the matter is, that the people of every village have been made collectively responsible for any crime or outrage committed on its ground; that a military police has been organized; and, above all, that the summary justice of the Court-Martial, so peculiarly impressive upon Orientals, is everywhere in full swing. Still, this success appears to be the exception, as we do not hear anything of the kind from other districts. The complete pacification of Rohilcund and Oude, of Bundelcund and many other large provinces, must yet require a very long time and give plenty of work yet to British troops and Court-Martials. But while the insurrection of Hindostan dwindles down to dimensions which deprive it of almost all military interest, there has occurred an event far off, at the utmost frontiers of Afghanistan, which is big with the threat of future difficulties. A conspiracy to murder their officers and to rise against the British has been discovered among several Sikh regiments at Dera Ismael Khan. How far this conspiracy was ramified, we cannot tell. Perhaps it was merely a local affair, arising among a peculiar class of Sikhs; but we are not in a position to assert this. At all events, this is a highly dangerous symptom. There are now nearly 100,000 Sikhs in the British service, and we have heard how saucy they are; they fight, they say, to-day for the British, but may fight to-morrow against them, as it may please God. Brave, passionate, fickle, they are even more subject to sudden and unexpected impulses than other Orientals. If mutiny should break out in earnest among them, then would the British indeed have hard work to keep their own. The Sikhs were always the most formidable opponents of the British among the natives of India; they have formed a comparatively powerful empire; they are of a peculiar sect of Brahminism, and hate both Hindoos and Mussulmans. They have seen the British raj in the utmost peril; they have contributed a great deal to restore it, and they are even convinced that their own share of the work was the decisive one. What is more natural than that they should harbor the idea that the time has come when the British raj shall be replaced by a Sikh raj, that a Sikh Emperor is to rule India from Delhi or Calcutta? It may be that this idea is still far from being matured among the Sikhs, it may be that they are so cleverly distributed that they are balanced by Europeans, so that any rising could be easily put down; but that this idea exists among them must be clear, we presume, to everybody who has read the accounts of the behaviour of the Sikhs after Delhi and Lucknow. Still, for the present, the British have reconquered India. The great rebellion, stirred up by the mutiny of the Bengal army, is indeed, it appears, dying out. But this second conquest has not increased England s hold upon the mind of the Indian people. The cruelty of the retribution dealt out by the British troops, goaded on by exaggerated and false reports of the atrocities attributed to the natives, and the attempt at confiscating the Kingdom of Oude, both wholesale and retail, have not created any particular fondness for the victors. On the contrary, they themselves confess that among both Hindoos and Mussulmans, the hereditary hatred against the Christian intruder is more fierce than ever. Impotent as this hatred may be at present, it is not without its significance and importance, while that menacing cloud is resting over the Sikh Punjaub. And this is not all. The two great Asiatic powers, England and Russia, have by this time got hold of one point between Siberia and India, where Russian and English interests must come into direct collision. That point is Pekin. Thence westward a line will ere long be drawn across the breadth of the Asiatic Continent, on which this collision of rival interests will constantly take place. Thus the time may indeed not be so very distant when the Sepoy and the Cossack will meet in the plains of the Oxus, and if that meeting is to take place, the anti-British passions of 150,000 native Indians will be a matter of serious consideration.

Marx and Engels. First Indian War of Independence 1857-58

https://www.marxists.org/archive/marx/works/1858/10/01.htm

The first great cause pointed out of the signal failure is the speculative overstocking of the Chinese market, during the first three years following the Pottinger treaty, and the carelessness of the English merchants as to the nature of the Chinese demand. The English exports to China which, in 1836, amounted to 1,326,000, had fallen in 1842 to 969000 Their rapid and continued rise during the following six years is shown by these figures: Yet in 1846 the exports did not only sink below the level of 1836, but the disasters overtaking the China houses at London during the crisis of 1847 proved the computed value of the exports from 1843 to 1846, such as it appears in the official return tables, to have by no means corresponded to the value actually realized. If the English exporters thus erred in the quantity, they did not less so in the quality of the articles offered to Chinese consumption. In proof of the latter assertion, the Economist quotes from Mr. W. Cooke, the late correspondent of the London Times at Shanghai and Canton, the following passages: Lastly, to prove the dependence of the reduction, maintenance or improvement of the trade, on the study of the wants of the consumer, the Economist reproduces from the same authority the following return for the year 1856: Now all these arguments and illustrations explain nothing beyond the reaction following the overtrade of 1843-45, It is a phenomenon by no means peculiar to the Chinese trade, that a sudden expansion of commerce should be followed by its violent contractions, or that a new market, at its opening. should be choked by British oversupplies; the articles thrown upon it being not very nicely calculated, in regard either to the actual wants or the paying powers of the consumers. In fact, this is a standing feature in the history of the markets of the world. On Napoleon's fall, after the opening of the European continent, British exports proved so disproportionate to the continental faculties of absorption that "the transition from war to peace" proved more disastrous than the continental system itself. Canning's recognition of the independence of the Spanish colonies in America was also instrumental in producing the commercial crisis of 1825 Wares calculated for the meridian of Moscow were then dispatched to Mexico and Colombia. And in our own day, notwithstanding its elasticity, even Australia has not escaped the fate common to all new markets, of having its powers of consumption as well as its means of payment over-stocked. The phenomenon peculiar to the Chinese market is this: that since its opening by the treaty of 1842, the export to Great Britain of tea and silk, of Chinese produce, has continually been expanding, while the import trade into China of British manufactures has, on the whole, remained stationary. The continuous and increasing balance of trade in favour of China might be said to bear an analogy to the state of commercial balance between Russia and Great Britain; but then, in the latter case, everything is explained by the protective policy of Russia, while the Chinese import duties are lower than those of any other country England trades with. The aggregate value of Chinese exports to England, which before 1842 might be rated at about IC.7,000,000, amounted in 1856 to the sum of about IC 9,500,000. While the quantity of tea imported into Great Britain never reached more than 50,000,000 lbs. before 1842, it had swollen in 1856 to about 90,000,000 lbs. On the other hand, the importance of the British import of Chinese silks only dates from 1852. Its progress may be computed from the following figures: Now take, on the other hand, the movement of the For the period following the opening of the market in 1842 and the acquisition of Hong Kong by the British, we find the following returns: The Economist tries to account for the stationary and relatively decreasing imports of British manufacture into the Chinese market by foreign competition, and Mr. Cooke is again quoted to bear witness to this proposition. According to this authority, the English are beaten by fair competition in the Chinese market in many branches of trade. The Americans, he says, beat the English in drills and sheetings. At Shanghai in 1856 the imports were 221,716 pieces of American drills, against 8,745 English, and 14,420 of American sheetings, against 1,240 English. In woollen goods, on the other hand, Germany and Russia are said to press hardly on their English rivals. We want no other proof than this illustration to convince us that Mr. Cooke and the Economist are both mistaken in the appreciation of the Chinese market. They consider as limited to the Anglo-Chinese trade features which are exactly reproduced in the trade between the United States and the Celestial Empire. In 1837, the excess of the Chinese exports to the United States over the imports into China was about 860,000. During the period since the treaty of 1842, the United States have received an annual average of 2,000,000 in Chinese produce, for which we paid in American merchandise 900,000. Of the 1,602,849 to which the aggregate imports into Shanghai, exclusive of specie and opium, amounted in 1855, England supplied 1,122,24I, America 272,708, and other countries 207,900; while the exports reached a total of 12,603,540, of which 6,405,040 were to England, 5,396,406 to America, and 102,088 to other countries. Compare only the American exports to the value of 272,708 with their imports from Shanghai exceeding 5,000,000. If, nevertheless, American competition has, to any sensible degree, made inroads on British traffic, how limited a field of employment for the aggregate commerce of foreign nations the Chinese market must offer. The last cause assigned to the trifling importance the Chinese import market has assumed since its opening in 1842, is the Chinese revolution, but notwithstanding that revolution, the exports to China relatively [swelled] in 1851-52, in the general increase of trade, and, during the whole of the revolutionary epoch, the opium trade, instead of falling off, rapidly obtained colossal dimensions. However that may be, this much will be admitted, that all the obstacles to foreign imports originating in the disordered state of the empire must be increased, instead of being diminished, by the late piratical war, and the fresh humiliations heaped on the ruling dynasty. It appears to us, after a careful survey of the history of Chinese commerce, that, generally speaking, the consuming and paying powers of the Cclestials have been greatly overestimated. With the present economical framework of Chinese society, which turns upon diminutive agriculture and domestic manufactures as its pivots, any large import of foreign produce is out of the question. Still, to the amount of L8,000,000, a sum which may be roughly calculated to form the aggregate balance in favour of China, as against England and the United States, it might gradually absorb a surplus quantity of English and American goods if the opium trade were suppressed. This conclusion is necessarily arrived at on the analysis of the simple fact that the Chinese finances and monetary circulation, in spite of the favourable balance of trade, are seriously deranged by an import of opium to the amount of about 7,000,000. John Bull, however, used to plume himself on his high standard of morality, prefers to bring up his adverse balance of trade by periodical war tributes extorted from China on piratical pretexts. He only forgets that the Carthegenian and Roman methods of making foreign people pay, are, if combined in the same hands, sure to clash with and destroy each other.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1858/10/05.htm

The Supplementary Treaty of Nanking was a supreme and rather desperate effort at getting rid of the opium trade by foreign aid. This effort having failed, and being now proclaimed a failure, the opium traffic, being now, so far as Eng. land is concerned, legalized, little doubt can remain that the Chinese Government will try a method alike recommended by political and financial considerations viz: legalize the cultiva. tion of the poppy in China, and lay duties on the foreign opium imported. Whatever may be the intentions of the present Chinese Government, the very circumstances in which it finds itself placed by the treaty of Tientsin, show all that way. That change once effected, the opium monopoly of India, and with it the Indian Exchequer, must receive a deadly blow, while the British opium traffic will shrink to the dimensions of an ordinary trade, and very soon prove a losing one. Till now, it has been a game played by John Bull with loaded dice. To have baffled its own object seems, therefore, the most obvious result of the opium war No. II. Having declared "a just war" on Russia, generous England desisted, at the conclusion of peace, from demanding any indemnity for her war expenses. Having, on the other hand, all along professed to be at peace with China itself, she, accordingly, cannot but make it pay for expenses incurred, in the opinion of her own present Ministers, by piracy on her own part. However, the first tidings of the fifteen or twenty millions of pounds sterling to be paid by the Celestials proved a quieter to the most scrupulous British conscience, and very pleasant calculations as to the beneficial effects of the Sycee silver upon the balance of trade, and the metal reserve of the Bank of England, were entered into by the Economist and the writers of money articles generally. But alas! the first impressions which the Palmerstonian press had given itself so much trouble to produce and work upon, were too tender to bear the shock of real information. A "separate article provides that a sum of two millions of taels" shall be paid "on account of the losses sustained by British subjects through the misconduct of the Chinese authorities at Canton; and a further sum of two millions of taels on account of " the expenses of the war. Now, these sums together amount to 1,334,000 only, while in 1842, the Emperor of China had to pay 4,200,000, of which 1,200,000 was indemnity for the contraband opium confiscated, and 3,000,000 for the expenses of the war. To come down from 4,200,000, with Hong Kong into the bargain, to a simple 1,334,000, seems no thriving trade after all; but the worst remains still to be said. Since, says the Chinese Emperor, yours was no war with China, but a "provincial war" with Canton only, try yourselves how to squeeze out of the province of Kwangtung the damages which your amiable war steamers have compelled me to adjudge to you. Meanwhile, your illustrious Gen. Straubenzee may keep Canton as a material guaranty, and continue to make the British arms the laughing-stock even of Chinese braves. The doleful feelings of sanguine John Bull at these clauses, which the small booty of 1,334,000 is encumbered with, have already vented themselves in audible groans. John Bull's anxiety as to the effects of the "provincial war" upon the tea trade is not quite gratuitous. From Macgregor's Commercial Tariffi it may be seen that in the last year of the former Chinese war, Russia received 120,000 chests of tea at Kiachta. The year after the conclusion of peace with China the Russian demand fell off 75 per cent, amounting to 30,000 only. At all events, the costs still to be incurred by the British in distraining Kwangtung are sure so to swell the wrong side of the balance that this second China war will hardly be self-paying, the greatest fault which, as Mr. Emerson justly remarks, anything can be guilty of in British estimation. Another great success of the English invasion is contained in Art- 51, according to which the term "barbarian" "shall not be applied" to the British Government or to British subjects "in any Chinese official document issued by the Chinese authorities." The Chinese authorities styling themselves Celestials, how humble to their understanding must not appear John Bull, who, instead of insisting on being called divine or Olympian, contents himself with weeding the character representing the word barbarian out of the official documents. The commercial articles of the Treaty give England no advantage not to be enjoyed by her rivals, and, for the present, dissolve into shadowy promises, for the greater part not worth the parchment they are written on. Art. 10 stipulates: By this article, the British are in fact excluded from the great commercial artery of the whole empire, from "the only line," as The Morning Starjustly remarks, "by which they can push their manufactures into the interior." If they will be good boys, and help the Imperial Government in dislodging the rebels from the regions now occupied by them, then they may eventually navigate the great river, but only to particular harbours. As to the new seaports opened, from "all" the ports as at first advertised, they have dwindled down to five ports, added to the five ports of the Treaty of Nanking, and, as a London paper remarks, "they are generally remote or insular." Besides, at this time of the day, the delusive notion of the growth of trade being proportionate to the number of ports opened, should have been exploded. Consider the harbours on the coasts of Great Britain, or France, or the United States; how few of them have developed themselves into real emporiums of commerce? Before the first Chinese war, the English traded exclusively to Canton. The concession of five new ports, instead of creating five new emporiums of commerce, has gradually transferred trade from Canton to Shanghai, as may be seen from the following figures, extracted from the Parliamentary Blue Book on the trade of various places for 1856-57. At the same time, it should be recollected that the Canton imports include the imports to Amoy and Pochow, which are transhiped at Canton. The "commercial clauses" of the treaty "are unsatisfactory," is a conclusion arrived at by the Daily Telegraph, Palmerston's most abject sycophant; but it chuckles at "the brightest point in the programme," viz: "that a British Minister may establish himself at Peking, while a Mandarin will install himself in London, and possibly invite the Queen to a ball at Albert Gate." However John Bull may indulge this fun, there can be no doubt that whatever political influence may be exercised at Peking will fall to the part of Russia, which, by dint of the last treaty, holds a new territory, being as large as France, and, in great part, on its frontier, 8oo miles only distant from Peking. It is by no means a comfortable reflection for John Bull that he himself, by his first opium war, procured Russia a treaty yielding her the navigation of the Amur and free trade on the land frontier, while by his second opium war he has helped her to the invaluable tract lying between the Gulf of Tartary and Lake Baikal, a region so much coveted by Russia that from Czar Alexey Michaelovitch down to Nicholas, she has always attempted to get it. So deeply did the London Times feel that sting that, in its publication of the St. Petersburg news, which greatly exaggerated the advantages won by Great Britain, good care was taken to suppress that part of the telegram which mentioned Russia's acquisition by treaty of the valley of the Amur.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1858/10/15.htm

Now, through all this hubbub and all this mystery, there transpires more and more the anxiety of the Government, that had given way to the pressure of its credulous Irish agents, who, in their turn, were mere playthings in the hands of the Orangemen, how to get out of the awkward fix without losing at once their reputation and their places. At first, it was pretended that the dangerous conspiracy, extending its ramifications from the south-west to the north-east over the whole surface of Ireland, issued from the Americanising Phoenix Club. Then it was a revival of Ribbonism; but now it is something quite new, quite unknown, and the more awful for all that. The shifts the Government is driven to may be judged from the manoeuvres of The Dublin Daily Express, the Government organ, which day by day treats its readers to false rumours of murders committed, armed men marauding, and midnight meetings taking place. To its intense disgust, the men killed return from their graves, and protest in its own columns against being so disposed of by the editor. There may exist such a thing as a Phoenix Club, but at all events, it is a very small affair, since the Government itself has thought fit to stifle this Phoenix in its own ashes. As to Ribbonism, its existence never depended upon secret conspirators. When, at the end of the eighteenth century, the Protestant Peep-o'-Day boys combined to wage war against the Catholics in the north of Ireland, the opposing society of the Defenders sprang up. When, in 1791, the Peep-o'-Day boys merged into Orangeism, the Defenders transformed themselves into Ribbonmen. When, at last, in our own days, the British Government disavowed Orangeism, the Ribbon Society, having lost its condition of life, dissolved itself voluntarily. The extraordinary steps taken by Lord Eglinton may, in fact, revive Ribbonism, as may the present attempts of the Dublin Orangemen to place English officers at the head of the Irish Constabulary, and fill its inferior ranks with their own partisans. At present there exist no secret societies in Ireland except agrarian societies. To accuse Ireland of producing such societies would be as judicious as to accuse woodland of producing mushrooms. The landlords of Ireland are confederated for a fiendish war of extermination against the cotters; or, as they call it, they combine for the economical experiment of clearing the land of useless mouths. The small native tenants are to be disposed of with no more ado than vermin is by the housemaid. The despairing wretches, on their part, attempt a feeble resistance by the formation of secret societies, scattered over the land, and powerless for effecting anything beyond demonstrations of individual vengeance. But if the conspiracy hunted after in Ireland is a mere invention of Orangeism, the premiums held out by the Government may succeed in giving shape and body to the airy nothing. The recruiting sergeant is no more sure to press with his shilling and his gin some of the Queen s mob into the Queen s service, than a reward for the detection of Irish secret societies is sure to create the societies to be detected. From the entrails of every county there rise immediately blacklegs who, transforming themselves into revolutionary delegates, travel through the rural districts, enrol members, administer oaths, denounce the victims, swear them to the gallows, and pocket the blood-money. To characterise this race of Irish informers and the effect on them of Government rewards, it will suffice to quote one passage from a speech delivered by Sir Robert Peel in the House of Commons:

Karl Marx in New-York Tribune 1858

https://www.marxists.org/archive/marx/works/1858/12/24.htm

According to his oracle in Printing-House Square, he grasps after colonies only in order to educate them in the principles of public liberty; but, if we adhere to facts, the Ionian-Islands, like India and Ireland, prove only that to be free at home, John Bull must enslave abroad. Thus, at this very moment, while giving vent to his virtuous indignation against Bonaparte s spy system at Paris, he is himself introducing it at Dublin.

Karl Marx in New-York Tribune 1859

https://www.marxists.org/archive/marx/works/1859/01/06.htm

London, April 8, 1859 The Indian financial crisis, which at this moment shares with the war rumors and the electioneering agitation in the privilege of absorbing public interest in England, must be considered in a double point of view. It involves both a temporary necessity and a permanent difficulty. On the 14th of February Lord Stanley brought in a bill in the House of Commons authorizing the Government to raise a loan of 7,000,000 in England, in order to adjust the extra expenditure of the Indian administration for the current year. About six weeks later, John Bull s self-congratulations as to the small cost of the Indian rebellion were roughly interrupted by the arrival of the Overland Mail, conveying a, cry of financial distress from the Government at Calcutta. On March 25, Lord Derby rose in the House of Lords to state that a further loan for India of 5,000,000, in addition to the 7,000,000 loan now before Parliament, would be required to meet the demands of the present year, and that even then, certain claims for compensation and prize money, amounting to 2,000,000 at least, would remain to be paid from some source not yet apparent. To make things pleasant, Lord Stanley had, in his first statement, only provided for the wants of the Indian Treasury at London, leaving the -British Government in India to its own resources, which, from the dispatches received, he could not but know to be far from sufficient. Quite apart from the expenses of the Home Government, or the Indian administration at London, Lord Canning estimated the deficit of the Government at Calcutta for the current year of 1859-60 at 12,000,000, after allowing an increase in the ordinary revenue of 800,000, and a decrease on military charges of 2 ,000,000. Such was his penury that he had stopped paying part of his civil service; such was his credit that the Government 5 per cents were quoted at 12 per cent discount; and such was his distress that he could only be saved from bankruptcy by the shipment from England to India of 3,000,000 of silver within a few months. Three points thus become evident. First: Lord Stanley s original statement was a dodge, and, so far from embracing all the Indian liabilities, did not even touch the immediate wants of the Indian Government in India. Secondly: During the whole period of the insurrection, if we except the sending from London in 1857 of 1,000,000 of silver to India, the Calcutta Government was left to shift for itself, to provide out of its own resources for the main part of the extraordinary war charges which, of course, had to be disbursed in India, for the barrack accommodation of some 60,000 additional Europeans, for the restoration of the treasures plundered, and for the replacing of all the revenues of the local Administrations which had been swept away. Thirdly: There is, apart from the wants of the Home Government, a deficit of 12,000,000, to be met in the present year. By operations, the questionable nature of which we forbear to dwell upon, this sum is to be reduced to 9,000,000, of which sum 5,000,000 are to be borrowed in India and 4,000,000 in England. Of the latter, 1,000,000 in silver bullion has already been shipped to Calcutta from London, and 2,000,000 more is to be dispatched in the shortest possible period. It will be seen from this succinct statement that the Indian Government was very unfairly dealt with by its English masters, who left it in the lurch, in order to throw dust in the eyes of John Bull; but it must, on the other hand, be admitted that the financial operations of Lord Canning surpass in awkwardness even his military and political exploits. Up to the end of January, 1859, he had contrived to raise the necessary means by loans in India, issued partly in Government stocks, partly in Treasury bills; but, strange to say, while his efforts had answered during the epoch of the revolution, they failed entirely from the moment English authority was restored by the force of arms. And not only did they fail, but there was a panic in regard to Government securities; there was an unprecedented depreciation in all funds, with protests from the Chambers of Commerce at Bombay and Calcutta, and, in the latter town, public meetings composed of English and native money-mongers, denouncing the vacillation, the arbitrary nature and the helpless imbecility of the Government measures. Now, the loanable capital of India which up to January 1859, had supplied the Government with funds, began to fail after that period, when the power of borrowing seems to have been exceeded. In point of fact the aggregate loans which from 1841 to 1857 amounted to 21,000,000, absorbed in the two years of 1857 and 1858 alone about 9,000,000, equal to almost one-half of the money borrowed during the previous sixteen years. Such a failure of resources, while accounting for the necessity of successively screwing up the rate of interest on Government loans from 4 to 6 per cent, is, of course, far from explaining the commercial panic in the Indian security market, and the utter inability of the Governor-General to meet the most urgent requirements. The riddle is solved by the fact that it has become a regular maneuver with Lord Canning to bring out new loans at higher rates of interest than those given on existing open loans, without any previous notice to the public, and with the utmost uncertainty prevailing as to the further financial operations contemplated. The depreciation of the funds, in consequence of these maneuvers, has been calculated at not less than 11,000,000. Pinched by the poverty of the Exchequer, frightened by the panic in the stock market, and roused by the protests on the part of the Chambers of Commerce and the Calcutta meetings, Lord Canning thought best to be a good boy and to try to come up to the desiderata of the monetary mind; but his notification of the 21st of February, 1859, shows again that the human understanding does not depend on human will. What was he required to do? Not to open simultaneously two loans on different conditions, and to tell the monetary public at once the sum required for the current year, instead of deceiving them by successive announcements, one contradictory of the other. And what does he do in his notification? In the first instance he says that there is to be raised by loan in the Indian market for the year 1859-60, 5,000,000, at 5 1/2 per cent, and that In the very same proclamation, sweeping away the entire value of the assurances just given, he proceeds: But that is not all. He opens, in fact, a double loan on different terms. While announcing that the issue of Treasury bills on the terms notified on Jan. 26, 1859, will be closed on April 30, he proclaims that a new issue of Treasury bills will be notified from the 1st of May, bearing interest of nearly 5 3/4 per cent, and redeemable at the expiration of one year from the date of issue. Both loans are kept open together, while, at the same time, the loan opened in January has not yet been concluded. The only financial matter which Lord Canning seems able to comprehend is that his annual salary amounts to 20,000 in name, and to about 40,000 in fact. Hence, despite the sneers of the Derby Cabinet, and his notorious incapacity, he sticks to his post from a feeling of duty. The effects of the Indian financial crisis on the English home market have already become apparent. In the first instance, the silver remittances on account of Government coming to swell the large remittances on mercantile account, and failing at an epoch when the ordinary silver supplies from Mexico are held back in consequence of the distracted condition of that country, have, of course, sent up the price of bar silver. On March 25, it had risen to the factitious price of 62 1/4 d. per ounce standard, causing such an influx of silver from every part of Europe that the price in London again fell to 62 3/8 d.; while the rate of discount at Hamburg rose from 2 1/2 to 3 per cent. Consequent upon these heavy importations of silver, exchanges have turned against England, and a drain of gold bullion has set in, which, for the present, only relieves the London money market of its plethora, but in the long run may seriously affect it, coupled, as it will be, with large Continental loans. The depreciation, however, on the London money market, of the Indian Government stocks and guaranteed railway securities, prejudicial as it must prove to the Government and railway loans still to be brought forward in the course of this season, is certainly the most serious effect on the home market as yet, resulting from the Indian financial crisis. The shares of many Indian railways, although 5 per cent interest upon them is guaranteed by the Government, are now at 2 or 3 per cent discount. Taking all in all, however, I regard the momentary Indian financial panic as a matter of secondary importance, if compared with the general crisis of the Indian Exchequer, which I may perhaps consider on another occasion. London, April 12, 1859 The latest overland mail, so far from showing any abatement of the financial crisis in India, reveals a state of derangement hardly anticipated. The shifts to which the Indian Government is driven in order to meet its most urgent wants, may be best illustrated by a recent measure of the Governor of Bombay. Bombay is the market where the opium of Malwa, averaging 30,000 chests annually, finds its outlet by monthly instalments of 2,000 or 3,000 chests, for which bills are drawn upon Bombay. By charging 400 rupees upon every chest imported into Bombay, the Government raises a revenue of 1,200,000 annually on Malwa opium. Now, to replenish his exhausted Exchequer, and ward off immediate bankruptcy, the Bombay Governor has issued a notification, which raises the duty on each chest of Malwa opium from 400 to 500 rupees; but, at the same time, he declares that this increased duty will not be levied till after the 1st of July, so that the holders of opium in Malwa have the privilege of bringing in the drug under the old duties for four months longer. Between the middle of March, when the notification was issued, and the 1st of July, there are only two months and a half during which opium can be imported, the monsoon setting in on the 15th of June. The holders of opium in Malwa will, of course, avail themselves of the interval allowed them for sending in opium at the old duty; and, consequently, during the two months and a half pour all their stock in hand into the Presidency. Since the balance of opium, of the old and new crops, remaining at Malwa amounts to 26,000 chests, and the price of Malwa opium reaches 1,250 rupees per chest, the Malwa merchants will have to draw upon the Bombay merchants for no less a sum than 3,000,000, of which more than 1,000,000 must come into the Bombay Treasury. The aim of this financial dodge is transparent. With a view to anticipate the annual revenue from the opium duty, and induce the dealers in the article to pay it at once, an enhancement of the duty is held out prospectively in terrorem While it would be quite superfluous to expatiate upon the empirical character of this contrivance, which fills the Exchequer for the present by creating a corresponding void a few months hence, no more striking instance could be given of the exhaustion of ways and means, on the part of the great Mogul s successors. Let us now turn to the general state of Indian finances, as it has grown out of the late insurrection. According to the last official accounts, the net revenue derived by the British from their Indian farm amounts to 23,208,000, say 24,000,000. This annual revenue has never sufficed to defray the annual expenses. From 1836 to 1850 the net deficit amounted to 13,171,096, or, on a rough average, to 1,000,000 annually. Even in the year 1856, when the Exchequer was exceptionally filled by the wholesale annexations, robberies and extortions of Lord Dalhousie, the income and expense did not exactly square, but, on the contrary, a deficit of about a quarter of a million was added to the usual crop of deficits. In 1857 the deficiency was 9,000,000, in 1858 it amounted to 13,000,000, and in 1859 it is estimated by the Indian Government itself at 12,000,000. The first conclusion, then, which we arrive at is that even under ordinary circumstances. deficits were accumulating, and that under extraordinary circumstances they must assume such dimensions as to reach one-half and more of the annual income. The question which next presents itself is, To what degree has this already existing gap between the expenses and the income of the Indian Government been widened by recent events? The new permanent debt of India accruing from the suppression of the mutiny is calculated by the most sanguine English financiers at between forty and fifty millions sterling, while Mr. Wilson estimates the permanent deficit, or the annual interest for this new debt to be defrayed out of the annual revenue, at not less than three millions. However, it would be a great mistake to think that this permanent deficit of three millions is the only legacy left by the insurgents to their vanquishers. The costs of the insurrection are not only in the past tense, but are in a high degree prospective. Even in quiet times, before the outbreak of the mutiny, the military charges swallowed sixty per cent at least of the aggregate regular income, since they exceeded 12,000;000; but the state of affairs is now changed. At the beginning of the mutiny the European force in India amounted to 38,000 effective men, while the native army mustered 260,000 men. The military forces at present employed in India amount to 112,000 Europeans and 320,000 native troops, including the native police. It may be justly said that these extraordinary numbers will be reduced to a more moderate standard with the disappearance of the extraordinary circumstances which swelled them to their present size. Yet the military commission appointed by the British Government has arrived at the conclusion that there will be required in India a permanent European force of 80,000 men, with a native force of 200,000 men the military charges being thus raised to almost double their original bight. During the debates on the Indian finances, in the House of Lords, on April 7, two points were admitted by all speakers of authority: on the one hand that an annual expenditure upon the revenue of India little short of twenty millions for the army alone was incompatible with a net revenue of twenty-four millions only; and, on the other hand, that it was difficult to imagine a state of things which for an indefinite series of years would render it safe for the English to leave India without a European force double its amount before the outbreak of the mutiny. But suppose even that it would do to add permanently to the European forces not more than one-third of their original strength, and we get at a new annual permanent deficit of four millions sterling at least. The new permanent deficit, then, derived on one hand from the consolidated debt contracted during the mutiny, and on the other hand from the permanent increase of the British forces in India, cannot, on the most moderate calculation, fall below seven millions sterling. To this must be added two other items the one accruing from an increase of liabilities, the other from a diminution of income. By a recent statement of the Railway Department of the Indian office at London, it results that the whole length of railways sanctioned for India is 4,817 miles, of which 559 miles only are yet opened. The whole amount of capital invested by the different railway companies amounts to 40,000,000 sterling, of which 19,000,000 are paid and 21,000,000 are still to be called in 96 per cent of the aggregate sum having been subscribed in England and 4 per cent only in India. Upon this amount of 40,000,000, the Government has guaranteed 5 per cent interest, so that the annual interest charged upon the revenues of India reaches 2,000,000, to be paid before the railways are in working order, and before they can yield any return. The Earl of Ellenborough, estimates the loss accruing to the Indian finances from this source, for the next three years to come, at 6,000,000 sterling, and the ultimate permanent deficit upon these railways at half a million annually. Lastly, of the 24,000,000 of Indian net revenue, a sum of 3,619,000 is derived from the sale of opium to foreign countries a source of revenue which, it is now generally admitted, must to a considerable extent be impaired by the late treaty with China. 148 It becomes, then, evident, that apart from the extra expenditure still necessitated to complete the suppression of the mutiny, an annual permanent deficit of 8,000,000 at least, will have to be defrayed out of a net revenue of 24,000,000, which the Government may, perhaps, by the imposition of new taxes, contrive to raise to 26,000,000. The necessary result of this state of things will be to saddle the English taxpayer with the liability for the Indian debt and, as Sir G. C. Lewis declared in the House of Commons, It will be confessed that these financial fruits of the glorious reconquest of India have not a charming appearance; and that John Bull pays exceedingly high protective duties for securing the monopoly of the Indian market to the Manchester free-traders.

Karl Marx in The New-York Tribune 1853

https://www.marxists.org/archive/marx/works/1859/04/30.htm

As regards the other condition, the locked-out will on no account consent to it, unless they are compelled to do so by dire necessity; they feel that to renounce the society, to renounce all organisations, would mean making themselves regular serfs of the capitalists and casting away the little scrap of independence that is still left to the modern proletarians. The obstinacy of the masters, who lay claim to an authority over their hands similar to that of the American plantation owner over his slaves, has evoked the disapproval even of a section of the bourgeois reporters. Naturally, we have no cause to be dissatisfied with the building masters. After all, they are doing everything in their power to widen the already wide gulf between labour and capital and to intensify the concentrated, conscious class hatred which is the best guarantee for a social upheaval. In London there are over 1,000 builders workshops in all. Only 88 of them, the biggest, are closed. The number of lockouts (dismissed workers) amounts to 19,000-20,000, not 40,000, as was maintained initially. Generous money contributions are streaming into the society from all parts of the country, but so far the unemployed workers have refused to draw on these. Honour to the brave! Would the bourgeoisie be capable of such sacrifice for the sake of its class interests?

Karl Marx in Das Volk 1859

https://www.marxists.org/archive/marx/works/1859/08/20.htm

Strange to say, the only part of the United Kingdom in which crime has seriously decreased, say by 50, and even by 75 per cent, is Ireland. How can we harmonise this fact with the public-opinion slang of England, according to which Irish nature, instead of British misrule, is responsible for Irish shortcomings? It is, again, no act on the part of the British ruler, but simply the consequence of a famine, an exodus, and a general combination of circumstances favourable to the demand for Irish labour, that has worked this happy change in Irish nature. However that may be, the significance of the following tabular statements cannot be misunderstood:

Karl Marx in New-York Tribune 1859

https://www.marxists.org/archive/marx/works/1859/09/16.htm

First, then, they suppressed the statement that the Russian treaty had already been ratified, and that the Emperor of China had given instructions to his mandarins to receive and escort the American Embassy to the capital for the exchange of the ratified copies of the American treaty. These acts were suppressed with a view to stifle the suspicion that would naturally arise, that the English and French Envoys, instead of the Court of Peking, are responsible for meeting obstacles in the transaction of their business which were not encountered either by their Russian or American colleagues. The other, still more important, fact that was at first suppressed by The Times, and the other Palmerston organs, but is now avowed on their part, is that the Chinese authorities had given notice of their willingness to conduct the English and French Envoys to Peking; that they were actually in waiting to receive them at one of the mouths of the river, and offered them an escort if they only consented to leave their vessels and troops. Now, as the treaty of Tien-tsin contains no clause granting to the English and French the right of sending a squadron of men-of-war up the Pejho, it becomes evident that the treaty was violated, not by the Chinese, but by the English, and that on the part of the latter there existed the foregone conclusion to pick a quarrel just before the period appointed for the exchange of the ratifications. Nobody will fancy that the Hon. Mr. Bruce acted on his own responsibility in thus baffling the ostensible end aimed at by the last Chinese war, but that, on the contrary, he only executed secret instructions received from London. Now, it is true that Mr. Bruce was dispatched, not by Palmerston, but by Derby; but, then I have only to remind you that during the first administration of Sir Robert Peel, when Lord Aberdeen kept the seals of the Foreign Office, Sir Henry Bulwer, the English Ambassador at Madrid, picked a quarrel with the Spanish Court, resulting in his expulsion from Spain, and that, during the debates in the House of Lords on this " untoward event,", it was proved that Bulwer, instead of obeying the official instructions of Aberdeen, had acted up to the secret instructions of Palmerston, who then sat on the Opposition benches. A manoeuvre has also been carried out during these last days in the Palmerstonian press, which leaves no doubt, at least to those acquainted with the secret history of English diplomacy during the last thirty years, as to the real author of the Peiho catastrophe and the impending third AngloChinese war. The Times intimates that the guns planted on the forts of Taku which caused such havoc among the British squadron were of Russian origin, and were directed by Russian officers. Another Palmerstonian organ is still more plain spoken. I quote: Now, this is one of Lord Palmerston's old tricks. When Russia wanted to conclude a treaty of commerce with China, he drove the latter by the opium war into the arms of her northern neighbour. When Russia requested the cession of the Amur, he brought it about by the second Chinese war, and now that Russia wants to consolidate her influence at Peking, he extemporizes the third Chinese war. In all his transactions with the weak Asiatic States, with China, Persia, Central Asia, Turkey, it has always been his invariable and constant rule to ostensibly oppose Russia's designs by picking a quarrel, not with Russia, but with the Asiatic State, to estrange the latter from England by piratical hostilities, and by this roundabout way drive it to the concessions it had been unwilling to yield to Russia. You may be sure that on this occasion the whole past Asiatic policy of Palmerston will be again sifted, and I draw, therefore, your attention to the Afghan papers ordered by the House of Commons to be printed on the 8th June, 1859. They throw more light on Palmerston's sinister policy, and the diplomatic history of the last thirty years, than any documents ever before printed. The case is, in a few words, this: In 1838 Palmerston commenced a war against Dost Mohammed, the ruler of Cabul, a war that led to the destruction of an English army, and was commenced on the plea of Dost Mohammed having entered into a secret alliance against England with Persia and Russia. In proof of this assertion, Palmerston laid, in 1839, before Parliament, a Blue Book, chiefly consisting of the correspondence of Sir A. Burnes, the British envoy at Cabul, with the Government at Calcutta. Burnes had been assassinated during an insurrection at Cabul against the English invaders, but, distrustful of the British Foreign Minister, had sent copies of some of his official letters to his brother, Dr. Burnes, at London. On the appearance, in 1839, of the "Afghan papers," prepared by Palmerston, Dr. Burnes accused him of having "garbled and forged the dispatches of the late Sir A. Burnes," and, in corroboration of his statement, had some of the genuine despatches printed. But it was only last summer that the murder came out. Under the Derby Ministry, on the motion of Mr. Hadfield, the House of Commons ordered all the Afghan papers to be published infull, and this order has been executed in such a form as to constitute a demonstration, to the meanest capacity, of the truth of the charge of garbling and forgery, in the interest of Russia. On the title-page of the Blue Book appears the following: The name of the official, which appears as a guaranty for the fidelity of the return, is "J. W. Kaye, Secretary in Political and Secret Departments," Mr. Kaye being the upright historian of the War in Afghanistan. Now, to illustrate the real relations of Palmerston with Russia, against which he pretended to have set up the Afghan war, one instance may suffice for the present. The Russian agent, Vickovitch, who came to Cabul in 1837, was the bearer of a letter from the Czar to Dost Mohammed, Sir Alexander Burnes obtained a copy of the letter, and sent it to Lord Auckland, the Governor-General of India. In his own despatches, and various documents inclosed by him, this circumstance is referred to over and over again. But the copy of the Czar's letter was expunged altogether from the papers presented by Palmerston in 1839, and in every despatch in which it is referred to, such alterations were made as were necessary to suppress the circumstance of the connection of the "Emperor of Russia" with the mission to Cabul. This forgery was committed in order to suppress the evidence of the Autocrat's connection with Vickovitch, whom, on his return to St. Petersburg, it suited Nicholas to formerly disavow. For instance, at page 82 of the Blue Book will be found the translation of a letter to Dost Mohammed, which reads now as follows, the brackets showing the words originally suppressed by Palmerston: These, and similar forgeries committed by Palmerston in order to protect the honour of the Czar, are not the only curiosity exhibited by the "Afghan papers." The invasion of Afghanistan was justified by Palmerston on the ground that Sir Alexander Burnes had advised it as a proper means for baffling Russian intrigues in Central Asia. Now Sir A. Burnes did quite the contrary, and consequently all his appeals on behalf of Dost Mohammed were altogether suppressed in Palmerston's edition of the "Blue Book;" the correspondence being by dint of garbling and forgery, turned quite to the reverse of its original meaning. Such is the man now about to enter on a third Chinese war, on the ostensible plea o thwarting Russia's designs in that quarter.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1859/10/01.htm

In a second article on the same subject, The Economist dwells on the importance, direct and indirect, of the English trade to China. In the year 1858, the British exports to China had risen to 2,876,000, while the value of the British imports from China had averaged upward of cg,000,000 for each of the last three years, so that the aggregate direct trade of England with China may be put down at about ci2,000,000. But beside these direct transactions there are three other important trades with which, less or more, England is intimately connected in the circle of exchanges, the trade between India and China, the trade between China and Australia, and the trade between China and the United States. "Australia," says The Economist, "takes from China large quantities of tea annually, and has nothing to give in exchange which finds a market in China. America also takes large quantities of tea and some silk of a value far exceeding that of their direct exports to China." Both these balances in favour of China have to be made good by England, who is paid for this equalization of exchanges by the gold of Australia and the cotton of the United States. England, therefore, independently of the balance due by herself to China, has also to pay to that country large sums in respect to gold imported from Australia and cotton from America. Now this balance due to China by England, Australia, and the United States and from China to India, as asked by China to India, on account of, en passant, that the imports never yet reached the amount of l,000,000 sterling while the exports to China from India realize the sum of nearly 10,000,000. The inference The Economist draws from these economical observations is, that any serious interruption of the British trade with China would "be a calamity of greater magnitude than the mere figures of our own exports and imports might at first sight suggest," and that the embarrassment consequent upon such a disturbance would not be felt in the direct British tea and silk trade only, but must also "affect" the British transactions with Australia and the United States. The Economist is, of course, aware of the fact that during the last Chinese war, the trade was not so much interfered with by the war as had been apprehended; and that, at the port of Shanghai, it was even not affected at all. But then, The Economist calls attention to "two novel features in the present dispute" which might essentially modify the effects of a new Chinese war upon trade these two novel features being the "imperial" not "local character of the present conflict, and the" signal success which, for the first time, the Chinese have effected against European forces. How very different sounds this language from the war cry The Economist so lustily shouted at the time of the Lorcha affair. The Ministerial Council, as I anticipated in my last letter, witnessed Mr. Milner Gibson's protest against the war, and his menace of seceding from the Cabinet, should Palmerston act up to the foregone conclusions betrayed in the columns of the French Moniteur. For the moment Palmerston prevented any rupture of the Cabinet, and the Liberal Coalition, by the statement that the force indispensable for the protection of British trade should be gathered in the Chinese waters, while before the arrival of more explicit reports on the part of the British Envoy, no resolution should be taken as to the war question. Thus the burning question was put off. Palmerston's real intention however transpires through the columns of his mob-organ The Daily Telegraph, which in one of its recent numbers says: The fix in which the Tories are hemmed up, by having allowed themselves to become inveigled into the responsible editorship of events planned by Palmerston and enacted by two of his agents, Lord Elgin and Mr. Bruce, (Lord Elgin's brother) I shall, perhaps, find another occasion for remarking upon.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1859/10/15.htm

And Lord Palmerston most coolly replied: "The right hon. gentleman says the course of events appeared to be the result of some system predetermined by the Government at home. Undoubtedly, it was." In the present instance, a cursory glance at the Blue Book, entitled: Lord Elgin, then, knows beforehand that the British Government "will desire" that his brother, Mr. Bruce, be accompanied by "an imposing force" of "gunboats" up the Peiho, and he orders Admiral Seymour to make ready "for this service." The Earl of Malmesbury, in his dispatch dated May 2, approved of the suggestion intimated by Lord Elgin to the Admiral. The whole correspondence exhibits Lord Elgin as the master, and Lord Malmesbury as the man. While the former constantly takes the initiative and acts upon the instructions originally received from Palmerston, without even waiting for new instructions from Downing Street, Lord Malmesbury contents himself with indulging "the desires" which his imperious subaltern anticipates him to feel. He nods assent when Elgin states that the treaty being not yet ratified, they had not the right to ascend any Chinese river; he nods assent, when Elgin thinks they ought to show much forbearance towards the Chinese in regard to the execution of the article of the treaty relating to the embassy to Pekin; and, nothing daunted, he nods assent when in direct contradiction to his own former statements, Elgin claims the right to enforce the passage of the Peiho by an "imposing fleet of gunboats." He nods assent in the same way that Dogberry nodded assent to the suggestions of the sexton. The sorry figure cut by the Earl of Malmesbury and the humility of his attitude, are easily understood if one calls to mind the cry raised on the advent of the Tory Cabinet by the London Times and other influential papers, as to the great peril threatening the brilliant success which Lord Elgin, under the instructions of Palmerston, was about to secure in China, but which the Tory Administration, if for pique only, and in order to justify their vote of censure on Palmerston's Canton bombardment, were likely to baffle. Malmesbury allowed himself to be intimidated by that cry. He had, moreover, before his eyes and in his heart the fate of Lord Ellenborough, who had dared openly to counteract the India policy of the noble Viscount, and in reward for his patriotic courage, was sacrificed by his own colleagues of the Derby Cabinet. Consequently, Malmesbury resigned the whole initiative into the hands of Elgin, and thus enabled the latter to execute Palmerston's plan on the responsibility of his official antagonists, the Tories. It is this same circumstance which for the present has put the Tories in a very dismal alternative as to the course to be taken in regard to the Peiho affair. Either they must sound the war trumpet with Palmerston, and thus keep him in office, or they must turn their backs on Malmesbury, upon whom they heaped such sickening flatteries-, during the late Italian war. The alternative is the more trying since the impending third China war is anything but popular with the British mercantile classes. In 1857 they bestrode the British lion, because they expected great commercial profits from a forcible opening of the Chinese market. At this moment, they feel, on the contrary, rather angry at seeing the fruits of the treaty obtained, all at once snapped away from their hold. They know that affairs look menacing enough in Europe and India, without the further complication of a Chinese war on a grand scale. They have not forgotten that, in 1857, the imports of tea fell by upward of 24 millions of pounds, that being the article almost exclusively exported from Canton, which was then the exclusive theatre of war, and they apprehend that this interruption of trade by war may now be extended to Shanghai and the other trading ports of the Celestial Empire. After a first Chinese war undertaken by the English in the interest of opium smuggling, and a second war carried on for the defence of the lorcha of a pirate, nothing was wanted for a climax but a war extemporized for the purpose of pestering China with the nuisance of permanent Embassies at its capital.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1859/10/18.htm

Wherever the real demand for commodities imported into Asiatic countries does not answer the supposed demand which in most instances is calculated on such superficial data as the extent of the new market, the magnitude of its population, and the vent foreign wares used to find at some outstanding seaports commercial men, in their eagerness at securing a larger area of exchange, are too prone to account for their disappointment by the circumstance that artificial arrangements, invented by barbarian Governments, stand in their way, and may, consequently, be cleared away by main force. This very delusion has, in our epoch, converted the British merchant, for instance, into the reckless supporter of every Minister who, by piratical aggressions, promises to extort a treaty of commerce from the barbarian. Thus the artificial obstacles foreign commerce was supposed to encounter on the part of the Chinese authorities, formed, in fact, the great pretext which, in the eyes of the mercantile world, justified every outrage committed on the Celestial Empire. The valuable information contained in Lord Elgin's Blue Book will, with every unprejudiced mind, go far to dispel such dangerous delusions. The Blue Book contains a report, dated in 1852, of Mr. Mitchell, a British agent at Canton, to Sir George Bonham, from which we quote the following passage: Mr. Mitchell admits that the trade between India and China, consisting almost exclusively in an exchange of silver for opium, has been greatly developed since the treat), of 1842, but, even in regard to this trade, he adds: That the treaty Of 1842 had no influence at all in fostering the British export trade to China will be seen from the following tabular statement: Absence of wants, and predilection for hereditary models of, dress, are obstacles which civilized commerce has to encounter in all new markets. As to the thickness and strength of drills, might British and American manufacturers not adapt their wares to the peculiar requirements of the Chinese? But here, we come to the real point at issue. In 1844, Mr. Mitchell sent some samples of the native cloth of every quality to England, with the prices specified. His correspondents assured him that they could not produce it in Manchester, and much less ship it to China, at the rates quoted. Whence this inability in the most advanced factory system of the world to undersell cloth woven by hand in the most primitive looms? The combination we have already pointed to, of minute agriculture with domestic industry, solves the riddle. We quote again from Mr. Mitchell: As a complement of Mr. Mitchell's statement may be considered the following description Lord Elgin gives of the rural population he met with during his voyage up the Yang-tse-kiang: It is this same combination of husbandry with manufacturing industry, which, for a long time, withstood, and still checks, the export of British wares to East India; but there that combination was based upon a peculiar constitution of the landed property which the British, in their position as the supreme landlords of the country, had it in their power to undermine, and thus forcibly convert part of the Hindu self-sustaining communities into mere farms, producing opium, cotton, indigo, hemp, and other raw materials, in exchange, for British stuff. In China the English have not yet wielded this power, nor are they likely ever to do so.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1859/12/03.htm

(a) To begin with, the question under discussion is material production. Individuals producing in a society, and hence the socially determined production of individuals, is of course the point of departure. The solitary and isolated hunter or fisherman, who serves Adam Smith and Ricardo as a starting point, is one of the unimaginative fantasies of eighteenth-century romances a la Robinson Crusoe; and despite the assertions of social historians, these by no means signify simply a reaction against over-refinement and reversion to a misconceived natural life. No more is Rousseau's contrat social, which by means of a contract establishes a relationship and connection between subjects that are by nature independent, based on this kind of naturalism. This is an illusion and nothing but the aesthetic illusion of the small and big Robinsonades. It is, on the contrary, the anticipation of bourgeois society, which began to evolve in the sixteenth century and in the eighteenth century made giant strides towards maturity. The individual in this society of free competition seems to be rid of natural ties, etc., which made him an appurtenance of a particular, limited aggregation of human beings in previous historical epochs. The prophets of the eighteenth century, on whose shoulders Adam Smith and Ricardo were still wholly standing, envisaged this 18th-century individual a product of the dissolution of feudal society on the one hand and of the new productive forces evolved since the sixteenth century on the other as an ideal whose existence belonged to the past. They saw this individual not as an historical result, but as the starting point of history; not as something evolving in the course of history, but posited by nature, because for them this individual was in conformity with nature, in keeping with their idea of human nature. This delusion has been characteristic of every new epoch hitherto. Steuart, who in some respect was in opposition to the eighteenth century and as an aristocrat tended rather to regard things from an historical standpoint, avoided this naive view. The further back we trace the course of history, the more does the individual, and accordingly also the producing individual, appear to be dependent and to belong to a larger whole. At first, the individual in a still quite natural manner is part of the family and of the tribe which evolves from the family; later he is part of a community, of one of the different forms of the community which arise from the conflict and the merging of tribes. It is not until the eighteenth century that in bourgeois society the various forms of the social texture confront the individual as merely means towards his private ends, as external necessity. But the epoch which produces this standpoint, namely that of the solitary individual, is precisely the epoch of the (as yet) most highly developed social (according to this standpoint, general) relations. Man is a Zoon politikon [political animal] in the most literal sense: he is not only a social animal, but an animal that can be individualised only within society. Production by a solitary individual outside society a rare event, which might occur when a civilised person who has already absorbed the dynamic social forces is accidentally cast into the wilderness is just as preposterous as the development of speech without individuals who live together and talk to one another. It is unnecessary to dwell upon this point further. It need not have been mentioned at all, if this inanity, which had rhyme and reason in the works of eighteenth-century writers, were not expressly introduced once more into modern political economy by Bastiat, Carey, Proudhon, etc. It is of course very pleasant for Proudhon, for instance, to be able to explain the origin of an economic relationship whose historical evolution he does not know in an historico-philosophical manner by means of mythology; alleging that Adam or Prometheus hit upon the ready-made idea, which was then put into practice, etc. Nothing is more tedious and dull than the fantasies of locus communis. Thus when we speak of production, we always have in mind production at a definite stage of social development, production by individuals in a society. It might therefore seem that, in order to speak of production at all, we must either trace the various phases in the historical process of development, or else declare from the very beginning that we are examining one particular historical period, as for instance modern bourgeois production, which is indeed our real subject-matter. All periods of production, however, have certain features in common: they have certain common categories. Production in general is an abstraction, but a sensible abstraction in so far as it actually emphasises and defines the common aspects and thus avoids repetition. Yet this general concept, or the common aspect which has been brought to light by comparison, is itself a multifarious compound comprising divergent categories. Some elements are found in all epochs, others are common to a few epochs. The most modern period and the most ancient period will have (certain) categories in common. Production without them is inconceivable. But although the most highly developed languages have laws and categories in common with the most primitive languages, it is precisely their divergence from these general and common features which constitutes their development. It is necessary to distinguish those definitions which apply to production in general, in order not to over look the essential differences existing despite the unity that follows from the very fact that the subject, mankind, and the object, nature, are the same. For instance, on failure to perceive this fact depends the entire wisdom of modern economists who prove the eternity and harmony of existing social relations. For example, no production is possible without an instrument of production, even if this instrument is simply the hand. It is not possible without past, accumulated labour, even if this labour is only the skill acquired by repeated practice and concentrated in the hand of a savage. Capital is among other things also an instrument of production, and also past, materialised labour. Consequently capital is a universal and eternal relation given by nature that is, provided one omits precisely those specific factors which turn the instrument of production or accumulated labour into capital. The whole history of the relations of production thus appears, for instance in Carey's writings, as a falsification malevolently brought about by the government. Just as there is no production in general, so also there is no general production. Production is always a particular branch of production e.g., agriculture, cattle-breeding, manufacture or it is the totality of production. Political economy, however, is not technology. The relation of the general categories of production at a given social stage to the particular forms of production is to be set forth elsewhere (later). Finally, not only is production particular production, but it is invariably only a definite social corpus, a social subject, that is engaged in a wider or narrower totality of productive spheres. The relation of the academic presentation to the actual process does not belong here either. Production in general. Particular branches of production. Totality of Production. It is fashionable to preface economic works with a general part and it is just this which appears under the heading Production, see for instance John Stuart Mill which deals with the general conditions of all production This general part comprises or purports to comprise: 1. The conditions without which production cannot be carried on. This means in fact only that the essential factors required for any kind of production are indicated. But this amounts actually, as we shall see, to a few very simple definitions, which are further expanded into trivial tautologies. 2. The conditions which promote production to a larger or smaller degree, as in the case of Adam Smith's progressive and stagnant state of society. To give this, which in Smith's work has its value as an aper u, to give it scientific significance, research into the degree of productivity at various periods in the development of individual nations would have to be conducted; strictly speaking, such an investigation lies outside the framework of the subject, those aspects which are however relevant to it ought to be mentioned in connection with the development of competition, accumulation, etc. The answer in its general form amounts to the general statement that an industrial nation achieves its highest productivity when it is altogether at the height of its historical development. (In fact, a nation is at the height of its industrial development so long as, not the gain, but gaining remains its principal aim. In this respect the Yankees are superior to the English.) Or else that for example certain races, formations, climates, natural circumstances, such as maritime position, fertility of the soil, etc., are more conducive to production than others. This again amounts to the tautological statement that the production of wealth grows easier in the measure that its subjective and objective elements become available. But all this is not really what the economists are concerned about in the general part. It is rather see for example Mill that production, as distinct from distribution, etc., is to be presented as governed by eternal natural laws which are independent of history, and at the same time bourgeois relations are clandestinely passed off as irrefutable natural laws of society in abstracto. This is the more or less conscious purpose of the whole procedure. As regards distribution, however, it is said that men have indeed indulged in a certain amount of free choice. Quite apart from the crude separation of production and distribution and their real interconnection, it should be obvious from the outset that, however dissimilar the mode of distribution at the various stages of society may be, it must be possible, just as in the case of production, to emphasise the common aspects, and it must be likewise possible to confuse and efface all historical differences in laws that are common to all mankind. For example, the slave, the serf, the wage-worker, they all receive an amount of food enabling them to exist as a slave, serf or wage-worker. The conqueror who lives on tribute, or the official who lives on taxes, or the landowner who lives on rent, or the monk who lives on alms, or the clergyman who lives on tithes, all receive a portion of the social product which is determined by laws different from those that determine the portion of the slave, and so on. The two principal factors which all economists include in this section are: 1) property and 2) its protection by the judiciary, police, etc. Only a very brief reply is needed: Regarding 1: production is always appropriation of nature by an individual within and with the help of a definite social organisation. In this context it is tautological to say that property (appropriation) is a condition of production. But it is quite ridiculous to make a leap from this to a distinct form of property, e.g., private property (this is moreover an antithetical form, which similarly presupposes nonproperty as a condition). History has shown, on the contrary, that common property (e.g., among the Indians, Slavs, ancient Celts, etc.) is the original form, and in the shape of communal property it plays a significant role for a long time. The question whether wealth develops faster under this or under that form of property is not yet under discussion at this point. It is tautological however to state that where no form of property exists there can be no production and hence no society either. Appropriation which appropriates nothing is a contradiction in terms. Regarding 2: safeguarding of what has been acquired, etc. If these trivialities are reduced to their real content, they say more than their authors realise, namely that each mode of production produces its specific legal relations, political forms, etc. It is a sign of crudity and lack of comprehension that organically coherent factors are brought into haphazard relation with one another, i.e., into a simple reflex connection. The bourgeois economists have merely in view that production proceeds more smoothly with modern police than, e.g., under club-law. They forget, however, that club-law too is law, and that the law of the stronger, only in a different form, still survives even in their constitutional State. While the social conditions appropriate to a particular stage of production are either still in the course of evolution or already in a state of dissolution, disturbances naturally occur in the process of production, although these may be of varying degree and extent. To recapitulate: there are categories which are common to all stages of production and are established by reasoning as general categories; the so-called general conditions of all and any production, however, are nothing but abstract conceptions which do not define any of the actual historical stages of production. Before starting upon a further analysis of production it is necessary to consider the various sections which economists place alongside it. The quite obvious conception is this: In the process of production members of society appropriate (produce, fashion) natural products in accordance with human requirements; distribution determines the share the individual receives of these products; exchange supplies him with the particular products into which he wants to convert the portion accorded to him as a result of distribution; finally, in consumption the products become objects of use, i.e. they are appropriated by individuals. Production creates articles corresponding to requirements; distribution allocates them according to social laws; exchange in its turn distributes the goods, which have already been allocated, in conformity with individual needs; finally, in consumption the product leaves this social movement, it becomes the direct object and servant of an individual need, which its use satisfies. Production thus appears as the point of departure, consumption as the goal, distribution and exchange as the middle, which has a dual form since, according to the definition, distribution is actuated by society and exchange is actuated by individuals. In production persons acquire an objective aspect, and in consumption' objects acquire a subjective aspect; in distribution it is society which by means of dominant general rules mediates between production and consumption; in exchange this mediation occurs as a result of random decisions of individuals. Distribution determines the proportion (the quantity) of the products accruing to the individual, exchange determines the products in which the individual claims to make up the share assigned to him by distribution. Production, distribution, exchange and consumption thus form a proper syllogism; production represents the general, distribution and exchange the particular, and consumption the individual case which sums up the whole. This is indeed a sequence, but a very superficial one. Production is determined by general laws of nature; distribution by random social factors, it may therefore exert a more or less beneficial influence on production; exchange, a formal social movement, lies between these two; and consumption, as the concluding act, which is regarded not only as the final aim but as the ultimate purpose, falls properly outside the sphere of economy, except in so far as it in turn exerts a reciprocal action on the point of departure thus once again initiating the whole process. The opponents of the economists who accuse the latter of crudely separating interconnected elements, either argue from the same standpoint or even from a lower one, no matter whether these opponents come from within or without the domain of political economy. Nothing is more common than the reproach that the economists regard production too much as a goal in itself, and that distribution is equally important. This argument is based on the concept of the economists that distribution is a separate and independent sphere alongside production. Another argument is that the different factors are not considered as a single whole; as though this separation had forced its way from the textbook into real life and not, on the contrary, from real life into the textbooks, and as though it were a question of the dialectical reconciliation of concepts and not of the resolution of actually existing conditions. Production is simultaneously consumption as well. It is consumption in a dual form subjective and objective consumption. [Firstly] the individual, who develops his abilities producing expends them as well, using them up in the act of production, just as in natural procreation vital energy is consumed. Secondly, it is consumption of the means of production, which are used and used up and in part (as for instance fuel) are broken down into simpler components. It similarly involves consumption of raw material which is absorbed and does not retain its original shape and quality. The act of production itself is thus in all its phases also an act of consumption. The economists concede this. They call productive consumption both production that is simultaneously identical with consumption, and consumption which is directly concurrent with production. The identity of production and consumption amounts to Spinoza's proposition: Determinatio est negatio. But this definition of productive consumption is only advanced in order to separate consumption that is identical with production from consumption in the proper sense, which is regarded by contrast as the destructive antithesis of production. Let us therefore consider consumption proper. Consumption is simultaneously also production, just as in nature the production of a plant involves the consumption of elemental forces and chemical materials. It is obvious that man produces his own body, e.g., through feeding, one form of consumption. But the same applies to any other kind of consumption which in one way or another contributes to the production of some aspect of man. Hence this is consumptive production. Nevertheless, says political economy, this type of production that is identical with consumption is a second phase arising from the destruction of the first product. In the first type of production the producer assumes an objective aspect, in the second type the objects created by him assume a personal aspect. Hence this consuming production although it represents a direct unity of production and consumption is essentially different from production proper. The direct unity, in which production is concurrent with consumption and consumption with production, does not affect their simultaneous duality. Production is thus at the same time consumption, and consumption is at the same time production. Each is simultaneously its opposite. But an intermediary movement takes place between the two at the same time. Production leads to consumption, for which it provides the material; consumption without production would have no object. But consumption also leads to production by providing for its products the subject for whom they are products. The product only attains its final consummation in consumption. A railway on which no one travels, which is therefore not used up, not consumed, is potentially but not actually a railway. Without production there is no consumption, but without consumption there is no production either, since in that case production would be useless. Consumption produces production in two ways. 1. Because a product becomes a real product only through consumption. For example, a dress becomes really a dress only by being worn, a house which is uninhabited is indeed not really a house; in other words a product as distinct from a simple natural object manifests itself as a product, becomes a product, only in consumption. It is only consumption which, by destroying the product, gives it the finishing touch, for the product is a product, not because it is materialised activity, but only in so far as it is an object for the active subject. 2. Because consumption creates the need for new production, and therefore provides the conceptual, intrinsically actuating reason for production, which is the pre-condition for production. Consumption furnishes the impulse to produce, and also provides the object which acts as the determining purpose of production. If it is evident that externally production supplies the object of consumption, it is equally evident that consumption posits the object of production as a concept, an internal image, a need, a motive, a purpose. Consumption furnishes the object of production in a form that is still subjective. There is no production without a need, but consumption re-creates the need. This is matched on the side of production, 1. By the fact that production supplies the material, the object of consumption. Consumption without an object is no consumption, in this respect, therefore, production creates, produces consumption. 2. But production provides not only the object of consumption, it also gives consumption a distinct form, a character, a finish. Just as consumption puts the finishing touch on the product as a product, so production puts the finishing touch to consumption. For one thing, the object is not simply an object in general, but a particular object which must be consumed in a particular way, a way determined by production. Hunger is hunger; but the hunger that is satisfied by cooked meat eaten with knife and fork differs from hunger that devours raw meat with the help of bands, nails and teeth. Production thus produces not only the object of consumption but also the mode of consumption, not only objectively but also subjectively. Production therefore creates the consumer. 3. Production not only provides the material to satisfy a need, but it also provides the need for the material. When consumption emerges from its original primitive crudeness and immediacy and its remaining in that state would be due to the fact that production was still primitively crude then it is itself as a desire brought about by the object. The need felt for the object is induced by the perception of the object. An objet d'art creates a public that has artistic taste and is able to enjoy beauty and the same can be said of any other product. Production accordingly produces not only an object for the subject, but also a subject for the object. Hence production produces consumption: 1) by providing the material of consumption; 2) by determining the mode of consumption; 3) by creating in the consumer a need for the objects which it first presents as products. It therefore produces the object of consumption, the mode of consumption and the urge to consume. Similarly, consumption produces the predisposition of the producer by positing him as a purposive requirement. The identity of consumption and production has three aspects 1. Direct identity: Production is consumption and consumption is production. Consumptive production and productive consumption. Economists call both productive consumption, but they still make a distinction. The former figures in their work as reproduction, the latter as productive consumption. All investigations of the former are concerned with productive and unproductive labour, those of the latter with productive and non-productive consumption. 2. Each appears as a means of the other, as being induced by it; this is called their mutual dependence; they are thus brought into mutual relation and appear to be indispensable to each other, but nevertheless remain extrinsic to each other. Production provides the material which is the external object of consumption, consumption provides the need, i.e., the internal object, the purpose of production. There is no consumption without production, and no production without consumption. This proposition appears in various forms in political economy. 3. Production is not only simultaneously consumption, and consumption simultaneously production; nor is production only a means of consumption and consumption the purpose of production i.e., each provides the other with its object, production supplying the external object of consumption, and consumption the conceptual object of production-in other words, each of them is not only simultaneously the other, and not merely the cause of the other, but each of them by being carried through creates the other, it creates itself as the other. It is only consumption that consummates the process of production, since consumption completes the product as a product by destroying it, by consuming its independent concrete form. Moreover by its need for repetition consumption leads to the perfection of abilities evolved during the first process of production and converts them into skills. Consumption is therefore the concluding act which turns not only the product into a product, but also the producer into a producer. Production, on the other hand, produces consumption by creating a definite mode of consumption, and by providing an incentive to consumption it thereby creates the capability to consume as a requirement. The last kind of identity, which is defined in point 3, has been variously interpreted by economists when discussing the relation of demand and supply, of objects and needs, of needs created by society and natural needs. After this, nothing is simpler for a Hegelian than to assume that production and consumption are identical. And this has been done not only by socialist belletrists but also by prosaic economists, such as Say, in declaring that if one considers a nation or mankind in abstracto then its production is its consumption. Storch has shown that this proposition of Say's is wrong, since a nation, for instance, does not consume its entire product, but must also provide means of production, fixed capital, etc. It is moreover wrong to consider society as a single subject, for this is a speculative approach. With regard to one subject, production and consumption appear as phases of a single operation. Only the most essential point is emphasised here, that production and consumption, if considered as activities of one subject or of single individuals, appear in any case as phases of one process whose actual point of departure is production which is accordingly the decisive factor. Consumption, as a necessity and as a need, is itself an intrinsic aspect of productive activity; the latter however is the point where the realisation begins and thus also the decisive phase, the action epitomising the entire process. An individual produces an object and by consuming it returns again to the point of departure: he returns however as a productive individual and an individual who reproduces himself. Consumption is thus a phase of production. But in society, the relation of the producer to the product after its completion is extrinsic, and the return of the product to the subject depends on his relations to other individuals. The product does not immediately come into his possession. Its immediate appropriation, moreover, is not his aim, if he produces within society. Distribution, which on the basis of social laws determines the individual's share in the world of products, intervenes between the producer and the products, i.e., between production and consumption. Is distribution, therefore, an independent sector alongside and outside production? When looking through the ordinary run of economic works, one's attention is attracted forthwith by the fact that everything is mentioned twice, e.g., rent, wages, interest and profit figure under the heading distribution, while under the heading of production land, labour and capital appear as factors of production. As to capital, it is evident from the outset that this is counted twice, first as a factor of production, and secondly as a source of income; i.e., as a determining and determinate form of distribution. Interest and profit appear therefore in production as well, since they are forms in which capital increases and grows, and are thus phases of its production. As forms of distribution, interest and profit presuppose capital as a factor of production. They are forms of distribution whose pre-condition is the existence of capital as a factor of production. They are likewise modes of reproduction of capital. Wages represent also wage-labour, which is examined in a different section; the particular function that labour performs as a factor of production in the one case appears as a function of distribution in the other. If labour did not have the distinct form of wage-labour, then its share in the product would not appear as wages, as for instance in slavery. Finally rent if we take the most advanced form of distribution by which landed property obtains a share in the product-presupposes large-scale landed property (strictly speaking, large-scale agriculture) as a factor of production, and not land in general; just as wages do not presuppose labour in general. The relations and modes of distribution are thus merely the reverse aspect of the factors of production. An individual whose participation in production takes the form of wage-labour will receive a share in the product, the result of production, in the form of wages. The structure of distribution is entirely determined by the structure of production. Distribution itself is a product of production, not only with regard to the content, for only the results of production can be distributed, but also with regard to the form, since the particular mode of men's participation in production determines the specific form of distribution, the form, in which they share in distribution. It is altogether an illusion to speak of land in the section on production, and of rent in the section on distribution, etc. Economists like Ricardo who are mainly accused of having paid exclusive attention to production, have accordingly regarded distribution as the exclusive subject of political economy, for they have instinctively treated the forms of distribution as the most precise expression in which factors of production manifest themselves in a given society. To the single individual distribution naturally appears as a social law, which determines his position within the framework of production, within which he produces; distribution thus being antecedent to production. An individual who has neither capital nor landed property of his own is dependent on wage-labour from his birth as a consequence of social distribution. But this dependence is itself the result of the existence of capital and landed property as independent factors of production. When one considers whole societies, still another aspect of distribution appears to be antecedent to production and to determine it, as though it were an ante-economic factor. A conquering nation may divide the land among the conquerors and in this way imposes a distinct mode of distribution and form of landed property, thus determining production. Or it may turn the population into slaves, thus making slave-labour the basis of production. Or in the course of a revolution, a nation may divide large estates into plots, thus altering the character of production in consequence of the new distribution. Or legislation may perpetuate land ownership in certain families, or allocate labour as a hereditary privilege, thus consolidating it into a caste system. In all these cases, and they have all occurred in history, it seems that distribution is not regulated and determined by production but, on the contrary, production by distribution. Distribution according to the most superficial interpretation is distribution of products; it is thus removed further from production and made quasi-independent of it. But before distribution becomes distribution of products, it is (1) distribution of the means of production, and (2) (which is another aspect of the same situation) distribution of the members of society among the various types of production (the subsuming of the individuals under definite relations Of production). It is evident that the distribution of products is merely a result of this distribution, which is comprised in the production process and determines the structure of production. To examine production divorced from this distribution which is a constituent part of it, is obviously idle abstraction; whereas conversely the distribution of products is automatically determined by that distribution which is initially a factor of production. Ricardo, the economist of production par excellence, whose object was the understanding of the distinct social structure of modern production, for this very reason declares that distribution, not production, is the proper subject of contemporary political economy. This is a witness to the banality of those economists who proclaim production as an eternal truth, and confine history to the domain of distribution. The question as to the relation between that form of distribution that determines production and production itself, belongs obviously to the sphere of production. If it should be said that in this case at least, since production must proceed from a specific distribution of the means of production, distribution is to this extent antecedent to and a prerequisite of production, then the reply would be as follows. Production has indeed its conditions and prerequisites which are constituent elements of it. At the very outset these may have seemed to be naturally evolved. In the course of production, however, they are transformed from naturally evolved factors into historical ones, and although they may appear as natural pre-conditions for any one period, they are the historical result of another period. They are continuously changed by the process of production itself. For example, the employment of machinery led to changes in the distribution of both the means of production and the product. Modern large-scale landed property has been brought about not only by modern trade and modern industry, but also by the application of the latter to agriculture. The above-mentioned questions can be ultimately resolved into this: what role do general historical conditions play in production and how is production related to the historical development as a whole? This question clearly belongs to the analysis and discussion of production. In the trivial form, however, in which these questions have been raised above, they can be dealt with quite briefly. Conquests may lead to either of three results. The conquering nation may impose its own mode of production upon the conquered people (this was done, for example, by the English in Ireland during this century, and to some extent in India); or it may refrain from interfering in the old mode of production and be content with tribute (e.g., the Turks and Romans); or interaction may take place between the two, giving rise to a new system as a synthesis (this occurred partly in the Germanic conquests). In any case it is the mode of production whether that of the conquering nation or of the conquered or the new system brought about by a merging of the two that determines the new mode of distribution employed. Although the latter appears to be a pre-condition of the new period of production, it is in its turn a result of production, a result not simply occasioned by the historical evolution of production in general, but by a specific historical form of production. The Mongols, for example, who caused devastation in Russia, acted in accordance with their mode of production, cattle-breeding, for which large uninhabited tracts are a fundamental requirement. The Germanic barbarians, whose traditional mode of production was agriculture with the aid of serfs and who lived scattered over the countryside, could the more easily adapt the Roman provinces to their requirements because the concentration of landed property carried out there had already uprooted the older agricultural relations. It is a long-established view that over certain epochs people lived by plunder. But in order to be able to plunder, there must be something to be plundered, and this implies production. Moreover, the manner of plunder depends itself on the manner of production, e.g., a stock-jobbing nation cannot be robbed in the same way as a nation of cowherds. The means of production may be robbed directly in the form of slaves. But in that case it is necessary that the structure of production in the country to which the slave is abducted admits of slave-labour, or (as in South America, etc.) a mode of production appropriate to slave-labour has to be evolved. Laws may perpetuate a particular means of production, e.g., land, in certain families. These laws acquire economic significance only if large-scale landed property is in keeping with the social mode of production, as for instance in Britain. Agriculture was carried on in France on a small scale, despite the existence of large estates, which were therefore parcelled out by the Revolution. But is it possible, e.g., by law, to perpetuate the division of land into small lots? Landed property tends to become concentrated again despite these laws. The influence exercised by laws on the preservation of existing conditions of distribution, and the effect they thereby exert on production has to be examined separately. Circulation is merely a particular phase of exchange or of exchange regarded in its totality. Since Exchange is simply an intermediate phase between production and distribution, which is determined by production, and consumption; since consumption is moreover itself an aspect of production, the latter obviously comprises also exchange as one of its aspects. Firstly, it is evident that exchange of activities and skills, which takes place in production itself, is a direct and essential part of production. Secondly, the same applies to the exchange of products in so far as this exchange is a means to manufacture the finished product intended for immediate consumption. The action of exchange in this respect is comprised in the concept of production. Thirdly, what is known as exchange between dealer and dealer, both with respect to its organisation and as a productive activity, is entirely determined by production. Exchange appears to exist independently alongside production and detached from it only in the last stage, when the product is exchanged for immediate consumption. But (1) no exchange is possible without division of labour, whether this is naturally evolved or is already the result of an historical process; (2) private exchange presupposes private production; (3) the intensity of exchange, its extent and nature, are determined by the development and structure of production: e.g., exchange between town and country, exchange in the countryside, in the town, etc. All aspects of exchange to this extent appear either to be directly comprised in production, or else determined by it. The conclusion which follows from this is, not that production, distribution, exchange and consumption are identical, but that they are links of a single whole, different aspects of one unit. Production is the decisive phase, both with regard to the contradictory aspects of production and with regard to the other phases. The process always starts afresh with production. That exchange and consumption cannot be the decisive elements, is obvious; and the same applies to distribution in the sense of distribution of products. Distribution of the factors of production, on the other hand, is itself a phase of production. A distinct mode of production thus determines the specific mode of consumption, distribution, exchange and the specific relations of these different phases to one another. Production in the narrow sense, however, is in its turn also determined by the other aspects. For example, if the market, or the sphere of exchange, expands, then the volume of production grows and tends to become more differentiated. Production also changes in consequence of changes in distribution, e.g., concentration of capital, different distribution of the population in town and countryside, and the like. Production is, finally, determined by the demands of consumption. There is an interaction between the various aspects. Such interaction takes place in any organic entity. When examining a given country from the standpoint of political economy, we begin with its population, the division of the population into classes, town and country, the sea, the different branches of production, export and import, annual production and consumption, prices, etc. It would seem to be the proper thing to start with the real and concrete elements, with the actual preconditions, e.g., to start in the sphere of economy with population, which forms the basis and the subject of the whole social process of production. Closer consideration shows, however, that this is wrong. Population is an abstraction if, for instance, one disregards the classes of which it is composed. These classes in turn remain empty terms if one does not know the factors on which they depend, e.g., wage-labour, capital, and so on. These presuppose exchange, division of labour, prices, etc. For example, capital is nothing without wage-labour, without value, money, price, etc. If one were to take population as the point of departure, it would be a very vague notion of a complex whole and through closer definition one would arrive analytically at increasingly simple concepts; from imaginary concrete terms one would move to more and more tenuous abstractions until one reached the most simple definitions. From there it would be necessary to make the journey again in the opposite direction until one arrived once more at the concept of population, which is this time not a vague notion of a whole, but a totality comprising many determinations and relations. The first course is the historical one taken by political economy at its inception. The seventeenth-century economists, for example, always took as their starting point the living organism, the population, the nation, the State, several States, etc., but analysis led them always in the end to the discovery of a few decisive abstract, general relations, such as division of labour, money, and value. When these separate factors were more or less clearly deduced and established, economic systems were evolved which from simple concepts, such as labour, division of labour, demand, exchange-value, advanced to categories like State, international exchange and world market. The latter is obviously the correct scientific method. The concrete concept is concrete because it is a synthesis of many definitions, thus representing the unity of diverse aspects. It appears therefore in reasoning as a summing-up, a result, and not as the starting point, although it is the real point of origin, and thus also the point of origin of perception and imagination. The first procedure attenuates meaningful images to abstract definitions, the second leads from abstract definitions by way of reasoning to the reproduction of the concrete situation. Hegel accordingly conceived the illusory idea that the real world is the result of thinking which causes its own synthesis, its own deepening and its own movement; whereas the method of advancing from the abstract to the concrete is simply the way in which thinking assimilates the concrete and reproduces it as a concrete mental category. This is, however, by no means the process of evolution of the concrete world itself. For example, the simplest economic category, e.g., exchange-value, presupposes population, a population moreover which produces under definite conditions, as well as a distinct kind of family, or community, or State, etc. Exchange-value cannot exist except as an abstract, unilateral relation of an already existing concrete organic whole. But exchange-value as a category leads an antediluvian existence. Thus to consciousness-and this comprises philosophical consciousness which regards the comprehending mind as the real man, and hence the comprehended world as such as the only real world; to consciousness, therefore, the evolution of categories appears as the actual process of production which unfortunately is given an impulse from outside whose result is the world; and this (which is however again a tautological expression) is true in so far as the concrete totality regarded as a conceptual totality, as a mental fact, is indeed a product of thinking, of comprehension; but it is by no means a product of the idea which evolves spontaneously and whose thinking proceeds outside and above perception and imagination, but is the result of the assimilation and transformation of perceptions and images into concepts. The totality as a conceptual entity seen by the intellect is a product of the thinking intellect which assimilates the world in the only way open to it, a way which differs from the artistic, religious and practically intelligent assimilation of this world. The concrete subject remains outside the intellect and independent of it that is so long as the intellect adopts a purely speculative, purely theoretical attitude. The subject, society, must always be envisaged therefore as the pre-condition of comprehension even when the theoretical method is employed. But have not these simple categories also an independent historical or natural existence preceding that of the more concrete ones? This depends. Hegel, for example, correctly takes ownership, the simplest legal relation of the subject, as the point of departure of the philosophy of law. No ownership exists, however, before the family or the relations of master and servant are evolved, and these are much more concrete relations. It would, on the other hand, be correct to say that families and entire tribes exist which have as yet only possessions and not property. The simpler category appears thus as a relation of simple family or tribal communities to property. In societies which have reached a higher stage the category appears as a comparatively simple relation existing in a more advanced community. The concrete substratum underlying the relation of ownership is however always presupposed. One can conceive an individual savage who has possessions; possession in this case, however, is not a legal relation. It is incorrect that in the course of historical development possession gave rise to the family. On the contrary, possession always presupposes this more concrete legal category. One may, nevertheless, conclude that the simple categories represent relations or conditions which may reflect the immature concrete situation without as yet positing the more complex relation or condition which is conceptually expressed in the more concrete category; on the other hand, the same category may be retained as a subordinate relation in more developed concrete circumstances. Money may exist and has existed in historical time before capital, banks, wage-labour, etc. came into being. In this respect it can be said, therefore, that the simpler category expresses relations predominating in an immature entity or subordinate relations in a more advanced entity; relations which already existed historically before the entity had developed the aspects expressed in a more concrete category. The procedure of abstract reasoning which advances from the simplest to more complex concepts to that extent conforms to actual historical development. It is true, on the other hand, that there are certain highly developed, but nevertheless historically immature, social formations which employ some of the most advanced economic forms, e.g., cooperation, developed division of labour, etc., without having developed any money at all, for instance Peru. In Slavonic communities too, money and its pre-condition, exchange is of little or no importance within the individual community, but is used on the borders, where commerce with other communities takes place; and it is altogether wrong to assume that exchange within the community is an original constituent element. On the contrary, in the beginning exchange tends to arise in the intercourse of different communities with one another, rather than among members of the same community. Moreover, although money begins to play a considerable role very early and in diverse ways, it is known to have been a dominant factor in antiquity only among nations developed in a particular direction, i.e., merchant nations. Even among the Greeks and Romans, the most advanced nations of antiquity, money reaches its full development, which is presupposed in modern bourgeois society, only in the period of their disintegration. Thus the full potential of this quite simple category does not emerge historically in the most advanced phases of society, and it certainly does not penetrate into all economic relations. For example, taxes in kind and deliveries in kind remained the basis of the Roman empire even at the height of its development; indeed a completely evolved monetary system existed in Rome only in the army, and it never permeated the whole complex of labour. Although the simpler category, therefore, may have existed historically before the more concrete category, its complete intensive and extensive development can nevertheless occur in a complex social formation, whereas the more concrete category may have been fully evolved in a more primitive social formation. Labour seems to be a very simple category. The notion of labour in this universal form, as labour in general, is also extremely old. Nevertheless labour in this simplicity is economically considered just as modern a category as the relations which give rise to this simple abstraction. The Monetary System, for example, still regards wealth quite objectively as a thing existing independently in the shape of money. Compared with this standpoint, it was a substantial advance when the Manufacturing or Mercantile System transferred the source of wealth from the object to the subjective activity mercantile or industrial labour but it still considered that only this circumscribed activity itself produced money. In contrast to this system, the Physiocrats assume that a specific form of labour agriculture creates wealth, and they see the object no longer in the guise of money, but as a product in general, as the universal result of labour. In accordance with the still circumscribed activity, the product remains a naturally developed product, an agricultural product, a product of the land par excellence. It was an immense advance when Adam Smith rejected all restrictions with regard to the activity that produces wealth for him it was labour as such, neither manufacturing, nor commercial, nor agricultural labour, but all types of labour. The abstract universality which creates wealth implies also the universality of the objects defined as wealth: they are products as such, or once more labour as such, but in this case past, materialised labour. How difficult and immense a transition this was is demonstrated by the fact that Adam Smith himself occasionally relapses once more into the Physiocratic system. It might seem that in this way merely an abstract expression was found for the simplest and most ancient relation in which human beings act as producers irrespective of the type of society they live in. This is true in one respect, but not in another. The fact that the specific kind of labour is irrelevant presupposes a highly developed complex of actually existing kinds of labour, none of which is any more the all-important one. The most general abstractions arise on the whole only when concrete development is most profuse, so that a specific quality is seen to be common to many phenomena, or common to all. Then it is no longer perceived solely in a particular form. This abstraction of labour is, on the other hand, by no means simply the conceptual resultant of a variety of concrete types of labour. The fact that the particular kind of labour employed is immaterial is appropriate to a form of society in which individuals easily pass from one type of labour to another, the particular type of labour being accidental to them and therefore irrelevant. Labour, not only as a category but in reality, has become a means to create wealth in general, and has ceased to be tied as an attribute to a particular individual. This state of affairs is most pronounced in the United States, the most modern form of bourgeois society. The abstract category labour, labour as such, labour sans phrase, the point of departure of modern economics, thus becomes a practical fact only there. The simplest abstraction, which plays a decisive role in modern political economy, an abstraction which expresses an ancient relation existing in all social formations, nevertheless appears to be actually true in this abstract form only as a category of the most modern society. It might be said that phenomena which are historical products in the United States e.g., the irrelevance of the particular type of labour appear to be among the Russians, for instance, naturally developed predispositions. But in the first place, there is an enormous difference between barbarians having a predisposition which makes it possible to employ them in various tasks, and civilised people who apply themselves to various tasks. As regards the Russians, moreover, their indifference to the particular kind of labour performed is in practice matched by their traditional habit of clinging fast to a very definite kind of labour from which they are extricated only by external influences. The example of labour strikingly demonstrates how even the most abstract categories, despite their validity in all epochs precisely because they are abstractions are equally a product of historical conditions even in the specific form of abstractions, and they retain their full validity only for and within the framework of these conditions. Bourgeois society is the most advanced and complex historical organisation of production. The categories which express its relations, and an understanding of its structure, therefore, provide an insight into the structure and the relations of production of all formerly existing social formations the ruins and component elements of which were used in the creation of bourgeois society. Some of these unassimilated remains are still carried on within bourgeois society, others, however, which previously existed. only in rudimentary form, have been further developed and have attained their full significance, etc. The anatomy of man is a key to the anatomy of the ape. On the other hand, rudiments of more advanced forms in the lower species of animals can only be understood when the more advanced forms are already known. Bourgeois economy thus provides a key to the economy of antiquity, etc. But it is quite impossible (to gain this insight) in the manner of those economists who obliterate all historical differences and who see in all social phenomena only bourgeois phenomena. If one knows rent, it is possible to understand tribute, tithe, etc., but they do not have to be treated as identical. Since bourgeois society is, moreover, only a contradictory form of development, it contains relations of earlier societies often merely in very stunted form or even in the form of travesties, e.g., communal ownership. Thus, although it is true that the categories of bourgeois economy are valid for all other social formations, this has to be taken cum grano salis, for they may contain them in an advanced, stunted, caricatured, etc., form, that is always with substantial differences. What is called historical evolution depends in general on the fact that the latest form regards earlier ones as stages in the development of itself and conceives them always in a one-sided manner, since only rarely and under quite special conditions is a society able to adopt a critical attitude towards itself; in this context we are not of course discussing historical periods which themselves believe that they are periods of decline. The Christian religion was able to contribute to an objective understanding of earlier mythologies only when its self-criticism was to a certain extent prepared, as it were potentially. Similarly, only when the self-criticism of bourgeois society had begun, was bourgeois political economy able to understand the feudal, ancient and oriental economies. In so far as bourgeois political economy did not simply identify itself with the past in a mythological manner, its criticism of earlier economies-especially of the feudal system against which it still had to wage a direct struggle-resembled the criticism that Christianity directed against heathenism, or which Protestantism directed against Catholicism. Just as in general when examining any historical or social science, so also in the case of the development of economic categories is it always necessary to remember that the subject, in this context contemporary bourgeois society, is presupposed both in reality and in the mind, and that therefore categories express forms of existence and conditions of existence and sometimes merely separate aspects of this particular society, the subject; thus the category, even from the scientific standpoint, by no means begins at the moment when it is discussed as such. This has to be remembered because it provides important criteria for the arrangement of the material. For example, nothing seems more natural than to begin with rent, i.e., with landed property, since it is associated with the earth, the source of all production and all life, and with agriculture, the first form of production in all societies that have attained a measure of stability. But nothing would be more erroneous. There is in every social formation a particular branch of production which determines the position and importance of all the others, and the relations obtaining in this branch accordingly determine the relations of all other branches as well. It is as though light of a particular hue were cast upon everything, tingeing all other colours and modifying their specific features; or as if a special ether determined the specific gravity of everything found in it. Let us take as an example pastoral tribes. (Tribes living exclusively on hunting or fishing are beyond the boundary line from which real development begins.) A certain type of agricultural activity occurs among them and this determines land ownership. It is communal ownership and retains this form in a larger or smaller measure, according to the degree to which these people maintain their traditions, e.g., communal ownership among the Slavs. Among settled agricultural people-settled already to a large extent-where agriculture predominates as in the societies of antiquity and the feudal period, even manufacture, its structure and the forms of property corresponding thereto, have, in some measure, specifically agrarian features. Manufacture is either completely dependent on agriculture, as in the earlier Roman period, or as in the Middle Ages, it copies in the town and in its conditions the organisation of the countryside. In the Middle Ages even capital unless it was solely money capital consisted of the traditional tools, etc., and retained a specifically agrarian character. The reverse takes place in bourgeois society. Agriculture to an increasing extent becomes just a branch of industry and is completely dominated by capital. The same applies to rent. In all forms in which landed property is the decisive factor, natural relations still predominate; in the forms in which the decisive factor is capital, social, historically evolved elements predominate. Rent cannot be understood without capital, but capital can be understood without rent. Capital is the economic power that dominates everything in bourgeois society. It must form both the point of departure and the conclusion and it has to be expounded before landed property. After analysing capital and landed property separately, their interconnection must be examined. It would be inexpedient and wrong therefore to present the economic categories successively in the order in which they have played the dominant role in history. On the contrary, their order of succession is determined by their mutual relation in modern bourgeois society and this is quite the reverse of what appears to be natural to them or in accordance with the sequence of historical development The point at issue is not the role that various economic relations have played in the succession of various social formations appearing in the course of history; even less is it their sequence as concepts (Proudhon) (a nebulous notion of the historical process), but their position within modern bourgeois society. It is precisely the predominance of agricultural peoples in the ancient world which caused the merchant nations Phoenicians, Carthaginians to develop in such purity (abstract precision). For capital in the shape of merchant or money capital appears in that abstract form where capital has not yet become the dominant factor in society. Lombards and Jews occupied the same position with regard to mediaeval agrarian societies. Another example of the various roles which the same categories have played at different stages of society are joint-stock companies, one of the most recent features of bourgeois society; but they arise also in its early period in the form of large privileged commercial companies with rights of monopoly. The concept of national wealth finds its way into the works of the economists of the seventeenth century as the notion that wealth is created for the State, whose power, on the other hand, is proportional to this wealth a notion which to some extent still survives even among eighteenth-century economists. This is still an unintentionally hypocritical manner in which wealth and the production of wealth are proclaimed to be the goal of the modern State, which is regarded merely as a means for producing wealth. The disposition of material has evidently to be made in such a way that (section) one comprises general abstract definitions, which therefore appertain in some measure to all social formations, but in the sense set forth earlier. Two, the categories which constitute the internal structure of bourgeois society and on which the principal classes are based. Capital, wage-labour, landed property and their relations to one another. Town and country. The three large social classes; exchange between them. Circulation. The (private) credit system. Three, the State as the epitome of bourgeois society. Analysis of its relations to itself. The 44 unproductive classes. Taxes. National debt. Public credit. Population. Colonies. Emigration. Four, international conditions of production. International division of labour. International exchange. Export and import. Rate of exchange. Five, world market and crises. Notes regarding points which have to be mentioned in this context and should not be forgotten. As regards art, it is well known that some of its peaks by no means correspond to the general development of society; nor, do they therefore to the material substructure, the skeleton as it were of its organisation. For example the Greeks compared with modern [nations), or else Shakespeare. It is even acknowledged that certain branches of art, e.g., the epos, can no longer be produced in their epoch-making classic form after artistic production as such has begun; in other words that certain important creations within the compass of art are only possible at an early stage in the development of art. If this is the case with regard to different branches of art within the sphere of art itself, it is not so remarkable that this should also be the case with regard to the entire sphere of art and its relation to the general development of society. The difficulty lies only in the general formulation of these contradictions. As soon as they are reduced to specific questions they are already explained. Let us take, for example, the relation of Greek art, and that of Shakespeare, to the present time. We know that Greek mythology is not only the arsenal of Greek art, but also its basis. Is the conception of nature and of social relations which underlies Greek imagination and therefore Greek (art) possible when there are self-acting mules, railways, locomotives and electric telegraphs? What is a Vulcan compared with Roberts and Co., Jupiter compared with the lightning conductor, and Hermes compared with the Credit Mobilier? All mythology subdues, controls and fashions the forces of nature in the imagination and through imagination; it disappears therefore when real control over these forces is established. What becomes of Fama side by side with Printing House Square? Greek art presupposes Greek mythology, in other words that natural and social phenomena are already assimilated in an unintentionally artistic manner by the imagination of the people. This is the material of Greek art, not just any mythology, i.e., not every unconsciously artistic assimilation of nature (here the term comprises all physical phenomena, including society); Egyptian mythology could never become the basis of or give rise to Greek art. But at any rate (it presupposes) a mythology; on no account however a social development which precludes a mythological attitude towards nature, i.e., any attitude to nature which might give rise to myth; a society therefore demanding from the artist an imagination independent of mythology. Regarded from another aspect: is Achilles possible when powder and shot have been invented? And is the Iliad possible at all when the printing press and even printing machines exist? Is it not inevitable that with the emergence of the press bar the singing and the telling and the muse cease, that is the conditions necessary for epic poetry disappear? The difficulty we are confronted with is not, however, that of understanding how Greek art and epic poetry are associated with certain forms of social development. The difficulty is that they still give us aesthetic pleasure and are in certain respects regarded as a standard and unattainable ideal. An adult cannot become a child again, or he becomes childish. But does the naivete of the child not give him pleasure, and does not he himself endeavour to reproduce the child's veracity on a higher level? Does not the child in every epoch represent the character of the period in its natural veracity? Why should not the historical childhood of humanity, where it attained its most beautiful form, exert an eternal charm because it is a stage that will never recur? There are rude children and precocious children. Many of the ancient peoples belong to this category. The Greeks were normal children. The charm their art has for us does not conflict with the immature stage of the society in which it originated. On the contrary its charm is a consequence of this and is inseparably linked with the fact that the immature social conditions which gave rise, and which alone could give rise, to this art cannot recur.

Economic Manuscripts: Appendix I: Production, Consumption, Distribution, Exchange

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/appx1.htm

The Germans have long since shown that in all spheres of science they are equal, and in most of them superior, to other civilised nations. Only one branch of science, political economy, had no German name among its foremost scholars. The reason is obvious. Political economy is the theoretical analysis of modern bourgeois society and therefore presupposes developed bourgeois conditions, conditions which for centuries, following the wars in the wake of the Reformation and the peasant wars and especially the Thirty Years War, could not establish themselves in Germany. The separation of the Netherlands from the Empire removed Germany from the international trade routes and restricted her industrial development from the very beginning to the pettiest scale. While the Germans painfully and slowly recovered from the devastations of the civil wars, while they used up their store of civic energy, which had never been very large, in futile struggle against the customs barriers and absurd commercial regulations which every petty princeling and imperial baron inflicted upon the industry of his subjects, while the imperial cities with their craft-guild practices and patrician spirit went to ruin Holland, England and France meanwhile conquered the leading positions in international trade, established one colony after another and brought manufactory production to the height of its development, until finally England, with the aid of steam power, which made her coal and iron deposits valuable, headed modern bourgeois development. But political economy could not arise in Germany so long as a struggle had still to be waged against so preposterously antiquated remnants of the Middle Ages as those which hampered the bourgeois development of her material forces until 1830. Only the establishment of the Customs Union enabled the Germans to comprehend political economy at all. It was indeed at this time that English and French economic works began to be imported for the benefit of the German middle class. Men of learning and bureaucrats soon got hold of the imported material and treated it in a way which does little credit to the German intellect. The literary efforts of a hotchpotch of chevaliers d industrie, traders, schoolmasters and bureaucrats produced a bunch of German economic publications which as regards triteness, banality, frivolity, verbosity and plagiarism are equalled only by the German novel. Among people pursuing practical objectives there arose first the protectionist school of the industrialists, whose chief spokesman, List, is still the best that German bourgeois political economy has produced although his celebrated work is entirely copied from the Frenchman Ferrier, the theoretical creator of the Continental System. In opposition to this trend the free-trade school was formed in the forties by merchants from the Baltic provinces, who fumblingly repeated the arguments of the English Free Traders with childlike, but not disinterested, faith. Finally, among the schoolmasters and bureaucrats who had to handle the theoretical aspects there were uncritical and desiccated collectors of herbaria, like Herr Rau, pseudo-clever speculators who translated foreign propositions into undigested Hegelian language like Herr Stein, or gleaners with literary pretensions in the field of so-called history of civilisation, like Herr Riehl. The upshot of all this was cameralistics, an eclectic economic sauce covering a hotchpotch of sundry trivialities, of the sort a junior civil servant might find useful to remember during his final examination. While in this way in Germany the bourgeoisie, the schoolmasters and the bureaucrats were still making great exertions to learn by rote, and in some measure to understand, the first elements of Anglo-French political economy, which they regarded as incontestable dogmas, the German proletarian party appeared on the scene. Its theoretical aspect was wholly based on a study of political economy, and German political economy as an independent science dates also from the emergence of this party. The essential foundation of this German political economy is the materialist conception of history whose principal features are briefly outlined in the Preface to the above-named work. Since the Preface has in the main already been published in Das Volk, we refer to it. The proposition that the process of social, political and intellectual life is altogether necessitated by the mode of production of material life"; that all social and political relations, all religious and legal systems, all theoretical conceptions which arise in the course of history can only be understood if the material conditions of life obtaining during the relevant epoch have been understood and the former are traced back to these material conditions, was a revolutionary discovery not only for economics but also for all historical sciences and all branches of science which are not natural sciences are historical. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. This proposition is so simple that it should be self-evident to anyone not bogged down in idealist humbug. But it leads to highly revolutionary consequences not only in the theoretical sphere but also in the practical sphere. At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or this merely expresses the same thing in legal terms with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure.... The bourgeois mode of production is the last antagonistic form of the social process of production antagonistic not in the sense of individual antagonism but of an antagonism that emanates from the individuals social conditions of existence but the productive forces developing within bourgeois society create also the material conditions for a solution of this antagonism. The prospect of a gigantic revolution, the most gigantic revolution that has ever taken place, accordingly presents itself to us as soon as we pursue our materialist thesis further and apply it to the present time. Closer consideration shows immediately that already the first consequences of the apparently simple proposition, that the consciousness of men is determined by their existence and not the other way round, spurn all forms of idealism, even the most concealed ones, rejecting all conventional and customary views of historical matters. The entire traditional manner of political reasoning is upset; patriotic magnanimity indignantly objects to such an unprincipled interpretation. It was thus inevitable that the new point of view should shock not only the exponents of the bourgeoisie but also the mass of French socialists who intended to revolutionise the world by virtue of the magic words, libert , galit , fraternite. But it utterly enraged the vociferous German vulgar democrats. They nevertheless have a partiality for attempting to plagiarise the new ideas in their own interest, although with an exceptional lack of understanding. The demonstration of the materialist conception even upon a single historical example was a scientific task requiring years of quiet research, for it is evident that mere empty talk can achieve nothing in this context and that only an abundance of critically examined historical material which has been completely mastered can make it possible to solve such a problem. Our party was propelled on to the political stage by the February Revolution and thus prevented from pursuing purely scientific aims. The fundamental conception, nevertheless, runs like an unbroken thread through all literary productions of the party. Every one of them shows that the actions in each particular case were invariably initiated by material causes and not by the accompanying phrases, that on the contrary the political and legal phrases, like the political actions and their results, originated in material causes. After the defeat of the Revolution of 1848-49, at a time when it became increasingly impossible to exert any influence on Germany from abroad, our party relinquished the field of emigrant squabbles for that was the only feasible action left to the vulgar democrats. While these were chasing about to their heart s content, scuffling today, fraternising tomorrow and the day after once more washing their dirty linen in public, while they went begging throughout America and immediately afterwards started another row over the division of the few coins they had collected our party was glad to find once more some quiet time for research work. It had the great advantage that its theoretical foundation was a new scientific conception the elaboration of which provided adequate work; even for this reason alone it could never become so demoralised as the great men of the emigration. The book under consideration is the first result of these studies. The purpose of a work like the one under review cannot simply be desultory criticism of separate sections of political economy or the discussion of one or another economic issue in isolation. On the contrary, it is from the beginning designed to give a systematic r sum of the whole complex of political economy and a coherent elaboration of the laws governing bourgeois production and bourgeois exchange. This elaboration is at the same time a comprehensive critique of economic literature, for economists are nothing but interpreters of and apologists for these laws. Hardly any attempt has been made since Hegel s death to set forth any branch of science in its specific inner coherence. The official Hegelian school had assimilated only the most simple devices of the master s dialectics and applied them to everything and anything, often moreover with ridiculous incompetence. Hegel s whole heritage was, so far as they were concerned, confined exclusively to a template, by means of which any subject could be knocked into shape, and a set of words and phrases whose only remaining purpose was to turn up conveniently whenever they experienced a lack of ideas and of concrete knowledge. Thus it happened, as a professor at Bonn has said, that these Hegelians knew nothing but could write about everything. The results were, of course, accordingly. For all their conceit these gentlemen were, however, sufficiently conscious of their failings to avoid major problems as far as possible. The superannuated fossilised type of learning held its ground because of its superior factual knowledge, and after Feuerbach s renunciation of the speculative method, Hegelianism gradually died away, and it seemed that science was once more dominated by antiquated metaphysics with its rigid categories. For this there were quite natural reasons. The rule of the Hegelian Diadochi, which ended in empty phrases, was naturally followed by a period in which the concrete content of science predominated once more over the formal aspect. Moreover, Germany at the same time applied itself with quite extraordinary energy to the natural sciences, in accordance with the immense bourgeois development setting in after 1848; with the coming into fashion of these sciences, in which the speculative trend had never achieved any real importance, the old metaphysical mode of thinking, even down to the extreme triviality of Wolff, gained ground rapidly. Hegel was forgotten and a new materialism arose in the natural sciences; it differed in principle very little from the materialism of the eighteenth century and its main advantage was merely a greater stock of data relating to the natural sciences, especially chemistry and physiology. The narrow-minded mode of thinking of the pre-Kantian period in its most banal form is reproduced by B chner and Vogt, and even Moleschott, who swears by Feuerbach, frequently flounders in a highly diverting manner through the most simple categories. The jaded cart-horse of the commonplace bourgeois mind falters of course in confusion in front of the ditch separating substance from appearance, and cause from effect; but one should not ride carthorses if one intends to go coursing over the very rough ground of abstract reasoning. In this context, therefore, a question had to be solved which was not connected with political economy as such. Which scientific method should be used? There was, on the one hand, the Hegelian dialectics in the quite abstract speculative form in which Hegel had left it, and on the other hand the ordinary, mainly Wolffian, metaphysical method, which had come again into vogue, and which was also employed by the bourgeois economists to write their bulky rambling volumes. The second method had been theoretically demolished by Kant and particularly by Hegel so that its continued use in practice could only be rendered possible by inertia and the absence of an alternative simple method. The Hegelian method, on the other hand, was in its existing form quite inapplicable. It was essentially idealist and the main point in this case was the elaboration of a world outlook that was more materialist than any previous one. Hegel s method took as its point of departure pure thought, whereas here the starting point was to be inexorable facts. A method which, according to its own avowal, came from nothing through nothing to nothing was in this shape by no means suitable. It was, nevertheless, the only element in the entire available logical material which could at least serve as a point of origin. It had not been subjected to criticism, not been overthrown; none of the opponents of the great dialectician had been able to make a breach in the proud edifice. It had been forgotten because the Hegelian school did not know how to apply it. Hence, it was first of all essential to carry through a thorough critique of the Hegelian method. It was the exceptional historical sense underlying Hegel s manner of reasoning which distinguished it from that of all other philosophers. However abstract and idealist the form employed, yet his evolution of ideas runs always parallel with the evolution of universal history, and the latter was indeed supposed to be only the proof of the former. Although this reversed the actual relation and stood it on its head, yet the real content was invariably incorporated in his philosophy, especially since Hegel unlike his followers did not rely on ignorance, but was one of the most erudite thinkers of all time. He was the first to try to demonstrate that there is an evolution, an intrinsic coherence in history, and however strange some things in his philosophy of history may seem to us now, the grandeur of the basic conception is still admirable today, compared both with his predecessors and with those who following him ventured to advance general historical observations. This monumental conception of history pervades the Ph nomenologies, Asthetik and Geschichte der Philosophie, and the material is everywhere set forth historically, in a definite historical context, even if in an abstract distorted manner. This epoch-making conception of history was a direct theoretical pre-condition of the new materialist outlook, and already this constituted a connecting link with the logical method as well. Since, even from the standpoint of pure reasoning, this forgotten dialectics had led to such results, and had moreover with the greatest ease coped with the whole of the former logic and metaphysics, it must at all events comprise more than sophistry and hairsplitting. But the critique of this method, which the entire official philosophy had evaded and still evades, was no small matter. Marx was and is the only one who could undertake the work of extracting from the Hegelian logic the nucleus containing Hegel s real discoveries in this field, and of establishing the dialectical method, divested of its idealist wrappings, in the simple form in which it becomes the only correct mode of conceptual evolution. The working out of the method which underlies Marx s critique of political economy is, we think, a result hardly less significant than the basic materialist conception. Even after the determination of the method, the critique of economics could still be arranged in two ways historically or logically. Since in the course of history, as in its literary reflection, the evolution proceeds by and large from the simplest to the more complex relations, the historical development of political economy constituted a natural clue, which the critique could take as a point of departure, and then the economic categories would appear on the whole in the same order as in the logical exposition. This form seems to have the advantage of greater lucidity, for it traces the actual development, but in fact it would thus become, at most, more popular. History moves often in leaps and bounds and in a zigzag line, and as this would have to be followed throughout, it would mean not only that a considerable amount of material of slight importance would have to be included, but also that the train of thought would frequently have to be interrupted; it would, moreover, be impossible to write the history of economy without that of bourgeois society, and the task would thus become immense, because of the absence of all preliminary studies. The logical method of approach was therefore the only suitable one. This, however, is indeed nothing but the historical method, only stripped of the historical form and diverting chance occurrences. The point where this history begins must also be the starting point of the train of thought, and its further progress will be simply the reflection, in abstract and theoretically consistent form, of the historical course. Though the reflection is corrected, it is corrected in accordance with laws provided by the actual historical course, since each factor can be examined at the stage of development where it reaches its full maturity, its classical form. With this method we begin with the first and simplest relation which is historically, actually available, thus in this context with the first economic relation to be found. We analyse this relation. The fact that it is a relation already implies that it has two aspects which are related to each other. Each of these aspects is examined separately; this reveals the nature of their mutual behaviour, their reciprocal action. Contradictions will emerge demanding a solution. But since we are not examining an abstract mental process that takes place solely in our mind, but an actual event which really took place at some time or other, or which is still taking place, these contradictions will have arisen in practice and have probably been solved. We shall trace the mode of this solution and find that it has been effected by establishing a new relation, whose two contradictory aspects we shall then have to set forth, and so on. Political economy begins with commodities, with the moment when products are exchanged, either by individuals or by primitive communities. The product being exchanged is a commodity. But it is a commodity merely by virtue of the thing, the product being linked with a relation between two persons or communities, the relation between producer and consumer, who at this stage are no longer united in the same person. Here is at once an example of a peculiar fact, which pervades the whole economy and has produced serious confusion in the minds of bourgeois economists economics is not concerned with things but with relations between persons, and in the final analysis between classes; these relations however are always bound to things and appear as things. Although a few economists had an inkling of this connection in isolated instances, Marx was the first to reveal its significance for the entire economy thus making the most difficult problems so simple and clear that even bourgeois economists will now be able to grasp them. If we examine the various aspects of the commodity, that is of the fully evolved commodity and not as it at first slowly emerges in the spontaneous barter of two primitive communities, it presents itself to us from two angles, that of use-value and of exchange-value, and thus we come immediately to the province of economic debate. Anyone wishing to find a striking instance of the fact that the German dialectic method at its present stage of development is at least as superior to the old superficially glib metaphysical method as railways are to the mediaeval means of transport, should look up Adam Smith or any other authoritative economist of repute to see how much distress exchange-value and use-value caused these gentlemen, the difficulty they had in distinguishing the two properly and in expressing the determinate form peculiar to each, and then compare the clear, simple exposition given by Marx. After use-value and exchange-value have been expounded, the commodity as a direct unity of the two is described as it enters the exchange process. The contradictions arising here may be found on pp. 20 and 21. We merely note that these contradictions are not only of interest for theoretical, abstract reasons, but that they also reflect the difficulties originating from the nature of direct interchange, i.e., simple barter, and the impossibilities inevitably confronting this first crude form of exchange. The solution of these impossibilities is achieved by investing a specific commodity money with the attribute of representing the exchange-value of all other commodities. Money or simple circulation is then analysed in the second chapter, namely (1) money as a measure of value, and, at the same time, value measured in terms of money, i.e., price, is more closely defined; (2) money as means of circulation and (3) the unity of the two aspects, real money which represents bourgeois material wealth as a whole. This concludes the first part, the conversion of money into capital is left for the second part. One can see that with this method, the logical exposition need by no means be confined to the purely abstract sphere. On the contrary, it requires historical illustration and continuous contact with reality. A great variety of such evidence is therefore inserted, comprising references both to different stages in the actual historical course of social development and to economic works, in which the working out of lucid definitions of economic relations is traced from the outset. The critique of particular, more or less one-sided or confused interpretations is thus substantially given already in the logical exposition and can be kept quite short. The economic content of the book will be discussed in a third article.

Economic Manuscripts: Engels' Review of Marx's Critique of Political Economy

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/appx2.htm

The wealth of bourgeois society, at first sight, presents itself as an immense accumulation of commodities, its unit being a single commodity. Every commodity, however, has a twofold aspect use-value and exchange-value. To begin with, a commodity, in the language of the English economists, is any thing necessary, useful or pleasant in life, an object of human wants, a means of existence in the widest sense of the term. Use-value as an aspect of the commodity coincides with the physical palpable existence of the commodity. Wheat, for example, is a distinct use-value differing from the use-values of cotton, glass, paper, etc. A use-value has value only in use, and is realized only in the process of consumption. One and the same use-value can be used in various ways. But the extent of its possible application is limited by its existence as an object with distinct properties. It is, moreover, determined not only qualitatively but also quantitatively. Different use-values have different measures appropriate to their physical characteristics; for example, a bushel of wheat, a quire of paper, a yard of linen. Whatever its social form may be, wealth always consists of use-values, which in the first instance are not affected by this form. From the taste of wheat it is not possible to tell who produced it, a Russian serf, a French peasant or an English capitalist. Although use-values serve social needs and therefore exist within the social framework, they do not express the social relations of production. For instance, let us take as a use-value a commodity such as a diamond. We cannot tell by looking at it that the diamond is a commodity. Where it serves as an aesthetic or mechanical use-value, on the neck of a courtesan or in the hand of a glass-cutter, it is a diamond and not a commodity. To be a use-value is evidently a necessary prerequisite of the commodity, but it is immaterial to the use-value whether it is a commodity. Use-value as such, since it is independent of the determinate economic form, lies outside the sphere of investigation of political economy. It belongs in this sphere only when it is itself a determinate form. Use-value is the immediate physical entity in which a definite economic relationship exchange-value is expressed. Exchange-value seems at first to be a quantitative relation, the proportion in which use-values are exchanged for one another. In this relation they constitute equal exchangeable magnitudes. Thus one volume of Propertius and eight ounces of snuff may have the same exchange-value, despite the dissimilar use-values of snuff and elegies. Considered as exchange-value, one use-value is worth just as much as another, provided the two are available in the appropriate proportion. The exchange-value of a palace can be expressed in a definite number of tins of boot polish. London manufacturers of boot polish, on the other hand, have expressed the exchange-value of their numerous tins of polish in terms of palaces. Quite irrespective, therefore, of their natural form of existence, and without regard to the specific character of the needs they satisfy as use-values, commodities in definite quantities are congruent, they take one another s place in the exchange process, are regarded as equivalents, and despite their motley appearance have a common denominator. Use-values serve directly as means of existence. But, on the other hand, these means of existence are themselves the products of social activity, the result of expended human energy, materialized labour. As objectification of social labour, all commodities are crystallisations of the same substance. The specific character of this substance, i.e., of labour which is embodied in exchange-value, has now to be examined. Let us suppose that one ounce of gold, one ton of iron, one quarter of wheat and twenty yards of silk are exchange-values of equal magnitude. As exchange-values in which the qualitative difference between their use-values is eliminated, they represent equal amounts of the same kind of labour. The labour which is uniformly materialised in them must be uniform, homogeneous, simple labour; it matters as little whether this is embodied in gold, iron, wheat or silk, as it matters to oxygen whether it is found in rusty iron, in the atmosphere, in the juice of grapes or in human blood. But digging gold, mining iron, cultivating wheat and weaving silk are qualitatively different kinds of labour. In fact, what appears objectively as diversity of the use-values, appears, when looked at dynamically, as diversity of the activities which produce those use-values. Since the particular material of which the use-values consist is irrelevant to the labour that creates exchange-value, the particular form of this labour is equally irrelevant. Different use-values are, moreover, products of the activity of different individuals and therefore the result of individually different kinds of labour. But as exchange-values they represent the same homogeneous labour, i.e., labour in which the individual characteristics of the workers are obliterated. Labour which creates exchange-value is thus abstract general labour. If one ounce of gold, one ton of iron, one quarter of wheat and twenty yards of silk are exchange-values of equal magnitude or equivalents, then one ounce of gold, half a ton of iron, three bushels of wheat and five yards of silk are exchange-values which have very different magnitudes, and this quantitative difference is the only difference of which as exchange-values they are at all capable. As exchange-values of different magnitudes they represent larger or smaller portions, larger or smaller amounts of simple, homogeneous, abstract general labour, which is the substance of exchange-value. The question now arises, how can these amounts be measured? Or rather the question arises, what is the quantitative form of existence of this labour, since the quantitative differences of the commodities as exchange-values are merely the quantitative differences of the labour embodied in them. Just as motion is measured by time, so is labour by labour-time. Variations in the duration of labour are the only possible difference that can occur if the quality of labour is assumed to be given. Labour-time is measured in terms of the natural units of time, i.e., hours, days, weeks, etc. Labour-time is the living state of existence of labour, irrespective of its form, its content and its individual features; it is the quantitative aspect of labour as well as its inherent measure. The labour-time materialised in the use-values of commodities is both the substance that turns them into exchange-values and therefore into commodities, and the standard by which the precise magnitude of their value is measured. The corresponding quantities of different use-values containing the same amount of labour-time are equivalents; that is, all use-values are equivalents when taken in proportions which contain the same amount of expended, materialised labour-time. Regarded as exchange-values all commodities are merely definite quantities of congealed labour-time. The following basic propositions are essential for an understanding of the determination of exchange-value by labour-time. Labour is reduced to simple labour, labour, so to speak, without any qualitative attributes; labour which creates exchange-value, and therefore commodities, is specifically social labour; finally, labour in so far as its results are use-values is distinct from labour in so far as its results are exchange-values. To measure the exchange-value of commodities by the labour-time they contain, the different kinds of labour have to be reduced to uniform, homogeneous, simple labour, in short to labour of uniform quality, whose only difference, therefore, is quantity. This reduction appears to be an abstraction, but it is an abstraction which is made every day in the social process of production. The conversion of all commodities into labour-time is no greater an abstraction, and is no less real, than the resolution of all organic bodies into air. Labour, thus measured by time, does not seem, indeed, to be the labour of different persons, but on the contrary the different working individuals seem to be mere organs of this labour. In other words the labour embodied in exchange-values could be called human labour in general. This abstraction, human labour in general, exists in the form of average labour which, in a given society, the average person can perform, productive expenditure of a certain amount of human muscles, nerves, brain, etc. It is simple labour [English economists call it unskilled labour ] which any average individual can be trained to do and which in one way or another he has to perform. The characteristics of this average labour are different in different countries and different historical epochs, but in any particular society it appears as something given. The greater part of the labour performed in bourgeois society is simple labour as statistical data show. Whether A works 6 hours producing iron and 6 hours producing linen, and B likewise works 6 hours producing iron and 6 hours producing linen, or A works 12 hours producing iron and B 12 hours producing linen is quite evidently merely a different application of the same labour-time. But what is the position with regard to more complicated labour which, being labour of greater intensity and greater specific gravity, rises above the general level? This kind of labour resolves itself into simple labour; it is simple labour raised to a higher power, so that for example one day of skilled labour may equal three days of simple labour. The laws governing this reduction do not concern us here. It is, however, clear that the reduction is made, for, as exchange-value, the product of highly skilled labour is equivalent, in definite proportions, to the product of simple average labour; thus being equated to a certain amount of this simple labour. The determination of exchange-value by labour-time, moreover, presupposes that the same amount of labour is materialised in a particular commodity, say a ton of iron, irrespective of whether it is the work of A or of B, that is to say, different individuals expend equal amounts of labour-time to produce use-values which are qualitatively and quantitatively equal. In other words, it is assumed that the labour-time contained in a commodity is the labour-time necessary for its production, namely the labour-time required, under the generally prevailing conditions of production, to produce another unit of the same commodity. From the analysis of exchange-value it follows that the conditions of labour which creates exchange-value are social categories of labour or categories of social labour, social however not in the general sense but in the particular sense, denoting a specific type of society. Uniform simple labour implies first of all that the labour of different individuals is equal and that their labour is treated as equal by being in fact reduced to homogeneous labour. The labour of every individual in so far as it manifests itself in exchange-values possesses this social character of equality, and it manifests itself in exchange-value only in so far as it is equated with the labour of all other individuals. Furthermore, in exchange-value the labour-time of a particular individual is directly represented as labour-time in general, and this general character of individual labour appears as the social character of this labour. The labour-time expressed in exchange-value is the labour-time of an individual, but of an individual in no way differing from the next individual and from all other individuals in so far as they perform equal labour; the labour-time, therefore, which one person requires for the production of a given commodity is the necessary labour-time which any other person would require to produce the same commodity. It is the labour-time of an individual, his labour-time, but only as labour-time common to all; consequently it is quite immaterial whose individual labour-time this is. This universal labour-time finds its expression in a universal product, a universal equivalent, a definite amount of materialised labour-time, for which the distinct form of the use-value in which it is manifested as the direct product of one person is a matter of complete indifference, and it can be converted at will into any other form of use-value, in which it appears as the product of any other person. Only as such a universal magnitude does it represent a social magnitude. The labour of an individual can produce exchange-value only if it produces universal equivalents, that is to say, if the individual s labour-time represents universal labour-time or if universal labour-time represents individual labour-time. The effect is the same as if the different individuals had amalgamated their labour-time and allocated different portions of the labour-time at their joint disposal to the various use-values. The labour-time of the individual is thus, in fact, the labour-time required by society to produce a particular use-value, that is to satisfy a particular want. But what matters here is only the specific manner in which the social character of labour is established. A certain amount of a spinner s labour-time is materialised, say, in 100 lb. of linen yarn. The same amount of labour-time is assumed to be represented in 100 yards of linen, the product of a weaver. Since these two products represent equal amounts of universal labour-time, and are therefore equivalents of any use-value which contains the same amount of labour-time, they are equal to each other. Only because the labour -time of the spinner and the labour-time of the weaver represent universal labour-time, and their products are thus universal equivalents, is the social aspect of the labour of the two individuals represented for each of them by the labour of the other, that is to say, the labour of the weaver represents it for the spinner, and the labour of the spinner represents it for the weaver. On the other hand, under the rural patriarchal system of production, when spinner and weaver lived under the same roof the women of the family spinning and the men weaving, say for the requirements of the family yarn and linen were social products, and spinning and weaving social labour within the framework of the family. But their social character did not appear in the form of yarn becoming a universal equivalent exchanged for linen as a universal equivalent, i.e., of the two products exchanging for each other as equal and equally valid expressions of the same universal labour-time. On the contrary, the product of labour bore the specific social imprint of the family relationship with its naturally evolved division of labour. Or let us take the services and dues in kind of the Middle Ages. It was the distinct labour of the individual in its original form, the particular features of his labour and not its universal aspect that formed the social ties at that time. Or finally let us take communal labour in its spontaneously evolved form as we find it among all civilised nations at the dawn of their history. In this case the social character of labour is evidently not effected by the labour of the individual assuming the abstract form of universal labour or his product assuming the form of a universal equivalent. The communal system on which this mode of production is based prevents the labour of an individual from becoming private labour and his product the private product of a separate individual; it causes individual labour to appear rather as the direct function of a member of the social organisation. Labour which manifests itself in exchange-value appears to be the labour of an isolated individual. It becomes social labour by assuming the form of its direct opposite, of abstract universal labour. Lastly, it is a characteristic feature of labour which posits exchange-value that it causes the social relations of individuals to appear in the perverted form of a social relation between things. The labour of different persons is equated and treated as universal labour only by bringing one use-value into relation with another one in the guise of exchange-value. Although it is thus correct to say that exchange-value is a relation between persons, it is however necessary to add that it is a relation hidden by a material veil. Just as a pound of iron and a pound of gold have the same weight despite their different physical and chemical properties, so two commodities which have different use-values but contain the same amount of labour-time have the same exchange-value. Exchange-value thus appears to be a social determination of use-values, a determination which is proper to them as things and in consequence of which they are able in definite proportions to take one another s place in the exchange process, i.e., they are equivalents, just as simple chemical elements combined in certain proportions form chemical equivalents. Only the conventions of our everyday life make it appear commonplace and ordinary that social relations of production should assume the shape of things, so that the relations into which people enter in the course of their work appear as the relation of things to one another and of things to people. This mystification is still a very simple one in the case of a commodity. Everybody understands more or less clearly that the relations of commodities as exchange-values are really the relations of people to the productive activities of one another. The semblance of simplicity disappears in more advanced relations of production. All the illusions of the Monetary System arise from the failure to perceive that money, though a physical object with distinct properties, represents a social relation of production. As soon as the modern economists, who sneer at illusions of the Monetary System, deal with the more complex economic categories, such as capital, they display the same illusions. This emerges clearly in their confession of naive astonishment when the phenomenon that they have just ponderously described as a thing reappears as a social relation and, a moment later, having been defined as a social relation, teases them once more as a thing. Since the exchange-value of commodities is indeed nothing but a mutual relation between various kinds of labour of individuals regarded as equal and universal labour, i.e., nothing but a material expression of a specific social form of labour, it is a tautology to say that labour is the only source of exchange-value and accordingly of wealth in so far as this consists of exchange-value. It is equally a tautology to say that material in its natural state does not have exchange-value since it contains no labour, and that exchange-value as such includes no material in a natural state. It is true that William Petty calls labour the father and earth the mother of wealth", Bishop Berkeley asks But all these observations are concerned not with abstract labour, which is the source of exchange-value, but with concrete labour as the source of material wealth, in short with labour in so far as it produces use-values. Since the use-value of the commodity is postulated, the specific utility and the definite usefulness of the labour expended on it is also postulated; but this is the only aspect of labour as useful labour which is relevant to the study of commodities. In considering bread as a use-value, we are concerned with its properties as an article of food and by no means with the labour of the farmer, miller, baker, etc. Even if the labour required were reduced by 95 per cent as a result of some invention, the usefulness of a loaf of bread would remain quite unaffected. It would lose not a single particle of its use-value even if it dropped ready-made from the sky. Whereas labour positing exchange-value manifests itself in the equality of commodities as universal equivalents, labour as useful productive activity manifests itself in the infinite variety of use-values. Whereas labour positing exchange-value is abstrect universal and uniform labour, labour positing use-value is concrete and distinctive labour, comprising infinitely varying kinds of labour as regards its form and the material to which it is applied. It would be wrong to say that labour which produces use-values is the only source of the wealth produced by it, that is of material wealth. Since labour is an activity which adapts material for some purpose or other, it needs material as a prerequisite. Different use-values contain very different proportions of labour and natural products, but use-value always comprises a natural element. As useful activity directed to the appropriation of natural factors in one form or another, labour is a natural condition of human existence, a condition of material interchange between man and nature, quite independent of the form of society. On the other hand, the labour which posits exchange-value is a specific social form of labour. For example, tailoring if one considers its physical aspect as a distinct productive activity produces a coat, but not the exchange-value of the coat. The exchange-value is produced by it not as tailoring as such but as abstract universal labour, and this belongs to a social framework not devised by the tailor. Women in ancient domestic industry, for instance, produced coats without producing the exchange-value of coats. Labour as a source of material wealth was well known both to Moses, the law-giver, and to Adam Smith, the customs official. Let us now examine a few propositions which follow from the reduction of exchange-value to labour-time. A commodity as a use-value has an eminently material function. Wheat for example is used as food. A machine replaces a certain amount of labour. This function, by virtue of which a commodity is a use-value, an article of consumption, may be called its service, the service it renders as a use-value. But the commodity as an exchange-value is always considered solely from the standpoint of the result. What matters is not the service it renders, but the service rendered to it in the course of its production. Thus the exchange-value of a machine, for instance, is determined not by the amount of labour-time which it can replace, but by the amount of labour-time expended in its production and therefore required for the production of a new machine of the same type. Thus, if the amount of labour required for the production of commodities remained constant, their exchange-value would also remain unchanged. But the facility or difficulty of production varies continually. If the productivity of labour grows, the same use-value will be produced in less time. If~the productivity of labour declines, more time will be needed to produce the same use-value. The amount of labour-time contained in a commodity, and therefore its exchange-value, is consequently a variable quantity, rising or falling in inverse proportion to the rise or fall of the productivity of labour. The level of the productivity of labour, which is predetermined in manufacturing industry, depends in agriculture and extractive industry also upon unpredictable natural conditions. The same quantity of labour will result in a larger or smaller output of various metals depending on the relative abundance of the deposits of these metals in the earth s crust. The same amount of labour may yield two bushels of wheat in a favourable season, and perhaps only one bushel in an unfavourable season. Scarcity or abundance brought about by natural circumstances seems in this case to determine the exchange-value of commodities, because it determines the productivity of the specific concrete labour which is bound up with the natural conditions. Equal amounts of labour-time, or equal amounts of exchange-value, are contained in unequal volumes of different use-values. The smaller the volume of a use-value which contains a given amount of labour-time as compared with other use-values of commodities, the greater is the specific exchange-value of that commodity. If we find that in different epochs of civilisation separated by long periods of time, various use-values for example gold, silver, copper and iron, or wheat, rye, barley and oats form a series of specific exchange-values which on the whole retain their relative order in relation to one another, though not their exact numerical proportions, it follows that the progressive development of the social productive forces has exerted a uniform or nearly uniform effect on the labour-time required for the production of these commodities. The exchange-value of a commodity is not expressed in its own use-value. But as materialisation of universal social labour-time, the use-value of one commodity is brought into relation with the use-values of other commodities. The exchange-value of one commodity thus manifests itself in the use-values of other commodities. In fact the exchange-value of one commodity expressed in the use-value of another commodity represents equivalence. If one says, for instance, one yard of linen is worth two pounds of coffee, then the exchange-value of linen is expressed in the use-value of coffee, and it is moreover expressed in a definite quantity of this use-value. Once the proportion is given, the value of any quantity of linen can be expressed in terms of coffee. It is evident that the exchange-value of a commodity, e.g., linen, is not exhaustively expressed by the proportion in which a particular commodity, e.g., coffee, forms its equivalent. The quantity of universal labour-time represented by a yard of linen exists simultaneously in infinitely varied amounts of the use-values of all other commodities. The use-value of any other commodity taken in the proportion which represents the same quantity of labour-time constitutes an equivalent for the yard of linen. The exchange-value of this particular commodity can therefore be exhaustively exprcssed only by the infinite number of equations in which the use-values of all other commodities form its equivalent. The only exhaustive expression for a universal equivalent is the sum of these equations or the totality of the different proportions in which a commodity can be exchanged for any other commodity. For example the series of equations 1 yard of linen = 1/8 lb. of tea + lb. of coffee 2 lbs. Of bread + 1 yards of calico. Thus if we had all the equations in which the value of a yard of linen is exhaustively expressed, we could denote its exchange-value in the form of a series. This is in fact an infinite series, for the range of commodities can never be finally circumscribed but expands continuously. Since the exchange-value of one commodity is measured by the use-values of all other commodities, the exchange-values of all other commodities are on the contrary measured in terms of the use-value of the one commodity measured by them. If the exchange-value of one yard of linen is expressed in 1/2 lb. of tea, or 2 lbs. of coffee, or 6 yards of calico, or 8 lbs. of bread, etc., it follows that coffee, tea, calico, bread, etc., must be equal to one another in the proportion in which they are equal to linen, a third magnitude, linen thus serves as a common measure of their exchange-value. The exchange-value of any commodity considered as materialised universal labour-time, .e., as a definite quantity of universal labour-time, is measured successively in terms of definite quantities of the use-values of all other commodities; and on the other hand the exchange-values of all other commodities are measured in the use-value of this one exclusive commodity. But any commodity considered as exchange-value is both the exclusive commodity which serves as the common measure of the exchange-values of all other commodities and on the other hand it is merely one commodity of the many commodities in the series in which the exchange-value of any other commodity is directly expressed. The existing number of different types of commodities does not affect the value of a commodity. But whether the series of equations in which its exchange-value can be realised is longer or shorter depends on the greater or smaller variety of different commodities. The series of equations which express, say, the value of coffee shows the range of its exchangeability, the limits within which it functions as an exchange-value. The exchange-value of a commodity as the objective expression of universal social labour-time finds its appropriate expression of equivalence in the infinite variety of use-values. We have seen that the exchange-value of a commodity varies with the quantity of labour-time directly contained in it. Its realised exchange-value, that is its exchange-value expressed in the use-values of other commodities, must also depend on the degree to which the labour-time expended on the production of all other commodities varies. For example, if the labour-time necessary for the production of a bushel of wheat remained unchanged, while the labour-time needed for the production of all other commodities doubled, the exchange-value of a bushel of wheat in terms of its equivalents would have been halved. The result would actually be the same as if the labour-time required to produce a bushel of wheat had been halved and the labour-time required to produce all other commodities had remained unchanged. The value of commodities is determined by the amount of them which can be produced in a given labour-time. In order to examine what changes are liable to affect this proportion, let us take two commodities, A and B. First The labour-time required for the production of B is assumed to remain unchanged. In this case the exchange-value of A expressed in terms of B falls or rises in direct proportion to the decrease or increase in the labour-time necessary for the production of A. Secondly. The labour-time necessary for the production of commodity A is assumed to remain unchanged. The exchange-value of commodity A in terms of B falls or rises in inverse proportion to the decrease or increase in the labour-time required to produce B. Thirdly. The labour-time required for the production of A and of B is assumed to decrease or increase at the same rate. The equation expressing the value of commodity A in terms of B remains unchanged in this case. If some factor were to cause the productivity of all types of labour to fall in equal degree, thus requiring the same proportion of additional labour for the production of all commodities, then the value of all commodities would rise, the actual expression of their exchange-value remaining unchanged, and the real wealth of society would decrease, since the production of the same quantity of use-values would require a larger amount of labour-time. Fourthly. The labour-time required for the production of both A and B is assumed to increase or decrease but in unequal degree, or else the labour-time required for the production of A is assumed to increase while that required for B decreases, or vice versa. All these cases can be simply reduced to the position where the labour-time required for the production of one commodity remains unchanged, while that required for the production of the other either increases or decreases. The exchange-value of any commodity is expressed in terms of the use-value of any other commodity, either in whole units or in fractions of that use-value. Every commodity as exchange-value can be just as easily divided as the labour-time contained in it. The equivalence of commodities is just as independent of the physical divisibility of their use-values as the summation of the exchange-values of commodities is unaffected by the changes which the use-values of the commodities may undergo in the course of their transformation into a single new commodity. So far two aspects of the commodity use-value and exchange-value have been examined, but each one separately. The commodity, however, is the direct unity of use-value and exchange-value, and at the same time it is a commodity only in relation to other commodities. The exchange process of commodities is the real relation that exists between them. This is a social process which is carried on by individuals independently of one another, but they take part in it only as commodity-owners; they exist for one another only insofar as their commodities exist; they thus appear to be in fact the conscious representatives of the exchange process. The commodity is a use-value, wheat, linen, a diamond, machinery, etc., but as a commodity it is simultaneously not a use-value. It would not be a commodity, if it were a use-value for its owner, that is a direct means for the satisfaction of his own needs. For its owner it is on the contrary a non-use-value, that is merely the physical depository of exchange-value, or simply a means of exchange. Use-value as an active carrier of exchange-value becomes a means of exchange. The commodity is a use-value for its owner only so far as it is an exchange-value. [It is in this sense that Aristotle speaks of exchange-value (see the passage quoted at the beginning of this chapter).] The commodity therefore has still to become a use-value, in the first place a use-value for others. Since it is not a use-value to its owner, it must be a use-value to owners of other commodities. If this is not the case, then the labour expended on it was useless; labour and the result accordingly is not a commodity. The commodity must, on the other hand, become a use-value for its owner, since his means of existence exist outside it, in the use-values of other people s commodities. To become a use- value, the commodity must encounter the particular need which it can satisfy. Thus the use-values of commodities become use-values by a mutual exchange of places: they pass from the hands of those for whom they were means of exchange into the hands of those for whom they serve as consumer goods. Only as a result of this universal alienation of commodities does the labour contained in them become useful labour. Commodities do not acquire a new economic form in the course of mutual relations as use-values. On the contrary, the specific form which distinguished them as commodities disappears. Bread, for instance, in passing from the baker to the consumer does not change its character as bread. It is rather that the consumer treats it as a use- value, as a particular foodstuff, whereas so long as it was in the hands of the baker it was simply representative of an economic relation, a concrete and at the same time an abstract thing. The only transformation therefore that commodities experience in the course of becoming use-values is the cessation of their formal existence in which they were non-use-values for their owner, and use-values for their non-owner. To become use-values commodities must be altogether alienated; they must enter into the exchange process; exchange however is concerned merely with their aspect as exchange-values. Hence, only by being realized as exchange-values can they be realized as use-values. The individual commodity as a use-value was originally regarded as something independent, while as an exchange- value it was from the outset regarded in its relation to all other commodities But this was merely a theoretical, hypothetical, relation. It realises itself only in the process of exchange. On the other hand, a commodity is an exchange- value in so far as a definite amount of labour-time has been expended on its production and it accordingly represents materialised labour-time. Yet the commodity as it comes into being is only materialised individual labour-time of a specific kind, and not universal labour-time. The commodity is thus not immediately exchange-value, but has still to become exchange-value. To begin with, it can be materialisation of universal labour-time only when it represents a particular useful application of labour-time, that is a use- value. This is the material condition under which alone the labour-time contained in commodities is regarded as universal, social labour-time. A commodity can only therefore become a use-value if it is realised as an exchange-value, while it can only be realised as an exchange-value if it is alienated and functions as a use-value. The alienation of a commodity as a use-value is only possible to the person for whom it is a use-value, i.e., an object satisfying particular needs. On the other hand, it can only be alienated in exchange for another commodity, or if we regard the matter from the standpoint of the owner of the other commodity, he too can only alienate, i.e., realise, his commodity by bringing it into contact with the particular need of which it is the object. During the universal alienation of commodities as use-values they are brought into relation with one another as discrete things which are physically different and because of their specific properties satisfy particular needs. But as mere use-values they exist independently of one another or rather without any connection. They can be exchanged as use-values only in connection with particular needs. They are, however, exchangeable only as equivalents, and they are equivalents only as equal quantities of materialised labour-time, when their physical properties as use- values, and hence the relations of these commodities to specific needs, are entirely disregarded. A commodity functions as an exchange-value if it can freely take the place of a definite quantity of any other commodity, irrespective of whether or not it constitutes a use-value for the owner of the other commodity. But for the owner of the other commodity it becomes a commodity only in so far as it constitutes a use-value for him, and for the owner in whose hands it is it becomes an exchange-value only in so far as it is a commodity for the other owner. One and the same relation must therefore be simultaneously a relation of essentially equal commodities which differ only in magnitude, i.e., a relation which expresses their equality as materialisations of universal labour-time, and at the same time it must be their relation as qualitatively different things, as distinct use-values for distinct needs, in short a relation which differentiates them as actual use-values But equality and inequality thus posited are mutually exclusive. The result is not simply a vicious circle of problems, where the solution of one problem presupposes the solution of the other, but a whole complex of contradictory premises, since the fulfillment of one condition depends directly upon the fulfillment of its opposite. The exchange process must comprise both the evolution and the solution of these contradictions, which cannot however be demonstrated in the process in this simple form We have merely observed how the commodities themselves are related to one another as use-values, i.e., how commodities as use-values function within the exchange process. On the other hand, exchange-value as we have considered it till now has merely existed as our abstraction, or, if one prefers, as the abstraction of the individual commodity- owner, who keeps the commodity as use-value in the ware- house, and has it on his conscience as exchange-value. In the exchange process, however, the commodities must exist for one another not only as use-values but also as exchange- values, and this aspect of their existence must appear as their own mutual relation. The difficulty which confronted us in the first place was that the commodity as a use-value has to be alienated, disposed of, before it can function as an exchange-value, as materialised labour, while on the contrary its alienation as a use-value presupposes its existence as exchange-value. But let us suppose that this difficulty has been overcome, that the commodity has shed its particular use-value and has thereby fulfilled the material condition of being socially useful labour, instead of the particular labour of an individual by himself. In the exchange process, the commodity as exchange-value must then become a universal equivalent, materialised general labour-time for all other commodities; it has thus no longer the limited function of a particular use-value, but is capable of being directly represented in all use-values as its equivalents. Every commodity however is the commodity which, as a result of the alienation of its particular use-value, must appear as the direct materialisation of universal labour- time. But on the other hand, only particular commodities, particular use-values embodying the labour of private individuals, confront one another in the exchange process. Universal labour-time itself is an abstraction which, as such, does not exist for commodities. Let us consider the series of equations in which the exchange-value of a commodity is expressed in concrete terms, for example To be sure, these equations merely denote that equal amounts of universal social labour-time are materialised in 1 yard of linen, 2 lbs. of coffee, 1/2 lb. of tea, etc. But the different kinds of individual labour represented in these particular use-values, in fact, become labour in general, and in this way social labour, only by actually being exchanged for one another in quantities which are proportional to the labour-time contained in them. Social labour-time exists in these commodities in a latent state, so to speak, and becomes evident only in the course of their exchange. The point of departure is not the labour of individuals considered as social labour, but on the contrary the particular kinds of labour of private individuals, i.e., labour which proves that it is universal social labour only by the supersession of its original character in the exchange process. Universal social labour is consequently not a ready-made prerequisite but an emerging result. Thus a new difficulty arises: on the one hand, commodities must enter the exchange process as materialized universal labour-time, on the other hand, the labour-time of individuals becomes materialized universal labour-time only as the result of the exchange process. It is through the alienation of its use-value, that is of its original form of existence, that every commodity has to acquire its corresponding existence as exchange-value. The commodity must therefore assume a dual form existence in the exchange process. On the other hand, its second form of existence, exchange-value, can only be represented by another commodity, for only commodities confront one another in the exchange process. How is it possible to present a particular commodity directly as materialised universal labour-time, or which amounts to the same thing how can the individual labour-time materialised in a particular commodity directly assume a universal character? The concrete expression of the exchange-value of a commodity, i.e., of any commodity considered as universal equivalent, consists of an infinite series of equations such as This is a theoretical statement since the commodity is merely regarded as a definite quantity of materialised universal labour-time. A particular commodity as a universal equivalent is transformed from a pure abstraction into a social result of the exchange process, if one simply reverses the above series of equations. For example Just as the labour-time contained in coffee, tea, bread, calico, in short in all commodities, is expressed in terms of linen, so conversely the exchange-value of linen is reflected in all other commodities which act as its equivalents, and the labour-time materialised in linen becomes direct universal labour-time, which is equally embodied in different volumes of all other commodities. Linen thus becomes the universal equivalent in consequence of the universal action of all other commodities in relation to it. Every commodity considered as exchange-value became a measure of the value of all other commodities. In this case, on the contrary, because the exchange-value of all commodities is measured in terms of one particular commodity, the excluded commodity becomes the adequate representation of exchange- value as the universal equivalent. On the other hand, the infinite series or the infinite number of equations in which the exchange-value of each commodity was expressed is now reduced to a single equation consisting of two terms. The equation 2 lbs. of coffee = 1 yard of linen is now a comprehensive expression for the exchange-value of coffee, for in this expression it appears as the direct equivalent to a definite quantity of any other commodity. Commodities within the exchange process accordingly exist for one another, or appear to one another, as exchange-values in the form of linen. The fact that all commodities are related to one another as exchange-values! i.e., simply as different quantities of materialised universal labour-time, now appears in the form that all exchange-values represent merely different quantities of one and the same article, linen. Universal labour-time thus appears as a specific thing, as a commodity in addition to and apart from all other commodities. At the same time, the equation in which one commodity represents the exchange-value of another commodity, e.g., 2 lbs. of coffee = 1 yard of linen, has still to be realised. Only by being alienated as a use-value an alienation which depends on whether it is able to prove in the exchange process that it is a needed object is it really converted from the form of coffee into that of linen, thus becoming a universal equivalent and really representing exchange-value for all other commodities. On the other hand, because as a result of their alienation as use-values all commodities are converted into linen, linen becomes the converted form of all other commodities, and only as a result of this transformation of all other commodities into linen does it become the direct reification of universal labour-time, i.e., the product of universal alienation and of the supersession of all individual labour. While commodities thus assume a dual form in order to represent exchange- value for one another, the commodity which has been set apart as universal equivalent acquires a dual use-value. In addition to its particular use-value as an individual commodity it acquires a universal use-value. This latter use- value is itself a determinate form, i.e., it arises from the specific role which this commodity plays as a result of the universal action exerted on it by the other commodities in the exchange process. The use-value of each commodity as an object which satisfies particular needs has a different value in different hands, e.g., it has one value for the person who disposes of it and a different value for the person who acquires it. The commodity which has been set apart as the universal equivalent is now an object which satisfies a universal need arising from the exchange process itself, and has the same use-value for everybody that of being carrier of exchange-value or a universal medium of exchange. Thus the contradiction inherent in the commodity as such, namely that of being a particular use-value and simultaneously universal equivalent, and hence a use-value for everybody or a universal use-value, has been solved in the case of this one commodity. Whereas now the exchange-value of all other commodities is in the first place presented in the form of an ideal equation with the commodity that has been set apart, an equation which has still to be realised; the use-value of this commodity, though real, seems in the exchange process to have merely a formal existence which has still to be realised by conversion into actual use-values. The commodity originally appeared as commodity in general, as universal labour-time materialised in a particular use-value. All commodities are compared in the exchange process with the one excluded commodity which is regarded as commodity in general, the commodity, the embodiment of universal labour-time in a particular use-value. They are therefore as particular commodities opposed to one particular commodity considered as being the universal commodity. [The same term is used by Genovesi. (Note in author s copy.)] The fact that commodity-owners treat one another s labour as universal social labour appears in the form of their treating their own commodities as exchange-values; and the interrelation of commodities as exchange-values in the exchange process appears as their universal relation to a particular commodity as the adequate expression of their exchange-value; this in turn appears as the specific relation of this particular commodity to all other commodities and hence as the distinctive, as it were naturally evolved, social character of a thing. The particular commodity which thus represents the exchange-value of all commodities, that is to say, the exchange-value of commodities regarded as a particular, exclusive commodity, constitutes money. It is a crystallization of the exchange-value of commodities and is formed in the exchange process. Thus, while in the exchange process commodities become use-values for one another by discarding all determinate forms and confronting one another in their immediate physical aspect, they must assume a new determinate form they must evolve money, so as to be able to confront one another as exchange-values. Money is not a symbol, just as the existence of a use-value in the form of a commodity is no symbol. A social relation of production appears as something existing apart from individual human beings, and the distinctive relations into which they enter in the course of production in society appear as the specific properties of a thing it is this perverted appearance, this prosaically real, and by no means imaginary, mystification that is characteristic of all social forms of labour positing exchange-value. This perverted appearance manifests itself merely in a more striking manner in money than it does in commodities. The necessary physical properties of the particular commodity, in which the money form of all other commodities is to be crystallised in so far as they direct]y follow from the nature of exchange-value are: unlimited divisibility, homogeneity of its parts and uniform quality of all units of the commodity. As the materialisation of universal labour- time it must be homogeneous and capable of expressing only quantitative differences. Another necessary property is durability of its use-value since it must endure through the exchange process. Precious metals possess these qualities in an exceptionally high degree. Since money is not the result of deliberation or of agreement, but has come into being spontaneously in the course of exchange, many different, more or less unsuitable, commodities were at various times used as money. When exchange reaches a certain stage of development, the need arises to polarise the functions of exchange-value and use-value among various commodities so that one commodity, for example, shall act as means of exchange while another is disposed of as a use-value. The outcome is that one commodity or sometimes several commodities representing the most common use-value come occasionally to serve as money. Even when no immediate need for these use-values exists, the demand for them is bound to be more general than that for other use-values, since they constitute the most substantial physical element in wealth. Direct barter, the spontaneous form of exchange, signifies the beginning of the transformation of use-values into commodities rather than the transformation of commodities into money. Exchange-value does not acquire an independent form, but is still directly tied to use-value. This is manifested in two ways. Use-value, not exchange-value, is the purpose of the whole system of production, and use- values accordingly cease to be use-values and become means of exchange, or commodities, only when a larger amount of them has been produced than is required for consumption. On the other hand, they become commodities only within the limits set by their immediate use-value, even when this function is polarised so that the commodities to be exchanged by their owners must be use-values for both of them, but each commodity must be a use-value for its non-owner. In fact, the exchange of commodities evolves originally not within primitive communities, but on their margins, on their borders, the few points where they come into contact with other communities. This is where barter begins and moves thence into the interior of the community, exerting a disintegrating influence upon it. The particular use-values which, as a result of barter between different communities, become commodities, e.g., slaves, cattle, metals, usually serve also as the first money within these communities. We have seen that the degree to which the exchange- value of a commodity functions as exchange-value is the higher, the longer the series of its equivalents or the larger the sphere in which the commodity is exchanged. The gradual extension of barter, the growing number of exchange transactions, and the increasing variety of commodities bartered lead, therefore, to the further development of the commodity as exchange-value, stimulates the formation of money and consequently has a disintegrating effect on direct barter. Economists usually reason that the emergence of money is due to external difficulties which the expansion of barter encounters, but they forget that these difficulties arise from the evolution of exchange-value and hence from that of social labour as universal labour. For example commodities as use-values are not divisible at will, a property which as exchange-values they should possess. Or it may happen that the commodity belonging to A may be use-value required by B; whereas B s commodity may not have any use-value for A. Or the commodity-owners may need each other s commodities but these cannot be divided and their relative exchange-values are different. In other words, on the plea of examining simple barter, these economists display certain aspects of the contradiction inherent in the commodity as being the direct unity of use-value and exchange-value. On the other hand, they then persistently regard barter as a form well adapted to commodity exchange, suffering merely from certain technical inconveniences, to overcome which money has been cunningly devised. Proceeding from this quite superficial point of view, an ingenious British economist has rightly maintained that money is merely a material instrument, like a ship or a steam engine, and not an expression of a social relation of production, and hence is not an economic category. It is therefore simply a malpractice to deal with this subject in political economy, which in fact has nothing in common with technology. The world of commodities presupposes a developed division of labour, or rather the division of labour manifests itself directly in the diversity of use-values which confront one another as particular commodities and which embody just as many diverse kinds of labour. The division of labour as the aggregate of all the different types of productive activity constitutes the totality of the physical aspects of social labour as labour producing use-values. But it exists as such as regards commodities and the exchange process only in its results, in the variety of the commodities them- selves. The exchange of commodities is the process in which the social metabolism, in other words the exchange of particular products of private individuals, simultaneously gives rise to definite social relations of production, into which individuals enter in the course of this metabolism. As they develop, the interrelations of commodities crystallise into distinct aspects of the universal equivalent, and thus the exchange process becomes at the same time the process of formation of money. This process as a whole, which comprises several processes, constitutes circulation.

Economic Manuscripts: Critique of Political Economy. The Commodity

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch01.htm

The decisive outcome of the research carried on for over a century and a half by classical political economy, beginning with William Petty in Britain and Boisguillebert in France, and ending with Ricardo in Britain and Sismondi in France, is an analysis of the aspects of the commodity into two forms of labour use-value is reduced to concrete labour or purposive productive activity, exchange-value to labour-time or homogeneous social labour. Petty reduces use-value to labour without deceiving himself about the dependence of its creative power on natural factors. He immediately perceives concrete labour in its entire social aspect as division of labour. This conception of the source of material wealth does not remain more or less sterile as with his contemporary Hobbes, but leads to the political arithmetic, the first form in which political economy is treated as a separate science. But he accepts exchange-value as it appears in the exchange of commodities, i.e., as money, and money itself as an existing commodity, as gold and silver. Caught up in the ideas of the Monetary System, he asserts that the labour which determines exchange-value is the particular kind of concrete labour by which gold and silver is extracted. What he really has in mind is that in bourgeois economy labour does not directly produce use-values but commodities, use-values which, in consequence of their alienation in exchange, are capable of assuming the form of gold and silver, i.e., of money, i.e., of exchange-value, i.e., of materialised universal labour. His case is a striking proof that recognition of labour as the source of material wealth by no means precludes misapprehension of the specific social form in which labour constitutes the source of exchange-value. Boisguillebert for his part, in fact, although he may not be aware of it, reduces the exchange-value of commodities to labour-time, by determining the true value (la juste valeur) according to the correct proportion in which the labour-time of the individual producers is divided between the different branches of industry, and declaring that free competition is the social process by which this correct proportion is established. But simultaneously, and in contrast with Petty, Boisguillebert wages a fanatical struggle against money, whose intervention, he alleges, disturbs the natural equilibrium or the harmony of the exchange of commodities and, like a fantastic Moloch, demands all physical wealth as a sacrifice. This polemic against money is, on the one hand, connected with definite historical conditions, for Boisguillebert fights against the blindly destructive greed for gold which possessed the court of Louis XIV, his tax-farmers and the aristocracy; whereas Petty acclaims the greed for gold as a vigorous force which spurs a nation to industrial progress and to the conquest of the world market; at the same time however it throws into bold relief more profound fundamental differences which recur as a perpetual contrast between typically English and typically French political economy. Boisguillebert, indeed, sees only the material substance of wealth, its use-value, enjoyment of it, and regards the bourgeois form of labour, the production of use-values as commodities and the exchange of commodities, as the appropriate social form in which individual labour accomplishes this object. Where, as in money, he encounters the specific features of bourgeois wealth, he therefore speaks of the intrusion of usurping alien factors, and inveighs against one of the forms of labour in bourgeois society, while simultaneously pronouncing utopian eulogies on it in another form. Boisguillebert s work proves that it is possible to regard labour-time as the measure of the value of commodities, while confusing the labour which is materialised in the exchange-value of commodities and measured in time units with the direct physical activity of individuals. It is a man of the New World where bourgeois relations of production imported together with their representatives sprouted rapidly in a soil in which the superabundance of humus made up for the lack of historical tradition who for the first time deliberately and clearly (so clearly as to be almost trite) reduces exchange-value to labour-time. This man was Benjamin Franklin, who formulated the basic law of modern political economy in an early work, which was written in 1729 and published in 1731. He declares it necessary to seek another measure of value than the precious metals, and that this measure is labour. "By labour may the value of silver be measured as well as other things. As, suppose one man is employed to raise corn, while another is digging and refining silver; at the year s end, or at any other period of time, the complete produce of corn, and that of silver, are the natural price of each other; and if one be twenty bushels, and the other twenty ounces, then an ounce of that silver is worth the labour of raising a bushel of that corn. Now if by the discovery of some nearer, more easy or plentiful mines, a man may get forty ounces of silver as easily as formerly he did twenty, and the same labour is still required to raise twenty bushels of corn, then two ounces of silver will be worth no more than the same labour of raising one bushel of corn, and that bushel of corn will be as cheap at two ounces, as it was before at one, caeteris paribus [other things being equal]. Thus the riches of a country are to be valued by the quantity of labour its inhabitants are able to purchase" (op. cit., p. 265). From the outset Franklin regards labour-time from a restricted economic standpoint as the measure of value. The transformation of actual products into exchange-values is taken for granted, and it is therefore only a question of discovering a measure of their value. To quote Franklin again: Trade in general being nothing else but the exchange of labour for labour, the value of all things is, as I have said before, most justly measured by labour (op. cit., p. 267). If in this sentence the term labour is replaced by concrete labour, it is at once obvious that labour in one form is being confused with labour in another form. Because trade may, for example, consist in the exchange of the labour of a shoemaker, miner, spinner, painter and so on, is therefore the labour of the painter the best measure of the value of shoes? Franklin, on the contrary, considers that the value of shoes, minerals, yarn, paintings, etc., is determined by abstract labour which has no particular quality and can thus be measured only in terms of quantity. But since he does not explain that the labour contained in exchange value is abstract universal social labour, which is brought about by the universal alienation of individual labour, he necessarily fails to recognize in money the direct embodiment of this alienated labor*. He therefore fails to see the intrinsic connection between money and labour which posits exchange-value, but on the contrary regards money as a convenient technical device which has been introduced into the sphere of exchange from outside. Franklin s analysis of exchange-value had no direct influence on the general course of the science, because he dealt only with special problems of political economy for definite practical purposes. The difference between concrete useful labour and labour which creates exchange-value aroused considerable interest in Europe during the eighteenth century in the following form: what particular kind of concrete labour is the source of bourgeois wealth? It was thus assumed that not every kind of labour which is materialised in use-values or yields products must thereby directly create wealth. But for both the Physiocrats and their opponents the crucial issue was not what kind of labour creates value but what kind of labour creates surplus value. They were thus discussing a complex form of the problem before having solved its elementary form; just as the historical progress of all sciences leads only through a multitude of contradictory moves to the real point of departure. Science, unlike other architects, builds not only castles in the air, but may construct separate habitable storeys of the building before laying the foundation stone. We shall now leave the Physiocrats and disregard a whole series of Italian economists, whose more or less pertinent ideas come close to a correct analysis of the commodity, in order to turn at once to Sir James Steuart, the first Briton to expound a general system of bourgeois economy. The concept of exchange-value like the other abstract categories of political economy are in his work still in process of differentiation from their material content and therefore appear to be blurred and ambiguous. In one passage he determines real value by labour-time ("what a workman can perform in a day"), but beside it he introduces wages and raw material in a rather confusing way. His struggle with the material content is brought out even more strikingly in another passage. He calls the physical element contained in a commodity, e.g., the silver in silver filigree, its intrinsic worth, and the labour-time contained in it its useful value. The first is according to him something real in itself, whereas the value of the second must be estimated according to the labour it has cost to produce it.... The labour employed in the modification represents a portion of a man s time. His clear differentiation between specifically social labour which manifests itself in exchange-value and concrete labour which yields use-values distinguishes Steuart from his predecessors and his successors. "Labour, he says, which through its alienation creates a universal equivalent, I call industry. He distinguishes labour as industry not only from concrete labour but also from other social forms of labour. He sees in it the bourgeois form of labour as distinct from its antique and mediaeval forms. He is particularly interested in the difference between bourgeois and feudal labour, having observed the latter in the stage of its decline both in Scotland and during his extensive journeys on the continent. Steuart knew very well that in pre-bourgeois eras also products assumed the form of commodities and commodities that of money; but he shows in great detail that the commodity as the elementary and primary unit of wealth and alienation as the predominant form of appropriation are characteristic only of the bourgeois period of production, and that accordingly labour which creates exchange-value is a specifically bourgeois feature. Various kinds of concrete labour, such as agriculture, manufacture, shipping and commerce, had each in turn been claimed to constitute the real source of wealth, before Adam Smith declared that the sole source of material wealth or of use-values is labour in general, that is the entire social aspect of labour as it appears in the division of labour. Whereas in this context he completely overlooks the natural factor, he is pursued by it when he examines the sphere of purely social wealth, exchange-value. Although Adam Smith determines the value of commodities by the labour-time contained in them, he then nevertheless transfers this determination of value in actual fact to pre-Smithian times. In other words, what he regards as true when considering simple commodities becomes confused as soon as he examines the higher and more complex forms of capital, wage-labour, rent, etc. He expresses this in the following way: the value of commodities was measured by labour-time in the paradise lost of the bourgeoisie, where people did not confront one another as capitalists, wage-labourers, landowners, tenant farmers, usurers, and so on, but simply as persons who produced commodities and exchanged them. Adam Smith constantly confuses the determination of the value of commodities by the labour-time contained in them with the determination of their value by the value of labour; he is often inconsistent in the details of his exposition and he mistakes the objective equalisation of unequal quantities of labour forcibly brought about by the social process for the subjective equality of the labours of individuals. He tries to accomplish the transition from concrete labour to labour which produces exchange-value, i.e., the basic form of bourgeois labour, by means of the division of labour. But though it is correct to say that individual exchange presupposes division of labour, it is wrong to maintain that division of labour presupposes individual exchange. For example, division of labour had reached an exceptionally high degree of development among the Peruvians, although no individual exchange, no exchange of products in the form of commodities, took place. David Ricardo, unlike Adam Smith, neatly sets forth the determination of the value of commodities by labour-time, and demonstrates that this law governs even those bourgeois relations of production which apparently contradict it most decisively. Ricardo s investigations are concerned exclusively with the magnitude of value, and regarding this he is at least aware that the operation of the law depends on definite historical pre-conditions. He says that the determination of value by labour-time applies to such commodities only as can be increased in quantity by the exertion of human industry, and on the production of which competition operates without restraint. This in fact means that the full development of the law of value presupposes a society in which large-scale industrial production and free competition obtain, in other words modern bourgeois society. For the rest, the bourgeois form of labour is regarded by Ricardo as the eternal natural form of social labour. Ricardo s primitive fisherman and primitive hunter are from the outset owners of commodities who exchange their fish and game in proportion to the labour-time which is materialised in these exchange-values. On this occasion he slips into the anachronism of allowing the primitive fisherman and hunter to calculate the value of their implements in accordance with the annuity tables used on the London Stock Exchange in 1817. Apart from bourgeois society, the only social system with which Ricardo was acquainted seems to have been the parallelograms of Mr. Owen. Although encompassed by this bourgeois horizon, Ricardo analyses bourgeois economy, whose deeper layers differ essentially from its surface appearance, with such theoretical acumen that Lord Brougham could say of him: "Mr. Ricardo seemed as if he had dropped from another planet. Arguing directly with Ricardo, Sismondi not only emphasises the specifically social character of labour which creates exchange-value, but states also that it is a characteristic feature of our economic progress to reduce value to necessary labour-time, to "the relation between the needs of the whole society and the quantity- of labour which is sufficient to satisfy these needs. Sismondi is no longer preoccupied with Boisguillebert s notion that labour which creates exchange-value is distorted by money, but just as Boisguillebert denounced money so does Sismondi denounce large industrial capital. Whereas Ricardo s political economy ruthlessly draws its final conclusion and therewith ends, Sismondi supplements this ending by expressing doubt in political economy itself. Since the determination of exchange-value by labour-time has been formulated and expounded in the clearest manner by Ricardo, who gave to classical political economy its final shape, it is quite natural that the arguments raised by economists should be primarily directed against him. If this polemic is stripped of its mainly trivial form it can be summarised as follows: One. Labour itself has exchange-value and different types of labour have different exchange-values. If one makes exchange-value the measure of exchange-value, one is caught up in a vicious circle, for the exchange-value used as a measure requires in turn a measure. This objection merges into the following problem: given labour-time as the intrinsic measure of value, how are wages to be determined on this basis. The theory of wage-labour provides the answer to this. Two. If the exchange-value of a product equals the labour-time contained in the product, then the exchange-value of a working day is equal to the product it yields, in other words, wages must be equal to the product of labour. But in fact the opposite is true. Ergo, this objection amounts to the problem, how does production on the basis of exchange-value solely determined by labour-time lead to the result that the exchange-value of labour is less than the exchange-value of its product? This problem is solved in our analysis of capital. Three. In accordance with the changing conditions of demand and supply, the market-price of commodities falls below or rises above their exchange-value. The exchange-value of commodities is, consequently, determined not by the labour-time contained in them, but by the relation of demand and supply. In fact, this strange conclusion only raises the question how on the basis of exchange-value a market-price differing from this exchange-value comes into being, or rather, how the law of exchange-value asserts itself only in its antithesis. This problem is solved in the theory of competition. Four. The last and apparently the decisive objection, unless it is advanced as commonly happens in the form of curious examples, is this: if exchange-value is nothing but the labour-time contained in a commodity, how does it come about that commodities which contain no labour possess exchange-value, in other words, how does the exchange-value of natural forces arise? The problem is solved in the theory of rent.

Economic Manuscripts: Historical Notes on the Analysis of Commodities

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch01a.htm

Gladstone, speaking in a parliamentary debate on Sir Robert Peel s Bank Act of 1844 and 1845, observed that even love has not turned more men into fools than has meditation upon the nature of money. He spoke of Britons to Britons. The Dutch, on the other hand, who in spite of Petty s doubts possessed a divine sense for money speculation from time immemorial, have never lost their senses in speculation about money. The principal difficulty in the analysis of money is surmounted as soon as it is understood that the commodity is the origin of money. After that it is only a question of clearly comprehending the specific form peculiar to it. This is not so easy because all bourgeois relations appear to be gilded, i.e., they appear to be money relations, and the money form, therefore, seems to possess an infinitely varied content, which is quite alien to this form. During the following analysis it is important to keep in mind that we are only concerned with those forms of money which arise directly from the exchange of commodities, but not with forms of money, such as credit money, which belong to a higher stage of production. For the sake of simplicity gold is assumed throughout to be the money commodity. 1. MEASURE OF VALUE The first phase of circulation is, as it were, a theoretical phase preparatory to real circulation. Commodities, which exist as use-values, must first of all assume a form in which they appear to one another nominally as exchange-values, as definite quantities of materialised universal labour-time. The first necessary move in this process is, as we have seen, that the commodities set apart a specific commodity, say, gold, which becomes the direct reification of universal labour-time or the universal equivalent. Let us return for a moment to the form in which gold is converted into money by commodities. In this series of equations iron, wheat, coffee, potash, etc., appear to one another as materialisation of uniform labour, that is labour materialised in gold, in which all distinctive features of the concrete labour represented in the different use-values are entirely obliterated. They are as values identical, i.e., materialisations of the same labour or the same materialisation of labour gold. Since they are uniform materialisations of the same labour, they differ only in one way, quantitatively: in other words they represent different magnitudes of value, because their use-values contain unequal amounts of labour-time. These individual commodities can be compared with one another as embodiments of universal labour-time, since they have been compared with universal labour-time in the shape of the excluded commodity, i.e., gold. The same dynamic relation, as a result of which commodities become exchange-values for one another, causes the labour-time contained in gold to represent universal labour-time, a given amount of which is expressed in different quantities of iron, wheat, coffee, etc., in short in the use-values of all commodities, or it may be displayed directly in the infinite series of commodity equivalents. Since the exchange-value of all commodities is expressed in gold, the exchange-value of gold is directly expressed in all commodities. Because the commodities themselves assume the form of exchange-value for one another, they turn gold into the universal equivalent or into money. Gold becomes the measure of value because the exchange-value of all commodities is measured in gold, is expressed in the relation of a definite quantity of gold and a definite quantity of commodity containing equal amounts of labour-time. To begin with, gold becomes the universal equivalent, or money, only because it thus functions as the measure of value and as such its own value is measured directly in all commodity equivalents. The exchange-value of all commodities, on the other hand, is now expressed in gold. One has to distinguish a qualitative and a quantitative aspect in this expression. The exchange-value of the commodity exists as the embodiment of equal uniform labour-time, the value of the commodity is thus fully expressed, for to the extent that commodities are equated with gold they are equated with one another. Their golden equivalent reflects the universal character of the labour-time contained in them on the one hand, and its quantity on the other hand. The exchange-value of commodities thus expressed in the form of universal equivalence and simultaneously as the degree of this equivalence in terms of a specific commodity, that is a single equation in which commodities are compared with a specific commodity, constitutes price. Price is the converted form in which the exchange-value of commodities appears within the circulation process. Thus as a result of the same process through which the values of commodities are expressed in gold prices, gold is transformed into the measure of value and thence into money. If the values of all commodities were measured in silver or wheat or copper, and accordingly expressed in terms of silver, wheat or copper prices, then silver, wheat or copper would become the measure of value and consequently universal equivalents. Commodities as exchange-values must be antecedent to circulation in order to appear as prices in circulation. Gold becomes the measure of value only because the exchange-value of all commodities is estimated in terms of gold. The universality of this dynamic relation, from which alone springs the capacity of gold to act as a measure, presupposes however that every single commodity is measured in terms of gold in accordance with the labour-time contained in both, so that the real measure of commodity and gold is labour itself, that is commodity and gold are as exchange-values equated by direct exchange. How this equating is carried through in practice cannot be discussed in the context of simple circulation. It is evident, however, that in countries where gold and silver are produced a definite amount of labour-time is directly incorporated in a definite quantity of gold and silver, whereas countries which produce no gold and silver arrive at the same result in a roundabout way, by direct or indirect exchange of their home products, i.e., of a definite portion of their average national labour, for a definite quantity of labour-time embodied in the gold and silver of countries that possess mines. Gold must be in principle a variable value, if it is to serve as a measure of value, because only as reification of labour-time can it become the equivalent of other commodities, but as a result of changes in the productivity of concrete labour, the same amount of labour-time is embodied in unequal volumes of the same type of use-values. The valuation of all commodities in terms of gold like the expression of the exchange-value of any commodity in terms of the use-value of another commodity merely presupposes that at a given moment gold represents a definite quantity of labour-time. The law of exchange-value set forth earlier applies to changes occurring in the value of gold. If the exchange-value of commodities remains unchanged, then a general rise of their prices in terms of gold can only take place when the exchange-value of gold falls. If the exchange-value of gold remains unchanged, then a general rise of prices in terms of gold is only possible if the exchange-values of all commodities rise. The reverse takes place in the case of a general decline in the prices of commodities. If the value of an ounce of gold falls or rises in consequence of a change in the labour-time required for its production, then it will fall or rise equally in relation to all other commodities and will thus for all of them continue to represent a definite volume of labour-time. The same exchange-values will now be estimated in quantities of gold which are larger or smaller than before, but they will be estimated in accordance with their values and will therefore maintain the same value relative to one another. The ratio 2:4:8 remains the same whether it becomes 1:2:4 or 4:8:16. The fact that, because of the changing value of gold, exchange-values are represented by varying quantities of gold does not prevent gold from functioning as the measure of value, any more than the fact that the value of silver is one-fifteenth of that of gold prevents silver from taking over this function. Labour-time is the measure of both gold and commodities, and gold becomes the measure of value only because all commodities are measured in terms of gold; it is consequently merely an illusion created by the circulation process to suppose that money makes commodities commensurable. On the contrary, it is only the commensurability of commodities as materialised labour-time which converts gold into money. The concrete form in which commodities enter the process of exchange is as use-values. The commodities will only become universal equivalents as a result of their alienation. The establishment of their price is merely their nominal conversion into the universal equivalent, an equation with gold which still has to be put into practice. But because prices convert commodities only nominally into gold or only into imaginary gold i.e., the existence of commodities as money is indeed not yet separated from their real existence gold has been merely transformed into imaginary money, only into the measure of value, and definite quantities of gold serve in fact simply as names for definite quantities of labour-time. The distinct form in which gold crystallises into money depends in each case on the way in which the exchange-values of commodities are represented with regard to one another. Commodities now confront one another in a dual form, really as use-values and nominally as exchange-values. They represent now for one another the dual form of labour contained in them, since the particular concrete labour actually exists as their use-value, while universal abstract labour-time assumes an imaginary existence in their price, in which they are all alike embodiments of the same substance of value, differing only quantitatively. The difference between exchange-value and price is, on the one hand, merely nominal; as Adam Smith says, labour is the real price of commodities and money their nominal price. Instead of saying that one quarter of wheat is worth thirty days labour, one now says it is worth one ounce of gold, when one ounce of gold is produced in thirty working days. The difference is on the other hand so far from being simply a nominal difference that all the storms which threaten the commodity in the actual process of circulation centre upon it. A quarter of wheat contains thirty days labour, and it therefore does not have to be expressed in terms of labour-time. But gold is a commodity distinct from wheat, and only circulation can show whether the quarter of wheat is actually turned into an ounce of gold as has been anticipated in its price. This depends on whether or not the wheat proves to be a use-value, whether or not the quantity of labour-time contained in it proves to be the quantity of labour-time necessarily required by society for the production of a quarter of wheat. The commodity as such is an exchange-value, the commodity has a price. This difference between exchange-value and price is a reflection of the fact that the particular individual labour contained in the commodity can only through alienation be represented as its opposite, impersonal, abstract, general and only in this form social labour, i.e., money. Whether it can be thus represented or not seems a matter of chance. Although, therefore, the price gives exchange-value a form of existence which is only nominally distinct from the commodity, and the two aspects of the labour contained in the commodity appear as yet only as different modes of expression; while, on the other hand, gold, the embodiment of universal labour-time, accordingly confronts concrete commodities merely as an imaginary measure of value; yet the existence of price as an expression of exchange-value, or of gold as a measure of value, entails the necessity for alienation of commodities in exchange for glittering gold and thus the possibility of their non-alienation. In short, there is here contained in latent form the whole contradiction which arises because the product is a commodity, or because the particular labour of an isolated individual can become socially effective only if it is expressed as its direct opposite, i.e., abstract universal labour. The utopians who wish to retain commodities but not money, production based on private exchange without the essential conditions for this type of production, are therefore quite consistent when they seek to abolish money not only in its palpable state but even in the nebulous, chimerical state that it assumes as the measure of value. For beneath the invisible measure of value lurks hard money. Given the process by which gold has been turned into the measure of value and exchange-value into price, all commodities when expressed in their prices are merely imagined quantities of gold of various magnitudes. Since they are thus various quantities of the same thing, namely gold, they are similar, comparable and commensurable, and thus arises the technical necessity of relating them to a definite quantity of gold as a unit of measure. This unit of measure then develops into a scale of measure by being divided into aliquot parts which are in turn subdivided into aliquot parts. The quantities of gold themselves, however, are measured by weight. The standard weights generally used for metals accordingly provide ready-made standard measures, which originally also served as standard measures of price wherever metallic currency was in use. Since commodities are no longer compared as exchange-values which are measured in terms of labour-time, but as magnitudes of the same denomination measured in terms of gold, gold, the measure of value, becomes the standard of price. The comparison of commodity-prices in terms of different quantities of gold thus becomes crystallised in figures denoting imaginary quantities of gold and representing gold as a standard measure divided into aliquot parts. Gold as measure of value and as standard of price has quite distinct specific functions, and the confusion of the one with the other has led to the most absurd theories. Gold as materialised labour-time is a measure of value, as a piece of metal of definite weight it is the standard of price. Gold becomes the measure of value because as an exchange-value it is compared with the exchange-values of other commodities; in its aspect as a standard of price a definite quantity of gold serves as a unit for other quantities of gold. Gold is the measure of value because its value is variable; it is the standard of price because it has been established as an invariable unit of weight. Here, as in all cases of measuring quantities of the same denomination, stability and exactitude of the proportions is essential. The necessity of establishing a quantity of gold as the unit of measure and its aliquot parts as subdivisions of this unit has given rise to the idea that a fixed ratio of values has been set up between a definite quantity of gold, whose value is of course variable, and the exchange-values of commodities. But such a view simply ignores the fact that the exchange-values of commodities are turned into prices, into quantities of gold, before gold becomes the standard of price. Quite irrespective of any changes in the value of gold, different quantities of gold will always represent the same ratio of values with regard to one another. lf the value of gold should fall by 1,000 per cent, then the value of twelve ounces of gold would still be twelve times bigger than that of one ounce of gold, and so far as prices are concerned what matters is only the proportion of the different quantities of gold to one another. Since, on the other hand, a rise or fall in the value of an ounce of gold does not in any way affect its weight, the weight of its aliquot parts remains likewise unaffected; gold can thus always serve as a stable standard of price, regardless of any changes in its value. As a result of an historical process, which, as we shall explain later, was determined by the nature of metallic currency, the names of particular weights were retained for constantly changing and diminishing weights of precious metals functioning as the standard of price. Thus the English pound sterling denotes less than one-third of its original weight, the pound Scots before the Union only 1/36, the French livre 1/74, the Spanish maravedi less than 1/1,000 and the Portuguese rei an even smaller proportion. Historical development thus led to a separation of the money names of certain weights of metals from the common names of these weights. Because the designation of the unit of measure, its aliquot parts and their names is, on the one hand, purely conventional, and on the other hand must be accepted as universal and indispensable within the sphere of circulation, it had to be established by legal means. The purely formal enactment thus devolved upon the government. Which particular metal served as the material of money depended on the given social conditions. The standard of price is of course different in different countries. In England, for example, the ounce as a weight of metal is divided into pennyweights, grains and carats troy; but the ounce of gold as the unit of money is divided into 3 7/8 sovereigns, the sovereign into 20 shillings and the shilling into 12 pence, so that 100 pounds of 22-carat gold (1,200 ounces) equal 4,672 sovereigns and 10 shillings. But in the world market, where state frontiers disappear, such national features of the standards of money disappear as well and are replaced by measures of weight generally used for metals. The price of a commodity, or the quantity of gold into which it is nominally converted, is now expressed therefore in the monetary names of the standard of gold. Thus, instead of saying a quarter of wheat is worth an ounce of gold, one would say in England it is worth 3 17s. 10/2d. All prices are thus expressed in the same denomination. The specific form which the exchange-value of commodities assumes is converted into denominations of money, by which their value is expressed. Money in turn becomes money of account. The transformation of commodities into money of account in the mind, on paper or in words takes place whenever the aspect of exchange-value becomes fixed in a particular type of wealth. This transformation needs the material of gold, but only in imagination. Not a single atom of real gold is used to estimate the value of a thousand bales of cotton in terms of a certain number of ounces of gold and then to express this number of ounces in . s. d., the names of account of the ounce. For instance, not a single ounce of gold was in circulation in Scotland before Sir Robert Peel s Bank Act of 1845, although the ounce of gold, called 3 17s. 10/2d. as the British standard of account, served as the legal standard of price. Similarly, silver serves as the standard of price in exchange of commodities between Siberia and China, although this trade is in fact merely barter. It makes no difference, therefore, to gold as money of account whether or not its standard unit or its subdivisions are actually coined. During the reign of William the Conqueror, one pound sterling, at that time a pound of pure silver, and the shilling, 0 of a pound, existed in England only as money of account, while the penny, 40 of a pound of silver, was the largest silver coin in existence. On the other hand, there are no shillings or pence in England today, although they are legal names of account for definite fractions of an ounce of gold. Money as money of account may exist only nominally, while actually existing money may be coined according to an entirely different standard. Thus in many of the English colonies in North America, the money in circulation consisted of Spanish and Portuguese coins till late in the eighteenth century, whereas the money of account was everywhere the same as in England. Because as standard of price gold is expressed by the same names of account as the prices of commodities for example 3 17s. 10 d. may denote an ounce of gold just as well as a ton of iron these names of account are called the mint-price of gold. Thus the queer notion arose that gold is estimated in its own material and that, unlike all other commodities, its price is fixed by the State. The establishing of names of account for definite weights of gold was mistaken for the establishing of the value of these weights. Gold has neither a fixed price nor any price at all, when it is a factor in the determination of prices and therefore functions as money of account. In order to have a price, in other words to be expressed in terms of a specific commodity functioning as the universal equivalent, this other commodity would have to play the same exclusive role in the process of circulation as gold. But two commodities which exclude all other commodities would exclude each other as well. Consequently, wherever silver and gold exist side by side as legal money, i.e., as measure of value, the vain attempt has always been made to treat them as one and the same substance. If one assumes that a given labour-time is invariably materialised in the same proportion in silver and gold, then one assumes, in fact, that silver and gold are the same substance, and that silver, the less valuable metal, represents a constant fraction of gold. The history of the monetary system in England from the reign of Edward III up to the time of George II consists of a continuous series of disturbances caused by conflict between the legally established ratio between the values of gold and silver and the actual fluctuations in their value. Sometimes the value of gold was too high, sometimes that of silver. The metal whose value was estimated at too low a rate was withdrawn from circulation, melted down and exported. The value-ratio of the two metals was then once again changed by law; but soon the new nominal value in its turn clashed with the actual value-ratio. In our own time, the slight and short-lived fall in the value of gold as compared with silver, brought about by the Indian and Chinese demand for silver, produced the same phenomenon on a large scale in France the export of silver and the elimination of silver from the sphere of circulation by gold. During the years 1855, 1856 and 1857, the excess of France s gold imports over her gold exports amounted to 41,580,000, while the excess of her silver exports over silver imports came to 34,704,000. In countries like France, where both metals are legally sanctioned measures of value and both are accepted as legal tender, where moreover every person can pay in the one or the other metal as he pleases, the metal whose value rises is in fact at a premium, and its price like that of any other commodity is measured in terms of the over-rated metal, which thus serves alone as the measure of value. All historical experience in this sphere simply shows that, where two commodities function as legally valid measures of value, it is always one of them only which actually maintains this position.

Economic Manuscripts: Money

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_1.htm

When, as a result of the establishing of prices, commodities have acquired the form in which they are able to enter circulation and gold has assumed its function as money, the contradictions latent in the exchange of commodities are both exposed and resolved by circulation. The real exchange of commodities, that is the social metabolic process, constitutes a transformation in which the dual nature of the commodity commodity as use-value and as exchange-value manifests itself; but the transformation of the commodity itself is, at the same time, epitomised in certain forms of money. To describe this transformation is to describe circulation. Commodities, as we have seen, constitute fully developed exchange-value only when a world of commodities and consequently a really developed system of division of labour is presupposed; in the same manner circulation presupposes that acts of exchange are taking place everywhere and that they are being continuously renewed. It also presupposes that commodities enter into the process of exchange with a determinate price, in other words that in the course of exchange they appear to confront one another in a dual form really as use-values and nominally (in the price) as exchange-values. The busiest streets of London are crowded with shops whose show cases display all the riches of the world, Indian shawls, American revolvers, Chinese porcelain, Parisian corsets, furs from Russia and spices from the tropics, but all of these worldly things bear odious, white paper labels with Arabic numerals and then laconic symbols s. d. This is how commodities are presented in circulation. a. The Metamorphosis of Commodities Closer examination shows that the circulation process comprises two distinct types of circuit. If commodities are denoted by C and money by M, the two circuits may be represented in the following way: C M C M C M In this section we are solely concerned with the first circuit, that is the one which directly expresses commodity circulation. The circuit C M C may be divided into the movement C M, the exchange of commodities for money, or sale; the opposite movement M C, the exchange of money for commodities, or purchase; and the unity of the two movements C M C, exchange of commodities for money so as to exchange money for commodities, in other words, selling in order to purchase. The outcome in which the transaction terminates is C C, i.e., exchange of one commodity for another, actual exchange of matter. C M C, when considered from the point of departure of the first commodity, represents its conversion into gold and its reconversion from gold into commodity; that is to say a movement in which at the outset the commodity appears as a particular use-value, then sheds this form of existence and assumes that of exchange-value or universal equivalent which is entirely distinct from its natural form finally it sheds this as well and emerges as a real use-value which can serve particular needs. In this last form it drops out of the sphere of circulation and enters that of consumption. Thus to begin with, the whole circuit of C M C represents the entire series of metamorphoses through which every individual commodity passes in order to become a direct use-value for its owner. The first metamorphosis takes place in C M, the first phase of the circuit; the second in M C, the other phase, and the entire circuit forms the curriculum vitae of the commodity. But the cycle C M C represents the complete metamorphosis of an individual commodity only because it is at the same time an aggregate of definite partial metamorphoses of other commodities. For each metamorphosis of the first commodity is its transformation into another commodity and therefore the transformation of the second commodity into the first; hence it is a double transformation which is carried through during a single stage of the cycle. To start with, we shall separately examine each of the two phases of exchange into which the cycle C M C is resolved. C M or sale: C, the commodity, enters the sphere of circulation not just as a particular use-value, e.g., a ton of iron, but as a use-value with a definite price, say 3 17s. 10 1/2d. or an ounce of gold. The price while on the one hand indicating the amount of labour-time contained in the iron, namely its value, at the same time signifies the pious wish to convert the iron into gold, that is to give the labour-time contained in the iron the form of universal social labour-time. If this transformation fails to take place, then the ton of iron ceases to be not only a commodity but also a product; since it is a commodity only because it is not a use-value for its owner, that is to say his labour is only really labour if it is useful labour for others, and it is useful for him only if it is abstract general labour. It is therefore the task of the iron or of its owner to find that location in the world of commodities where iron attracts gold. But if the sale actually takes place, as we assume in this analysis of simple circulation, then this difficulty, the salto mortale of the commodity, is surmounted. As a result of this alienation that is its transfer from the person for whom it is a non-use-value to the person for whom it is a use-value the ton of iron proves to be in fact a use-value and its price is simultaneously realised, and merely imaginary gold is converted into real gold. The term ounce of gold or 3 17s. 10 1/2d., has now been replaced by an ounce of real gold, but the ton of iron has gone. The sale C M does not merely transform the commodity which by means of the price was nominally turned into gold really into gold, but gold, which as measure of value was only nominally gold and in fact functioned only as the money name of commodities, is through the same process transformed into actual money. As gold became nominally the universal equivalent, because the values of all commodities were measured in terms of gold, so now, as a result of the universal alienation of commodities in exchange for it and the sale C M is the procedure by which this universal alienation is accomplished does it become the absolutely alienated commodity, i.e., real money. But gold becomes real money through sale, only because the exchange-values of commodities expressed in prices were already converted into nominal gold. During the sale C M, and likewise during the purchase M C, two commodities, i.e., units of exchange-value and use-value, confront each other; but in the case of the commodity exchange-value exists merely nominally as its price, whereas in the case of gold, although it has real use-value, its use-value merely represents exchange-value and is therefore merely a formal use-value which is not related to any real individual need. The contradiction of use-value and exchange-value is thus polarised at the two extreme points of C M, so that with regard to gold the commodity represents use-value whose nominal exchange-value, the price, still has to be realised in gold; with regard to the commodity, on the other hand, gold represents exchange-value whose formal use-value still has to acquire a material form in the commodity. The contradictions inherent in the exchange of commodities are resolved only by reason of this duplication of the commodity so that it appears as commodity and gold, and again by way of the dual and opposite relation in which each extreme is nominal where its opposite is real, and real where its opposite is nominal, in other words they are resolved only by means of presenting commodities as bilateral polar opposites. So far we have regarded C M as a sale, as the conversion of a commodity into money. But if we consider it from the other side, then the same transaction appears, on the contrary, as M C, a purchase, the conversion of money into a commodity. A sale is inevitably and simultaneously its opposite, a purchase; it is the former if one looks at the transaction from one side and the latter if one sees it from the other. In other words, the difference between the transactions is in reality merely that in C M the initiative comes from the side of the commodity or of the seller while in M C it comes from the side of money or of the purchaser. When we describe the first metamorphosis of the commodity, its transformation into money, as the result of the first phase of the circuit, we simultaneously presuppose that another commodity has already been converted into money and is therefore now in the second phase of the circuit, M C. We are thus caught up in a vicious circle of presuppositions. This vicious circle is indeed circulation itself. If we do not regard M in C M as belonging to the metamorphosis of another commodity, then we isolate the act of exchange from the process of circulation. But if it is separated from the process, the phase C M disappears and there remain only two commodities which confront each other, for instance iron and gold, whose exchange is not a distinct part of the cycle but is direct barter. At the place where gold is produced, it is a commodity like any other commodity. Its relative value and that of iron or of any other commodity is there reflected in the quantities in which they are exchanged for one another. But this transaction is presupposed in the process of circulation, the value of gold is already given in the prices of commodities. It would therefore be entirely wrong to assume that within the framework of circulation, the relation of gold and commodities is that of direct barter and that consequently their relative value is determined by their exchange as simple commodities. It seems as though in the process of circulation gold were exchanged merely as a commodity for other commodities, but this illusion arises simply because a definite quantity of a given commodity is equalised by means of prices with a definite quantity of gold: that is, it is compared with gold as money, the universal equivalent, and consequently it can be directly exchanged for gold. In so far as the price of a commodity is realised in gold, the commodity is exchanged for gold as a commodity, as a particular materialisation of labour-time; but in so far as it is the price of the commodity that is realised in gold, the commodity is exchanged for gold as money and not as a commodity, i.e., for gold as the materialisation of general labour-time. But the quantity of gold for which the commodity is exchanged in the process of circulation is in both cases determined not by means of exchange, but the exchange is determined by the price of the commodity, by its exchange-value calculated in terms of gold. Within the process of circulation gold seems to be always acquired as the result of a sale C M. But since C M, the sale, is simultaneously M C, a purchase, it is evident that while C the commodity which begins the process undergoes its first metamorphosis, the other commodity which confronts it as M from the opposite extreme undergoes its second metamorphosis and accordingly passes through the second phase of the circuit while the first commodity is still in the first phase of its cycle. The outcome of the first stage of circulation, of the sale, provides money, the point of departure of the second stage. The first form of the commodity has now been replaced by its golden equivalent. This outcome may to begin with involve a pause, since the commodity has now assumed a specific durable form. The commodity which was not a use-value in the hands of its owner exists now in a form in which it is always useful because it can always be exchanged, and it depends on circumstances when and at which point in the world of commodities it will again be thrown into circulation. The golden chrysalis state forms an independent phase in the life of the commodity, in which it can remain for a shorter or longer period. The separation and independence of the acts of purchase and sale is a general feature of the labour which creates exchange-value, whereas in barter the exchange of one discrete use-value is directly tied to the exchange of another discrete use-value. The purchase, M C, is the reverse movement to C M and at the same time the second or final metamorphosis of the commodity. Regarded as gold or as the general equivalent, the commodity can be directly expressed in terms of the use-values of all other commodities, all of which through their prices seek gold as their hereafter, and simultaneously they indicate the key note which must be sounded so that their bodies, the use-values, should change over to the money side, while their soul, the exchange-value, is turned into gold. The general result of the alienation of commodities is the absolutely alienated commodity. The conversion of gold into commodities has no qualitative limit but only a quantitative limit, the fact that the amount of gold, or the value it represents, is limited. Everything can be obtained with ready money. Whereas the commodity realises its own price and the use-value of someone else s money through its alienation as a use-value in the movement C M, it realises its own use-value and the price of the other commodity through its alienation as an exchange-value in the movement M C. Just as by the realisation of its price, the commodity simultaneously turns gold into real money, so by its retransformation it converts gold into its (the commodity s) own merely transitory money form. Because commodity circulation presupposes an advanced division of labour and therefore also a diversity of wants on the part of the individual, a diversity bearing an inverse relation to the narrow scope of his own production, the purchase M C will at times consist of an equation with one commodity as the equivalent, and at other times of a series of commodity equivalents determined by the buyer s needs and the amount of money at his disposal. Just as a sale must at the same time be a purchase, so the purchase must at the same time be a sale; M C is simultaneously C M, but in this case gold or the purchaser takes the initiative. Returning to the complete circuit C M C, we can see that in it one commodity passes through the entire series of its metamorphoses. But at the same time as this commodity begins the first phase of its circuit and undergoes the first metamorphosis, another commodity commences the second phase of the circuit, passes through its second metamorphosis and drops out of circulation; the first commodity, on the other hand, enters the second phase of the circuit, passes through its second metamorphosis and drops out of circulation, while a third commodity enters the sphere of circulation, passes through the first phase of its cycle and accomplishes the first metamorphosis. Thus the total circuit C M C representing the complete metamorphosis of a commodity is simultaneously the end of a complete metamorphosis of a second commodity and the beginning of a complete metamorphosis of a third commodity; it is therefore a series without beginning or end. To demonstrate this and to distinguish the commodities we shall use different symbols to denote C in the two extremes, e.g., C' M C''. Indeed, the first term C' M presupposes that M is the outcome of another C M, and is accordingly itself only the last term of the circuit C M C', while the second term M C'' implies that it will result in C" M, and constitutes the first term of the circuit C" M C''', and so on. It is moreover evident, that, although M is the outcome of a single sale, the last term M C may take the form of M C' + M C'' + M C''', and so forth; in other words it may be divided into numerous purchases, i.e., into numerous sales and hence numerous first terms of new complete metamorphoses of commodities. While in this way the complete metamorphosis of a single commodity forms not only a link of just one sequence of metamorphoses without beginning or end, but of many such sequences, the circulation of the world of commodities since every individual commodity goes through the circuit C M C constitutes an infinitely intricate network of such series of movements, which constantly end and constantly begin afresh at an infinite number of different points. But each individual sale or purchase stands as an independent isolated transaction, whose complementary transaction, which constitutes its continuation, does not need to follow immediately but may be separated from it temporally and spatially. Because every particular cycle C M or M C representing the transformation of one commodity into use-value and of another into money, i.e., the first and second phase of the circuit, forms a separate interval for both sides, and since on the other hand all commodities begin their second metamorphosis, that is turn up at the starting point of the circuit's second phase, in the form of gold, the general equivalent, a form common to them all, in the real process of circulation any M C may follow any particular C M, i.e., the second section of the life cycle of any commodity may follow the first section of the life cycle of any other commodity. For example, A sells iron for 2, and thus C M or the first metamorphosis of the commodity iron has taken place, but for the time being A does not buy anything else. At the same time B, who had sold two quarters of wheat for 6 two weeks ago, buys a coat and trousers from Moses and Son with the same 6, and thereby completes M C or the second metamorphosis of the commodity wheat. The two transactions M C and C M appear to be parts of the same sequence only because. as M [money or] gold, all commodities look alike and gold does not look any different whether it represents transformed iron or transformed wheat. In the real process of circulation C M C, therefore, represents an exceedingly haphazard coincidence and succession of motley phases of various complete metamorphoses. The actual process of circulation appears, therefore, not as a complete metamorphosis of the commodity, i.e., not as its movement through opposite phases, but as a mere accumulation of numerous purchases and sales which chance to occur simultaneously or successively. The process accordingly loses its distinct form, especially as each individual transaction, e.g., a sale, is simultaneously its opposite, a purchase, and vice versa. On the other hand, the metamorphoses in the world of commodities constitute the process of circulation and the former must therefore be reflected in the total movement of circulation. This reflection will be examined in the next section. Here we shall merely observe that the C at each of the two extremes of the circuit C M C has a different formal relation to M. The first C is a particular commodity which is compared with money as the universal commodity, whereas in the second phase money as the universal commodity is compared with an individual commodity. The formula C M C can therefore be reduced to the abstract logical syllogism P U I, where particularity forms the first extreme, universality characterises the common middle term and individuality signifies the final extreme. The commodity-owners entered the sphere of circulation merely as guardians of commodities. Within this sphere they confront one another in the antithetical roles of buyer and seller, one personifying a sugar-loaf, the other gold. Just as the sugar-loaf becomes gold, so the seller becomes a buyer. These distinctive social characters are, therefore, by no means due to individual human nature as such, but to the exchange relations of persons who produce their goods in the specific form of commodities. So little does the relation of buyer and seller represent a purely individual relationship that they enter into it only in so far as their individual labour is negated, that is to say, turned into money as non-individual labour. It is therefore as absurd to regard buyer and seller, these bourgeois economic types, as eternal social forms of human individuality, as it is preposterous to weep over them as signifying the abolition of individuality. They are an essential expression of individuality arising at a particular stage of the social process of production. The antagonistic nature of bourgeois production is, moreover, expressed in the antithesis of buyer and seller in such a superficial and formal manner that this antithesis exists already in pre-bourgeois social formations, for it requires merely that the relations of individuals to one another should be those of commodity-owners. An examination of the outcome of the circuit C M C shows that it dissolves into the exchange of C C. Commodity has been exchanged for commodity, use-value for use-value, and the transformation of the commodity into money, or the commodity as money, is merely an intermediary stage which helps to bring about this metabolism. Money emerges thus as a mere medium of exchange of commodities, not however as a medium of exchange in general, but a medium of exchange adapted to the process of circulation, i.e., a medium of circulation. If, because the process of circulation of commodities ends in C C and therefore appears as barter merely mediated by money, or because C M C in general does not only fall apart into two isolated cycles but is simultaneously their dynamic unity, the conclusion were to be drawn that only the unity and not the separation of purchase and sale exists, this would display a manner of thinking the criticism of which belongs to the sphere of logic and not of economics. The division of exchange into purchase and sale not only destroys locally evolved primitive, traditionally pious and sentimentally absurd obstacles standing in the way of social metabolism, but it also represents the general fragmentation of the associated factors of this process and their constant confrontation, in short it contains the general possibility of commercial crises, essentially because the contradiction of commodity and money is the abstract and general form of all contradictions inherent in the bourgeois mode of labour. Although circulation of money can occur therefore without crises, crises cannot occur without circulation of money. This simply means that where labour based on individual exchange has not yet evolved a monetary system, it is quite unable of course to produce phenomena that presuppose a full development of the bourgeois mode of production. This displays the profundity of the criticism that proposes to remedy the shortcomings of the bourgeois system of production by abolishing the privileges of precious metals and by introducing a so-called rational monetary system. A proposition reputed to be exceedingly clever may on the other hand serve as an example of economic apologetics. James Mill, the father of the well-known English economist John Stuart Mill, says: Mill establishes equilibrium by reducing the process of circulation to direct barter, but on the other hand he insinuates buyer and seller, figures derived from the process of circulation, into direct barter. Using Mill's confusing language one may say that there are times when it is impossible to sell all commodities, for instance in London and Hamburg during certain stages of the commercial crisis of 1857/58 there were indeed more buyers than sellers of one commodity, i.e., money, and more sellers than buyers as regards all other forms of money, i.e, commodities. The metaphysical equilibrium of purchases and sales is confined to the fact that every purchase is a sale and every sale a purchase, but this gives poor comfort to the possessors of commodities who unable to make a sale cannot accordingly make a purchase either. The separation of sale and purchase makes possible not only commerce proper, but also numerous pro forma transactions, before the final exchange of commodities between producer and consumer takes place. It thus enables large numbers of parasites to invade the process of production and to take advantage of this separation. But this again means only that money, the universal form of labour in bourgeois society, makes the development of the inherent contradictions possible.

Economic Manuscripts: Medium of Exchange

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_2.htm

In the first instance real circulation consists of a mass of random purchases and sales taking place simultaneously. In both purchase and sale commodities and money confront each other in the same way; the seller represents the commodity, the buyer the money. As a means of circulation money therefore appears always as a means of purchase, and this obscures the fact that it fulfils different functions in the antithetical phases of the metamorphosis of commodities. Money passes into the hands of the seller in the same transaction which transfers the commodity into the hands of the buyer. Commodity and money thus move in opposite directions, and this change of places in the course of which the commodity crosses over to one side and money to the other occurs simultaneously at an indefinite number of points along the entire surface of bourgeois society. But the first move of the commodity in the sphere of circulation is also its last move. No matter whether the commodity changes its position because gold is attracted by it (C M) or because it is attracted by gold (M C), in consequence of the single move, the single change of place, it falls out of the sphere of circulation into that of consumption. Circulation is a perpetual movement of commodities, though always of different commodities, and each commodity makes but one move. Each commodity begins the second phase of its circuit not as the same commodity, but as a different commodity, i.e., gold. The movement of the metamorphosed commodity is thus the movement of gold. The same coin or the identical bit of gold which in the transaction C M changed places with a commodity becomes in turn the starting point of M C, and thus for the second time changes places with another commodity. Just as it passed from the hands of B, the buyer, into those of A, the seller, so now it passes from the hands of A, who has become a buyer, into those of C. The changes in the form of a commodity, its transformation into money and its retransformation from money, in other words the movement of the total metamorphosis of a commodity, accordingly appear as the extrinsic movement of a single coin which changes places twice, with two different commodities. However scattered and fortuitous the simultaneous purchases and sales may be, a buyer is always confronted by a seller in actual circulation, and the money which takes the place of the commodity sold must already have changed places once with another commodity before reaching the hands of the buyer. On the other hand, sooner or later the money will pass again from the hands of the seller who has become a buyer into those of a new seller, and its repeated changes of place express the interlocking of the metamorphoses of commodities. The same coins therefore proceed always in the opposite direction to the commodities moved from one point of the circuit to another; some coins move more frequently, others less frequently, thus describing a longer or shorter curve. The different movements of one and the same coin can follow one another only temporally, just as conversely the multiplicity and fragmentation of the purchases and sales are reflected in the simultaneous and spatially concurrent changes of place of commodity and money. The simple form of commodity circulation, C M C, takes place when money passes from the hands of the buyer into those of the seller and from the seller who has become a buyer into the hands of a new seller. This concludes the metamorphosis of the commodity and hence the movement of money in so far as it is the expression of this metamorphosis. But since there are new use-values produced continuously in the form of commodities, which must therefore be thrown continuously afresh into the sphere of circulation, the circuit C M C is renewed and repeated by the same commodity-owners. The money they have spent as buyers returns to them when they once more become sellers of commodities. The perpetual renewal of commodity circulation is reflected in the fact that over the entire surface of bourgeois society money not only circulates from one person to another but that at the same time it describes a number of distinct small circuits, starting from an infinite variety of points and returning to the same points, in order to repeat the movement afresh. As the change of form of the commodity appears as a mere change in place of money, and the continuity of the movement of circulation belongs entirely to the monetary side because the commodity always makes only one step in the direction opposite to that of money, money however invariably making the second step for the commodity to complete the motion begun by the commodity so the entire movement appears to be initiated by money, although during the sale the commodity causes the money to move, thus bringing about the circulation of the money in the same way as during the purchase the money brings about the circulation of the commodity. Since moreover money always confronts commodities as a means of purchase and as such causes commodities to move merely by realising their prices, the entire movement of circulation appears to consist of money changing places with commodities by realising their prices either in separate transactions which occur simultaneously, side by side, or successively when the same coin realises the prices of different commodities one after another. If, for example, one examines C M C' M C'' M C''', etc., and disregards the qualitative aspects, which become unrecognisable in actual circulation, there emerges only the same monotonous operation. After realising the price of C, M successively realises the prices of C', C'', etc., and the commodities C', C'', C''', etc., invariably take the place vacated by money. It thus appears that money causes the circulation of commodities by realising their prices. While it serves to realise prices, money itself circulates continuously, sometimes moving merely to a different place, at other times tracing a curve or describing a small cycle in which the points of departure and of return are identical. As a medium of circulation it has a circulation of its own. The movement and changing forms of the circulating commodities thus appear as the movement of money mediating the exchange of commodities, which are in themselves immobile. The movement of the circulation process of commodities is therefore represented by the movement of money as the medium of circulation, i.e., by the circulation of money. Just as commodity-owners presented the products of individual labour as products of social labour, by transforming a thing, i.e., gold, into the direct embodiment of labour-time in general and therefore into money, so now their own universal movement by which they bring about the exchange of the material elements of their labour confronts them as the specific movement of a thing, i.e., as the circulation of gold. The social movement is for the commodity owners on the one hand an external necessity and on the other merely a formal intermediary process enabling each individual to obtain different use-values of the same total value as that of the commodities which he has thrown into circulation. The commodity begins to function as a use-value when it leaves the sphere of circulation, whereas the use-value of money as a means of circulation consists in its very circulation. The movement of the commodity in the sphere of circulation is only an insignificant factor, whereas perpetual rotation within this sphere becomes the function of money. The specific function which it fulfils within circulation gives money as the medium of circulation a new and distinctive aspect, which now has to be analysed in more detail. First of all, it is evident that the circulation of money is an infinitely divided movement, for it reflects the infinite fragmentation of the process of circulation into purchases and sales, and the complete separation of the complementary phases of the metamorphosis of commodities. It is true that a recurrent movement, real circular motion, takes place in the small circuits of money in which the point of departure and the point of return are identical; but in the first place, there are as many points of departure as there are commodities, and their indefinite multitude balks any attempt to check, measure and compute these circuits. The time which passes between the departure from and the return to the starting point is equally uncertain. It is, moreover, quite irrelevant whether or not such a circuit is described in a particular case. No economic fact is more widely known than that somebody may spend money without receiving it back. Money starts its circuit from an endless multitude of points and returns to an endless multitude of points, but the coincidence of the point of departure and the point of return is fortuitous, because the movement C M C does not necessarily imply that the buyer becomes a seller again. It would be even less correct to depict the circulation of money as a movement which radiates from one centre to all points of the periphery and returns from all the peripheral points to the same centre. The so-called circuit of money, as people imagine it, simply amounts to the fact that the appearance of money and its disappearance, its perpetual movement from one place to another, is everywhere visible. When considering a more advanced form of money used to mediate circulation, e.g., bank-notes, we shall find that the conditions governing the issue of money determine also its reflux. But as regards simple money circulation it is a matter of chance whether a particular buyer becomes a seller once again. Where actual circular motions are taking place continuously in the sphere of simple money circulation, they merely reflect the more fundamental processes of production, for instance, with the money which the manufacturer receives from his banker on Friday he pays his workers on Saturday, they immediately hand over the larger part of it to retailers, etc., and the latter return it to the banker on Monday. We have seen that money simultaneously realises a given sum of prices comprising the motley purchases and sales which coexist in space, and that it changes places with each commodity only once. But, on the other hand, in so far as the movements of complete metamorphoses of commodities and the concatenation of these metamorphoses are reflected in the movement of money, the same coin realises the prices of various commodities and thus makes a larger or smaller number of circuits. Hence, if we consider the process of circulation in a country during a definite period, for instance a day, then the amount of gold required for the realisation of prices and accordingly for the circulation of commodities is determined by two factors: on the one hand, the sum total of prices and, on the other hand, the average number of circuits which the individual gold coins make. The number of circuits or the velocity of money circulation is in its turn determined by, or simply reflects, the average velocity of the commodities passing through the various phases of their metamorphosis, the speed with which the metamorphoses constituting a chain follow one another, and the speed with which new commodities are thrown into circulation to replace those that have completed their metamorphosis. Whereas during the determination of prices the exchange-value of all commodities is nominally turned into a quantity of gold of the same value and in the two separate transactions, M C and C M, the same value exists twice, on the one hand in the shape of commodities and on the other in the form of gold; yet gold as a medium of circulation is determined not by its isolated relation to individual static commodities, but by its dynamic existence in the fluid world of commodities. The function of gold is to represent the transformation of commodities by its changes of place, in other words to indicate the speed of their transformation by the speed with which it moves from one point to another. Its function in the process as a whole thus determines the actual amount of gold in circulation, or the actual quantity which circulates. Commodity circulation is the prerequisite of money circulation; money, moreover, circulates commodities which have prices, that is commodities which have already been equated nominally with definite quantities of gold. The determination of the prices of commodities presupposes that the value of the quantity of gold which serves as the standard measure, or the value of gold, is given. According to this assumption, the quantity of gold required for circulation is in the first place determined therefore by the sum of the commodity-prices to be realised. This sum, however, is in its turn determined by the following factors: 1. the price level, the relative magnitude of the exchange-values of commodities in terms of gold, and 2. the quantity of commodities circulating at definite prices, that is the number of purchases and sales at given prices. If a quarter of wheat costs 60s., then twice as much gold is required to circulate it or to realise its price as would be required if it cost only 30s. Twice as much gold is needed to circulate 500 quarters at 60s. as is needed to circulate 250 quarters at 60s. Finally only half as much gold is needed to circulate 10 quarters at 100s. as is needed to circulate 40 quarters at 50s. It follows therefore that the quantity of gold required for the circulation of commodities can fall despite rising prices, if the mass of commodities in circulation decreases faster than the total sum of prices increases, and conversely the amount of means of circulation can increase while the mass of commodities in circulation decreases provided their aggregate prices rise to an even greater extent. Thus excellent investigations carried out in great detail by Englishmen have shown that in England, for instance, the amount of money in circulation grows during the early stages of a grain shortage, because the aggregate price of the smaller supply of grain is larger than was the aggregate price of the bigger supply of grain, and for some time the other commodities continue to circulate as before at their old prices. The amount of money in circulation decreases, however, at a later stage of the grain shortage, because along with the grain either fewer commodities are sold at their old prices, or the same amount of commodities is sold at lower prices. But the quantity of money in circulation is, as we have seen, determined not only by the sum of commodity-prices to be realised, but also by the velocity with which money circulates, i.e., the speed with which this realisation of prices is accomplished during a given period. If in one day one and the same sovereign makes ten purchases each consisting of a commodity worth one sovereign, so that it changes hands ten times, it transacts the same amount of business as ten sovereigns each of which makes only one circuit a day. The velocity of circulation of gold can thus make up for its quantity: in other words, the stock of gold in circulation is determined not only by gold functioning as an equivalent alongside commodities, but also by the function it fulfils in the movement of the metamorphoses of commodities. But the velocity of currency can make up for its quantity only to a certain extent, for an endless number of separate purchases and sales take place simultaneously at any given moment. If the aggregate prices of the commodities in circulation rise, but to a smaller extent than the velocity of currency increases, then the volume of money in circulation will decrease. If, on the contrary, the velocity of circulation decreases at a faster rate than the total price of the commodities in circulation, then the volume of money in circulation will grow. A general fall in prices accompanied by an increase in the quantity of the medium of circulation and a general rise in prices accompanied by a decrease in the quantity of the medium of circulation are among the best documented phenomena in the history of prices. But the causes occasioning a rise in the level of prices and at the same time an even larger rise in the velocity of currency, as also the converse development, lie outside the scope of an investigation into simple circulation. We may mention by way of illustration that in periods of expanding credit the velocity of currency increases faster than the prices of commodities, whereas in periods of contracting credit the velocity of currency declines faster than the prices of commodities. It is a sign of the superficial and formal character of simple money circulation that the quantity of means of circulation is determined by factors such as the amount of commodities in circulation, prices, increases or decreases of prices, the number of purchases and sales taking place simultaneously, and the velocity of currency all of which are contingent on the metamorphosis proceeding in the world of commodities, which is in turn contingent on the general nature of the mode of production, the size of the population, the relation of town and countryside, the development of the means of transport, the more or less advanced division of labour, credit, etc., in short on circumstances which lie outside the framework of simple money circulation and are merely mirrored in it. If the velocity of circulation is given, then the quantity of the means of circulation is simply determined by the prices of commodities. Prices are thus high or low not because more or less money is in circulation, but there is more or less money in circulation because prices are high or low. This is one of the principal economic laws, and the detailed substantiation of it based on the history of prices is perhaps the only achievement of the post-Ricardian English economists. Empirical data show that, despite temporary fluctuations, and sometimes very intense fluctuations, over longer periods the level of metallic currency or the volume of gold and silver in circulation in a particular country may remain on the whole stable, deviations from the average level amounting merely to small oscillations. This phenomenon is simply due to the contradictory nature of the factors determining the volume of money in circulation. Changes occurring simultaneously in these factors neutralise their effects and everything remains as it was. The law that, if the speed of circulation of money and the sum total of the commodity-prices are given, the amount of the medium of circulation is determined, can also be expressed in the following way: if the exchange-values of commodities and the average speed of their metamorphoses are given, then the quantity of gold in circulation depends on its own value. Thus, if the value of gold, i.e. the labour-time required for its production, were to increase or to decrease, then the prices of commodities would rise or fall in inverse proportion and, provided the velocity remained unchanged, this general rise or fall in prices would necessitate a larger or smaller amount of gold for the circulation of the same amount of commodities. The result would be similar if the previous standard of value were to be replaced by a more valuable or a less valuable metal. For instance, when, in deference to its creditors and impelled by fear of the effect the discovery of gold in California and Australia might have, Holland replaced gold currency by silver currency, 14 to 15 times more silver was required than formerly was required of gold to circulate the same volume of commodities. Since the quantity of gold in circulation depends upon two variable factors, the total amount of commodity-prices and the velocity of circulation, it follows that it must be possible to reduce and expand the quantity of metallic currency; in short, in accordance with the requirements of the process of circulation, gold must sometimes be put into circulation and sometimes withdrawn from it. We shall see later how these conditions are realized in the process of circulation.

Economic Manuscripts: The Circulation of Money

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_2b.htm

Gold functioning as a medium of circulation assumes a specific shape, it becomes a coin. In order to prevent its circulation from being hampered by technical difficulties, gold is minted according to the standard of the money of account. Coins are pieces of gold whose shape and imprint signify that they contain weights of gold as indicated by the names of the money of account, such as pound sterling, shilling, etc. Both the establishing of the mint-price and the technical work of minting devolve upon the State. Coined money assumes a local and political character, it uses different national languages and wears different national uniforms, just as does money of account. Coined money circulates therefore in the internal sphere of circulation of commodities, which is circumscribed by the boundaries of a given community and separated from the universal circulation of the world of commodities. But the only difference between gold in the form of bullion and gold in the form of coin is that between the denomination of the coin and denomination of its metal weight. What appears as a difference of denomination in the latter case, appears as a difference of shape in the former. Gold coins can be thrown into the crucible and thus turned again into gold sans phrase, just as conversely gold bars have only to be sent to the mint to be transformed into coin. The conversion and reconversion of one form into the other appears as a purely technical operation. In exchange for 100 pounds or 1,200 ounces troy of 22-carat gold one receives 4,672 or 4,672 gold sovereigns from the English mint, and if one puts these sovereigns on one side of a pair of scales and 100 pounds of gold bars on the other, the two will balance. This proves that the sovereign is simply a quantity of gold with a specific shape and a specific imprint the weight of which is denoted by this name in the English monetary scale. The 4,672 gold sovereigns are thrown into circulation at different points and, once in the current, they make a certain number of moves each day, some sovereigns more and others less. If the average number of moves made by one ounce of gold during a day were ten, then the 1,200 ounces of gold would realise a total of commodity-prices amounting to 12,000 ounces or 46,725 sovereigns. An ounce of gold, no matter how one may twist and turn it, will never weigh ten ounces. But here in the process of circulation, one ounce does indeed amount to ten ounces. In the process of circulation a coin is equal to the quantity of gold contained in it multiplied by the number of moves it makes. In addition to its actual existence as an individual piece of gold of a certain weight, the coin thus acquires a nominal existence which arises from the function it performs. But whether the sovereign makes one or ten moves, in each particular purchase or sale it nevertheless acts merely as a single sovereign. The effect is the same as in the case of a general who on the day of battle replaces ten generals by appearing at ten different places at the crucial time, but remains the same general at each point. The nominalisation of the medium of circulation, which arises as a result of the replacement of quantity by velocity, concerns only the functioning of coins within the process of circulation but does not affect the status of the individual coins. But the circulation of money is an external movement and the sovereign, although non olet, [It does not smell. Ed.] keeps mixed company. The coin, which comes into contact with all sorts of hands, bags, purses, pouches, tills, chests and boxes, wears away, leaves a particle of gold here and another there, thus losing increasingly more of its intrinsic content as a result of abrasion sustained in the course of its worldly career. While in use it is getting used up. Let us consider a sovereign at a moment when its original solid features are as yet hardly impaired. Jacob estimates that of the 380 million which existed in Europe in 1809, 19 million had completely disappeared as a result of abrasion by 1829, that is in the course of 20 years. Whereas the commodity having taken its first step, bringing it into the sphere of circulation, drops out of it again, the coin, after making a few steps in the sphere of circulation, represents a greater metal content than it actually possesses. The longer a coin circulates at a given velocity, or the more rapidly it circulates in a given period of time, the greater becomes the divergence between its existence as a coin and its existence as a piece of gold or silver. What remains is magni nominis umbra, the body of the coin is now merely a shadow. Whereas originally circulation made the coin heavier, it now makes it lighter, but in each individual purchase or sale it still passes for the original quantity of gold. As a pseudo-sovereign, or pseudo-gold, the sovereign continues to perform the function of a legal gold coin. Although friction with the external world causes other entities to lose their idealism, the coin becomes increasingly ideal as a result of practice, its golden or silver substance being reduced to a mere pseudo-existence. This second idealisation of metal currency, that is, the disparity between its nominal content and its real content, brought about by the process of circulation itself, has been taken advantage of both by governments and individual adventurers who debased the coinage in a variety of ways. The entire history of the Monetary System from the early Middle Ages until well into the eighteenth century-is a history of such bilateral and antagonistic counterfeiting, and Custodi s voluminous collection of works of Italian economists is largely concerned with this subject. But the ideal existence of gold within the confines of its function comes into conflict with its real existence. In the course of circulation some gold coins have lost more of their metal content, others less, and one sovereign is now indeed worth more than another. Since they are however equally valid while they function as coin the sovereign that weighs a quarter of an ounce is valued no more highly than the sovereign which only represents a quarter of an ounce some unscrupulous owners perform surgical operations on sovereigns of standard weight to achieve the same result artificially which circulation has brought about spontaneously in the case of lighter coins. Sovereigns are clipped and debased and the surplus gold goes into the melting pot. When 4,672 gold sovereigns placed on the scales weigh on the average only 800 ounces instead of 1,200, they will buy only 800 ounces of gold on the gold market: in other words, the market-price of gold has risen above the mint-price. All sovereigns, even those retaining the standard weight, would be worth less as coin than in the shape of bars. Sovereigns of standard weight would be reconverted into bars, a form in which a greater quantity of gold has a greater value than a smaller quantity of gold. When the decline of the metal content has affected a sufficient number of sovereigns to cause a permanent rise of the market-price of gold over its mint-price, the coins will retain the same names of account but these will henceforth stand for a smaller quantity of gold. In other words, the standard of money will be changed, and henceforth gold will be minted in accordance with this new standard. Thus, in consequence of its idealisation as a medium of circulation, gold in its turn will have changed the legally established relation in which it functioned as the standard of price. A similar revolution would be repeated after a certain period of time; gold both as the standard of price and the medium of circulation in this way being subject to continuous changes, so that a change in the one aspect would cause a change in the other and vice versa. This accounts for the phenomenon mentioned earlier, namely that, as the history of all modern nations shows, the same monetary titles continued to stand for a steadily diminishing metal content. The contradiction between gold as coin and gold as the standard of price becomes also the contradiction between gold as coin and gold as the universal equivalent, which circulates not only within the boundaries of a given territory but also on the world market. As a measure of value gold has always retained its full weight, because it has served only nominally as gold. When serving as an equivalent in the separate transaction C M, gold reverts from movement immediately to a state of rest; but when it serves as a coin its natural substance comes into constant conflict with its function. The transformation of gold sovereigns into nominal gold cannot be entirely prevented, but legislation attempts to preclude the establishment of nominal gold as coin by withdrawing it from circulation when the coins in question have lost a certain percentage of their substance. According to English law, for instance, a sovereign which has lost more than 0.747 grain of weight is no longer legal tender. Between 1844 and 1848, 48 million gold sovereigns were weighed by the Bank of England, which possesses scales for weighing gold invented by Mr. Cotton. This machine is not only able to detect a difference between the weights of two sovereigns amounting to one-hundredth of a grain, but like a rational being it flings the light-weight coin onto a board from which it drops into another machine that cuts it into pieces with oriental cruelty. Under these conditions, however, gold coins would not be able to circulate at all unless they were confined to a definite sphere of circulation where they wear out less quickly. In so far as a gold coin in circulation is worth a quarter of an ounce, whereas it weighs only a fifth of an ounce, it has indeed become a mere token or symbol for one-twentieth of an ounce of gold, and in this way the process of circulation converts all gold coins to some extent into mere tokens or symbols representing their substance. But a thing cannot be its own symbol. Painted grapes are no symbol of real grapes, but are imaginary grapes. Even less is it possible for a light-weight sovereign to be the symbol of a standard-weight sovereign, just as an emaciated horse cannot be the symbol of a fat horse. Since gold thus becomes a symbol of itself but cannot serve as such a symbol it assumes a symbolic existence quite separate from its own existence in the shape of silver or copper counters in those spheres of circulation where it wears out most rapidly, namely where purchases and sales of minute amounts go on continuously. A certain proportion of the total number of gold coins, although not always the same coins, perpetually circulate in these spheres. This proportion of gold coins is replaced by silver or copper tokens. Various commodities can thus serve as coin alongside gold, although only one specific commodity can function as the measure of value and therefore also as money within a particular country. These subsidiary means of circulation, for instance silver or copper tokens, represent definite fractions of gold coins within the circulation. The amount of silver or copper these tokens themselves contain is, therefore, not determined by the value of silver or copper in relation to that of gold, but is arbitrarily established by law. They may be issued only in amounts not exceeding those in which the small fractions of gold coin they represent would constantly circulate, either as small change for gold coin of higher denominations or to realise correspondingly low prices of commodities. The silver tokens and copper tokens will belong to distinct spheres of retail trade. It is self-evident that their velocity of circulation stands in inverse ratio to the price they realise in each individual purchase and sale, or to the value of the fraction of the gold coin they represent. The relatively insignificant total amount of subsidiary coins in circulation indicates the velocity with which they perpetually circulate, if one bears in mind the huge volume of retail trade daily transacted in a country like England. A recently published parliamentary report shows, for instance, that in 1857 the English Mint coined gold to the amount of 4,859,000 and silver having a nominal value of 733,000 and a metal value of 363,000. In the ten-year period ending December 31, 1867, the total amount of gold coined came to 5S,239,000 and that of silver to only 2,434,000. The nominal value of copper coins issued in 1857 was only 6,720, while the value of the copper contained in them was 3,492; of this total 3,136 was issued as pennies, 2,464 as halfpennies and 1,120 as farthings. The total nominal value of the copper coin struck during the last ten years came to 141,477, and their metal value to 73,503. Just as gold coin is prevented from perpetually functioning as coin by the statutory provision that on losing a certain quantity of metal it is demonetised, so conversely by laying down the price level which they can legally realize silver and copper counters are prevented from moving into the sphere of gold coin and from establishing themselves as money. Thus for example in England, copper is legal tender for sums up to 6d. and silver for sums up to 40s. The issue of silver and copper tokens in quantities exceeding the requirements of their spheres of circulation would not lead to a rise in commodity-prices but to the accumulation of these tokens in the hands of retail traders, who would in the end be forced to sell them as metal. In 1798, for instance, English copper coins to the amounts of 20, 30 and 50, spent by private people, had accumulated in the tills of shopkeepers and, since their attempts to put the coins again into circulation failed, they finally had to sell them as metal on the copper market. The metal content of the silver and copper tokens, which represent gold coin in distinct spheres of home circulation, is determined by law; but when in circulation they wear away, just as gold coins do, and, because of the velocity and constancy of their circulation, they are reduced even faster to a merely imaginary, or shadow existence. If one were to establish that silver and copper tokens also, on losing a certain amount of metal, should cease to function as coin, it would be necessary to replace them in turn in certain sections of their own sphere of circulation by some other symbolic money, such as iron or lead; and in this way the representation of one type of symbolic money by other types of symbolic money would go on for ever. The needs of currency circulation itself accordingly compel all countries with a developed circulation to ensure that silver and copper tokens function as coin independently of the percentage of metal they lose. It thus becomes evident that they are, by their very nature, symbols of gold coin not because they are made of silver or copper, not because they have value, but they are symbols in so far as they have no value. Relatively worthless things, such as paper, can function as symbols of gold coins. Subsidiary coins consist of metal, silver, copper, etc., tokens principally because in most countries the less valuable metals circulated as money e.g., silver in England, copper in the ancient Roman Republic, Sweden, Scotland, etc. before the process of circulation reduced them to the status of small coin and put a more valuable metal in their place. It is in the nature of things moreover that the monetary symbol which directly arises from metallic currency should be, in the first place, once again a metal. Just as the portion of gold which would constantly have to circulate as small change is replaced by metal tokens, so the portion of gold which as coin remains always in the sphere of home circulation, and must therefore circulate perpetually, can be replaced by tokens without intrinsic value. The level below which the volume of currency never falls is established in each country by experience. What was originally an insignificant divergence of the nominal content from the actual metal content of metallic currency can therefore reach a stage where the two things are completely divorced. The names of coins become thus detached from the substance of money and exist apart from it in the shape of worthless scraps of paper. In the same way as the exchange-value of commodities is crystallised into gold money as a result of exchange, so gold money in circulation is sublimated into its own symbol, first in the shape of worn gold coin, then in the shape of subsidiary metal coin, and finally in the shape of worthless counters, scraps of paper, mere tokens of value. But the gold coin gave rise first to metallic and then to paper substitutes only because it continued to function as a coin despite the loss of metal it incurred. It circulated not because it was worn, but it was worn to a symbol because it continued to circulate. Only in so far as in the process of circulation gold currency becomes a mere token of its own value can mere tokens of value be substituted for it. In so far as the circuit C M C is the dynamic unity of the two aspects C M and M C, which directly change into each other, or in so far as the commodity undergoes the entire metamorphosis, it evolves its exchange-value into price and into money, but immediately abandons these forms again to become once more a commodity, or rather a use-value. The exchange-value of the commodity thus acquires only a seemingly independent existence. We have seen, on the other hand, that gold, when it functions only as specie, that is when it is perpetually in circulation, does indeed represent merely the interlinking of the metamorphoses of commodities and their ephemeral existence as money. Gold realises the price of one commodity only in order to realise that of another, but it never appears as exchange-value in a state of rest or even a commodity in a state of rest. The reality which in this process the exchange-value of commodities assumes, and which is expressed by gold in circulation, is merely the reality of an electric spark. Although it is real gold, it functions merely as apparent gold, and in this function therefore a token of itself can be substituted for it. The token of value, say a piece of paper, which functions as a coin, represents the quantity of gold indicated by the name of the coin, and is thus a token of gold. A definite quantity of gold as such does not express a value relation, nor does the token which takes its place. The gold token represents value in so far as a definite quantity of gold, because it is materialised labour-time, possesses a definite value. But the amount of value which the token represents depends in each case upon the value of the quantity of gold represented by it. As far as commodities are concerned, the token of value represents the reality of their price and constitutes a token of their price and a token of their value only because their value is expressed in their price. In the circuit C M C, in so far as it expresses merely the dynamic unity of the two metamorphoses or the direct transformation of one metamorphosis into the other and this is how it appears in the sphere of circulation, within which the token of value operates the exchange-value of commodities assumes in the price merely a nominal existence and in money merely an imaginary or symbolic existence. Exchange-value thus appears to be something purely conceptual or an imagined entity but possessing no reality except in the commodities, in so far as a definite amount of labour-time is materialised in them. The token of value therefore seems to represent the value of commodities directly, since it appears to be not a token of gold but a token of the exchange-value which exists solely in the commodity and is merely expressed in the price. But the appearance is deceptive. The token of value is directly only a token of price, that is a token of gold, and only indirectly a token of the value of the commodity. Gold, unlike Peter Schlemihl, has not sold its shadow, but uses its shadow as a means of purchase. Thus the token of value is effective only when in the process of exchange it signifies the price of one commodity compared with that of another or when it represents gold with regard to every commodity-owner. First of all custom turns a certain, relatively worthless object, a piece of leather, a scrap of paper, etc., into a token of the material of which money consists, but it can maintain this position only if its function as a symbol is guaranteed by the general intention of commodity-owners, in other words if it acquires a legal conventional existence and hence a legal rate of exchange. Paper money issued by the state and given a legal rate is an advanced form of the token of value, and the only kind of paper money which directly arises from metallic currency or from simple commodity circulation itself. Credit money belongs to a more advanced stage of the social process of production and conforms to very different laws. Symbolic paper money indeed does not differ at all from subsidiary metal coin except in having a wider sphere of circulation. Even the merely technical development of the standard of price, or of the mint-price, and later the external transformation of gold bars into gold coin led to state intervention and consequently to a visible separation of internal circulation from the general circulation of commodities, this division being completed by the transformation of coin into a token of value. Money as a simple medium of circulation can after all acquire an independent existence only within the sphere of internal circulation. Our exposition has shown that gold in the shape of coin, that is tokens of value divorced from gold substance itself, originates in the process of circulation itself and does not come about by arrangement or state intervention. Russia affords a striking example of a spontaneously evolved token of value. At a time when hides and furs served as money in that country, the contradiction between the perishable and unwieldy material and its function as a medium of circulation led to the custom of substituting small pieces of stamped leather for it; these pieces thus became money orders payable in hides and furs. Later they were called kopeks and became mere tokens representing fractions of the silver ruble and as such were used here and there until 1700, when Peter the Great ordered their replacement by small copper coins issued by the State. In antiquity writers, who were able to observe only the phenomena of metallic currency, among them Plato and Aristotle already understood that gold coin is a symbol or token of value. Paper money with a legal rate of exchange arises early in countries such as China, which have not evolved a credit system. Later advocates of paper money also refer expressly to the transformation of the metal coin into a token of value which is brought about by the circulation process itself. Such references occur in the works of Benjamin Franklin and Bishop Berkeley. How many reams of paper cut into fragments can circulate as money? In this form the question is absurd. Worthless tokens become tokens of value only when they represent gold within the process of circulation, and they can represent it only to the amount of gold which would circulate as coin, an amount which depends on the value of gold if the exchange-value of the commodities and the velocity of their metamorphoses are given. The number of pieces of paper with a denomination of 5 which could be used in circulation would be one-fifth of the number of pieces of paper with a denomination of 1, and if all payments were to be transacted in shilling notes, then twenty times more shilling notes than pound notes would have to circulate. If gold coin were represented by notes of different denomination, e.g., 5 notes, 1 notes and 10s. notes, the number of the different types of tokens of value needed would not just be determined by the quantity of gold required in the sphere of circulation as a whole, but by the quantity needed in the sphere of circulation of each particular type of note. If 14 million were the level below which the circulation of a country never fell (this is the presupposition of English Banking legislation, not however with regard to coin but to credit money), then 14 million pieces of paper, each a token of value representing 1, could circulate. If the value of gold decreased or increased because the labour-time required for its production had fallen or risen then the number of pound notes in circulation would increase or decrease in inverse ratio to the change in the value of gold, provided the exchange-value of the same mass of commodities remained unchanged. Supposing gold were superseded by silver as the standard of value and the relative value of silver to gold were 1:15, then 210 million pound notes would have to circulate henceforth instead of 14 million, if from now on each piece of paper was to represent the same amount of silver as it had previously represented of gold. The number of pieces of paper is thus determined by the quantity of gold currency which they represent in circulation, and as they are tokens of value only in so far as they take the place of gold currency, their value is simply determined by their quantity. Whereas, therefore, the quantity of gold in circulation depends on the prices of commodities, the value of the paper in circulation, on the other hand, depends solely on its own quantity. The intervention of the State which issues paper money with a legal rate of exchange and we speak only of this type of paper money seems to invalidate the economic law. The State, whose mint price merely provided a definite weight of gold with a name and whose mint merely imprinted its stamp on gold, seems now to transform paper into gold by the magic of its imprint. Because the pieces of paper have a legal rate of exchange, it is impossible to prevent the State from thrusting any arbitrarily chosen number of them into circulation and to imprint them at will with any monetary denomination such as 1, 5, or 20. Once the notes are in circulation it is impossible to drive them out, for the frontiers of the country limit their movement, on the one hand, and on the other hand they lose all value, both use-value and exchange-value, outside the sphere of circulation. Apart from their function they are useless scraps of paper. But this power of the State is mere illusion. It may throw any number of paper notes of any denomination into circulation but its control ceases with this mechanical act. As soon as the token of value or paper money enters the sphere of circulation it is subject to the inherent laws of this sphere. Let us assume that 14 million is the amount of gold required for the circulation of commodities and that the State throws 210 million notes each called 1 into circulation: these 210 million would then stand for a total of gold worth 14 million. The effect would be the same as if the notes issued by the State were to represent a metal whose value was one-fifteenth that of gold or that each note was intended to represent one-fifteenth of the previous weight of gold. This would have changed nothing but the nomenclature of the standard of prices, which is of course purely conventional, quite irrespective of whether it was brought about directly by a change in the monetary standard or indirectly by an increase in the number of paper notes issued in accordance with a new lower standard. As the name pound sterling would now indicate one-fifteenth of the previous quantity of gold, all commodity-prices would be fifteen times higher and 210 million pound notes would now be indeed just as necessary as 14 million had previously been. The decrease in the quantity of gold which each individual token of value represented would be proportional to the increased aggregate value of these tokens. The rise of prices would be merely a reaction of the process of circulation, which forcibly placed the tokens of value on a par with the quantity of gold which they are supposed to replace in the sphere of circulation. One finds a number of occasions in the history of the debasement of currency by English and French governments when the rise in prices was not proportionate to the debasement of the silver coins. The reason was simply that the increase in the volume of currency was not proportional to its debasement; in other words, if the exchange-value of commodities was in future to be evaluated in terms of the lower standard of value and to be realised in coins corresponding to this lower standard, then an inadequate number of coins with lower metal content had been issued. This is the solution of the difficulty which was not resolved by the controversy between Locke and Lowndes. The rate at which a token of value whether it consists of paper or bogus gold and silver is quite irrelevant can take the place of definite quantities of gold and silver calculated according to the mint-price depends on the number of tokens in circulation and by no means on the material of which they are made. The difficulty in grasping this relation is due to the fact that the two functions of money as a standard of value and a medium of circulation are governed not only by conflicting laws, but by laws which appear to be at variance with the antithetical features of the two functions. As regards its function as a standard of value, when money serves solely as money of account and gold merely as nominal gold, it is the physical material used which is the crucial factor. Exchange-values expressed in terms of silver, or as silver prices, look of course quite different from exchange-values expressed in terms of gold, or as gold prices. On the other hand, when it functions as a medium of circulation, when money is not just imaginary but must be present as a real thing side by side with other commodities, its material is irrelevant and its quantity becomes the crucial factor. Although whether it is a pound of gold, of silver or of copper is decisive for the standard measure, mere number makes the coin an adequate embodiment of any of these standard measures, quite irrespective of its own material. But it is at variance with common sense that in the case of purely imaginary money everything should depend on the physical substance, whereas in the case of the corporeal coin everything should depend on a numerical relation that is nominal. The rise or fall of commodity-prices corresponding to an increase or decrease in the volume of paper notes the latter where paper notes are the sole medium of circulation is accordingly merely a forcible assertion by the process of circulation of a law which was mechanically infringed by extraneous action; i.e., the law that the quantity of gold in circulation is determined by the prices of commodities and the volume of tokens of value in circulation is determined by the amount of gold currency which they replace in circulation. The circulation process will, on the other hand, absorb or as it were digest any number of paper notes, since, irrespective of the gold title borne by the token of value when entering circulation, it is compressed to a token of the quantity of gold which could circulate instead. In the circulation of tokens of value all the laws governing the circulation of real money seem to be reversed and turned upside down. Gold circulates because it has value, whereas paper has value because it circulates. If the exchange-value of commodities is given, the quantity of gold in circulation depends on its value, whereas the value of paper tokens depends on the number of tokens in circulation. The amount of gold in circulation increases or decreases with the rise or fall of commodity-prices, whereas commodity-prices seem to rise or fall with the changing amount of paper in circulation. The circulation of commodities can absorb only a certain quantity of gold currency, the alternating contraction and expansion of the volume of money in circulation manifesting itself accordingly as an inevitable law, whereas any amount of paper money seems to be absorbed by circulation. The State which issues coins even 1/100 of a grain below standard weight debases gold and silver currency and therefore upsets its function as a medium of circulation, whereas the issue of worthless pieces of paper which have nothing in common with metal except the denomination of the coinage is a perfectly correct operation. The gold coin obviously represents the value of commodities only after the value has been assessed in terms of gold or expressed as a price, whereas the token of value seems to represent the value of commodities directly. It is thus evident that a person who restricts his studies of monetary circulation to an analysis of the circulation of paper money with a legal rate of exchange must misunderstand the inherent laws of monetary circulation. These laws indeed appear not only to be turned upside down in the circulation of tokens of value but even annulled; for the movements of paper money, when it is issued in the appropriate amount, are not characteristic of it as token of value, whereas its specific movements are due to infringements of its correct proportion to gold, and do not directly arise from the metamorphosis of commodities.

Economic Manuscripts: Coins and Tokens of Value

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_2c.htm

Money as distinguished from coin is the result of the circuit C M C and constitutes the starting point of the circuit M C M, that is the exchange of money for commodities so as to exchange commodities for money. In the form C M C it is the commodity that is the beginning and the end of the transaction; in the form M C M it is money. Money mediates the exchange of commodities in the first circuit, the commodities mediates the evolution of money into money in the second circuit. Money, which serves solely as a medium in the first circuit, appears as the goal of circulation in the second, whereas the commodity, which was the goal in the first circuit, appears simply as a means in the second. Because money itself is already the result of the circuit C M C, the result of circulation appears to be also its point of departure in the form M C M. The exchange of material is the content of C M C, whereas the real content of the second circuit, M C M, is the commodity in the form in which it emerged from the first circuit. In the formula C M C the two extremes are commodities of the same value, which are at the same time however qualitatively different use-values. Their exchange, C C, is real exchange of material. On the other hand, in the formula M C M both extremes are gold and moreover gold of the same value. But it seems absurd to exchange gold for commodities in order to exchange commodities for gold, or if one considers the final result M M, to exchange gold for gold. But if one translates M C M into the formula to buy in order to sell, which means simply to exchange gold for gold with the aid of an intermediate movement, one will immediately recognise the predominant form of bourgeois production. Nevertheless, in real life people do not buy in order to sell, but they buy at a low price in order to sell at a high price. They exchange money for commodities in order then to exchange these for a larger amount of money, so that the extremes M, M are quantitatively different, even if not qualitatively. This quantitative difference presupposes the exchange of non-equivalents, whereas commodities and money as such are merely antithetical forms of the commodity, in other words, different forms of existence of the same value. Money and commodity in the circuit M C M therefore imply more advanced relations of production, and within simple circulation the circuit is merely a reflection of movement of a more complex character. Hence money as distinct from the medium of circulation must be derived from C M C, the immediate form of commodity circulation. Gold, i.e., the specific commodity which serves as standard of value and medium of circulation, becomes money without any special effort on the part of society. Silver has not become money in England, where it is neither the standard of value nor the predominant medium of circulation, similarly gold ceased to be money in Holland as soon as it was deposed from its position of standard of value. In the first place, a commodity in which the functions of standard of value and medium of circulation are united accordingly becomes money, or the unity of standard of value and medium of circulation is money. But as such a unity gold in its turn possesses an independent existence which is distinct from these two functions. As the standard of value gold is merely nominal money and nominal gold; purely as a medium of circulation it is symbolic money and symbolic gold, but in its simple metallic corporeality gold is money or money is real gold. Let us for a moment consider the commodity gold, that is money, in a state of rest and its relations with other commodities. All prices of commodities signify definite amounts of gold; they are thus merely notional gold or notional money, i.e., symbols of gold, just as, on the other hand, money considered as a token of value appeared to be merely a symbol of the prices of commodities. Since all commodities are therefore merely notional money, money is the only real commodity. Gold is the material aspect of abstract wealth in contradistinction to commodities which only represent the independent form of exchange-value, of universal social labour and of abstract wealth. So far as use-value is concerned, each commodity represents only one element of physical wealth, only one separate facet of wealth, through its relation to a particular need. But money satisfies any need since it can be immediately turned into the object of any need. Its own use-value is realised in the endless series of use-values which constitute its equivalents. All the physical wealth evolved in the world of commodities is contained in a latent state in this solid piece of metal. Thus whereas the prices of commodities represent gold, the universal equivalent or abstract wealth, the use-value of gold represents the use-values of all commodities. Gold is, therefore, the material symbol of physical wealth. It is the "epitome of all things" (Boisguillebert), the compendium of social wealth. As regards its form, it is the direct incarnation of universal labour, and as regards its content the quintessence of all concrete labour. It is universal wealth in an individual form. Functioning as a medium of circulation, gold suffered all manner of injuries, it was clipped and even reduced to a purely symbolical scrap of paper. Its golden splendour is restored when it serves as money The servant becomes the master. The mere underling becomes the god of commodities. Gold as money was in the first place divorced from the medium of circulation because the metamorphosis of the commodity was interrupted and the commodity remained in the form of gold. This happens whenever a sale is not immediately turned into a purchase. The fact that gold as money assumes an independent existence is thus above all a tangible expression of the separation of the process of circulation or of the metamorphosis of commodities into two discrete and separate transactions which exist side by side. The coin itself becomes money as soon as its movement is interrupted. In the hands of the seller who receives it in return for a commodity it is money, and not coin; but when it leaves his hands it becomes a coin once more. Everybody sells the particular commodity which he produces, but he buys all other commodities that he needs as a social being. How often he appears on the market as a seller depends on the labour-time required to produce his commodity, whereas his appearance as a buyer is determined by the constant renewal of his vital requirements. In order to be able to buy without selling, he must have sold something without buying. The circuit C M C is indeed the dynamic unity of sale and purchase only in so far as it is simultaneously the continuous process of their separation. So that money as coin may flow continuously, coin must continuously congeal into money. The continual movement of coin implies its perpetual stagnation in larger or smaller amounts in reserve funds of coin which arise everywhere within the framework of circulation and which are at the same time a condition of circulation. The formation, distribution, dissolution and re-formation of these funds constantly changes; existing funds disappear continuously and their disappearance is a continuous fact. This unceasing transformation of coin into money and of money into coin was expressed by Adam Smith when he said that, in addition to the particular commodity he sells, every commodity-owner must always keep in stock a certain amount of the general commodity with which he buys. We have seen that M C, the second member of the circuit C M C, splits up into a series of purchases, which are not effected all at once but successively over a period of time, so that one part of M circulates as coin, while the other part remains at rest as money. In this case, money is in fact only suspended coin and the various component parts of the coinage in circulation appear, constantly changing, now in one form, now in another. The first transformation of the medium of circulation into money constitutes therefore merely a technical aspect of the circulation of money. The first spontaneously evolved form of wealth consists of an overplus or excess of products, i.e. of the portion of products which are not directly required as use-values, or else of the possession of products whose use-value lies outside the range of mere necessity. When considering the transition from commodity to money, we saw that at a primitive stage of production it is this overplus or excess of products which really forms the sphere of commodity exchange. Superfluous products become exchangeable products or commodities. The adequate form of this surplus is gold and silver, the first form in which wealth as abstract social wealth is kept. It is not only possible to store commodities in the form of gold and silver, i.e., in the material shape of money, but gold and silver constitute wealth in preserved form. Every use-value fulfils its function while it is being consumed, that is destroyed, but the use-value of gold as money is to represent exchange-value, to be the embodiment of universal labour-time as an amorphous raw material. As amorphous metal exchange-value possesses an imperishable form. Gold or silver as money thus immobilised constitutes a hoard. In the case of nations with purely metallic currency, such as the ancients, hoarding becomes a universal practice extending from the individual to the State, which guards its State hoard. In Asia and Egypt, during their early period, these hoards were in the custody of kings and priests and served mainly as evidence of their power. In Greece and Rome the creation of State hoards became a principle of public policy, for excess wealth in this form is always safe and can be used at any moment. The rapid transfer of such hoards by conquerors from one country to another and their sudden effusion in part into the sphere of circulation are characteristics of the economy of antiquity. As materialised labour-time gold is a pledge for its own magnitude of value, and, since it is the embodiment of universal labour-time, its continuous function as exchange-value is vouched for by the process of circulation. The simple fact that the commodity-owner is able to retain his commodities in the form of exchange-value, or to retain the exchange-value as commodities, makes the exchange of commodities, in order to recover them transformed into gold, the specific motive of circulation. The metamorphosis of commodities C M takes place for the sake of their metamorphosis, for the purpose of transforming particular physical wealth into general social wealth. Change of form instead of exchange of matter becomes an end in itself. Exchange-value, which was merely a form, is turned into the content of the movement. Commodities remain wealth, that is commodities, only while they keep within the sphere of circulation, and they remain in this liquid state only in so far as they ossify into silver and gold. They remain liquid as the crystallisation of the process of circulation. But gold and silver establish themselves as money only in so far as they do not function as means of circulation. They become money as non-means of circulation. The withdrawal of commodities from circulation in the form of gold is thus the only means of keeping them continuously in circulation. The owner of commodities can recover as money from circulation only as much as he put into it in the form of commodities. Looked at from the standpoint of the circulation of commodities, the first condition of hoarding is constant selling, the incessant throwing of commodities into circulation. On the other hand, money as a medium of circulation constantly disappears in the process of circulation itself, since it is all the time being realised in use-values and dissolved in ephemeral enjoyments. It must, therefore, be withdrawn from the stream of circulation; in other words commodities must be retained in the first stage of their metamorphosis in order to prevent money from functioning as means of purchase. The owner of commodities who has now become a hoarder of money must sell as much as possible and buy as little as possible, as even old Cato preached patrem familias vendacem, non emacem esse. [The head of the family should be eager to sell, not eager to buy. Cato the Elder, De re rustica. Ed.] Parsimony is the negative pre-condition of hoarding, just as industry is its positive pre-condition. The smaller the proportion that is withdrawn from circulation as an equivalent for the commodities [thrown into it] consisting of particular commodities or use-values, the larger the proportion that consists of money or exchange-value. The appropriation of wealth in its general form therefore implies renunciation of the material reality of wealth. Hence the motive power of hoarding is avarice, which desires not commodities as use-values, but exchange-value as a commodity. So as to take possession of superfluous wealth in its general form, particular needs must be treated as luxuries and superfluities. For instance, in 1593 the Cortes sent a petition to Philip II, which among other matters contains the following passage: The hoarder of money scorns the worldly, temporal and ephemeral enjoyments in order to chase after the eternal treasure which can be touched neither by moths nor by rust, and which is wholly celestial and wholly mundane. Wealth in the shape of gold and silver is imperishable because exchange-value is represented by an indestructible metal and especially because gold and silver are prevented from functioning as means of circulation and thus from becoming a merely transient monetary aspect of commodities. The perishable content is thus sacrificed to the nonperishable form. An outward expression of the desire to withdraw money from the stream of circulation and to save it from the social metabolism is the burying of it, so that social wealth is turned into an imperishable subterranean hoard with an entirely furtive private relationship to the commodity-owner. Doctor Bernier, who spent some time at Aurangzeb's court at Delhi, relates that merchants, especially non-Moslem heathens, in whose hands nearly the entire commerce and all money are concentrated secretly bury their money deep in the ground, Incidentally, in so far as the hoarder of money combines asceticism with assiduous diligence he is intrinsically a Protestant by religion and still more a Puritan. Even in advanced bourgeois societies hoards of money are buried at times of upheaval in the social metabolic process. This is an attempt to save social cohesion for the commodity-owner this cohesion is represented by the commodity and the adequate embodiment of the commodity is money in its compact form from the social movement. The social sinews of things are buried alongside the body whose sinews they are. If the hoard were not constantly in tension with circulation, it would now simply be a heap of useless metal, its monetary soul would have disappeared and nothing but burnt-out ashes of circulation, its caput mortuum, would remain. Money, i.e., exchange-value which has assumed an independent existence, is by nature the embodiment of abstract wealth; but, on the other hand, any given sum of money is a quantitatively finite magnitude of value. The quantitative delimitation of exchange-value conflicts with its qualitative universality, and the hoarder regards the limitation as a restriction, which in fact becomes also a qualitative restriction, i.e., the hoard is turned into a merely limited representation of material wealth. Money as the universal equivalent may be directly expressed, as we have seen, in terms of an equation, in which it forms one side while the other side consists of an endless series of commodities. The degree in which the realisation of exchange-value approaches such an infinite series, in other words how far it corresponds to the concept of exchange-value, depends on its magnitude. After all, movement of exchange-value as such, as an automaton, can only be expansion of its quantitative limits. But in passing one set of quantitative limits of the hoard new restrictions are set up, which in turn must be abolished. What appears as a restriction is not a particular limit of the hoard, but any limitation of it. The formation of hoards therefore has no intrinsic limits, no bounds in itself, but is an unending process, each particular result of which provides an impulse for a new beginning. Although the hoard can only be increased by being preserved, on the other hand it can only be preserved by being increased. Money is not just an object of the passion for enrichment, it is the object of it. This urge is essentially auri sacra fames. [The accursed greed for gold. Ed.] The passion for enrichment by contrast with the urge to acquire particular material wealth, i.e., use-values, such as clothes, jewellery, herds of cattle, etc., becomes possible only when general wealth as such is represented by a specific thing and can thus be retained as a particular commodity. Money therefore appears both as the object and the source of the desire for riches. The underlying reason is in fact that exchange-value as such becomes the goal, and consequently also an expansion of exchange-value. Avarice clings to the hoard and does not allow money to become a medium of circulation, but greed for gold preserves the monetary soul of the hoard and maintains it in constant tension with circulation. The activity which amasses hoards is, on the one hand, the withdrawal of money from circulation by constantly repeated sales, and on the other, simple piling up, accumulation. It is indeed only in the sphere of simple circulation, and specifically in the form of hoards, that accumulation of wealth as such takes place, whereas the other so-called forms of accumulation, as we shall see later, are quite improperly, and only by analogy with simple accumulation of money, regarded as accumulation. All other commodities are accumulated either as use-values, and in this case the manner of their accumulation is determined by the specific features of their use-value. Storing of corn, for example, requires special equipment; collecting sheep makes a person a shepherd; accumulation of slaves and land necessitates relations of domination and servitude, and so on. Unlike the simple act of piling things up, the formation of stocks of particular types of wealth requires special methods and develops special traits in the individual. Or wealth in the shape of commodities may be accumulated as exchange-value, and in this case accumulation becomes a commercial or specifically economic operation. The one concerned in it becomes a corn merchant, a cattle-dealer, and so forth. Gold and silver constitute money not as the result of any activity of the person who accumulates them, but as crystals of the process of circulation which takes place without his assistance. He need do nothing but put them aside, piling one lot upon another, a completely senseless activity, which if applied to any other commodity would result in its devaluation. Our hoarder is a martyr to exchange-value, a holy ascetic seated at the top of a metal column. He cares for wealth only in its social form, and accordingly he hides it away from society. He wants commodities in a form in which they can always circulate and he therefore withdraws them from circulation. He adores exchange-value and he consequently refrains from exchange. The liquid form of wealth and its petrification, the elixir of life and the philosophers' stone are wildly mixed together like an alchemist's apparitions. His imaginary boundless thirst for enjoyment causes him to renounce all enjoyment. Because he desires to satisfy all social requirements, he scarcely satisfies the most urgent physical wants. While clinging to wealth in its metallic corporeality the hoarder reduces it to a mere chimaera. But the accumulation of money for the sake of money is in fact the barbaric form of production for the sake of production, i.e., the development of the productive powers of social labour beyond the limits of customary requirements. The less advanced is the production of commodities, the more important is hoarding the first form in which exchange-value assumes an independent existence as money and it therefore plays an important role among ancient nations, in Asia up to now, and among contemporary agrarian nations, where exchange-value has not yet penetrated all relations of production. Before, however, examining the specific economic function that hoarding fulfils in relation to metallic currency, let us note another form of hoarding. Gold and silver articles, quite irrespective of their aesthetic properties, can be turned into money, since the material of which they consist is the material of money, just as gold coins and gold bars can be transformed into such articles. Since gold and silver are the material of abstract wealth, their employment as concrete use-values is the most striking manifestation of wealth, and although at certain stages of production the commodity-owner hides his treasures, he is impelled to show to other commodity-owners that he is a rich man, whenever he can safely do so. He bedecks himself and his house with gold. In Asia, and India in particular, where the formation of hoards does not play a subordinate part in the total mechanism of production, as it does in bourgeois economy, but where this form of wealth is still considered a final goal, gold and silver articles are in fact merely hoards in an aesthetic form. The law in mediaeval England treated gold and silver articles simply as a kind of treasure-hoard, since the rough labour applied to them added little to their value. They were intended to be thrown again into circulation and the fineness of the metal of which they were made was therefore specified in the same way as that of coin. The fact that increasing wealth leads to an increased use of gold and silver in the form of luxury articles is such a simple matter that ancient thinkers clearly understood it, whereas modern economists put forward the incorrect proposition that the use of silver and gold articles increases not in proportion to the rise in wealth but in proportion to the fall in the value of precious metals. There is therefore always a flaw in their otherwise accurate explanations regarding the use of Californian and Australian gold, for according to their views the increased employment of gold as raw material is not justified by a corresponding fall in its value. As a result of the fight between the American colonies and Spain and the interruption of mining by revolutions, the average annual output of precious metals decreased by more than one-half between 1810 and 1830. The amount of coin circulating in Europe decreased by almost one-sixth in 1829 as compared with 1809. Although the output thus decreased and the costs of production (provided they changed at all) increased, nevertheless an exceptionally rapid rise in the use of precious metals as articles of luxury took place in England even during the war and on the continent following the Treaty of Paris. Their use increased with the growth of wealth in general. It may be regarded as a general law that the conversion of gold and silver coin into luxury goods predominates in times of peace, while their reconversion into bars and also into coin only predominates in turbulent periods. How considerable a proportion of the gold and silver stock exists in the shape of luxury articles compared with the amount used as money is shown by the fact that in 1829, according to Jacob, the ratio was as 2 to 1 in England, while in Europe as a whole and America, 25 per cent more precious metal was used in luxury goods than in coins. We have seen that the circulation of money is merely a manifestation of the metamorphosis of commodities, or of the transformation which accompanies the social metabolism. The total quantity of gold in circulation must therefore perpetually increase or decrease in accordance with the varying aggregate price of the commodities in circulation, that is in accordance, on the one hand, with the volume of their metamorphoses which take place simultaneously and, on the other hand, with the prevailing velocity of their transformation. This is only possible provided that the proportion of money in circulation to the total amount of money in a given country varies continuously. Thanks to the formation of hoards this condition is fulfilled. If prices fall or the velocity of circulation increases, then the money ejected from the sphere of circulation is absorbed by the reservoirs of hoarders; if prices rise or the velocity of circulation decreases, then these hoards open and a part of them streams back into circulation. The solidification of circulating money into hoards and the flowing of the hoards into circulation is a continuously changing and oscillating movement, and the prevalence of the one or the other trend is solely determined by variations in the circulation of commodities. The hoards thus act as channels for the supply or withdrawal of circulating money, so that the amount of money circulating as coin is always just adequate to the immediate requirements of circulation. If the total volume of circulation suddenly expands and the fluid unity of sale and purchase predominates, so that the total amount of prices to be realised grows even faster than does the velocity of circulation of money, then the hoards dwindle visibly; whenever an abnormal stagnation prevails in the movement as a whole, that is when the separation of sale from purchase predominates, then the medium of circulation solidifies into money to a remarkable extent and the reservoirs of the hoarders are filled far above their average level. In countries which have purely metallic currency or are at an early stage of development of production, hoards are extremely fragmented and scattered throughout the country, whereas in advanced bourgeois countries they are concentrated in the reservoirs of banks. Hoards must not be confused with reserve funds of coin, which form a constituent element of the total amount of money always in circulation, whereas the active relation of hoard and medium of circulation presupposes that the total amount of money decreases or increases. As we have seen, gold and silver articles also act both as channels for the withdrawal of precious metals and latent sources of supply. Under ordinary circumstances only the former function plays an important role in the economy of metallic currency.

Economic Manuscripts: Money

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_3.htm

Up to now two forms of money which differ from the medium of circulation have been considered, namely suspended coin and hoard. The first form, the temporary transformation of coins into money, reflects the fact that in a certain sphere of circulation, the second term of C M C, that is M C the purchase, must break up into a series of successive purchases. Hoarding, however, is either simply due to the separation of the transaction C M which does not proceed to M C, or it is merely an independent development of the first metamorphosis of commodities, money, or the alienated form of existence of all commodities as distinct from means of circulation, which represents the always saleable form of the commodity. Coin held in reserve and hoards constitute money only as non-means of circulation, and are non-means of circulation merely because they do not circulate. The distinctive form of money which we now consider circulates or enters circulation, but does not function as means of circulation. Money as means of circulation was always means of purchase, but now it does not serve in that capacity. When as a result of hoarding money becomes the embodiment of abstract social wealth and the material representative of physical wealth, this aspect of money acquires specific functions within the process of circulation. When money circulates simply as a means of circulation and hence as a means of purchase, this presupposes that commodity and money confront each other simultaneously; in other words, that the same value is available twice, as a commodity in the hands of the seller at one pole, and as money in the hands of the buyer at the other pole. The simultaneous existence of the two equivalents at opposite poles and their simultaneous change of place, or their mutual alienation, presupposes in its turn that seller and buyer enter into relation with each other only as owners of actually existing commodities. But the metamorphosis of commodities, in the course of which the various distinct forms of money are evolved, transforms the commodity-owners as well, and alters the social role they play in relation to one another. In the course of the metamorphosis of commodities the keeper of commodities changes his skin as often as the commodity undergoes a change or as money appears in a new form. Commodity-owners thus faced each other originally simply as commodity-owners; then one of them became a seller, the other a buyer; then each became alternately buyer and seller; then they became hoarders and finally rich men. Commodity-owners emerging from the process of circulation are accordingly different from those entering the process. The different forms which money assumes in the process of circulation are in fact only crystallisations of the transformation of commodities, a transformation which is in its turn only the objective expression of the changing social relations in which commodity-owners conduct their exchange. New relations of intercourse arise in the process of circulation, and commodity-owners, who represent these changed relations, acquire new economic characteristics. In the same way as within the sphere of internal circulation money becomes nominal, and a mere piece of paper representing gold is able to function as money, so a buyer or seller who comes forward as a mere representative of money or commodities, namely one who represents future money or future commodities, is enabled by the same process to operate as a real buyer or seller. All the distinct forms evolved by gold as money are merely manifestations of aspects latent in the metamorphosis of commodities, but these aspects did not assume a separate form in the simple circulation of money, in money as it appears as coin and the circuit C M C as a dynamic unity, or else they emerged merely as potentialities, as did for example the interruption of the metamorphosis of commodities. We have seen that in the course of the transaction C M the commodity as a real use-value and nominal exchange-value is brought into relation with money as a real exchange-value and only nominal use-value. By alienating the commodity as use-value the seller realises its exchange-value and the use-value of money. In contrast, by alienating money as exchange-value, the buyer realises its use-value and the price of the commodity. Commodity and money, accordingly, change places. The active process of this bilateral polar antithesis is in its turn separated while it is being carried through. The seller actually alienates the commodity but realises its price in the first place only nominally. He has sold the commodity at its price, but the price will only be realised at a predetermined later date. The buyer buys as the representative of future money, whereas the seller sells as the owner of a commodity available here and now. On the one hand, the seller actually hands over the commodity as use-value without actually realising its price; on the other hand, the buyer actually realises his money in the use-value of the commodity without actually handing over the money as exchange-value. Just as formerly money was represented by a token of value, so now it is symbolically represented by the buyer himself. Just as formerly the value-token as a universal symbol entailed a State guarantee and a legal rate, so now the buyer as a personal symbol gives rise to private, legally enforcible, contracts among commodity-owners. Conversely, in the transaction M C, money as a real means of purchase may be alienated, thus realising the price of the commodity before the use-value of the money is realised, or before the commodity is handed over. This happens, for instance, in the well-known form of advance payment; also in the form of payment used by the English government to buy opium from Indian ryots, and is largely used by foreign merchants living in Russia to buy goods produced in that country. In these cases, however, money functions only in the familiar form of means of purchase and therefore requires no new definition, or any further discussion. With regard to the changed form which the two transactions M C and C M assume here, we shall only note that the purely conceptual distinction of purchase and sale as it appears directly in circulation becomes now a real distinction, since there is only money in one case and only commodity in the other; in each of them, however, only the extreme is actually available from which the initiative comes. Both forms, moreover, have in common the fact that in each of them one equivalent exists only by common decision of buyer and seller, a decision which is mutually binding and is given a distinct legal form. Seller and buyer become creditor and debtor. Whereas the commodity-owner as the guardian of a hoard was a rather comical figure, he now becomes terrifying, because he regards, not himself, but his neighbour as the embodiment of a definite sum of money, and turns his neighbour and not himself into a martyr to exchange-value. The former believer becomes a creditor [In German a pun on the words der Gl ubige, the believer, and der Gl ubiger, the creditor. Ed] and turns from religion to Jurisprudence. In the changed form of C M, in which the commodity is actually on hand and the money is merely represented, money functions first as the measure of value. The exchange-value of the commodity is assessed in money as its measure, but the exchange-value assessed by contract, that is the price, exists not merely in the mind of the seller, but is also the measure of the liabilities of the buyer. Secondly, money functions here as means of purchase, although it is merely its future existence which casts its shadow before it, for it causes the commodity to move from the hands of the seller into those of the buyer. On the settlement day of the contract, money enters circulation, for it moves from the hands of the former buyer into those of the former seller. But it does not come into the sphere of circulation as means of circulation or means of purchase. It fulfilled these functions before it existed, and it appears on the scene after ceasing to perform these functions. It enters circulation as the only adequate equivalent of the commodity, as the absolute embodiment of exchange-value, as the last word of the exchange process, in short as money, and moreover as money functioning as the universal means of payment. Money functioning as means of payment appears to be the absolute commodity, but it remains within the sphere of circulation, not outside it as with the hoard. The difference between means of purchase and means of payment becomes very conspicuous, and unpleasantly so, at times of commercial crises. The conversion of products into money in the sphere of circulation appears originally simply as an individual necessity for the commodity-owner when his own product does not constitute use-value for himself, but has still to become a use-value through alienation. In order to make payment on the contractual settlement day, however, he must already have sold commodities. The evolution of the circulation process thus turns selling into a social necessity for him, quite irrespective of his individual needs. As a former buyer of commodities he is forced to become a seller of other commodities so as to obtain money, not as a means of purchase, but as a means of payment, as the absolute form of exchange-value. The conversion of commodities into money as a final act, or the first metamorphosis of commodities as the ultimate goal, which in hoarding appeared to be the whim of the commodity-owner, has now become an economic function. The motive and the content of selling for the sake of payment constitutes the content of the circulation process, a content arising from its very form. In this type of sale, the commodity moves from one position to another, although its first metamorphosis, its conversion into money, is deferred. On the buyer's side, however, the second metamorphosis is carried through, i.e., money is reconverted into commodities, before the first metamorphosis has taken place, i.e., before the conversion of the commodities into money. In this case, therefore, the first metamorphosis appears to take place later than the second. Hence money, the form of the commodity in its first metamorphosis, acquires a new distinctive aspect. Money, that is the independent development of exchange-value, is no longer an intermediary phase of commodity circulation, but its final result. No proof in detail is needed to show that such purchases on credit, in which the two poles of the transaction are separated in time, evolve spontaneously on the basis of simple circulation of commodities. At first it happens that in the course of circulation certain commodity-owners confront one another repeatedly as buyers and sellers. Such repeated occurrences do not remain merely accidental, but commodities may, for example, be ordered for a future date at which they are to be delivered and paid for. The sale in this case takes place only nominally, i.e., juridically, without the actual presence of commodities and money. The two forms of money, means of circulation and means of payment, are here still identical, since on the one hand commodities and money change places simultaneously, and on the other, money does not purchase commodities but realises the price of commodities previously sold. Moreover, owing to the specific nature of a number of use-values they are really alienated not by being in fact handed over but only by being leased for a definite period. For example, when one sells the use of a house for a month, its use-value is delivered only at the expiration of the month, although the house changes hands at the beginning of the month. Because in this case the actual transfer of the use-value and its real alienation are separated in time, the realisation of its price also takes place later than the date on which it changes hands. Finally, owing to differences in the period and length of time required for the production of different commodities, one producer comes to the market as a seller before the other can act as a buyer, and if the same commodity-owners repeatedly buy and sell one another's products, the two aspects of the transaction are separated according to the conditions of production of their commodities. This gives rise to relations of creditor and debtor among commodity-owners. These relations can be fully developed even before the credit system comes into being, although they are the natural basis of the latter. It is evident however that the evolution of the credit system, and therefore of the bourgeois mode of production in general, causes money to function increasingly as a means of payment to the detriment of its function both as a means of purchase and even more as an element of hoarding. For instance in England, coin is almost entirely confined to the sphere of retail trade and to petty transactions between producers and consumers, whereas money as means of payment predominates in the sphere of large commercial transactions. Money as the universal means of payment becomes the universal commodity of contracts, though at first only within the sphere of commodity circulation. But as this function of money develops, all other forms of payment are gradually converted into payments in money. The extent to which money functions as the exclusive means of payment indicates how deep-seated and widespread the domination of production by exchange-value is. The volume of money in circulation as means of payment is first of all determined by the amount of payments due, that is by the aggregate prices of the commodities which have been sold, not of the commodities that are to be sold as is the case with simple money circulation. But the amount thus determined is subject to modification by two factors: first by the velocity with which a coin repeats the same operation, or the number of payments which constitute a dynamic chain of payments. A pays B, then B pays C and so on. The velocity with which the same coin can act repeatedly as means of payment depends, on the one hand, on the interconnection of the commodity-owners' relations as creditors and debtors, in which the same commodity-owner who is a creditor in relation to one person is a debtor in relation to another, and so forth; and on the other hand, on the period of time separating the various dates on which payments are due. The series of payments, or of first metamorphoses carried out subsequently, is qualitatively different from the series of metamorphoses represented by the movement of money as means of circulation. The second series does not only appear in temporal succession, but it comes into being in this way. A commodity is turned into money, then into a commodity again, thus making it possible for another commodity to be turned into money, and so on: in other words, a seller becomes a buyer and another commodity-owner thereby becomes a seller. This sequence arises fortuitously in the course of commodity exchange itself. But the fact that the money which A pays to B is then used by B to pay C, and then by C to pay D, etc., and that moreover payments rapidly succeed one another this external relation is but a manifestation of a previously existing social relation. The same coin passes through various hands not because it acts as means of payment; but it is passed on as means of payment because these hands have already been joined. A far more extensive integration of the individual into the process of circulation is accordingly signified by the velocity of money as means of payment, than by the velocity of money as coin or means of purchase. The aggregate of prices of simultaneous, and therefore spatially coexisting, purchases and sales is the limit beyond which the velocity of currency cannot be substituted for its volume. But this barrier does not exist when money functions as means of payment. If payments falling due simultaneously are concentrated at one place, which occurs at first spontaneously at the large foci of commodity circulation, then payments offset one another like negative and positive quantities: A who has to pay B may receive a payment from C at the same time, and so on. The amount of money required as means of payment thus depends not on the aggregate amount of payments which are due to be made simultaneously, but on the degree of their concentration and on the size of the balance left over after the negative and positive amounts have been offset against one another. Special devices for this type of balancing arise even if no credit system has been evolved, as was the case in ancient Rome. But consideration of them is no more relevant here than is consideration of the usual settlement dates, which in every country become established among people of certain social strata. Here we shall merely note that scholarly investigations of the specific influence exerted by these dates on the periodic variations in the quantity of money in circulation have been undertaken only in recent times. When payments cancel one another as positive and negative quantities, no money need actually appear on the scene. Here money functions merely as measure of value with respect to both the price of the commodity and the size of mutual obligations. Apart from its nominal existence, exchange-value does not therefore acquire an independent existence in this case, even in the shape of a token of value, in other words money becomes purely nominal money of account. Money functioning as means of payment thus contains a contradiction: on the one hand, when payments balance, it acts merely as a nominal measure; on the other hand, when actual payments have to be made, money enters circulation not as a transient means of circulation, but as the static aspect of the universal equivalent, as the absolute commodity, in short, as money. Where chains of payments and an artificial system for adjusting them have been developed, any upheaval that forcibly interrupts the flow of payments and upsets the mechanism for balancing them against one another suddenly turns money from the nebulous chimerical form it assumed as measure of value into hard cash or means of payment. Under conditions of advanced bourgeois production, when the commodity-owner has long since become a capitalist, knows his Adam Smith and smiles superciliously at the superstition that only gold and silver constitute money or that money is after all the absolute commodity as distinct from other commodities money then suddenly appears not as the medium of circulation but once more as the only adequate form of exchange-value, as a unique form of wealth just as it is regarded by the hoarder. The fact that money is the sole incarnation of wealth manifests itself in the actual devaluation and worthlessness of all physical wealth, and not in purely imaginary devaluation as for instance in the Monetary System. This particular phase of world market crises is known as monetary crisis. The summum bonum, the sole form of wealth for which people clamour at such times, is money, hard cash, and compared with it all other commodities just because they are use-values appear to be useless, mere baubles and toys, or as our Doctor Martin Luther says, mere ornament and gluttony. This sudden transformation of the credit system into a monetary system adds theoretical dismay to the actually existing panic, and the agents of the circulation process are overawed by the impenetrable mystery surrounding their own relations. Payments in their turn necessitate reserve funds, accumulations of money as means of payment. The formation of reserve funds, unlike hoarding, no longer seems an activity extraneous to circulation, or, as in the case of coin reserves, a purely technical stagnation of coin; on the contrary money has to be gradually accumulated so as to be available at definite dates in the future when payments become due. Although with the development of bourgeois production, therefore, the abstract form of hoarding regarded as enrichment decreases, the form of hoarding necessitated by the exchange process itself increases; a part of the wealth which generally accumulates in the sphere of commodity circulation being drawn into reserve funds of means of payment. The more advanced is bourgeois production, the more these funds are restricted to the indispensable minimum. Locke's work on the lowering of the rate of interest contains interesting information about the size of these reserve funds in his time. It shows how substantial a proportion of the money in circulation in England was absorbed by the reserves of means of payment precisely during the period when banking began to develop. The law regarding the quantity of money in circulation as it emerged from the examination of simple circulation of money is significantly modified by the circulation of means of payment. If the velocity of money, both as means of circulation and as means of payment, is given, then the aggregate amount of money in circulation during a particular period is determined by the total amount of commodity-prices to be realised [plus] the total amount of payments falling due during this period minus the payments that balance one another. This does not affect at all the general principle that the amount of money in circulation depends upon commodity-prices, for the aggregate amount of payments is itself determined by the prices laid down in the contracts. It is however quite obvious that the aggregate prices of the commodities in circulation during a definite period, say a day, are by no means commensurate with the volume of money in circulation on the same day, even if the velocity of circulation and the economic methods of payment are assumed to remain unchanged; since a certain quantity of commodities is in circulation whose prices will only be realised in money at a later date, and a certain amount of money in circulation corresponds to commodities which have left the sphere of circulation a long time ago. This amount of money depends in its turn on the value of the payments that fall due on this day, although the relevant contracts were concluded at widely varying dates. We have seen that changes in the value of gold and silver do not affect their functions as measure of value and money of account. But with regard to hoarded money these changes are of decisive importance, since with the rise or fall in the value of gold and silver the value of the hoard of gold or silver will rise or fall. Such changes are of even greater importance for money as means of payment. The payment is effected at a date subsequent to the sale of the commodities; that is to say, money performs two different functions at two different periods, acting first as a measure of value, and then as the means of payment appropriate to this measure. If meanwhile a change has occurred in the value of the precious metals, or in the labour-time needed for their production, the same quantity of gold or silver will have a greater or smaller value when it functions as means of payment than at the time it served as measure of value, when the contract was signed. The function which a specific commodity, such as gold or silver, performs as money, or as exchange-value that has assumed an independent form, comes here into conflict with the nature of the specific commodity, whose value depends on variations in its costs of production. It is well-known that the fall in the value of precious metals in Europe gave rise to a great social revolution, just as the ancient Roman Republic at an early stage of its history experienced a reverse revolution caused by a rise in the value of copper, the metal in which the debts of the plebeians were contracted. Even without further examination of the influence which fluctuations in the value of precious metals exert on the system of bourgeois economy, it is clear that a fall in the value of precious metals favours debtors at the expense of creditors, while a rise in their value favours creditors at the expense of debtors. Gold becomes money, as distinct from coin, first by being withdrawn from circulation and hoarded, then by entering circulation as a non-means of circulation, finally however by breaking through the barriers of domestic circulation in order to function as universal equivalent in the world of commodities. It thus becomes world money. In the same way as originally the commonly used weights of precious metals served as measures of value, so on the world market the monetary denominations are reconverted into corresponding denominations of weight. Just as amorphous crude metal (aes rude) was the original form of means of circulation, and originally the coined form was simply the official indication of metallic weight, so precious metal serving as universal coin discards its specific shape and imprint and reverts to neutral bullion form; that is when national coins, such as Russian imperials, Mexican thalers and English sovereigns, circulate abroad their titles become unimportant and what counts is only their substance. Finally, as international money the precious metals once again fulfil their original function of means of exchange: a function which, like commodity exchange itself, originated at points of contact between different primitive communities and not in the interior of the communities. Money functioning as world money reverts to its original natural form. When it leaves domestic circulation, money sheds the particular forms occasioned by the development of exchange within particular areas, or the local forms assumed by money as measure of price specie, small change, and token of value. We have seen that only one commodity serves as a measure of value in the internal circulation of any country. But since in one country gold performs this function, in another silver, a double standard of value is recognised on the world market, and all functions of money are duplicated. The translation of the values of commodities from gold prices into silver prices and vice versa always depends on the relative value of the two metals; this relative value varying continuously and its determination appearing accordingly as a continuous process. Commodity-owners in every country are compelled to use gold and silver alternately for foreign commerce thus exchanging the metal current as money within the country for the metal which they happen to require as money in a foreign country. Every nation thus employs both gold and silver as world money. Gold and silver in the sphere of international commodity circulation appear not as means of circulation but as universal means of exchange. The universal means of exchange act however merely as means of purchase and means of payment, two forms which we have already described, but their relations are reversed on the world market. When in the sphere of internal circulation money was used as coin, i.e., as the intermediary link in the dynamic unity C M C or as the merely transitory form of exchange-value during the perpetual motion of commodities it functioned exclusively as means of purchase. The reverse is the case on the world market. Here gold and silver act as means of purchase if the interchange is only unilateral and therefore purchase and sale are separated. For example, the border trade at Kyakhta is in fact and according to treaty stipulations barter, in which silver is only used as a measure of value. The war of 1857-58 induced the Chinese to sell without buying. Thereupon silver suddenly appeared as means of purchase. In deference to the letter of the treaty, the Russians turned French five-franc coins into crude silver articles which were used as means of exchange. Silver has always served as means of purchase for Europe and America, on the one side, and Asia, where it congeals into hoards, on the other. Precious metals, moreover, serve as international means of purchase when the usual equilibrium in the interchange of products between two nations is suddenly disturbed, e.g., when a bad harvest compels one of them to buy on an extraordinary scale. Precious metals, finally, are used as international means of purchase by the gold and silver producing countries, where they are direct products and also commodities, and not a converted form of commodities. With the development of commodity exchange between different national spheres of circulation, the function which world money fulfils as means of payment for settling international balances develops also. International circulation, like domestic circulation, requires a constantly changing amount of gold and silver. Part of the accumulated hoards is consequently used by every nation as a reserve fund of world money, a fund which is sometimes diminished, sometimes replenished according to fluctuations in commodity exchange. In addition to particular movements of world money which flows backwards and forwards between national spheres of circulation, there is a general movement of world money; the points of departure being the sources of production, from which gold and silver flow in various directions to all the markets of the world. Thus gold and silver as commodities enter the sphere of world circulation and in proportion to the labour-time contained in them they are exchanged for commodity equivalents before reaching the area of domestic circulation. They accordingly already have a definite value when they turn up in these areas. Their relative value on the world market is therefore uniformly affected by every fall or rise in their costs of production and is quite independent of the degree to which gold or silver is absorbed by the various national spheres of circulation. One branch of the stream of metal which is caught up in a particular area of the world of commodities immediately enters the domestic circulation of money as replacement of worn-out coins; another is diverted into various reservoirs where coin, means of payment and world money accumulate; a third is used to make luxury articles and the rest, finally, is turned simply into hoards. Where the bourgeois mode of production has reached an advanced stage the formation of hoards is reduced to the minimum needed by the different branches of the circulation process for the free action of their mechanism. Under these conditions hoards as such consist only of wealth lying idle, unless they represent a temporary surplus in the balance of payments, the result of an interruption in the interchange of products and therefore commodities congealed in their first metamorphosis. Just as in theory gold and silver as money are universal commodities, so world money is the appropriate form of existence of the universal commodity. In the same proportion as all commodities are exchanged for gold and silver these become the transmuted form of all commodities and hence universally exchangeable commodities. They are realised as embodiments of universal labour-time in the degree that the interchange of the products of concrete labour becomes world-wide. They become universal equivalents in proportion to the development of the series of particular equivalents which constitute their spheres of exchange. Because the exchange-value of commodities is universally developed in international circulation, it appears transformed into gold and silver as international money. Since as a result of their versatile industry and all-embracing commerce the nations of commodity-owners have turned gold into adequate money, they regard industry and commerce merely as means enabling them to withdraw money in the form of gold and silver from the world market. Gold and silver as international money are therefore both the products of the universal circulation of commodities and the means to expand its scope. Just as the alchemists, who wanted to make gold, were not aware of the rise of chemistry, so commodity-owners, chasing after a magical form of the commodity, are not aware of the sources of world industry and world trade that are coming into being. Gold and silver help to create the world market by anticipating its existence in their concept of money. Their magical effect is by no means confined to the infancy of bourgeois society, but is the inevitable consequence of the inverted way in which their own social labour appears to the representatives of the world of commodities; a proof of this being the remarkable influence which the discovery of gold in various new areas exerted on international trade in the middle of the nineteenth century. As money develops into international money, so the commodity-owner becomes a cosmopolitan. The cosmopolitan relations of men to one another originally comprise only their relations as commodity-owners. Commodities as such are indifferent to all religious, political, national and linguistic barriers. Their universal language is price and their common bond is money. But together with the development of international money as against national coins, there develops the commodity-owner's cosmopolitanism, a cult of practical reason, in opposition to the traditional religious, national and other prejudices which impede the metabolic process of mankind. The commodity-owner realises that nationality is but the guinea's stamp, since the same amount of gold that arrives in England in the shape of American eagles is turned into sovereigns, three days later circulates as napoleons in Paris and may be encountered as ducats in Venice a few weeks later. The sublime idea in which for him the whole world merges is that of a market, the world market.

Economic Manuscripts: Means of Payment

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_3b.htm

At first the process of bourgeois production takes possession of metallic currency as an existing and ready-made instrument, which, although it has been gradually reorganised, in its basic structure has nevertheless been retained. The question why gold and silver, and not other commodities, are used as the material of money lies outside the confines of the bourgeois system. We shall therefore do no more than summarise the most important aspects. Because universal labour-time itself can only display quantitative differences, the object to be recognised as its specific embodiment must be able to express purely quantitative differences, thus presupposing identical, homogeneous quality. This is the first condition that has to be fulfilled if a commodity is to function as a measure of value. If, for instance, one evaluates all commodities in terms of oxen, hides, corn, etc., one has in fact to measure them in ideal average oxen, average hides, etc., since there are qualitative differences between one ox and another, one lot of corn and another, one hide and another. Gold and silver, on the other hand, as simple substances are always uniform and consequently equal quantities of them have equal values. Another condition that has to be fulfilled by the commodity which is to serve as universal equivalent and that follows directly from its function of representing purely quantitative differences, is its divisibility into any desired number of parts and the possibility of combining these again, so that money of account can be represented in palpable form too. Gold and silver possess these qualities to an exceptional degree. As means of circulation gold and silver have an advantage over other commodities in that their high specific gravity representing considerable weight in a relatively small space is matched by their economic specific gravity, in containing much labour-time, i.e., considerable exchange-value, in a relatively small volume. This facilitates transport, transfer from one hand to another, from one country to another, enabling gold and silver suddenly to appear and just as suddenly to disappear in short these qualities impart physical mobility, the sine qua non of the commodity that is to serve as the perpetuum mobile of the process of circulation. The high specific value of precious metals, their durability, relative indestructibility, the fact that they do not oxidise when exposed to the air and that gold in particular is insoluble in acids other than aqua regia all these physical properties make precious metals the natural material for hoarding. Peter Martyr, who was apparently a great lover of chocolate, remarks, therefore, of the sacks of cocoa which in Mexico served as a sort of money. Metals in general owe their great importance in the direct process of production to their use as instruments of production. Gold and silver, quite apart from their scarcity, cannot be utilised in this way because, compared with iron and even with copper (in the hardened state in which the ancients used it), they are very soft and, therefore, to a large extent lack the quality on which the use:value of metals in general depends. Just as the precious metals are useless in the direct process of production, so they appear to be unnecessary as means of subsistence, i.e., as articles of consumption. Any quantity of them can thus be placed at will within the social process of circulation without impairing production and consumption as such. Their individual use-value does not conflict with their economic function. Gold and silver, on the other hand, are not only negatively superfluous i.e., dispensable objects, but their aesthetic qualities make them the natural material for pomp, ornament, glamour, the requirements of festive occasions, in short, the positive expression of supra abundance and wealth. They appear, so to speak, as solidified light raised from a subterranean world, since all the rays of light in their original composition are reflected by silver, while red alone, the colour of the highest potency, is reflected by gold. Sense of colour, moreover, is the most popular form of aesthetic perception in general. The etymological connection between the names of precious metals and references to colour in various Indo-European languages has been demonstrated by Jakob Grimm (see his History of the German Language). Finally the fact that it is possible to transform gold and silver from coin into bullion, from bullion into articles of luxury and vice versa, the advantage they have over other commodities of not being confined to the particular useful form they have once been given makes them the natural material for money, which must constantly change from one form into another. Nature no more produces money than it does bankers or a rate of exchange. But since in bourgeois production, wealth as a fetish must be crystallised in a particular substance, gold and silver are its appropriate embodiment. Gold and silver are not by nature money, but money consists by its nature of gold and silver. Gold or silver as crystallisation of money is, on the one hand, not only the product of the circulation process but actually its sole stable product; gold and silver are, on the other hand, finished primary products, and they directly represent both these aspects, which are not distinguished by specific forms. The universal product of the social process, or the social process itself considered as a product, is a particular natural product, a metal, which is contained in the earth's crust and can be dug up. We have seen that gold and silver cannot comply with the demand that as money they should have an invariable value. Their value is nevertheless more stable than that of other commodities on the average, as even Aristotle noted. Apart from the general effect of an appreciation or depreciation of the precious metals, variations in the relative value of gold and silver are of particular importance, since both are used side by side as monetary material on the world market. The purely economic reasons of such changes in value conquests and other political upheavals, which exerted a substantial influence on the value of metals in antiquity, have merely a local and temporary effect must be attributed to changes in the labour-time required for the production of these metals. This labour-time itself will depend on the relative scarcity of natural deposits and the difficulties involved in procuring them in a purely metallic state. Gold is in fact the first metal that man discovered. On the one hand, it occurs in nature in pure crystalline form, as a separate substance not chemically combined with other substances, or in a virgin state, as the alchemists said; on the other hand, nature herself performs the technical work by washing gold on a large scale in rivers. Only the crudest labour is required on the part of man for extracting gold either from rivers or from alluvial deposits; whereas production of silver requires mining and in general a relatively high level of technical development. The value of silver is therefore originally higher than that of gold, although it is absolutely less scarce. Strabo's statement that an Arabian tribe gave ten pounds of gold for one pound of iron, and two pounds of gold for one pound of silver, is by no means incredible. But the value of silver tends to fall in relation to that of gold, as the productive powers of social labour develop and consequently the product of simple labour becomes more expensive compared with that of complex labour, and with the earth's crust being increasingly opened up the original surface-sources of gold are liable to be exhausted. Finally, at a given stage of development of technology and of the means of communication, the discovery of new territories containing gold or silver plays an important role. The ratio of gold to silver in ancient Asia was 6 to 1 or 8 to 1; the latter ratio was prevalent in China and Japan even in the early nineteenth century; 10 to 1, the ratio obtaining in Xenophon's time, can be regarded as the average ratio of the middle period of antiquity. The working of the Spanish silver mines by Carthage and later by Rome exerted a rather similar influence on the ancient world to that of the discovery of the American mines on modern Europe. During the era of the Roman emperors, 15 or 16 to 1 can be taken as the rough average, although the value of silver in Rome often sank even lower. During the following period reaching from the Middle Ages to modern times, a similar movement which begins with a relative depreciation of gold and ends with a fall in the value of silver takes place. The average ratio in the Middle Ages, as in Xenophon's time, was 10 to l, and as a result of the discovery of mines in America the ratio once again becomes 16 or 15 to 1. The discovery of gold in Australia, California and Colombia will probably lead to another fall in the value of gold.

Economic Manuscripts: The Precious Metals

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02_4.htm

The fact that commodities are only nominally converted in the form of prices into gold and hence gold is only nominally transformed into money led to the doctrine of the nominal standard of money. Because only imaginary gold or silver, i.e., gold and silver merely as money of account, is used in the determination of prices, it was asserted that the terms pound, shilling, pence, thaler, franc, etc., denote ideal particles of value but not weights of gold or silver or any form of materialised labour. If, for example, the value of an ounce of silver were to rise, it would contain more of these particles and would therefore have to be divided or coined into a greater number of shillings. This doctrine, which arose at the close of the seventeenth century, was again advanced during the last commercial crisis in England and was even advocated by Members of Parliament in two special reports appended to the 1858 Report of the Select Committee on the Bank Acts. In England at the time of the accession of William III, the mint-price of an ounce of silver was 5s. 2d., that is 1/62 of an ounce of silver was called a penny and 12 of these pence were called a shilling. A bar of silver weighing say six ounces would, according to this standard, be coined into 31 coins which would be called shillings. But whereas the mint-price of an ounce of silver was 5s. 2d., its market-price rose to 6s. 3d., that is to say in order to buy an ounce of uncoined silver 6s. 3d. had to be handed over. How was it possible for the market-price of an ounce of silver to rise above its mint-price, if the mint-price was merely a name of account for fractions of an ounce of silver? The solution of this riddle was quite simple. Four million of the 5,600,000 of silver money in circulation at that time were worn out or clipped. A trial showed that 57,200 in silver coins, whose weight ought to have been 220,000 ounces, weighed only 141,000 ounces. The mint continued to coin silver pieces according to the same standard, but the lighter shillings which were actually in circulation represented smaller fractions of an ounce than their name denoted. A larger quantity of these reduced shillings had consequently to be paid for an ounce of uncoined silver on the market. When, because of the resulting difficulties, it was decided to recoin all the money, Lowndes, the Secretary to the Treasury, claimed that the value of an ounce of silver had risen and that in future accordingly 6s. 3d. would have to be struck from an ounce instead of 5s. 2d. as previously. He thus in effect asserted that, because the value of an ounce of silver had risen, the value of its aliquot parts had fallen. But his false theory was merely designed to make a correct practical measure more palatable. The government debts had been contracted in light shillings, were they to be repaid in coins of standard weight? Instead of saying pay back 4 ounces of silver for every 5 ounces you received nominally but which contained in fact only 4 ounces of silver, he said, on the contrary, pay back nominally 5 ounces but reduce their metal content to 4 ounces and call the amount you hitherto called 4/5 of a shilling a shilling. Lowndes s action, therefore, was in reality based on the metal content, whereas in theory he stuck to the name of account. His opponents on the other hand, who simply clung to the name of account and therefore declared that a shilling of standard weight was identical with a shilling which was 25 to 50 per cent lighter, claimed to be adhering to the metal content. John Locke, who championed the new bourgeoisie in every way he took the side of the manufacturers against the working classes and the paupers, the merchants against the old-fashioned usurers, the financial aristocracy against governments that were in debt; he even demonstrated in a separate work that the bourgeois way of thinking is the normal human way of thinking took up Lowndes s challenge. John Locke won the day and money borrowed in guineas containing 10 to 14 shillings was repaid in guineas of 20 shillings. Sir James Steuart gives the following ironical summary of this operation: Steuart believed that in the course of further development of commerce the nation would become wiser. But he was wrong. Some 120 years later the same quid pro quo was repeated. Very fittingly it was Bishop Berkeley, the advocate of mystical idealism in English philosophy, who gave the doctrine of the nominal standard of money a theoretical twist, which the practical Secretary to the Treasury had omitted to do. Berkeley asks In this passage, the author, on the one hand, confuses the measure of value with the standard of price, and on the other he confuses gold or silver as measure of value and as means of circulation. Because tokens can be substituted for precious metals in the sphere of circulation, Berkeley concludes that these tokens in their turn represent nothing, i.e., the abstract concept of value. The theory of the nominal standard of money was so fully elaborated by Sir James Steuart, that his followers they are not aware of being followers since they do not know him can find neither a new expression nor even a new example. He writes: Steuart simply considers money as it appears in the sphere of circulation, i.e., as standard of price and as money of account. If different commodities are quoted at 15s., 20s. and 36s. respectively in a price list, then in a comparison of their value both the silver content of the shilling and its name are indeed quite irrelevant. Everything is now expressed in the numerical relations of 15, 20 and 36, and the numeral one has become the sole unit of measure. The purely abstract expression of a proportion is after all only the abstract numerical proportion. In order to be consistent, Steuart therefore had to abandon not only gold and silver but also their legal designations. But since he does not understand how the measure of value is transformed into the standard of price, he naturally thinks that the particular quantity of gold which serves as a unit of measure is, as a measure, related to values as such, and not to other quantities of gold. Because commodities appear to be magnitudes of the same denomination as a result of the conversion of their exchange-values into prices, Steuart denies the existence of the characteristic feature of the measure which reduces commodities to the same denomination, and since in this comparison of different quantities of gold the quantity of gold which serves as a standard is conventionally established, he denies that it must be established at all. Instead of calling a 360th part of a circle a degree, he might call a 180th part a degree; the right angle would then measure not 90 degrees but 45, and the measurements of acute and obtuse angles would change correspondingly. Nevertheless, the measure of the angle would remain firstly a qualitatively determined mathematical figure, the circle, and secondly a quantitatively determined section of the circle. As for Steuart s economic examples one of these disproves his own assertions, the other proves nothing at all. The money of the Bank of Amsterdam was in fact only the name of account for Spanish doubloons, which retained their standard weight because they lay idle in the vaults of the bank, while the coins which busily circulated lost weight as a result of intensive friction with their environment. As for the African idealists, we must leave them to their fate until reliable accounts of travellers provide further information about them. One might say that the French assignat National property, Assignment of 100 francs is nearly ideal money in Steuart s sense. The use-value which the assignat was supposed to represent, i.e., confiscated land, was indeed specified, but the quantitative definition of the unit of measure had been omitted, and franc was therefore a meaningless word. How much or little land this franc represented depended on the outcome of public auctions. But in practice the assignat circulated as a token representing silver money, and its depreciation was consequently measured in terms of this silver standard. The period when the Bank of England suspended cash payments was hardly more prolific of war bulletins than of monetary theories. The depreciation of bank-notes and the rise of the market-price of gold above its mint-price caused some defenders of the Bank to revive the doctrine of the ideal measure of money. Lord Castlereagh found the classically confused expression for this confused notion when he declared that the standard of money is a sense of value in reference to currency as compared with commodities. A few years after the Treaty of Paris when the situation permitted the resumption of cash payments, the problem which Lowndes had broached during the reign of William III arose again in practically the same form. A huge national debt and a mass of private debts, fixed obligations, etc., which had accumulated in the course of over 20 years, were incurred in depreciated bank-notes. Should they be repaid in bank-notes 4,672 10s. of which represented, not in name but in fact, 100 lbs. of 22-carat gold? Thomas Attwood, a Birmingham banker, acted like a resurrected Lowndes. He advocated that as many shillings should be returned to the creditors as they had nominally lent, but whereas according to the old monetary standard, say, 1/78 of an ounce of gold was known as a shilling, now perhaps 1/90 of an ounce should be called a shilling. Attwood s supporters are known as the Birmingham school of little shilling men". The quarrel about the ideal standard of money, which began in 1819, was still carried on in 1845 by Sir Robert Peel and Attwood, whose wisdom in so far as it concerns the function of money as a measure is fully summarised in the following quotation: The hazy notion about the ideal measure of money fades away in the last words and its real mental content becomes clear. Pound, shilling, etc., the names of account of gold, are said to be names representing definite quantities of labour-time. Since labour-time is the substance and the inherent measure of value, the names thus indeed express the value relations themselves. In other words it is asserted that labour-time is the real standard of money. Here we leave the Birmingham school and merely note in passing that the doctrine of the ideal measure of money has gained new importance in connection with the controversy over the convertibility or non-convertibility of bank-notes. While the denomination of paper is based on gold or silver, the convertibility of the note, i.e., its exchangeability for gold or silver, remains an economic law regardless of what juridical law may say. For instance, a Prussian paper thaler, although legally inconvertible, would immediately depreciate if in everyday commerce it were worth less than a silver thaler, that is if it were not convertible in practice. The consistent advocates of inconvertible paper money in Britain, therefore, had recourse to the ideal standard of money. If the denominations of money, pound, shilling and so on, are names for a determinate amount of particles of value, of which sometimes more, sometimes less are either absorbed or lost by a commodity when it is exchanged for other commodities, then the value of an English 5 note, for instance, is just as little affected by its relation to gold as by its relation to iron and cotton. Since its designation would no longer equate the bank-note in theory to a determinate quantity of gold or of any other commodity, its very concept would preclude the demand for its convertibility, that is for its equation in practice with a determinate quantity of a specific thing. John Gray was the first to set forth the theory that labour-time is the direct measure of money in a systematic way. He proposes that a national central bank should ascertain through its branches the labour-time expended in the production of various commodities. In exchange for the commodity, the producer would receive an official certificate of its value, i.e., a receipt for as much labour-time as his commodity contains, and this bank-note of one labour week, one labour day, one labour hour, etc., would serve at the same time as an order to the bank to hand over an equivalent in any of the other commodities stored in its warehouses. This is the basic principle, which is scrupulously worked out in detail and modelled throughout on existing English institutions. Gray says that under this system The precious metals would lose their privileged position in comparison with other commodities and Since labour-time is the intrinsic measure of value, why use another extraneous standard as well? Why is exchange-value transformed into price? Why is the value of all commodities computed in terms of an exclusive commodity, which thus becomes the adequate expression of exchange-value, i.e., money? This was the problem which Gray had to solve. But instead of solving it, he assumed that commodities could be directly compared with one another as products of social labour. But they are only comparable as the things they are. Commodities are the direct products of isolated independent individual kinds of labour, and through their alienation in the course of individual exchange they must prove that they are general social labour, in other words, on the basis of commodity production, labour becomes social labour only as a result of the universal alienation of individual kinds of labour. But as Gray presupposes that the labour-time contained in commodities is immediately social labour-time, he presupposes that it is communal labour-time or labour-time of directly associated individuals. In that case, it would indeed be impossible for a specific commodity, such as gold or silver, to confront other commodities as the incarnation of universal labour and exchange-value would not be turned into price; but neither would use-value be turned into exchange-value and the product into a commodity, and thus the very basis of bourgeois production would be abolished. But this is by no means what Gray had in mind goods are to be produced as commodities but not exchanged as commodities. Gray entrusts the realisation of this pious wish to a national bank. On the one hand, society in the shape of the bank makes the individuals independent of the conditions of private exchange, and, on the other hand, it causes them to continue to produce on the basis of private exchange. Although Gray merely wants to reform the money evolved by commodity exchange, he is compelled by the intrinsic logic of the subject-matter to repudiate one condition of bourgeois production after another. Thus he turns capital into national capital, and land into national property and if his bank is examined carefully it will be seen that it not only receives commodities with one hand and issues certificates for labour supplied with the other, but that it directs production itself. In his last work, Lectures on Money, in which Gray seeks timidly to present his labour money as a purely bourgeois reform, he gets tangled up in even more flagrant absurdities. Every commodity is immediately money; this is Gray s thesis which he derives from his incomplete and hence incorrect analysis of commodities. The organic project of labour money and national bank and warehouses is merely a fantasy in which a dogma is made to appear as a law of universal validity. The dogma that a commodity is immediately money or that the particular labour of a private individual contained in it is immediately social labour, does not of course become true because a bank believes in it and conducts its operations in accordance with this dogma. On the contrary, bankruptcy would in such a case fulfil the function of practical criticism. The fact that labour money is a pseudo-economic term, which denotes the pious wish to get rid of money, and together with money to get rid of exchange-value, and with exchange-value to get rid of commodities, and with commodities to get rid of the bourgeois mode of production, this fact, which remains concealed in Gray s work and of which Gray himself was not aware, has been bluntly expressed by several British socialists, some of whom wrote earlier than Gray and others later. But it was left to M. Proudhon and his school to declare seriously that the degradation of money and the exaltation of commodities was the essence of socialism and thereby to reduce socialism to an elementary misunderstanding of the inevitable correlation existing between commodities and money.

Economic Manuscripts: Historical Notes on the Analysis of Commodities

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02b.htm

Just as in the sixteenth and seventeenth centuries, when modern bourgeois society was in its infancy, nations and princes were driven by a general desire for money to embark on crusades to distant lands in quest of the golden grail, so the first interpreters of the modern world, the originators of the Monetary System the Mercantile System is merely a variant of it declared that gold and silver, i.e., money, alone constitutes wealth. They quite correctly stated that the vocation of bourgeois society was the making of money, and hence, from the standpoint of simple commodity production, the formation of permanent hoards which neither moths nor rust could destroy. It is no refutation of the Monetary System to point out that a ton of iron whose price is 3 has the same value as 3 in gold. The point at issue is not the magnitude of the exchange-value, but its adequate form. With regard to the special attention paid by the Monetary and Mercantile systems to international trade and to individual branches of national labour that lead directly to international trade, which are regarded by them as the only real source of wealth or of money, one has to remember that in those times national production was for the most part still carried on within the framework of feudal forms and served as the immediate source of subsistence for the producers themselves. Most products did not become commodities; they were accordingly neither converted into money nor entered at all into the general process of the social metabolism; hence they did not appear as materialisation of universal abstract labour and did not indeed constitute bourgeois wealth. Money as the end and object of circulation represents exchange-value or abstract wealth, not any physical element of wealth, as the determining purpose and driving motive of production. It was consistent with the rudimentary stage of bourgeois production that those misunderstood prophets should have clung to the solid, palpable and glittering form of exchange-value, to exchange-value in the form of the universal commodity as distinct from all particular commodities. The sphere of commodity circulation was the strictly bourgeois economic sphere at that time. They therefore analysed the whole complex process of bourgeois production from the standpoint of that basic sphere and confused money with capital. The unceasing fight of modern economists against the Monetary and Mercantile systems is mainly provoked by the fact that the secret of bourgeois production, i.e., that it is dominated by exchange-value, is divulged in a naively brutal way by these systems. Although drawing the wrong conclusions from it, Ricardo observes somewhere that, even during a famine, corn is imported because the corn-merchant thereby makes money, and not because the nation is starving. Political economy errs in its critique of the Monetary and Mercantile systems when it assails them as mere illusions, as utterly wrong theories, and fails to notice that they contain in a primitive form its own basic presuppositions. These systems, moreover, remain not only historically valid but retain their full validity within certain spheres of the modern economy. At every stage of the bourgeois process of production when wealth assumes the elementary form of commodities, exchange-value assumes the elementary form of money, and in all phases of the productive process wealth for an instant reverts again to the universal elementary form of commodities. The functions of gold and silver as money, in contradistinction to their functions as means of circulation and in contrast with all other commodities, are not abolished even in the most advanced bourgeois economy, but merely restricted; the Monetary and Mercantile systems accordingly remain valid. The catholic fact that gold and silver as the direct embodiment of social labour, and therefore as the expression of abstract wealth, confront other profane commodities, has of course violated the protestant code of honour of bourgeois economists, and from fear of the prejudices of the Monetary System, they lost for some time any sense of discrimination towards the phenomena of money circulation, as the following account will show. It was quite natural that, by contrast with the Monetary and Mercantile systems, which knew money only as a crystalline product of circulation, classical political economy in the first instance should have understood the fluid form of money, that is the form of exchange-value which arises and vanishes within the metamorphosis of commodities. Because commodity circulation is looked at exclusively in the form C M C, and this in its turn solely as the dynamic unity of sale and purchase, the specific aspect of money as means of circulation is upheld against its specific aspect as money. If the function of means of circulation in serving as coin is isolated, then, as we have seen, it becomes a value-token. But since classical political economy was at first confronted with metallic currency as the predominant form of currency, it regarded metallic money as coin, and coin as a mere token of value. In accordance with the law relating to the circulation of value-tokens, the proposition is then advanced that the prices of commodities depend on the volume of money in circulation, and not that the volume of money in circulation depends on the prices of commodities. This view is more or less clearly outlined by Italian economists of the seventeenth century; it is sometimes accepted, sometimes repudiated by Locke, and firmly set forth in the Spectator (in the issue of October 19, 1711) as well as in the works of Montesquieu and Hume. Since Hume is by far the most important exponent of this theory in the eighteenth century, we shall begin our survey with him. Under certain conditions, an increase or decrease in the quantity of either specie in circulation, or tokens of value in circulation, seems to have a similar effect upon commodity-prices. If there is a fall or rise in the value of gold and silver, in which the exchange-value of commodities is measured as price, then prices rise or fall because a change has taken place in their standard of value; and an increased or diminished amount of gold and silver is in circulation as coin because the prices have risen or fallen. The observable phenomenon, however, is that with an increasing or diminishing volume of means of circulation, prices change while the exchange-value of commodities remains constant. If, on the other hand, the amount of value-tokens in circulation falls below the requisite level, or rises above it, then it is forcibly reduced to that level by a fall or rise of commodity-prices. The effect in both cases appears to be brought about by the same cause, and Hume holds fast to this appearance. Any scholarly investigation of the relation between the volume of means of circulation and movements in commodity-prices must assume that the value of the monetary material is given. Hume, however, considers exclusively periods when revolutionary changes in the value of the precious metals take place, that is revolutions in the standard of value. The rise in commodity-prices that occurred simultaneously with the increase in the amount of specie consequent upon the discovery of the American mines forms the historical background of his theory, and its practical motive was the polemic that he waged against the Monetary and Mercantile systems. It is, of course, quite possible to increase the supply of precious metals while their costs of production remain unchanged. On the other hand, a decrease in their value, that is in the labour-time required to produce them, will in the first place be attested only by an increase in their supply. Hume's disciples accordingly stated subsequently that the diminished value of the precious metals was reflected in the growing volume of means of circulation, and the growing volume of the means of circulation was reflected in increased commodity-prices. But there is in reality an increase only in the prices of exported commodities which are exchanged for gold and silver as commodities and not as means of circulation. The price of those commodities, which are measure in gold and silver of reduced value, thus rises in relation to all other commodities whose exchange-value continues to be measured in gold and silver in accordance with the scale of their former costs of production. Such a dual evaluation of exchange-values of commodities in a given country can of course occur only temporarily; gold and silver prices must be adjusted to correspond with the exchange-values themselves, so that finally the exchange-values of all commodities are assessed in accordance with the new value of monetary material. This is not the place for either a description of this process or an examination of the ways in which the exchange-value of commodities prevails within the fluctuations of market-prices. Recent critical investigations of the movement of commodity-prices during the sixteenth century have conclusively demonstrated that in the early stages of the evolution of the bourgeois mode of production, such adjustment proceeds only very gradually, extending over long periods, and does not by any means keep in step with the increase of ready money in circulation. Quite inappropriate are references in vogue among Hume's disciples to rising prices in ancient Rome brought about by the conquest of Macedonia, Egypt and Asia Minor. The sudden and forcible transfer of hoarded money from one country to another is a specific feature of the ancient world; but the temporary lowering of the production costs of precious metals achieved in a particular country by the simple method of plunder does not affect the inherent laws of monetary circulation, any more than, for instance, the distribution of Egyptian and Sicilian corn free of charge in Rome affects the general law which regulates corn prices. For a detailed analysis of the circulation of money, Hume, like all other eighteenth-century writers, lacked the necessary material, i.e., on the one hand a reliable history of commodity-prices, and on the other hand, official and continuous statistics regarding the expansion and contraction of the medium of circulation, the influx or withdrawal of precious metals, etc., in other words material which on the whole only becomes accessible when banking is fully developed. The following propositions summarise Hume's theory of circulation. 1. Commodity-prices in a given country are determined by the amount of money (real or token money) existing therein. 2. The money circulating in a given country represents all commodities which are in that country. As the amount of money grows, each unit represents a correspondingly larger or smaller proportion of the things represented. 3. If the volume of commodities increases, then their prices fall or the value of money rises. If the amount of money increases, then, on the contrary, commodity-prices rise and the value of money falls. If this example were to prove anything, Hume would have to show that in a given system of notation the quantity of characters employed does not depend on the numerical value, but that on the contrary the numerical value is determined by the quantity of characters employed. It is quite true that there is no advantage in evaluating or counting commodity values in gold or silver of diminished value; and as the value of the commodities in circulation increased, therefore, nations invariably decided that it was more convenient to count in silver than in copper, and in gold than in silver. In the proportion that nations grew richer, they turned the less-valuable metals into subsidiary coin and the more valuable metals into money. Hume, moreover, forgets that in order to calculate values in terms of gold and silver, neither gold nor silver need be present. Money of account and means of circulation are for him identical phenomena and he regards both as coin. Because a change in the value of the standard of value, i.e. in the precious metals which function as money of account, causes a rise or fall in commodity-prices, and hence, provided the velocity of money remains unchanged, an increase or decrease in the volume of money in circulation, Hume infers that increases or decreases of commodity-prices are determined by the quantity of money in circulation. Hume could have deduced from the closing down of European mines that not only the quantity of gold and silver grew during the sixteenth and seventeenth centuries, but that simultaneously their cost of production diminished. Along with the volume of imported American gold and silver commodity-prices rose in Europe in the sixteenth and seventeenth centuries; commodity-prices are consequently in every country determined by the volume of gold and silver which the country contains. This was the first necessary consequence drawn by Hume. Prices in the sixteenth and seventeenth centuries did not rise in step with the increased amount of precious metals; more than half a century elapsed before any change at all was noticeable in the prices of commodities, and even after this a considerable time elapsed before the prices of commodities in general were revolutionised, that is before the exchange-values of commodities were generally estimated according to the diminished value of gold and silver. Hume who quite contrary to the principles of his own philosophy uncritically turns unilaterally interpreted facts into general propositions concludes that, in consequence, the price of commodities or the value of money is determined not by the absolute amount of money present in a country, but rather by the amount of gold and silver actually in circulation; in the long run, however, all the gold and silver present in the country must be absorbed as coin in the sphere of circulation. It is clear, that, if gold and silver themselves have value, quite irrespective of all other laws of circulation, only a definite quantity of gold and silver can circulate as the equivalent of a given aggregate value of commodities. Thus, if without reference to the total value of commodities, all the gold and silver that happens to be in the country must participate as means of circulation in the exchange of commodities, then gold and silver have no intrinsic value and are indeed not real commodities. This is Hume's third necessary consequence. According to Hume, commodities without price and gold and silver without value enter the process of circulation. He, therefore, never mentions the value of commodities and the value of gold, but speaks only of their reciprocal quantity. Locke had already said that gold and silver have a purely imaginary or conventional value; this was the first blunt opposition to the contention of the Monetary System that only gold and silver have genuine value. The fact that gold and silver are money only as the result of the function they perform in the social process of exchange is thus taken to mean that their specific value and hence the magnitude of their value is due to their social function. Gold and silver are thus things without value, but in the process of circulation, in which they represent commodities, they acquire a fictitious value. This process turns them not into money but into value: a value that is determined by the proportion of their own volume to the volume of commodities, for the two volumes must balance. Although then, according to Hume, gold and silver enter the world of commodities as non-commodities, as soon as they function as coin he transforms them into plain commodities, which are exchanged for other commodities by simple barter. Provided the world of commodities consisted of a single commodity, e.g., one million quarters of corn, it would be quite simple to imagine that, if two million ounces of gold existed, one quarter of corn would be exchanged for two ounces of gold or, if twenty million ounces of gold existed, one quarter would be exchanged for twenty ounces of gold; the price of the commodity and the value of money would thus rise or fall in inverse ratio to the available quantity of money. But the world of commodities consists of an infinite variety of use-values, whose relative value is by no means determined by their relative quantities. How then does Hume envisage this exchange of commodities for gold? He confines himself to the vague abstract conception that every commodity being a portion of the total volume of commodities is exchanged for a commensurate portion of the existing volume of gold. The dynamic movement of commodities a movement, which originates in the contradiction of exchange-value and use-value contained in the commodities, which is reflected in the circulation of money and epitomised in the various distinct aspects of the latter is thus obliterated and replaced by an imaginary mechanical equalisation of the amount of precious metals present in a particular country and the volume of commodities simultaneously available. Sir James Steuart begins his investigation of specie and money with a detailed criticism of Hume and Montesquieu. He is indeed the first to ask whether the amount of money in circulation is determined by the prices of commodities, or the prices of commodities determined by the amount of money in circulation. Although his exposition is tarnished by his fantastic notion of the measure of value, by his inconsistent treatment of exchange-value in general and by arguments reminiscent of the Mercantile System, he discovers the essential aspects of money and the general laws of circulation of money, because he does not mechanically place commodities on one side and money on the other, but really deduces its various functions from different moments in commodity exchange. The second law discovered by Steuart is that currency based on credit returns to its point of departure. Finally he analyses the consequences produced by the diversity in the rate of interest obtaining in different countries on the export and import of precious metals. The last two aspects are mentioned here only for the sake of a complete picture, since they are remote from our subject, namely simple circulation. Symbolical money or credit money Steuart does not yet distinguish these two forms of money can function as means of purchase and means of payment in place of the precious metals in domestic circulation, but not on the world market. Paper notes are consequently money of the society, whereas gold and silver are money of the world. It is a characteristic of nations with an historical development, in the sense given to this term by the Historical School of Law, that they always forget their own history. Thus although during this half century the issue of the relation between commodity-prices and the quantity of currency has agitated Parliament continuously and has caused thousands of pamphlets, large and small, to be published in England, Steuart remained even more of a dead dog than Spinoza appeared to be to Moses Mendelssohn in Lessing's time. Even the most recent historiographer of currency, MacClaren, makes Adam Smith the inventor of Steuart's theory, and Ricardo the inventor of Hume's theory. Whereas Ricardo improves upon Hume's theory, Adam Smith records the results of Steuart's research as dead facts. The Scottish proverb that if one has gained a little it is often easy to gain much, but the difficulty is to gain a little, has been applied by Adam Smith to intellectual wealth as well, and with meticulous care he accordingly keeps the sources secret to which he is indebted for the little, which he turns indeed into much. More than once he prefers to take the sharp edge off a problem when the use of precise definitions might have forced him to settle accounts with his predecessors. This is, for instance, the case with the theory of money. Adam Smith tacitly accepts Steuart's theory by relating that a part of gold and silver available in a country is used as coin, a part is accumulated as reserve funds for merchants in countries which have no banks and as bank reserves in countries with a credit system, a part serves as a stock for the adjustment of international payments, and a part is converted into luxury articles. He quietly eliminates the question about the amount of coin in circulation by quite improperly regarding money as a simple commodity. This not entirely artless slip of Adam Smith was with much pomposity fashioned into a dogma by his vulgariser, the insipid J. B. Say, whom the French have designated prince de la science, just as Johann Christoph Gottsched calls his Schonaich a Homer and Pietro Aretino calls himself terror principum and lux mundi. The tension caused by the struggle against the illusions of the Mercantile System prevented Adam Smith, moreover, from objectively considering the phenomena of metallic currency, whereas his views on paper money are original and profound. Just as the palaeontological theories of the eighteenth century inevitably contain an undercurrent which arises from a critical or an apologetic consideration of the biblical tradition of the Deluge, so behind the facade of all monetary theories of the eighteenth century a hidden struggle is waged against the Monetary System, the spectre which stood guard over the cradle of bourgeois economy and still cast its heavy shadow over legislation. Investigations of monetary matters in the nineteenth century were stimulated directly by phenomena attending the circulation of bank-notes, rather than by those of metallic currency. The latter was merely referred to for the purpose of discovering the laws governing the circulation of bank-notes. The suspension of cash payments by the Bank of England in 1797, the rise in price of many commodities which followed, the fall in the mint-price of gold below its market-price, and the depreciation of bank-notes especially after 1809 were the immediate practical occasion for a party contest within Parliament and a theoretical encounter outside it, both waged with equal passion. The historical background of the debate was furnished by the evolution of paper money in the eighteenth century, the fiasco of Law's bank, the growing volume of value-tokens which was accompanied by a depreciation of provincial bank-notes of the British colonies in North America from the beginning to the middle of the eighteenth century; after which came the legally-imposed paper money, the Continental bills issued by the American Government during the War of Independence, and finally the French assignats, an experiment conducted on an even larger scale. Most English writers of that period confuse the circulation of bank-notes, which is determined by entirely different laws, with the circulation of value-tokens or of government bonds which are legal tender and, although they pretend to explain the phenomena of this forced currency by the laws of metallic currency, in reality they derive the laws of metallic currency from the phenomena of the former. We omit the numerous writers whose works appeared between 1800 and 1809 and turn at once to Ricardo, because he not only summarises his predecessors and expresses their ideas with greater precision, but also because monetary theory in the form he has given it has dominated British banking law up to the present time. Like his predecessors, Ricardo confuses the circulation of bank-notes or of credit money with the circulation of simple tokens of value. The fact which dominates his thought is the depreciation of paper money and the rise in commodity-prices that occurred simultaneously. The printing presses in Threadneedle Street which issue paper notes played the same role for Ricardo as the American mines played for Hume; and in one passage Ricardo explicitly equates these two causes. His first writings, which deal only with monetary matters, originated at a time when a most violent controversy raged between the Bank of England, which was backed by the Ministers and the war party, and its adversaries around whom were grouped the parliamentary opposition, the Whigs and the peace party. These writings appeared as the direct forerunners of the famous Report of the Bullion Committee of 1810, which adopted Ricardo's ideas. The odd fact that Ricardo and his supporters, who maintained that money was merely a token of value, were called bullionists was due not only to the name of the Committee but also to the content of Ricardo's theory. Ricardo restated and further elaborated the same ideas in his work on political economy, but he has nowhere examined money as such in the way in which he has analysed exchange-value, profit, rent, etc. To begin with, Ricardo determines the value of gold and silver, like the value of all other commodities, by the quantity of labour-time materialised in them. The value of other commodities is measured in terms of the precious metals, which are commodities of a determinate value. The quantity of means of circulation employed in a country is thus determined by the value of the standard of money on the one hand, and by the aggregate of the exchange-values of commodities on the other. This quantity is modified by the economy with which payments are effected. Since, therefore, the quantity in which money of a given value can be circulated is determined, and within the framework of circulation its value manifests itself only in its quantity, money within the sphere of circulation can be replaced by simple value-tokens, provided that these are issued in the amount determined by the value of money. Moreover So far, therefore, Ricardo has assumed that the value of money is given, and has determined the amount of means of circulation by the prices of commodities: for him money as a token of value is a token which stands for a determinate quantity of gold and is not a valueless symbol representing commodities, as it was for Hume. When Ricardo suddenly interrupts the smooth progress of his exposition and adopts the opposite view, he does so in order to deal with the international movement of precious metals and thus complicates the problem by introducing extraneous aspects. Following his own train of thought, let us first of all leave aside all artificial and incidental aspects and accordingly locate the gold and silver mines within the countries in which the precious metals circulate as money. The only proposition which follows from Ricardo's analysis up to now is that if the value of gold is given, the amount of money in circulation is determined by the prices of commodities. The volume of gold circulating in a country therefore is simply determined by the exchange-value of the commodities in circulation at the given time. Now supposing that the aggregate amount of these exchange-values decreases, because either a smaller amount of commodities is produced at the old exchange-values, or the same amount of commodities is produced but the commodities represent less exchange-value as a result of an increase in the productivity of labour. Or let us assume by contrast that the aggregate exchange-value has increased, because a larger volume of commodities has been produced while production costs's remain constant, or because either the same or a smaller volume of commodities has a larger value as a result of a decline in the productivity of labour. What happens to the existing quantity of metal in circulation in these two cases? If gold is money only because it circulates as a medium of circulation, if it is forced to stay in the sphere of circulation, like paper money with forced currency issued by the State (and Ricardo implies this), then the quantity of money in circulation will, in the first case, be excessive in relation to the exchange-value of the metal, and it will stand below its normal level in the second case. Although endowed with a specific value, gold thus becomes a token which, in the first case, represents a metal with a lower exchange-value than its own, and in the second case represents a metal which has a higher value. Gold as a token of value will fall below its real value in the first case, and rise above it in the second case (once more a deduction made from paper money with forced currency). The effect would be the same as if, in the first case, all commodities were evaluated in metal of lower value than gold, and in the second case as if they were evaluated in metal of a higher value. Commodity-prices would therefore rise in the first case, and fall in the second. The movement of commodity-prices, their rise or fall, in either case would be due to the relative expansion or contraction in the amount of gold in circulation occasioning a rise above or a fall below the level corresponding to its own value, i.e., the normal quantity determined by the relation between its own value and the value of the commodities which are to be circulated. The same process would take place if the aggregate price of the commodities in circulation remained constant, but the amount of gold in circulation either fell below or rose above the proper level; the former might occur if gold coin worn out in circulation were not replaced by sufficient new output from the mines, the latter if the new supply from the mines surpassed the requirements of circulation. In both cases it is assumed that the production cost of gold, or its value, remains unchanged. To recapitulate: if the exchange-values of the commodities are given, the money in circulation is at its proper level when its quantity is determined by its own metallic value. It exceeds this level, gold falls below its own metallic value and the prices of commodities rise, whenever the aggregate exchange-value of commodities decreases or the supply of gold from the mines increases. The quantity of money sinks below its appropriate level, gold rises above its own metallic value and commodity-prices fall, whenever the aggregate exchange-value of commodities increases or the supply of gold from the mines is insufficient to replace worn-out gold. In these two cases the gold in circulation is a token of value representing either a larger or a smaller value than it actually possesses. It can become an appreciated or depreciated token of itself. When commodities are generally evaluated in conformity with the new value of money, and commodity-prices in general have risen or fallen accordingly, the amount of gold in circulation will once more be commensurate with the needs of circulation (a result which Ricardo emphasises with special satisfaction), but it will be at variance with the production costs of precious metals, and hence with the relations of precious metals as commodities to other commodities. According to Ricardo's general theory of exchange-value, the rise of gold above its exchange-value, in other words above the value which is determined by the labour-time it contains, would lead to an enlarged output of gold until the increased supply reduced it again to its proper value. Conversely, a fall of gold below its value would lead to a decline in the output of gold until its value rose again to its proper level. These opposite movements would resolve the contradiction between the metallic value of gold and its value as a medium of circulation; the amount of gold in circulation would reach its proper level and commodity-prices would once more be in accordance with the standard of value. These fluctuations in the value of gold would in equal measure affect gold bullion, since according to the assumption all gold that is not used as luxury articles is in circulation. Seeing that even gold in the form of coin or bullion can become a value-token representing a larger or smaller value than its own, it is obvious that any convertible bank-notes that are in circulation must share the same fate. Although bank-notes are convertible and their real value accordingly corresponds to their nominal value, the aggregate currency consisting of metal and of convertible notes may appreciate or depreciate if, for reasons described earlier, the total quantity either rises above or falls below the level which is deter mined by the exchange-value of the commodities in circulation and the metallic value of gold. According to this point of view, inconvertible paper money has only one advantage over convertible paper money, i.e., it can be depreciated in two ways. It may fall below the value of the metal which it professes to represent, because too much of it has been issued, or it may fall because the metal it represents has fallen below its own value. This depreciation, not of notes in relation to gold, but of gold and notes taken together, i.e., of the aggregate means of circulation of a country, is one of Ricardo's main discoveries, which Lord Overstone and Co. pressed into their service and turned into a fundamental principle of Sir Robert Peel's bank legislation of 1844 and 1845. What should have been demonstrated was that the price of commodities or the value of gold depends on the amount of gold in circulation. The proof consists in postulating what has to be proved, i.e., that any quantity of the precious metal serving as money, regardless of its relation to its intrinsic value, must become a medium of circulation, or coin, and thus a token of value for the commodities in circulation regardless of the total amount of their value. In other words, this proof rests on disregarding all functions performed by money except its function as a medium of circulation. When driven into a corner, as for instance in his controversy with Bosanquet, Ricardo entirely dominated by the phenomenon of value-tokens depreciating because of their quantity, resorts to dogmatic assertion. If Ricardo had presented his theory in abstract form, as we have done, without introducing concrete circumstances and incidental aspects which represent digressions from the main problem, its hollowness would have been quite obvious. But he gives the whole analysis an international veneer. It is easy to show, however, that the apparent magnitude of scale can in no way alter the insignificance of the basic ideas. The first proposition, therefore, was: the quantity of specie in circulation is normal if it is determined by the aggregate value of commodities in circulation estimated in terms of the metallic value of specie. Adjusted for the international scene this reads: when circulation is in a normal state, the amount of money in each country is commensurate with its wealth and industry. The value of money in circulation corresponds to its real value, i.e., its costs of production: in other words, money has the same value in all countries. Money therefore would never be transferred (exported or imported) from one country to another. A state of equilibrium would thus prevail between the currencies (the total volume of money in circulation) of different countries. The appropriate level of national currency is now expressed in the form of international currency-equilibrium, and this means in fact simply that nationality does not affect the general economic law at all. We have now reached again the same crucial point as before. In what way is the appropriate level upset, which now reads as follows: in what way is the international equilibrium of currencies upset, or why does money cease to have the same value in all countries, or finally why does it cease to have its specific value in each country? Just as previously the appropriate level was upset because the volume of gold in circulation increased or decreased while the aggregate value of commodities remained unchanged, or because the quantity of money in circulation remained constant while the exchange-value of commodities increased or decreased; so now the international level, which is determined by the value of the metal, is upset because the amount of gold is augmented in one country as a result of the discovery of new gold mines in that country, or because the aggregate exchange-value of the commodities in circulation in a particular country increases or decreases. Just as previously the output of precious metals was diminished or enlarged in accordance with the need for reducing or expanding the currency, and in accordance with it to lower or raise commodity-prices, so now the same effect is achieved by export and import from one country to another. In a country where prices have risen and, owing to expanded circulation, the value of gold has fallen below its metallic value, gold would be depreciated in relation to other countries, and the prices of commodities would consequently be higher than in other countries. Gold would, therefore, be exported and commodities imported. The opposite movement would take place in the reverse situation. Just as previously the output of gold continued until the proper ratio of values between gold and commodities was re-established, so now the import or export of gold, accompanied by a rise or fall in commodity-prices, would continue until equilibrium of the international currencies had been re-established. Just as in the first example the output of gold expanded or diminished only because gold stood above or below its value, so now the international movement of gold is brought about by the same cause. Just as in the former example the quantity of metal in circulation and thereby prices were affected by every change in gold output, so now they are affected similarly by international import and export of gold. When the relative value of gold and commodities, or the normal quantity of means of circulation, is established, no further production of gold takes place in the former case, and no more export or import of gold in the latter, except to replace worn-out coin and for the use of the luxury industry. It thus follows, The import or export of gold is invariably brought about by the metal being underrated or overrated owing to an expansion of the currency above its proper level or its contraction below that level. It follows further: since the output of gold is expanded or diminished in our first case, and gold is imported or exported in our second case, only because its quantity has risen above its proper level or fallen below it, because it is rated above its metallic value or below it, and consequently commodity-prices are too high or too low, every one of these movements acts as its own corrective, for, by augmenting or curtailing the amount of money in circulation, prices are reduced again to their correct level, which is determined by the value of gold and the value of commodities in the first case, and by the international level of currencies in the second. To put it in other words, money circulates in different countries only because it circulates as coin in each country. Money is simply specie, and the amount of gold present in a country must enter the sphere of circulation; as a token representing itself it can thus rise above or fall below its value. By the circuitous route of these international intricacies we have managed to return to the simple thesis which forms the point of departure. A few examples will show how arbitrarily actual phenomena are arranged by Ricardo to suit his abstract theory. He asserts, for instance, that in periods of crop failure, which occurred frequently in England between 1800 and 1820, gold is exported, not because corn is needed and gold constitutes money, i.e., it is always an efficacious means of purchase and means of payment on the world market, but because the value of gold has fallen in relation to other commodities and hence the currency of the country suffering from crop failure is depreciated in relation to the other national currencies. That is to say, because the bad harvest reduces the volume of commodities in circulation, the existing quantity of money in circulation exceeds its normal level and all commodity-prices consequently rise. As opposed to this paradoxical explanation, statistics show that in the case of crop failures in England from 1793 up to the present, the existing amount of means of circulation was not excessive but on the contrary it was insufficient, and therefore more money than previously circulated and was bound to circulate. At the time of Napoleon's Continental System and the English Blockade Decrees, Ricardo likewise asserted that the British exported gold instead of commodities to the Continent, because their money was depreciated in relation to that of continental countries, the prices of their commodities were therefore higher and the export of gold rather than commodities was thus a more profitable commercial transaction. According to him commodities were dear and money cheap on the English market, whereas on the Continent commodities were cheap and money dear. In 1810 just at the time when Ricardo first advanced his currency theory, and the Bullion Committee embodied it in its parliamentary report the prices of all British commodities slumped ruinously in comparison with their level in 1808 and 1809, whereas the relative value of gold rose. Agricultural products were an exception because their import from abroad was impeded and the amount available within the country was greatly reduced by bad harvests. So completely did Ricardo misunderstand the function that precious metals perform as international means of payment that in his evidence before the Committee of the House of Lords (1819) he could declare: His death occurred in time before the onset of the crisis of 1825 demonstrated the falsehood of his forecast. The time within which Ricardo's literary activity falls was in general hardly favourable to the study of the function which precious metals perform as world money. Before the imposition of the Continental System Britain had almost continuously a favourable trade balance, and while the System was in force her transactions with the European continent were too insignificant to affect the English rate of exchange. The transfer of money had a predominantly political character, and Ricardo seems to have completely misunderstood the role which subsidies played in British gold export. Among the contemporaries of Ricardo, James Mill was the most important of the adherents of his principles of political economy. He attempted to expound Ricardo's monetary theory on the basis of simple metallic currency, omitting the irrelevant international complications, which conceal the inadequacy of Ricardo's conception, and all controversial references to the operation of the Bank of England. His main propositions are as follows. Mill's whole wisdom is reduced to a series of assumptions which are both arbitrary and trite. He wishes to prove that it is the total quantity of the money in any country which determines the price of commodities or the value of money. If one assumes that the quantity and the exchange-value of the commodities in circulation remain constant, likewise the velocity of circulation and the value of precious metals, which is determined by the cost of production, and if simultaneously one assumes that nevertheless the quantity of specie in circulation increases or decreases in relation to the volume of money existing in a country, then it is indeed evident that one has assumed what one has pretended to prove. Mill, moreover, commits the same error as Hume, namely placing not commodities with a determinate exchange-value, but use-values into circulation; his proposition is therefore wrong, even if one accepts all his assumptions. The velocity of circulation may remain unchanged, similarly the value of precious metals and the quantity of commodities in circulation, yet they may nevertheless require sometimes a larger sometimes a smaller amount of money for their circulation as a result of changes in their exchange-value. Mill notices that a part of the money existing in a country circulates while another part stagnates. By means of a very odd rule of averages he assumes that all the money present in a country is actually in circulation, although in reality it does not seem to be so. If one assumes that in a given country 10 million silver thalers circulate twice in the course of a year, then, if each thaler were used in only one purchase, 20 million could be in circulation. And if the total quantity of all forms of silver in the country amounted to 100 million, it may be supposed that the 100 million could be in circulation if each coin performed one purchase in five years. One could as well assume that all the money existing in the world circulated in Hampstead, but that each portion of it performed one circuit in 3,000,000 years instead of, say, three circuits in one year. The one assumption is just as relevant as the other to the determination of the relation between the aggregate of commodity-prices and the amount of currency. Mill is aware of the crucial importance of establishing a direct connection between the commodities and the whole stock of money not just the amount of money in circulation in a particular country at a given time. He admits that the whole of the goods of a country are not exchanged at once against the whole of the money, but says that separate portions of the goods are exchanged for various portions of money at different times throughout the year. In order to remove this incongruity he assumes that it does not exist. Incidentally, the whole concept of a direct confrontation between commodities and money and their direct exchange is derived from the movement of simple purchases and sales or from the function performed by money as means of purchase. The simultaneous appearance of commodities and money ceases even when money acts as means of payment. The commercial crises of the nineteenth century, and in particular the great crises of 1825 and 1836, did not lead to any further development of Ricardo's currency theory, but rather to new practical applications of it. It was no longer a matter of single economic phenomena such as the depreciation of precious metals in the sixteenth and seventeenth centuries confronting Hume, or the depreciation of paper currency during the eighteenth century and the beginning of the nineteenth confronting Ricardo but of big storms on the world market, in which the antagonism of all elements in the bourgeois process of production explodes; the origin of these storms and the means of defence against them were sought within the sphere of currency, the most superficial and abstract sphere of this process. The theoretical assumption which actually serves the school of economic weather experts as their point of departure is the dogma that Ricardo had discovered the laws governing purely metallic currency. It was thus left to them to subsume the circulation of credit money or bank-notes under these laws. The most common and conspicuous phenomenon accompanying commercial crises is a sudden fall in the general level of commodity-prices occurring after a prolonged general rise of prices. A general fall of commodity-prices may be expressed as a rise in the value of money relative to all other commodities, and, on the other hand, a general rise of prices may be defined as a fall in the relative value of money. Either of these statements describes the phenomenon but does not explain it. Whether the task set is to explain the periodic rise in the general level of prices alternating with a general fall, or the same task is said to be to explain the alternating fall and rise in the relative value of money compared with that of commodities the different terminology has just as little effect on the task itself as a translation of the terms from German into English would have. Ricardo's monetary theory proved to be singularly apposite since it gave to a tautology the semblance of a causal relation. What is the cause of the general fall in commodity-prices which occurs periodically? It is the periodically occurring rise in the relative value of money. What on the other hand is the cause of the recurrent general rise in commodity-prices It is the recurrent fall in the relative value of money. It would be just as correct to say that the recurrent rise and fall of prices is brought about by their recurrent rise and fall. The proposition advanced presupposes that the intrinsic value of money, i.e., its value as determined by the production costs of the precious metals, remains unchanged. If the tautology is meant to be more than a tautology, then it is based on a misapprehension of the most elementary notions. We know that if the exchange-value of A expressed in terms of B falls, it may be due either to a fall in the value of A or to a rise in the value of B; similarly if, on the contrary, the exchange-value of A expressed in terms of B rises. Once the transformation of the tautology into a causal relationship is taken for granted, everything else follows easily. The rise in commodity-prices is due to a fall in the value of money, the fall in the value of money, however, as we know from Ricardo, is due to excessive currency, that is to say, to the fact that the amount of money in circulation rises above the level determined by its own intrinsic value and the intrinsic value of commodities. Similarly in the opposite fall of commodity-prices is due to the value of money rising above its intrinsic value as a result of an insufficient amount of currency. Prices therefore rise and fall periodically, because periodically there is too much or too little money in circulation If it is proved, for instance, that the rise of prices coincided with a decreased amount of money in circulation, and the fall of prices with an increased amount, then it is nevertheless possible to assert that, in consequence of some reduction or increase which can in no way be ascertained statistically of commodities in circulation, the amount of money in circulation has relatively, though not absolutely, increased or decreased. We have seen that, according to Ricardo, even when a purely metallic currency is employed, these variations in the level of prices must take place, but, because they occur alternately, they neutralise one another. For example, an insufficient amount of currency brings about a fall in commodity-prices, the fall of commodity-prices stimulates an export of commodities to other countries, but this export leads to an influx of money into the country, the influx of money causes again a rise in commodity-prices. When there is an excessive amount of currency the reverse occurs: commodities are imported and money exported. Since notwithstanding these general price movements, which arise from the very nature of Ricardo's metallic currency, their severe and vehement form, the form of crisis, belongs to periods with developed credit systems, it is clear that the issue of bank-notes is not exactly governed by the laws of metallic currency. The remedy applicable to metallic currency is the import and export of precious metals, which are immediately thrown into circulation as coin, their inflow or outflow thus causing commodity-prices to fall or to rise. The banks must now artificially exert the same influence on commodity-prices by imitating the laws of metallic currency. If gold is flowing in from abroad, it is a proof that there is an insufficient amount of currency, that the value of money is too high and commodity-prices too low, and bank-notes must therefore be thrown into circulation in accordance with the newly imported gold. On the other hand, bank-notes must be taken out of circulation in accordance with an outflow of gold from the country. In other words the issue of bank-notes must be regulated according to the import and export of the precious metals or according to the rate of exchange. Ricardo's wrong assumption that gold is simply specie and that consequently the whole of the imported gold is used to augment the money In circulation thus causing prices to rise, and that the whole of the gold exported represents a decrease in the amount of specie and thus causes prices to fall this theoretical assumption is now turned into a practical experiment by making the amount of specie in circulation correspond always to the quantity of gold in the country. Lord Overstone (Jones Loyd, the banker), Colonel Torrens, Norman, Clay, Arbuthnot and numerous other writers known in England as the currency school have not only preached this doctrine, but have made it the basis of the present English and Scottish banking legislation by means of Sir Robert Peel's Bank Acts of 1844 and 1845. The analysis of the ignominious fiasco they suffered both in theory and practice, after experiments on the largest national scale, can only be made in the section dealing with the theory of credit. It is obvious however that Ricardo's theory, which regards currency, the fluid form of money, in isolation, ends by attributing to increases and decreases in the amount of precious metals an absolute influence on bourgeois economy such as was never imagined even in the superstitious concepts of the Monetary System. Ricardo, who declared that paper money is the most perfect form of money, was thus to become the prophet of the bullionists. After Hume's theory, or the abstract opposition to the Monetary System, had been developed to its extreme conclusions, Steuart's concrete interpretation of money was finally restored to its legitimate position by Thomas Tooke. Tooke derives his principles not from some theory or other but from a scrupulous analysis of the history of commodity-prices from 1793 to 1856. In the first edition of his History of Prices, which was published in 1823, Tooke is still completely engrossed in the Ricardian theory and vainly tries to reconcile the facts with this theory. His pamphlet On the Currency, which was published after the crisis of 1825, could even be regarded as the first consistent exposition of the views which Overstone was to set forth later. But continued investigation of the history of prices compelled Tooke to recognise that the direct correlation between prices and the quantity of currency presupposed by this theory is purely imaginary, that increases or decreases in the amount of currency when the value of precious metals remains constant are always the consequence, never the cause, of price variations, that altogether the circulation of money is merely a secondary movement and that, in addition to serving as medium of circulation, money performs various other functions in the real process of production. His detailed research does not belong to the sphere of simple metallic currency and at this stage it is accordingly not yet possible to examine it or the works of Wilson and Fullarton, who belong to the same school of thought. None of these writers take a one-sided view of money but deal with its various aspects, though only from a mechanical angle without paying any attention to the organic relation of these aspects either with one another or with the system of economic categories as a whole. Hence, they fall into the error of confusing money as distinct from currency with capital or even with commodities; although on the other hand, they are occasionally constrained to assert that there is a distinction between these two categories and money. When, for example, gold is sent abroad, then indeed capital is sent abroad, but this is also the case when iron, cotton, corn, in short when any commodity, is exported. Both are capital and the difference between them does not consist therefore in the fact that one is capital, but that one is money and the other commodity. The role of gold as international means of exchange is thus due not to the distinctive form it has as capital, but to the specific function it performs as money. Similarly when gold or bank-notes which take its place act as means of payment in domestic trade they are at the same time capital. But it would be impossible to use capital in the shape of commodities instead, as crises very strikingly demonstrate, for instance. It is again the difference between commodities and gold used as money and not its function as capital which turns gold into a means of payment. Even when capital is directly exported as capital, e.g., in order to lend a definite amount on interest abroad, it depends on market conditions whether this is exported in the shape of commodities or of gold; and if it is exported as gold this is done because of the specific function which the precious metals perform as money in contradistinction to commodities. Generally speaking these writers do not first of all examine money in its abstract form in which it develops within the framework of simple commodity circulation and grows out of the relations of commodities in circulation. As a consequence they continually vacillate between the abstract forms which money assumes, as opposed to commodities, and those forms of money which conceal concrete factors, such as capital, revenue, and so forth.

Economic Manuscripts: Theories of the Medium of Circulation and of Money 1859

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/ch02c.htm

[...] The first work which I undertook to dispel the doubts assailing me was a critical re-examination of the Hegelian philosophy of law; the introduction to this work being published in the Deutsch-Franzosische Jahrbucher issued in Paris in 1844. My inquiry led me to the conclusion that neither legal relations nor political forms could be comprehended whether by themselves or on the basis of a so-called general development of the human mind, but that on the contrary they originate in the material conditions of life, the totality of which Hegel, following the example of English and French thinkers of the eighteenth century, embraces within the term "civil society"; that the anatomy of this civil society, however, has to be sought in political economy. The study of this, which I began in Paris, I continued in Brussels, where I moved owing to an expulsion order issued by M. Guizot. The general conclusion at which I arrived and which, once reached, became the guiding principle of my studies, can be summarised as follows. In the social production of their life, men enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material productive forces. The sum total of these relations of production constitutes the economic structure of society, the real foundation, on which rises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the social, political and intellectual life process in general. It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness. At a certain stage of their development, the material productive forces of society come in conflict with the existing relations of production, or what is but a legal expression for the same thing with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution. With the change of the economic foundation the entire immense superstructure is more or less rapidly transformed. In considering such transformations a distinction should always be made between the material transformation of the economic conditions of production, which can be determined with the precision of natural science, and the legal, political, religious, aesthetic or philosophic in short, ideological forms in which men become conscious of this conflict and fight it out. Just as our opinion of an individual is not based on what he thinks of himself, so can we not judge of such a period of transformation by its own consciousness; on the contrary, this consciousness must be explained rather from the contradictions of material life, from the existing conflict between the social productive forces and the relations of production. No social order ever perishes before all the productive forces for which there is room in it have developed; and new, higher relations of production never appear before the material conditions of their existence have matured in the womb of the old society itself. Therefore mankind always sets itself only such tasks as it can solve; since, looking at the matter more closely, it will always be found that the tasks itself arises only when the material conditions of its solution already exist or are at least in the process of formation. In broad outlines Asiatic[A], ancient, feudal, and modern bourgeois modes of production can be designated as progressive epochs in the economic formation of society. The bourgeois relations of production are the last antagonistic form of the social process of production antagonistic not in the sense of individual antagonisms, but of one arising from the social conditions of life of the individuals; at the same time the productive forces developing in the womb of bourgeois society create the material conditions for the solution of that antagonism. This social formation brings, therefore, the prehistory of society to a close. Frederick Engels, with whom I maintained a constant exchange of ideas by correspondence since the publication of his brilliant essay on the critique of economic categories (printed in the Deutsch-Franzosische Jahrbucher, arrived by another road (compare his Lage der arbeitenden Klasse in England ) at the same result as I, and when in the spring of 1845 he too came to live in Brussels, we decided to set forth together our conception as opposed to the ideological one of German philosophy, in fact to settle accounts with our former philosophical conscience. The intention was carried out in the form of a critique of post-Hegelian philosophy. The manuscript [The German Ideology], two large octavo volumes, had long ago reached the publishers in Westphalia when we were informed that owing to changed circumstances it could not be printed. We abandoned the manuscript to the gnawing criticism of the mice all the more willingly since we had achieved our main purpose self-clarification.... [...]

Economic Manuscripts: A Contribution to the Critique of Political Economy (Preface Abstract)

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/preface-abs.htm

The economic conditions of existence of the three great classes into which modern bourgeois society is divided are analysed under the first three headings; the interconnection of the other three headings is self-evident. The first part of the first book, dealing with Capital, comprises the following chapters: 1. The commodity, 2. Money or simple circulation; 3. Capital in general. The present part consists of the first two chapters. The entire material lies before me in the form of monographs, which were written not for publication but for self-clarification at widely separated periods; their remoulding into an integrated whole according to the plan I have indicated will depend upon circumstances. A general introduction, which I had drafted, is omitted, since on further consideration it seems to me confusing to anticipate results which still have to be substantiated, and the reader who really wishes to follow me will have to decide to advance from the particular to the general. A few brief remarks regarding the course of my study of political economy are appropriate here. Although I studied jurisprudence, I pursued it as a subject subordinated to philosophy and history. In the year 1842-43, as editor of the Rheinische Zeitung, I first found myself in the embarrassing position of having to discuss what is known as material interests. The deliberations of the Rhenish Landtag on forest thefts and the division of landed property; the official polemic started by Herr von Schaper, then Oberprasident of the Rhine Province, against the Rheinische Zeitung about the condition of the Moselle peasantry, and finally the debates on free trade and protective tariffs caused me in the first instance to turn my attention to economic questions. On the other hand, at that time when good intentions to push forward often took the place of factual knowledge, an echo of French socialism and communism, slightly tinged by philosophy, was noticeable in the Rheinische Zeitung. I objected to this dilettantism, but at the same time frankly admitted in a controversy with the Allgemeine Augsburger Zeitung that my previous studies did not allow me to express any opinion on the content of the French theories. When the publishers of the Rheinische Zeitung conceived the illusion that by a more compliant policy on the part of the paper it might be possible to secure the abrogation of the death sentence passed upon it, I eagerly grasped the opportunity to withdraw from the public stage to my study. The first work which I undertook to dispel the doubts assailing me was a critical re-examination of the Hegelian philosophy of law; the introduction to this work being published in the Deutsch-Franzosische Jahrbucher issued in Paris in 1844. My inquiry led me to the conclusion that neither legal relations nor political forms could be comprehended whether by themselves or on the basis of a so-called general development of the human mind, but that on the contrary they originate in the material conditions of life, the totality of which Hegel, following the example of English and French thinkers of the eighteenth century, embraces within the term civil society ; that the anatomy of this civil society, however, has to be sought in political economy. The study of this, which I began in Paris, I continued in Brussels, where I moved owing to an expulsion order issued by M. Guizot. The general conclusion at which I arrived and which, once reached, became the guiding principle of my studies can be summarised as follows. In the social production of their existence, men inevitably enter into definite relations, which are independent of their will, namely relations of production appropriate to a given stage in the development of their material forces of production. The totality of these relations of production constitutes the economic structure of society, the real foundation, on which arises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the general process of social, political and intellectual life. It is not the consciousness of men that determines their existence, but their social existence that determines their consciousness. At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or this merely expresses the same thing in legal terms with the property relations within the framework of which they have operated hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an era of social revolution. The changes in the economic foundation lead sooner or later to the transformation of the whole immense superstructure. In studying such transformations it is always necessary to distinguish between the material transformation of the economic conditions of production, which can be determined with the precision of natural science, and the legal, political, religious, artistic or philosophic in short, ideological forms in which men become conscious of this conflict and fight it out. Just as one does not judge an individual by what he thinks about himself, so one cannot judge such a period of transformation by its consciousness, but, on the contrary, this consciousness must be explained from the contradictions of material life, from the conflict existing between the social forces of production and the relations of production. No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society. Mankind thus inevitably sets itself only such tasks as it is able to solve, since closer examination will always show that the problem itself arises only when the material conditions for its solution are already present or at least in the course of formation. In broad outline, the Asiatic, ancient,[A] feudal and modern bourgeois modes of production may be designated as epochs marking progress in the economic development of society. The bourgeois mode of production is the last antagonistic form of the social process of production antagonistic not in the sense of individual antagonism but of an antagonism that emanates from the individuals' social conditions of existence but the productive forces developing within bourgeois society create also the material conditions for a solution of this antagonism. The prehistory of human society accordingly closes with this social formation. Frederick Engels, with whom I maintained a constant exchange of ideas by correspondence since the publication of his brilliant essay on the critique of economic categories (printed in the Deutsch-Franz sische Jahrb cher, arrived by another road (compare his Lage der arbeitenden Klasse in England) at the same result as I, and when in the spring of 1845 he too came to live in Brussels, we decided to set forth together our conception as opposed to the ideological one of German philosophy, in fact to settle accounts with our former philosophical conscience. The intention was carried out in the form of a critique of post-Hegelian philosophy. The manuscript [The German Ideology], two large octavo volumes, had long ago reached the publishers in Westphalia when we were informed that owing to changed circumstances it could not be printed. We abandoned the manuscript to the gnawing criticism of the mice all the more willingly since we had achieved our main purpose self-clarification. Of the scattered works in which at that time we presented one or another aspect of our views to the public, I shall mention only the Manifesto of the Communist Party, jointly written by Engels and myself, and a Discours sur le libre echange, which I myself published. The salient points of our conception were first outlined in an academic, although polemical, form in my Misere de la philosophie..., this book which was aimed at Proudhon appeared in 1847. The publication of an essay on Wage-Labour [Wage-Labor and Capital] written in German in which I combined the lectures I had held on this subject at the German Workers' Association in Brussels, was interrupted by the February Revolution and my forcible removal from Belgium in consequence. The publication of the Neue Rheinische Zeitung in 1848 and 1849 and subsequent events cut short my economic studies, which I could only resume in London in 1850. The enormous amount of material relating to the history of political economy assembled in the British Museum, the fact that London is a convenient vantage point for the observation of bourgeois society, and finally the new stage of development which this society seemed to have entered with the discovery of gold in California and Australia, induced me to start again from the very beginning and to work carefully through the new material. These studies led partly of their own accord to apparently quite remote subjects on which I had to spend a certain amount of time. But it was in particular the imperative necessity of earning my living which reduced the time at my disposal. My collaboration, continued now for eight years, with the New York Tribune, the leading Anglo-American newspaper, necessitated an excessive fragmentation of my studies, for I wrote only exceptionally newspaper correspondence in the strict sense. Since a considerable part of my contributions consisted of articles dealing with important economic events in Britain and on the continent, I was compelled to become conversant with practical detail which, strictly speaking, lie outside the sphere of political economy. This sketch of the course of my studies in the domain of political economy is intended merely to show that my views no matter how they may be judged and how little they conform to the interested prejudices of the ruling classes are the outcome of conscientious research carried on over many years. At the entrance to science, as at the entrance to hell, the demand must be made:

Economic Manuscripts: Preface to A Contribution to the Critique of Political Economy

https://www.marxists.org/archive/marx/works/1859/critique-pol-economy/preface.htm

It must be added that over the years the noble Ferdinand s flow of poetry has dried up and the little that he still manages to squeeze out of his cranium is ignominiously bad. Hence one has to resort to various dodges, with complete works, etc., which cannot be done every day. So, if one is not to be forgotten, advertising becomes more necessary with every passing day. Who in fact spoke of Freiligrath from 1849 to I 858? No one. Only Bettziech has rediscovered this classic, who had been forgotten to such an extent that he was only used as a Christmas or birthday present, and who already figured in the history of literature, rather than in literature itself. The only one to blame for this was naturally Karl Marx with his breathing. But once Freiligrath is warmed through again by the incense of Gartenl ube, you will see what sort of poetry he will spout forth! What a petty, wretched, miserable business with these poets! This is why I praise Siebel. He is a really bad poet, of course, but he knows that he is a humbug through and through and desires only that he be given access to the advertising trade as a necessary proc d [occupation] of the times, for without this he would be nothing.

Letters: Marx-Engels Correspondence 1859

https://www.marxists.org/archive/marx/works/1859/letters/59_12_22.htm

On the 16th of September, 1859, the account of the repulse on the Peiho was received in England. Instead of summoning Parliament, Lord Palmerston addressed himself to Louis Bonaparte, and conversed with the autocrat on a new Anglo-French expedition against China. During three months, as Lord Grey says, the British ports and arsenals "have resounded with the din of preparation," and measures were taken for dispatching artillery, stores, and gun-boats to China, and for sending large forces of not less than io,000 men, in addition to the naval forces. The country having thus been fairly embarked in a new war, on the one hand by a treaty with France, on the other by a vast expenditure incurred without any previous communication to Parliament, the latter, on its meeting, is coolly asked "to thank Her Majesty for having informed them of what had happened and of the preparations that were being made for an expedition to China." In what different style could Louis Napoleon himself have addressed his own corps legislatif, or the Emperor Alexander his senate? In the debate on the Address in the House of Commons in 1857, Mr. Gladstone, the present Chancellor of the Exchequer, with reference to the Persian war, had indignantly exclaimed: Lord Palmerston has not only repeated the proceeding, "so dangerous to the Constitution"; he has not only repeated it this time with the concurrence of the sanctimonious Mr. Gladstone, but as if to try the strength of ministerial irresponsibility, wielding the rights of Parliament against the Crown, the prerogatives of the Crown against Parliament, and the privileges of both against the people he had the boldness to repeat the dangerous proceeding within the same sphere of action. His one Chinese war being censured by the Parliament, he undertakes another Chinese war in spite of Parliament. Still, in both Houses, only one man mustered courage enough to make a stand against this ministerial usurpation; and, curious to say, that one man belonging not to the popular, but to the aristocratic branch of the Legislature. The man is Lord Grey. He proposed an amendment to the Address in answer to the Queen's Speech to the purport that the expedition ought not to have been entered upon before the sense of both Houses of Parliament was taken. The manner in which Lord Grey's amendment was met, both by the spokesman of the ministerial party and leader, Her Majesty's opposition, is highly characteristic of the political crisis which the representative institutions of England are rapidly approaching. Lord Grey conceded that, in a formal sense, the Crown enjoyed the prerogative of entering upon wars, but since ministers were interdicted from spending one single farthing on any enterprise without the previous sanction of Parliament, it was the constitutional law and practice that the responsible representatives of the Crown should never enter upon warlike expeditions before notice having been given to Parliament, and the latter been called to make provision for defraying the expenditure which might be thus incurred. Thus, if the council of the nation thought fit, it might check, in the beginning, any unjust or impolitic war contemplated by ministers. His Lordship then quoted some examples in order to show how strictly these rules were formerly adhered to. In 1790, when some British vessels were seized by the Spaniards on the north-west coast of America, Pitt brought down to both Houses a message from the Crown calling for a vote of credit to meet the probable expenses. Again, in December 1826, when the daughter of Don Pedro applied to England for assistance against Ferdinand VII. of Spain, who intended an invasion of Portugal to the benefit of Don Miguel, Canning brought down a similar message notifying to Parliament the nature of the case and the amount of expenditure likely to be incurred. In conclusion Lord Grey. broadly intimated that the Ministry had dared to raise taxes upon the country without the concurrence of Parliament, since the large expenditure already incurred must have been defrayed one way or an other, and could not have been defrayed without encroaching upon money-grants provided for entirely different demands. Now which sort of reply did Lord Grey elicit on the part of the cabinet? The Duke of Newcastle, who had been foremost in protesting against the lawfulness of Palmerston's second Chinese war, answered, in the first instance, that "the very wholesome practice" had arisen of late years of "never moving an amendment to the Address ... unless some at party object "was to be attained. Consequently, Lord Grey being not prompted by factious motives, An pretending not to aspire to put Ministers out in order to put himself in what for the life of the Duke of Newcastle, could he mean by infringing upon that " very wholesome practice of late years?" Was he crotchety enough to fancy that they were to break lances except for great party objects? In the second instance, was it not notorious that the constitutional practice, so anxiously adhered to by Pitt and Canning, had been over and over again departed from by Lord Palmerston? Had that noble Viscount not carried on a war of his own in Portugal in 1831, in Greece in 1850, and, as the Duke of Newcastle might have added, in Persia, in Afghanistan and in many other countries? Why, if Parliament had allowed Lord Palmerston to usurp to himself the right of war and peace and taxation during the course of thirty years, why, then, should they all at once try to break from their long servile tradition? Constitutional law might be on the side of Lord Grey, but prescription was undoubtedly on the side of Lord Palmerston. Why call the noble Viscount to account at this time of the day, since never before had he been punished for similar "wholesome" innovations? In fact, the Duke of Newcastle seemed rather indulgent in not accusing Lord Grey of rebellion for his attempt at breaking through Lord Palmerston's prescriptive privilege of doing with his own the forces and the money of England as he liked. Equally original was the manner in which the Duke of Newcastle endeavoured to prove the legality of the Peiho expedition. There exists an Anglo-Chinese treaty of 1843 by dint of which England enjoys all the rights conceded by the Celestials to the most favoured nations. Now Russia, in her recent treaty with China, has stipulated for the right of sailing up the Peiho. Consequently, under the treaty of 1843, the English had a right to such passage. This, the Duke of Newcastle said, he might insist upon "without any great special pleading." Might he, indeed! On the one side there is the ugly circumstance that the Russian treaty was only ratified, and, consequently dates its actual existence only from an epoch posterior to the Peiho catastrophe. This, of course, is but a slight husteron proteron. On the other hand, it is generally known that a state of war suspends all existing treaties. If the English were at war with the Chinese at the time of the Peiho expedition, they, of course, could appeal neither to the treaty Of 1843, nor to any other treaty whatever. If they were not at war, Palmerston's Cabinet has taken upon itself to commence a new war without the sanction of Parliament. To escape the latter power of the dilemma, poor Newcastle asserts that since the Canton bombardment, for the last two years, "England had never been at peace with China." Consequently the Ministry had pushed on hostilities, not recommenced them, and consequently he might, without special pleading, appeal to the treaties effective only during a time of peace. And to heighten the beauty of this queer sort of dialectics, Lord Palmerston, the chief of the Cabinet, asserts at the same time, in the House of Commons, that England all this time over "had never been at war with China." They were not so now. There were, of course, Canton bombardments, Peiho catastrophes, and Anglo-French expeditions, but there was no war, since war had never been declared, and since, to this moment, the Emperor of China had allowed transactions at Shanghai to proceed in their usual course. The very fact of his having broken, in regard to the Chinese, through all the legitimate international forms of war, Palmerston pleads as a reason for dispensing also with the constitutional forms in regard to the British Parliament, while his spokesman in the House of Lords, Earl Granville, "with regard to China," disdainfully declares "the consultation of Parliament by Government" to be "a purely technical point." The consultation of Parliament by Government a purely technical point! What difference, then, does still remain between a British Parliament and a French Corps legislatif? In France, it is, at least, the presumed heir of a national hero who dares to place himself in the place of the nation, and who at the same time openly confronts all the dangers of such usurpation. But, in England, it is some subaltern spokesman, some worn-out place-hunter, some anonymous nonentity of a so-called Cabinet, that, relying on the donkey power of the Parliamentary mind and the bewildering evaporations of an anonymous press, without making any noise, without incurring any danger, quietly creep their way to irresponsible power. Take on the one hand the commotions raised by a Sulla; take on the other the fraudulent business-like manoeuvres of the manager of a joint stock bank, the secretary of a benevolent society, or the clerk of a vestry, and you will understand the difference between imperialist usurpation in France and ministerial usurpation in England! Lord Derby, fully aware of the equal interest both factions have in securing ministerial impotence and irresponsibility, could, of course, "not concur with the noble Earl (Grey) in the strong views which he takes of the lapses of Government." He could not quite concur in Lord Grey's complaint that the Government ought to have called Parliament together, to have consulted them on the Chinese question," but he "certainly would not support him by his vote should he press the amendment to a division." Consequently, the amendment was not pressed to a division, and the whole debate, in both Houses, on the Chinese war evaporated in grotesque compliments showered by both factions on the head of Admiral Hope for having so gloriously buried the English forces in the mud.

Karl Marx in New York Daily Tribune

https://www.marxists.org/archive/marx/works/1860/02/14.htm

In Spanish drama there are two jesters for every hero. Calder n provides holy Cyprian himself, the Spanish Faust, with a Mosc n and a Clarin. In the same way, the reactionary General von Radowitz had two comic adjutants in the Frankfurt parliament, his harlequin Lichnowski and his clown Vincke. But Pope s realm of dullness differs from that of the National-Zeitung in that there Dunce the second rules at present, as once did Dunce the first, while here the old Dunce, Dunce the first, still holds sway.

Marx Engels on Art and Literature

https://www.marxists.org/archive/marx/works/1860/herr-vogt/abstract.htm

I was extraordinarily taken with your two short poems on Leibniz and Alles Wurst ; it would be good if you enclosed them (should you agree to my proposal) in the first letter to Weydemeyer.

Letters: Marx-Engels Correspondence 1860

https://www.marxists.org/archive/marx/works/1860/letters/60_04_09a.htm

By pure chance, the old Danish Kj mpe-Viser fell into my hands. Some very nice things here and there among a lot of rubbish. Here is one, translated by Uhland. I like this much better than the very smooth Uhland version. Another, Her Jon, is even nicer.

Letters: Marx Engels on Art and Literature

https://www.marxists.org/archive/marx/works/1860/letters/60_06_20.htm

The year 1861, it appears, has not yet troubles enough to bear. We have our Secessionist Revolution in America; there is the Rebellion in China ; the advance of Russia in Eastern and Central Asia; the Eastern question, with its corollaries of the French occupation of Syria and the Suez Canal; the breaking up of Austria, with Hungary in almost open insurrection; the siege of Ga ta, and Garibaldi s promise of liberating Venice on the first of March; and last, but not least, the attempt to restore Marshal MacMahon to his ancestral throne of Ireland. But all this is not enough. We are now promised, besides, a fourth Schleswig-Holstein campaign. The King of Denmark, in 1851, voluntarily entered into certain obligations to Prussia and Austria with regard to Schleswig. He promised that the Duchy should not be incorporated with Denmark; that its Representative Assembly should remain distinct from that of Denmark; and that both the German and Danish nationalities in Schleswig should receive equal protection. Beside this, so far as regards Holstein, the rights of its Representative Assembly were expressly guaranteed. Upon these conditions, the federal troops which had occupied Holstein were withdrawn. The Danish Government executed its promises in a most evasive way. In Schleswig, the southern half is exclusively German; in the northern half, all the towns are German, while the country people speak a corrupted Danish dialect, and the written language, from time immemorial, has almost everywhere been German. By the consent of the population, a process of Germanization has been going on there for centuries; so much so that, with the exception of the most northerly border districts, even that portion of the peasantry who speak a Danish dialect (which is, however, so far distant from the written Danish as to be easily intelligible to the German inhabitants of the South), understand the written High German better than the written Danish language. After 1851, the Government divided the country into a Danish, a German, and a mixed district. In the German district, German; in the Danish district, Danish was to be the exclusive official language of the Government, the courts of law, the pulpit, and the schools. In the mixed districts, both languages were to be equally admissible. This looks fair enough, but the truth is that, in establishing the Danish district, the written Danish language was forced upon a population the great majority of whom did not even understand it, and only desired to be governed, tried, educated, christened, and married in the German language. However, the Government now opened a regular crusade for the weeding out of all traces of Germanism from the district, forbidding even private tuition in families in any other than the Danish language; and sought at the same time, by more indirect means, in the mixed district to give the Danish language the preponderance. The opposition created by these measures was very violent, and an attempt was made to put it down by a series of petty acts of tyranny. In the small town of Eckernf rde, for instance, about $4,000 fines were at once inflicted for the crime of unlawfully petitioning the Representative Assembly; and all the parties fined were, as convicts, declared to be deprived of their right of voting. Still, the population and the Assembly persisted and now persist in their opposition. In Holstein, the Danish Government found it impossible to make the Representative Assembly vote any taxes unless they granted concessions in a political and national sense. This they would not do; neither would they do without the revenues of the Duchy. In order, therefore, to manufacture some legal ground on which to levy them, they convoked a Council of the Kingdom, an assembly without any representative character, but supposed to represent Denmark proper, Schleswig-Holstein, and Lauenburg. Although the Holsteiners refused to attend, this body voted the taxes for the whole monarchy, and, based upon this vote, the Government assessed the taxes to be paid in Holstein. Thus Holstein, which was to be an independent and separate Duchy, was deprived of all political independence, and made subject to an Assembly preeminently Danish. These are the grounds on which the German press, for five or six years past, have called on the German Governments to employ coercive measures against Denmark. The grounds, in themselves, are certainly good. But the German press that press which was allowed to exist during the reactionary period after 1849 merely used Schleswig-Holstein as a means of popularity. It was indeed very cheap to hold forth in high indignation against the Danes, when the Governments of Germany allowed it those Governments which at home tried to emulate Denmark in petty tyranny. War against Denmark was the cry when the Crimean war broke out. War against Denmark again, when Louis Napoleon invaded Austrian Italy. Now, then, they will have it all their own way. The new era in Prussia, hitherto so coy when called upon by the liberal press, in this instance chimes in with it. The new King of Prussia proclaims to the world that he must bring this old complaint to a settlement; the decrepit Diet at Frankfort puts all its clumsy machinery in motion for the salvation of German nationality, and the liberal press-triumphs? No such thing. The liberal press, now at once put to the test, eats its words, cries out, Caution! discovers that Germany has no fleet wherewith to fight the ships of a naval power, and, especially in Prussia, shows all the symptoms of cowardice. What a few months ago was an urgent patriotic duty, is now all of a sudden an Austrian intrigue, which Prussia is warned not to give way to. That the German Governments, in their sudden enthusiasm for the cause of Schleswig-Holstein, are in the least sincere, is, of course, out of the question. As the Danish Dagbladet says: This has been decidedly the case in Saxony, and to a certain extent it is now the case in Prussia. But in Prussia the sudden starting of this question also signifies, evidently, an alliance with Austria. The Prussian Government behold Austria breaking to pieces from within, while she is menaced from without by a war with Italy. It certainly is not the interest of the Prussian Government to see Austria annihilated. At the same time, the Italian war, to which Louis Napoleon would not long remain an impartial spectator, would scarcely again come off without touching the territory of the German Confederation, in which case Prussia is bound to interfere. Then the war with France on the Rhine would certainly be combined with a Danish war on the Eider; and while the Prussian Government cannot afford to have Austria broken down, why wait till Austria is again defeated? Why not engage in the quarrel of Schleswig-Holstein, and thereby interest in the war all North Germany which would not fight for the defence of Venetia? If this be the reasoning of the Prussian Government, it is logical enough, but it was quite as logical in 1859, before Austria was weakened by Magenta and Solferino and by her internal convulsions. Why was it not then acted upon? It is not at all certain that this great war will come off next Spring. But if it does come off, although neither party deserves any sympathy, it must have this result, that whichsoever be beaten in the beginning, there will be a revolution. If Louis Napoleon be defeated, his throne is sure to fall; and if the King of Prussia and the Emperor of Austria be worsted, they will have to give way before a German revolution.

Engels in the New-York Tribune 1861

https://www.marxists.org/archive/marx/works/1861/02/12.htm

London, Sept. 18, 1861 Mrs. Beecher Stowe s letter to Lord Shaftesbury, whatever its intrinsic merit may be, has done a great deal of good, by forcing the anti-Northern organs of the London press to speak out and lay before the general public the ostensible reasons for their hostile tone against the North, and their ill-concealed sympathies with the South, which looks rather strange on the part of people affecting an utter horror of Slavery. Their first and main grievance is that the present American war is not one for the abolition of Slavery, and that, therefore, the high-minded Britisher, used to undertake wars of his own, and interest himself in other people s wars only on the basis of broad humanitarian principles, cannot be expected to feel any sympathy with his Northern cousins. Now, in the first instance, the premiss must be conceded. The war has not been undertaken with a view to put down Slavery, and the United States authorities themselves have taken the greatest pains to protest against any such idea. But then, it ought to be remembered that it was not the North, but the South, which undertook this war; the former acting only on the defense. If it be true that the North, after long hesitations, and an exhibition of forbearance unknown in the annals of European history, drew at last the sword, not for crushing Slavery, but for saving the Union, the South, on its part, inaugurated the war by loudly proclaiming the peculiar institution as the only and main end of the rebellion. It confessed to fight for the liberty of enslaving other people, a liberty which, despite the Northern protests, it asserted to be put in danger by the victory of the Republican party and the election of Mr. Lincoln to the Presidential chair. The Confederate Congress boasted that its new-fangled constitution, as distinguished from the Constitution of the Washingtons, Jeffersons, and Adams s, had recognized for the first time Slavery as a thing good in itself, a bulwark of civilization, and a divine institution. If the North professed to fight but for the Union, the South gloried in rebellion for the supremacy of Slavery. If Anti-Slavery and idealistic England felt not attracted by the profession of the North, how came it to pass that it was not violently repulsed by the cynical confessions of the South? The Saturday Review helps itself out of this ugly dilemma by disbelieving the declarations of the seceders themselves. It sees deeper than this, and discovers that Slavery had very little to do with Secession; the declarations of Jeff. Davis and company to the contrary being mere conventionalisms with about as much meaning as the conventionalisms about violated altars and desecrated hearths, which always occur in such proclamations. The staple of argument on the part of the anti-Northern papers is very scanty, and throughout all of them we find almost the same sentences recurring, like the formulas of a mathematical series, at certain intervals, with very little art of variation or combination. What The Economist and The Examiner had to ask was not only why the Crittenden and other compromise measures were proposed in Congress, but why they were not passed? They affect to consider those compromise proposals as accepted by the North and rejected by the South, while, in point of fact, they were baffled by the Northern party, that had carried the Lincoln election. Proposals never matured into resolutions, but always remaining in the embryo state of pia desideria, the South had of course never any occasion either of rejecting or acquiescing in. We come nearer to the pith of the question by the following remark of The Examiner: One might suppose that The Examiner and the other oracles of public opinion in England had made themselves sufficiently familiar with the contemporaneous history to not need Mrs. Stowe s information on such all-important points. The progressive abuse of the Union by the slave power, working through its alliance with the Northern Democratic party, is, so to say, the general formula of the United States history since the beginning of this century. The successive compromise measures mark the successive degrees of the encroachment by which the Union became more and more transformed into the slave of the slave-owner. Each of these compromises denotes a new encroachment of the South, a new concession of the North. At the same time none of the successive victories of the South was carried but after a hot contest with an antagonistic force in the North, appearing under different party names with different watchwords and under different colors. If the positive and final result of each single contest told in favor of the South, the attentive observer of history could not but see that every new advance of the slave power was a step forward to its ultimate defeat. Even at the times of the Missouri Compromise the contending forces were so evenly balanced that Jefferson, as we see from his memoirs, apprehended the Union to be in danger of splitting on that deadly antagonism. The encroachments of the slaveholding power reached their maximum point, when, by the Kansas-Nebraska bill, for the first time in the history of the United States, as Mr. Douglas himself confessed, every legal barrier to the diffusion of Slavery within the United States territories was broken down, when, afterward, a Northern candidate bought his Presidential nomination by pledging the Union to conquer or purchase in Cuba a new field of dominion for the slaveholder; when, later on, by the Dred Scott decision, diffusion of Slavery by the Federal power was proclaimed as the law of the American Constitution, and lastly, when the African slave-trade was de facto reopened on a larger scale than during the times of its legal existence. But, concurrently with this climax of Southern encroachments, carried by the connivance of the Northern Democratic party, there were unmistakable signs of Northern antagonistic agencies having gathered such strength as must soon turn the balance of power. The Kansas war, the formation of the Republican party, and the large vote cast for Mr. Fr mont during the Presidential election of 1856, were so many palpable proofs that the North had accumulated sufficient energies to rectify the aberrations which United States history, under the slaveowners pressure, had undergone, for half a century, and to make it return to the true principles of its development. Apart from those political phenomena, there was one broad statistical and economical fact indicating that the abuse of the Federal Union by the slave interest had approached the point from which it would have to recede forcibly, or de bonne grace b That fact was the growth of the North-West, the immense strides its population had made from 1850 to 1860, and the new and reinvigorating influence it could not but bear on the destinies of the United States. Now, was all this a secret chapter of history? Was the admission of Mrs. Beecher Stowe wanted to reveal to The Examiner and the other political illuminati of the London press the carefully hidden truth that up to that time the Slave party had used the Union for their purposes? Is it the fault of the American North that the English pressmen were taken quite unawares by the violent clash of the antagonistic forces, the friction of which was the moving power of its history for half a century? Is it the fault of the Americans that the English press mistake for the fanciful crotchet hatched in a single day what was in reality the matured result of long years of struggle? The very fact that the formation and the progress of the Republican party in America have hardly been noticed by the London press, speaks volumes as to the hollowness of its Anti-Slavery tirades. Take, for instance, the two antipodes of the London press, The London Times and Reynolds s Weekly Newspaper, the one the great organ of the respectable classes, and the other the only remaining organ of the working class. The former, not long before Mr. Buchanan s career drew to an end, published an elaborate apology for his Administration and a defamatory libel against the Republican movement. Reynolds, on his part, was, during Mr. Buchanan s stay at London, one of his minions, and since that time never missed an occasion to write him up and to write his adversaries down. How did it come to pass that the Republican party, whose platform was drawn up on the avowed antagonism to the encroachments of the Slaveocracy and the abuse of the Union by the slave interest, carried the day in the North? How, in the second instance, did it come to pass that the great bulk of the Northern Democratic party, flinging aside its old connexions with the leaders of Slaveocracy, setting at naught its traditions of half a century, sacrificing great commercial interests and greater political prejudices, rushed to the support of the present Republican Administration and offered it men and money with an unsparing hand? Instead of answering these questions The Economist exclaims: This is, in fact, a masterly piece of logic. Anti-Slavery England cannot sympathize with the North breaking down the withering influence of slaveocracy, because she cannot forget that the North, while bound by that influence, supported the slave-trade, mobbed the Abolitionists, and had its Democratic institutions tainted by the slavedriver s prejudices. She cannot sympathize with Mr. Lincoln s Administration, because she had to find fault with Mr. Buchanan s Administration. She must needs sullenly cavil at the present movement of the Northern resurrection, cheer up the Northern sympathizers with the slave-trade, branded in the Republican platform, and coquet with the Southern slaveocracy, setting up an empire of its own, because she cannot forget that the North of yesterday was not the North of to-day. The necessity of justifying its attitude by such pettifogging Old Bailey pleas proves more than anything else that the anti-Northern part of the English press is instigated by hidden motives, too mean and dastardly to be openly avowed. As it is one of its pet maneuvers to taunt the present Republican Administration with the doings of its Pro-Slavery predecessors, so it tries hard to persuade the English people that The N. Y. Herald ought to be considered the only authentic expositor of Northern opinion. The London Times having given out the cue in this direction, the servum pecus of the other anti-Northern organs, great and small, persist in beating the same bush. So says The Economist: The Economist knows perfectly well that The N. V. Herald s efforts, which were eagerly supported by The London Times, at embroiling the United States into a war with England, only intended securing the success of Secession and thwarting the movement of Northern regeneration. Still there is one concession made by the anti-Northern English press. The Saturday snob tells us: And The Economist remarks: In 1859, on the occasion of John Brown s Harper s Ferry expedition, the very same Economist published a series of elaborate articles with a view to prove that, by dint of an economical law, American Slavery was doomed to gradual extinction from the moment it should be deprived of its power of expansion. That economical law was perfectly understood by the Slaveocracy. The limitation of Slavery to its constitutional area, as proclaimed by the Republicans, was the distinct ground upon which the menace of Secession was first uttered in the House of Representatives on December 19, 1859. Mr. Singleton (Mississippi) having asked Mr. Curtis (Iowa), if the Republican party would never let the South have another foot of slave territory while it remained in the Union, and Mr. Curtis having responded in the affirmative, Mr. Singleton said this would dissolve the Union. His advice to Mississippi was the sooner it got out of the Union the better gentlemen should recollect that [ ... ] Jefferson Davis led our forces in Mexico, and [...] still he lives, perhaps to lead the Southern army. Quite apart from the economical law which makes the diffusion of Slavery a vital condition for its maintenance within its constitutional areas, the leaders of the South had never deceived themselves as to its necessity for keeping up their political sway over the United States. John Calhoun, in the defense of his propositions to the Senate, stated distinctly on Feb. 19, 1847, that the Senate was the only balance of power left to the South in the Government, and that the creation of new Slave States had become necessary for the retention of the equipoise of power in the Senate. Moreover, the Oligarchy of the 300,000 slave-owners could not even maintain their sway at home save by constantly throwing out to their white plebeians the bait of prospective conquests within and without the frontiers of the United States. If, then, according to the oracles of the English press, the North had arrived at the fixed resolution of circumscribing Slavery within its present limits, and of thus extinguishing it in a constitutional way, was this not sufficient to enlist the sympathies of Anti-Slavery England? But the English Puritans seem indeed not to be contented save by an explicit Abolitionist war. However, in the very same numbers in which these papers tell us that they cannot sympathize with the North because its war is no Abolitionist war, we are informed that the desperate expedient of proclaiming Negro emancipation and summoning the slaves to a general insurrection, is a thing the mere conception of which [...] is repulsive and dreadful, and that a compromise would be far preferable to success purchased at such a cost and stained by such a crime. Thus the English eagerness for the Abolitionist war is all cant. The cloven foot peeps out in the following sentences: The Examiner and The Economist comment each other. The latter is honest enough to confess at last that with him and his followers sympathy is a mere question of tariff, while the former reduces the war between North and South to a tariff war, to a war between Protection and Free-Trade. The Examiner is perhaps not aware that even the South Carolina Nullifiers of 1832, as Gen. Jackson testifies, used Protection only as a pretext for secession; but even The Examiner ought to know that the present rebellion did not wait upon the passing of the Morrill tariff for breaking out. In point of fact, the Southerners could not have been tired of being robbed of the fruits of their slave labor by the Protective tariff of the North, considering that from 1846-1861 a Free-Trade tariff had obtained. The Spectator characterizes in its last number the secret thought of some of the Anti-Northern organs in the following striking manner:

Karl Marx in the New-York Tribune 1861

https://www.marxists.org/archive/marx/works/1861/10/11.htm

London, Sept. 21, 1861 The continual rise in the prices of raw cotton begins at last to seriously react upon the cotton factories, their consumption of cotton being now 25 per cent less than the full consumption. This result has been brought about by a daily lessening rate of production, many mills working only four or three days per week, part of the machinery being stopped, both in those establishments where short time has been commenced and in those which are still running full time, and some mills being temporarily altogether closed. In some places, as at Blackburn, for instance, short time has been coupled with a reduction of wages. However, the short-time movement is only in its incipient state, and we may predict with perfect security that some weeks later the trade will have generally resorted to three days working per week, concurrently with a large stoppage of machinery in most establishments. On the whole, English manufacturers and merchants were extremely slow and reluctant in acknowledging the awkward position of their cotton supplies. In the innermost recesses of the mercantile mind the notion was cherished that the whole American crisis, and, consequently, the blockade, would have ceased before the end of the year, or that Lord Palmerston would forcibly break through the blockade. The latter idea has been altogether abandoned, since, beside all other circumstances, Manchester became aware that two vast interests, the monetary interest having sunk an immense capital in the industrial enterprises of Northern America, and the corn trade, relying on Northern America as its principal source of supply, would combine to check any unprovoked aggression on the part of the British Government. The hopes of the blockade being raised in due time, for the requirements of Liverpool or Manchester, or the American war being wound up by a compromise with the Secessionists, have given way before a feature hitherto unknown in the English cotton market, viz., American operations in cotton at Liverpool, partly on speculation, partly for reshipment to America. Consequently, for the last two weeks the Liverpool cotton market has been feverishly excited, the speculative investments in cotton on the part of the Liverpool merchants being backed by speculative investments on the part of the Manchester and other manufacturers eager to provide themselves with stocks of raw material for the Winter. The extent of the latter transactions is sufficiently shown by the fact that a considerable portion of the spare warehouse room in Manchester is already occupied by such stocks, and that throughout the week beginning with Sept. 15 and ending with Sept. 22, Middling Americans had increased 3/8d. per lb, and fair ones 5/8;d. From the outbreak of the American war the prices of cotton were steadily rising, but the ruinous disproportion between the prices of the raw material and the prices of yarns and cloth was not declared until the last weeks of August. Till then, any serious decline in the prices of cotton manufactures, which might have been anticipated from the considerable decrease of the American demand, had been balanced by an accumulation of stocks in first hands, and by speculative consignments to China and India. Those Asiatic markets, however, were soon overdone. Some other circumstances contributed to contract the Indian market. The late famine in the north-western provinces has been succeeded by the ravages of the cholera, while throughout Lower Bengal an excessive fall of rain, laying the country under water, seriously damaged the rice crops. In letters from Calcutta, which reached England last week, sales were reported giving a net return Of 9 d. per pound for 40s twist, which cannot be bought at Manchester for less than 11 3/8d., while sales of 40-inch shirtings, compared with present rates at Manchester, yield losses at 7 d., 9d., and 12d. per piece. In the China market, prices were also forced down by the accumulation of the stocks imported. Under these circumstances, the demand for the British cotton manufactures decreasing, their prices can, of course, not keep pace with the progressive rise in the price of the raw material; but, on the contrary, the spinning, weaving, and printing of cotton must, in many instances, cease to pay the costs of production. Take, as an example, the following case, stated by one of the greatest Manchester manufacturers, in reference to coarse spinning: The consumption of Indian cotton is rapidly growing, and with a further rise in prices, the Indian supply will come forward at increasing ratios; but still it remains impossible to change, at a few months notice, all the conditions of production and turn the current of commerce. England pays now, in fact, the penalty for her protracted misrule of that vast Indian empire. The two main obstacles she has now to grapple with in her attempts at supplanting American cotton by Indian cotton, is the want of means of communication and transport throughout India, and the miserable state of the Indian peasant, disabling him from improving favorable circumstances. Both these difficulties the English have themselves to thank for. English modern industry, in general, relied upon two pivots equally monstrous. The one was the potato as the only means of feeding Ireland and a great part of the English working class. This pivot was swept away by the potato disease and the subsequent Irish catastrophe. A larger basis for the reproduction and maintenance of the toiling millions had then to be adopted. The second pivot of English industry was the slave-grown cotton of the United States. The present American crisis forces them to enlarge their field of supply and emancipate cotton from slave-breeding and slave-consuming oligarchies. As long as the English cotton manufactures depended on slave-grown cotton, it could be truthfully asserted that they rested on a twofold slavery, the indirect slavery of the white man in England and the direct slavery of the black men on the other side of the Atlantic.

Karl Marx in the New-York Tribune 1861

https://www.marxists.org/archive/marx/works/1861/10/14.htm

London, Oct. 5, 1861 English people participate in the government of their own country by reading The Times newspaper. This judgment, passed by an eminent English author on what is called British self-government, is only true so far as the foreign policy of the Kingdom is concerned. As to measures of domestic reform, they were never carried by the support of The Times, but The Times never ceased attacking and opposing them until after it had become aware of its utter inability to any longer check their progress. Take, for instance, the Catholic Emancipation, the Reform bill, the abolition of the Corn laws, the Stamp Tax, and the Paper Duty. When victory had unmistakably declared on the side of the Reformers, The Times wheeled round, deserted the reactionary camp, and managed to find itself, at the decisive moment, on the winning side. In all these instances, The Times gave not the direction to public opinion, but submitted to it, ungraciously, reluctantly, and after protracted, but frustrated, attempts at rolling back the surging waves of popular progress. Its real influence on the public mind is, therefore, confined to the field of foreign policy. In no part of Europe are the mass of the people, and especially of the middle-classes, more utterly ignorant of the foreign policy of their own country than in England, an ignorance springing from two great sources. On the one hand, since the glorious Revolution of 1688, the aristocracy has always monopolized the direction of foreign affairs in England. On the other hand, the progressive division of labor has, to a certain extent, emasculated the general intellect of the middle-class men by the circumscription of all their energies and mental faculties within the narrow spheres of their mercantile, industrial and professional concerns. Thus it happened that, while the aristocracy acted for them, the press thought for them in their foreign or international affairs; and both parties, the aristocracy and the press, very soon found out that it would be their mutual interest to combine. One has only to open Cobbett s Political Register to convince himself that, since the beginning of this century, the great London papers have constantly played the part of attorneys to the heaven-born managers of English foreign policy. Still, there were some intermediate periods to be run through before the present state of things had been brought about. The aristocracy, that had monopolized the management of foreign affairs, first shrunk together into an oligarchy, represented by a secret conclave, called the cabinet, and, later on, the cabinet was superseded by one single man, Lord Palmerston, who, for the last thirty years, has usurped the absolute power of wielding the national forces of the British Empire, and determining the line of its Foreign Policy. Concurrently with this usurpation, by the law of concentration, acting in the field of newspaper-mongering still more rapidly than in the field of cotton-spinning, The London Times had attained the position of being the national paper of England, that is to say, of representing the English mind to Foreign nations. If the monopoly of managing the Foreign affairs of the nation had passed from the aristocracy to an oligarchic conclave, and from an oligarchic conclave to one single man, the Foreign Minister of England, viz: Lord Palmerston, the monopoly of thinking and judging for the nation, on its own Foreign relations, and representing the public mind in regard to these relations, had passed from the press to one organ of the press, to The Times. Lord Palmerston, who secretly and from motives unknown to the people at large, to Parliament and even to his own colleagues, managed the Foreign affairs of the British Empire, must have been very stupid if he had not tried to possess himself of the one paper which had usurped the power of passing public judgment in the name of the English people on his own secret doings. The Times, in whose vocabulary the word virtue was never to be found, must, on its side, have boasted more than Spartan virtue not to ally itself with the absolute ruler in fact of the national power of the Empire. Hence, since the French coup d' tat, when the Government by faction was in England superseded by the Government by the coalition of factions, and Palmerston, therefore, found no longer rivals endangering his usurpation, The Times became his mere slave. He had taken care to smuggle some of its virtue into the subordinate posts of the cabinet, and to cajole others by their admission into his social circle. Since that time, the whole business of The Times, so far as the foreign affairs of the British Empire are concerned, is limited to manufacturing a public opinion to conform to Lord Palmerston s Foreign policy. It has to prepare the public mind for what he intends doing, and to make it acquiesce in what he has done. The slavish drudgery which, in fulfilling this work, it has to undergo, was best exemplified during the last session of Parliament. That session proved anything but favorable to Lord Palmerston. Some independent members of the H. of C., Liberals and Conservatives, rebelled against his usurped dictatorship, and, by an exposure of his past misdeeds, tried to awaken the nation to a sense of the danger of continuing the same uncontrolled power in the same hands. Mr. Dunlop, opening the attack by a motion for a Select Committee on the Afghan Papers, which Palmerston had laid on the table of the House in 1839, proved that Palmerston had actually forged these papers. The Times, in its Parliamentary report, suppressed all the passages of Mr. Dunlop s speech which it considered most damaging to its master. Later on, Lord Montagu, in a motion for the publication of all papers relating to the Danish Treaty of 1852, accused Palmerston of having been the principal in the maneuvers intended to alter the Danish succession in the interest of a foreign power and of having misled the House of Commons by deliberate misstatements. Palmerston, however, had come to a previous understanding with Mr. Disraeli to baffle Lord Montagu s motion by a count-out of the House, which in fact put a stop to the whole proceeding. Still, Lord Montagu s speech had lasted one hour and a half before it was cut off by the count-out. The Times having been informed by Palmerston that the count-out was to take place, its editor specially charged with the task of mutilating and cooking the Parliamentary reports had given himself a holiday, and thus Lord Montagu s speech appeared unmutilated in The Times s columns. When, on the following morning, the mistake was discovered, a leader was prepared telling John Bull that the count-out was an ingenious institution for suppressing bores, that Lord Montagu was a regular bore, and that the business of the nation could not be carried on if Parliamentary bores were not disposed of in the most unceremonious way. Again Palmerston stood on his trial last session, when Mr. Hennessy moved for a production of the Foreign office dispatches during the Polish revolution of 1831. Again The Times recurred, as in the case of Mr. Dunlop s motion, to the simple process of suppression. Its report of Mr. Hennessy s speech is quite an edition in usum delphini. If one considers how much painstaking it must cause to run through the immense Parliamentary reports the same night they are forwarded to the newspaper office from the House of Commons, and in the same night mutilate, alter, falsify them so as not to tell against Palmerston s political purity, one must concede that whatever emoluments and advantages The Times may reap from its subserviency to the noble Viscount, its task is no pleasant one. If, then, The Times is able by misstatement and suppression thus to falsify public opinion in regard to events that happened but yesterday in the British House of Commons, its power of misstatement and suppression in regard to events occurring on a distant soil, as in the case of the American war, must, of course, he unbounded. If in treating of American affairs it has strained all its forces to exasperate the mutual feelings of the British and Americans, it did not do so from any sympathy with the British Cotton Lords nor out of regard for any real or supposed English interest. It simply executed the orders of its master. From the altered tone of The London Times during the past week, we may, therefore, infer that Lord Palmerston is about to recede from the extremely hostile attitude he had assumed till now against the United States. In one of its to-day leaders, The Times, which for months had exalted the aggressive powers of the Secessionists, and expatiated upon the inability of the United States to cope with them, feels quite sure of the military superiority of the North. That this change of tone is dictated by the master, becomes quite evident from the circumstance that other influential papers, known to be connected with Palmerston, have simultaneously veered round. One of them, The Economist, gives rather a broad hint to the public-opinion-mongers that the time has come for carefully watching their pretended feelings toward the United States. The passage in The Economist which I allude to, and which I think worth quoting as a proof of the new orders received by Palmerston s pressmen, runs thus: All I intended to show for the present was that Palmerston, and consequently the London press, working to his orders, is abandoning his hostile attitude against the United States. The causes that have led to this revirement, as the French call it, I shall try to explain in a subsequent letter. Before concluding, I may still add that Mr. Forster, M.P. for Bradford, delivered last Tuesday, in the theater of Bradford Mechanics Institute a lecture On the Civil War in America in which he traced the true origin and character of that war, and victoriously refuted the misstatements of the Palmerstonian press.

Karl Marx in the New-York Tribune 1861

https://www.marxists.org/archive/marx/works/1861/10/21.htm

What the potato was to Irish agriculture, cotton is to the dominant branch of Great Britain s industry. On its processing depends the subsistence of a mass of the population which is greater than the whole population of Scotland or two-thirds of the present population of Ireland. According to the 1861 census, the population of Scotland was 3,061,117, and that of Ireland only 5,764,543, while more than four million people in England and Scotland live directly or indirectly on the cotton industry. True, the cotton plant has not contracted any disease. Neither is its production the monopoly of a few areas of the world. On the contrary, no other plant providing material for clothing thrives on such extensive areas in America, Asia and Africa.. The cotton monopoly of the slave-owning states of the American Union is not natural, but historically shaped. It grew and developed simultaneously with the monopoly of the English cotton industry on the world market. ... Suddenly the American Civil War threatens this mainstay of English industry. While the Union blockades the ports of the Southern States to prevent the export of this year s cotton harvest and thereby cut off the secessionists main source of income, the Confederation imparts compulsive force to this blockade merely by its decision not to export a single bale of cotton voluntarily and, moreover, to force England to come and fetch cotton herself from the southern ports. England is to be driven to break through the blockade by force, to declare war on the Union, and thus to throw her sword on the scales in favour of the slave-owning states.

Karl Marx in Die Presse 1861

https://www.marxists.org/archive/marx/works/1861/11/06.htm

London, Oct. 12, 1861 On the occasion of the King of Prussia s visit at Compiegne, The London Times published some racy articles, giving great offense on the other side of the Channel. The Pays, journal de l'Empire, in its turn, characterized The Times writers as people whose heads were poisoned by gin, and whose pens were dipped into mud. Such occasional exchanges of invective are only intended to mislead public opinion as to the intimate relations connecting Printing-House Square to the Tuileries. There exists beyond the French frontiers no greater sycophant of the Man of December than The London Times, and its services are the more invaluable, the more that paper now and then assumes the tone and the air of a Cato censor toward its Caesar. The Times had for months heaped insult upon Prussia. Improving the miserable Macdonald affair, it had told Prussia that England would feel glad to see a transfer of the Rhenish Provinces from the barbarous sway of the Hohenzollern to the enlightened despotism of a Bonaparte. It had not only exasperated the Prussian dynasty, but the Prussian people. It had written down the idea of an Anglo-Prussian alliance in case of a Prussian conflict with France. It had strained all its powers to convince Prussia that she had nothing to hope from England, and that the, next best thing she could do would be to come to some understanding with France. When at last the weak and trimming monarch of Prussia resolved upon the visit at Compiegne, The Times could proudly exclaim: quorum magna pars fui; but now the time had also arrived for obliterating from the memory of the British the fact that The Times had been the pathfinder of the Prussian monarch. Hence the roar of its theatrical thunders. Hence the counter roars of the Pays, journal de l'Empire. The Times had now recovered its position of the deadly antagonist of Bonapartism, and, therefore, the power of lending its aid to the Man of December. An occasion soon offered. Louis Bonaparte is, of course, most touchy whenever the renown of rival pretenders to the French crown is concerned. He had covered himself with ridicule in the affair of the Duke d'Aumale s pamphlet against Plon Plon, and, by his proceedings, had done more in furtherance of the Orleanist cause than all the Orleanist partisans combined. Again, in these latter days, the French people were called upon to draw a parallel between Plon Plon and the Orleans princes. When Plon Plon set out, for America, there were caricatures circulated in the Faubourg St. Antoine representing him as a fat man in search of a crown, but professing at the same time to be a most inoffensive traveler, with a peculiar aversion to the smell of powder. While Plon Plon is returning to France with no more laurels than he gathered in the Crimea and in Italy, the Princes of Orleans cross the Atlantic to take service in the ranks of the National army. Hence a great stir in the Bonapartist camp. It would not do to give vent to Bonapartist anger through the venal press of Paris. The Imperialist fears would thus only be betrayed, the pamphlet scandal renewed, and odious comparisons provoked between exiled Princes who fight under the republican banner against the enslavers of working millions, with another exiled Prince, who had himself sworn in as an English special constable to share in the glory of putting down an English workingmen s movement. Who should extricate the Man of December out of this dilemma? Who but The London Times? If the same London Times, which, on the 6th, 7th, 8th, and 9th of October, 1861, had roused the furies of the Pays, journal de l'Empire, by its rather cynical strictures on the visit at Compiegne if that very same paper should come out on the 12th of October, with a merciless onslaught on the Orleans Princes, because of their enlistment in the ranks of the National Army of the United States, would Louis Bonaparte not have proved his case against the Orleans Princes? Would The Times article not be done into French, commented upon by the Paris papers, sent by the Pr fet de Police to all the journals of all the departments, and circulated throughout the whole of France, as the impartial sentence passed by The London Times, the personal foe of Louis Bonaparte, upon the last proceedings of the Orleans Princes? Consequently, The Times of to-day has come out with a most scurrilous onslaught on these princes. Louis Bonaparte is, of course, too much of a business man to share the judicial blindness in regard to the American war of the official public opinion-mongers. He knows that the true people of England, of France, of Germany, of Europe, consider the cause of the United States as their own cause, as the cause of liberty, and that, despite all paid sophistry, they consider the soil of the United States as the free soil of the landless millions of Europe, as their land of promise, now to be defended sword in hand, from the sordid grasp of the slaveholder. Louis Napoleon knows, moreover, that in France the masses connect the fight for the maintenance of the Union with the fight of their forefathers for the foundation of American independence, and that with them every Frenchman drawing his sword for the National Government appears only to execute the bequest of Lafayette. Bonaparte, therefore, knows that if anything be able to win the Orleans Princes good opinions from the French people, it will be their enlistment in the ranks of the national army of the United States. He shudders at this very notion. and consequently The London Times, his censorious sycophant, tells to-day the Orleans princes that they will derive no increase of popularity with the French nation from stooping to serve on this ignoble field of action. Louis Napoleon knows that all the wars waged in Europe between hostile nations since his coup d' tat, have been mock wars, groundless, wanton, and carried on on false pretenses. The Russian war, and the Italian war, not to, speak of the piratical expeditions against China, Cochin-China, and so forth, never enlisted the sympathies of the French people, instinctively aware that both wars were carried on only with the view to strengthening the chains forged by the coup d' tat. The first grand war of contemporaneous history is the American war. The peoples of Europe know that the Southern slaveocracy commenced that war with the declaration that the continuance of slaveocracy was no longer compatible with the continuance of the Union. Consequently, the people of Europe know that a fight for the continuance of the Union is a fight against the continuance of the slaveocracy that in this contest the highest form of popular self-government till now realized is giving battle to the meanest and most shameless form of man s enslaving recorded in the annals of history. Louis Bonaparte feels, of course, extremely sorry that the Orleans Princes should embark in just such a war, so distinguished, by the vastness of its dimensions and the grandeur of its ends, from the groundless, wanton and diminutive wars Europe has passed through since 1849. Consequently, The London Times must needs declare: The Times is, of course, bound to wind up its onslaught on the Orleans Princes because of their stooping to serve on such an ignoble field of action. With a deep bow before the victor of Sevastopol and Solferino, it is unwise, says The London Times, to challenge a comparison between such actions as Springfield and Manassas, and the exploits of Sevastopol and Solferino. The next mail will testify to the premeditated use made of The Times s article by the Imperialist organs. A friend in times of need is proverbially worth a thousand friends in times of prosperity, and the secret ally of The London Times is just now very badly off. A dearth of cotton, backed by a dearth of grain; a commercial crisis coupled with an agricultural distress, and both of them combined with a reduction of Custom revenues and a monetary embarrassment compelling the Bank of France to screw its rate of discount to six per cent, to enter into transactions with Rothschilds and Baring for a loan of two millions sterling on the London market, to pawn abroad French Government stock, and with all that to show but a reserve of 12,000,000 against liabilities amounting to more than 40,000,000. Such a state of economical affairs prepares just the situation for rival pretenders to stake double. Already there have been bread-riots in the Faubourg St. Antoine, and this of all times is therefore the most inappropriate time for allowing Orleans Princes to catch popularity. Hence the fierce forward rush of The London Times.

Karl Marx in the New-York Tribune 1861

https://www.marxists.org/archive/marx/works/1861/11/07a.htm

London, Nov. 8, 1861 The contemplated intervention in Mexico by England, France, and Spain, is, in my opinion, one of the most monstrous enterprises ever chronicled in the annals of international history. It is a contrivance of the true Palmerston make, astounding the uninitiated by an insanity of purpose and an imbecility of the means employed which appear quite incompatible with the known capacity of the old schemer. It is probable that, among the many irons which, to amuse the French public, Louis Bonaparte is compelled to always keep in the fire, a Mexican Expedition may have figured. It is sure that Spain, whose never overstrong head has been quite turned by her recent cheap successes in Morocco and St. Domingo, dreams of a restoration in Mexico. But, nevertheless, it is certain that the French plan was far from being matured, and that both France and Spain strove hard against a joint expedition to Mexico under English leadership. On Sept. 24, Palmerston s private Moniteur, The London Morning Post, first announced in detail the scheme for the joint intervention, according to the terms of a treaty just concluded, as it said, between England, France, and Spain. This statement had hardly crossed the Channel, when the French Government, through the columns of the Paris Patrie, gave it the lie direct. On Sept. 27, The London Times, Palmerston s national organ, first broke its silence on the scheme in a leader contradicting, but not quoting, the Patrie. The Times even stated that Earl Russell had communicated to the French Government the resolution arrived at on the part of England of interfering in Mexico, and that M. de Thouvenel replied that the Emperor of the French had come to a similar conclusion. Now it was the turn of Spain. A semi-official paper of Madrid, while affirming Spain s intention to meddle with Mexico, repudiated at the same time the idea of a joint intervention with England. The dementis were not yet exhausted. The Times had categorically asserted that the full assent of the American President had been given to the Expedition. All the American papers taking notice of The Times article, have long since contradicted its assertion. It is, therefore, certain, and has even been expressly admitted by The Times, that the joint intervention in its present form is of English i.e., Palmerstonian make. Spain was cowed into adherence by the pressure of France; and France was brought round by concessions made to her in the field of European policy. In this respect, it is a significant coincidence that The Times of November 6, in the very number in which it announces the conclusion at London of a convention for the joint interference in Mexico, simultaneously publishes a leader, pooh-poohing and treating with exquisite contumely the protest of Switzerland against the recent invasion of her territory viz., the Dappenthal by a French military force. In return for his fellowship in the Mexican expedition, Louis Bonaparte has obtained carte blanche for his contemplated encroachments on Switzerland and, perhaps, on other parts of the European continent. The transactions on these points between England and France have lasted throughout the whole of the months of September and October. There exist in England no people desirous of an intervention in Mexico save the Mexican bondholders, who, however, had never to boast the least sway over the national mind. Hence the difficulty of breaking to the public the Palmerstonian scheme. The next best means was to bewilder the British elephant by contradictory statements, proceeding from the same laboratory, compounded of the same materials, but varying in the doses administered to the animal. The Morning Post, in its print of September 24, announced that there would be no territorial war on Mexico, that the only point at issue was the monetary claims on the Mexican exchequer; that it would be impossible to deal with Mexico as an organized and established Government, and that, consequently, the principal Mexican ports would be temporarily occupied and their customs revenues sequestered. The Times of September 27 declared, on the contrary, that to dishonesty, to repudiation, to the legal and irremediable plunder of our countrymen by the default of a bankrupt community, we were steeled by long endurance, and that, consequently, the private robbery of the English bondholders lay not, as The Post had it, at the bottom of the intervention. While remarking, en passant, that the City of Mexico was sufficiently healthy, should it be necessary to penetrate so far, The Times hoped, however, that the mere presence of a combined squadron in the Gulf, and the seizure of certain ports, will urge the Mexican Government to new exertions in keeping the peace, and will convince the malcontents that they must confine themselves to some form of opposition more constitutional than brigandage. If, then, according to The Post, the expedition was to start because there exists no Government in Mexico, it was, according to The Times, only intended as encouraging and supporting the existing Mexican Government. To be sure! The oddest means ever hit upon for the consolidation of a Government consists in the seizure of its territory and the sequestration of its revenue. The Times and The Morning Post having once given out the cue, John Bull was then handed over to the minor ministerial oracles, systematically belaboring him in the same contradictory style for four weeks, until public opinion had at last become sufficiently trained to the idea of a joint intervention in Mexico, although kept in deliberate ignorance of the aim and purpose of that intervention. At last, the transactions with France had drawn to an end; the Moniteur announced that the convention between the three interfering powers had been concluded on October 31;c and the journal des D bats, one of whose coproprietors is appointed to the command of one of the vessels of the French squadron, informed the world that no permanent territorial conquest was intended; that Vera Cruz and other points on the coast were to be seized, an advance to the capital being agreed upon in case of noncompliance by the constituted authorities in Mexico with the demands of the intervention; that, moreover, a strong government was to be imported into the Republic. The Times, which ever since its first announcement on September 27, seemed to have forgotten the very existence of Mexico, had now again to step forward. Everybody ignorant of its connection with Palmerston, and the original introduction in its columns of his scheme, would be induced to consider the to-day s leader of The Times as the most cutting and merciless satire on the whole adventure. It sets out by stating that the expedition is a very remarkable one [later on it says a curious one]. Authoritative interference in behalf of order! This is literally the Holy Alliance slang, and sounds very remarkable indeed on the part of England, glorying in the non-intervention principle! And why is the way of war, and of declaration of war, and all other behests of international law, supplanted by an authoritative interference in behalf of order? Because, says The Times, there exists no Government in Mexico. And what is the professed aim of the expedition? To address demands to the constituted authorities at Mexico. The only grievances complained of by the intervening Powers, the only causes which might give to their hostile procedure the slightest shade of justification, are easily to be summed up. They are the monetary claims of the bondholders and a series of personal outrages said to have been committed upon subjects of England, France and Spain. These were also the reasons of the intervention as originally put forth by The Morning Post, and as some time ago officially indorsed by Lord John Russell in an interview with some representatives of the Mexican bondholders in England. The to-day s Times states: England, France, and Spain have concerted an expedition to bring Mexico to the performance of her specific engagements, and to give protection to the subjects of the respective crowns. However, in the progress of its article, The Times veers round, and exclaims: The Times, then, confesses in so many words that the reasons originally given out for the expedition are shallow pretexts; that for the attainment of redress nothing like the present procedure was needed; and that, in point of fact, the recognition of monetary claims, and the protection of European subjects have nothing at all to do with the present joint intervention in Mexico. What, then, is its real aim and purpose? Before following The Times in its further explanations, we will, en passant, note some more curiosities which it has taken good care not to touch upon. In the first instance, it is a real curiosity to see Spain Spain out of all other countries turn crusader for the sanctity of foreign debts! Last Sunday s Courrier du Dimanche already summons the French Government to improve the opportunity, and compel Spain, into the eternally delayed performance of her old standing engagements to French bondholders. The second still greater curiosity is, that the very same Palmerston who, according to Lord John Russell s recent declaration, is about invading Mexico to make its Government pay the English bondholders, has himself, voluntarily, and despite the Mexican Government, sacrificed the treaty rights of England and the security mortgaged by Mexico to her British creditors. By the treaty concluded with England in 1826, Mexico became bound to not allow the establishment of Slavery in any of the territories constituting her then empire. By another clause of the same treaty, she tendered England, as a security for the loans obtained from British capitalists, the mortgage of 45,000,000 acres of the public lands in Texas. It was Palmerston who, ten or twelve years later, interfered as the mediator for Texas against Mexico. In the treaty then concluded by him with Texas, he sacrificed not only the Anti-Slavery cause, but also the mortgage on the public lands, thus robbing the English bondholders of their security. The Mexican Government protested at the time, but meanwhile, later on, Secretary John C. Calhoun could permit himself the jest of informing the Cabinet of St. James that its desire of seeing Slavery abolished in Texas would be best realized by annexing Texas to the United States. The English bondholders lost, in fact, any claim upon Mexico, by the voluntary sacrifice on the part of Palmerston of the mortgage secured to them in the treaty of 1826. But, since The London Times avows that the present intervention has nothing to do either with monetary claims or with personal outrages, what, then, in all the world, is its real or pretended aim? England, France, and Spain, planning a new Holy Alliance, and having formed themselves into an armed areopagus for the restoration of order all over the world, Mexico, says The Times, must be rescued from anarchy, and put in the way of self-government and peace. A strong and stable government must be established there by the invaders, and that government is to be extracted from some Mexican party. Now, does any one imagine that Palmerston and his mouthpiece, The Times, really consider the joint intervention as a means to the professed end, viz: The extinction of anarchy, and the establishment in Mexico of a strong and stable government? So far from cherishing any such chimerical creed, The Times states expressly in its first leader of September 27: In its to-day s leader, The Times goes on reasoning in the same strain, and resumes its scruples in this sentence: Palmerston and The Times, then, are fully aware that there exists a government in Mexico, that the Liberal party, ostensibly favored by England, is now in power, that the ecclesiastical rule has been overthrown; that Spanish intervention was the last forlorn hope of the priests and bandits; and, finally, that Mexican anarchy was dying away. They know, then, that the joint intervention, with no other avowed end save the rescue of Mexico from anarchy, will produce just the opposite effect, weaken the Constitutional Government, strengthen the priestly party by a supply of French and Spanish bayonets, rekindle the embers of civil war, and, instead of extinguishing, restore anarchy to its full bloom. The inference The Times itself draws from those premises is really remarkable and curious. It does, consequently, not militate against the expediency of the expedition itself, that the expedition militates against its only ostensible purpose. It does not militate against the means that it baffles its own avowed end. The greatest curiosity pointed out by The Times, I have, however, stilt kept in petto. It would, indeed, be the greatest curiosity of all if the United States, living in amity with Mexico, should associate with the European order-mongers, and, by participating in their acts, sanction the interference of a European armed Areopagus with the internal affairs of American States. The first scheme of such a transplantation of the Holy Alliance to the other side of the Atlantic was, at the time of the restoration, drawn up for the French and Spanish Bourbons by Chateaubriand. The attempt was baffled by an English Minister, Mr. Canning, and an American President, Mr. Monroe. The present convulsion in the United States appeared to Palmerston an opportune moment for taking up the old project in a modified form. Since the United States, for the present, must allow no foreign complication to interfere with their war for the Union, all they can do is to protest. Their best well-wishers in Europe hope that they will protest, and thus, before the eyes of the world, firmly repudiate any complicity in one of the most nefarious schemes. This military expedition of Palmerston s, carried out by a coalition with two other European powers, is started during the prorogation, without the sanction, and against the will of the British Parliament. The first extra Parliamentary war of Palmerston s was the Afghan war softened and justified by the production of forged papers. Another war of that sort was his Persian war of 1856-1857. He defended it at the time on the plea that the principle of the previous sanction of the House did not apply to Asiatic wars. It seems that it does neither apply to American wars. With the control over foreign wars, Parliament will lose all control over the national exchequer, and Parliamentary government turn to a mere farce.

Karl Marx in the New-York Tribune 1861

https://www.marxists.org/archive/marx/works/1861/11/23.htm

Fr mont's dismissal from the post of Commander-in-Chief in Missouri forms a turning point in the history of the development of the American Civil War. Fremont has two great sins to expiate. He was the first candidate of the Republican Party for the presidential office (1856), and he is the first general of the North to have threatened the slaveholders with emancipation of slaves (August 30, 1861). He remains, therefore, a rival of candidates for the presidency in the future and an obstacle to the makers of compromises in the present. During the last two decades the singular practice developed in the United States of not electing to the presidency any man who occupied an authoritative position in his own party. The names of such men, it is true, were utilised for election demonstrations, but as soon as it came to actual business, they were dropped and replaced by unknown mediocrities of merely local influence. In this manner Polk, Pierce, Buchanan, etc., became Presidents. Likewise Abraham Lincoln. General Andrew Jackson was in fact the last President of the United States who owed his office to his personal importance, whilst all his successors owed it, on the contrary, to their personal unimportance. In the election year 1860, the most distinguished names of the Republican Party were Fr mont and Seward. Known for his adventures during the Mexican War, for his intrepid exploration of California and his candidacy of 1856, Fr mont was too striking a figure even to come under consideration as soon as it was no longer a question of a Republican demonstration, but of a Republican success. He did not, therefore, stand as a candidate. It was otherwise with Seward, a Republican Senator in the Congress at Washington, Governor of the State of New York and, since the rise of the Republican Party, unquestionably its leading orator. It required a series of mortifying defeats to induce Mr. Seward to renounce his own candidacy and to give his oratorical patronage to the then more or less unknown Abraham Lincoln. As soon, however, as he saw his attempt to stand as a candidate fail, he imposed himself as a Republican Richelieu on a man whom he considered as a Republican Louis XIII. He contributed towards making Lincoln President, on condition that Lincoln made him secretary of State, an office which is in some measure comparable with that of a British Prime Minister. As a matter of fact, Lincoln was hardly President-elect, when Seward secured the Secretaryship of State. Immediately a singular change took place in the attitude of the Demosthenes of the Republican Party, whom the prophesying of the "irrepressible conflict" between the system of free Labour and the system of slavery had made famous. Although elected on November 6, 1860, Lincoln took up office as President only on March 4, 1861. In the interval, during the winter session of Congress, Seward made himself the central figure of all attempts at compromise; the Northern organs of the South, such as the New York Herald, for example, whose b te noire Seward had been till then, suddenly extolled him as the statesman of reconciliation and, indeed, it was not his fault that peace at any price was not achieved. Seward manifestly regarded the post of Secretary of State as a mere preliminary step, and busied himself less with the "irrepressible conflict" of the present than with the presidency of the future. He has provided fresh proof that virtuosos of the tongue are dangerously inadequate statesmen. Read his state dispatches! What a repulsive mixture of magniloquence and petty-mindedness, of simulated strength and real weakness! For Seward, therefore, Fr mont was the dangerous rival who had to be ruined; an undertaking that appeared so much the easier since Lincoln, in accordance with his legal tradition, has an aversion for all genius, anxiously clings to the letter of the Constitution and fights shy of every step that could mislead the "loyal" slaveholders of the border states. Fr mont's character offered another hold. He is manifestly a man of pathos, somewhat high-stepping and haughty, and not without a touch of the melodramatic. First the government attempted to drive him to voluntary retirement by a succession of petty chicaneries. When this did not succeed, it deprived him of his command at the very moment when the army he himself had organised came face to face with the foe in south-west Missouri and a decisive battle was imminent. Fr mont is the idol of the states of the North-west, which sing his praises as the "pathfinder." They regard his dismissal as a personal insult. Should the Union government meet with a few more mishaps like those of Bull Run and Ball's Bluff, it has itself given the opposition, which will then rise up against it and smash the hitherto prevailing diplomatic system of waging war, its leader in John Fr mont. We shall return later to the indictment of the dismissed general published by the War Department in Washington.

The Dismissal of Frémont

https://www.marxists.org/archive/marx/works/1861/11/26.htm

London, Nov. 30, 1861 Since the declaration of war against Russia I never witnessed an excitement throughout all the strata of English society equal to that produced by the news of the Trent affair, conveyed to Southampton by the La Plata on the 27th inst. At about 2 o'clock p.m., by means of the electric telegraph, the announcement of the untoward event was posted in the news-rooms of all the British Exchanges. All commercial securities went down, while the price of saltpeter went up. Consols declined per cent, while at Lloyds war risks of five guineas were demanded on vessels from New-York. Late in the evening the wildest rumors circulated in London, to the effect that the American Minister had forthwith been sent his passports, that orders had been issued for the immediate seizure of all American ships in the ports of the United Kingdom, and so forth. The cotton friends of Secession at Liverpool improved the opportunity for holding, at ten minutes notice, in the cotton salesroom of the Stock Exchange, an indignation meeting, under the presidency of Mr. Spence, the author of some obscure pamphlet in the interest of the Southern Confederacy. Commodore Williams, the Admiralty Agent on board the Trent, who had arrived with the La Plata, was at once summoned to London. On the following day, the 28th of November, the London press exhibited, on the whole, a tone of moderation strangely contrasting with the tremendous political and mercantile excitement of the previous evening. The Palmerston papers, Times, Morning Post, Daily Telegraph, Morning Advertiser, and Sun, had received orders to calm down rather than to exasperate. The Daily News, by its strictures on the conduct of the San Jacinto, evidently aimed less at hitting the Federal Government than clearing itself of the suspicion of Yankee prejudices, while The Morning Star, John Bright s organ, without passing any judgment on the policy and wisdom of the act, pleaded its lawfulness. There were only two exceptions to the general tenor of the London press. The Tory-scribblers of The Morning Herald and The Standard, forming in fact one paper under different names, gave full vent to their savage satisfaction of having at last caught the republicans in a trap, and finding a casus belli, ready cut out. They were supported by but one other journal, The Morning Chronicle, which for years had tried to prolong its checkered existence by alternately selling itself to the poisoner Palmer and the Tuileries. The excitement on the Exchange greatly subsided in consequence of the pacific tone of the leading London papers. On the same 28th of Nov., Commander Williams attended at the Admiralty, and reported the circumstances of the occurrence in the old Bahama Channel. His report, together with the written depositions of the officers on board the Trent, were at once submitted to the law officers of the Crown, whose opinion, late in the evening, was officially brought under the notice of Lord Palmerston, Earl Russell and other members of the Government. On the 29th of November there was to be remarked some slight change in the tone of the ministerial press. It became known that the law officers of the Crown, on a technical ground, had declared the proceedings of the frigate San Jacinto illegal, and that later in the day, the Cabinet, summoned to a general council, had decided to send by next steamer to Lord Lyons instructions to conform to the opinion of the English law officers. Hence the excitement in the principal places of business, such as the Stock Exchange, Lloyd s, the Jerusalem, the Baltic, etc., set in with redoubled force, and was further stimulated by the news that the projected shipments to America of saltpeter had been stopped on the previous day, and that on the 29th a general order was received at the Custom-House prohibiting the exportation of this article to any country except under certain stringent conditions. The English funds further fell , and at one time a real panic prevailed in all the stock markets, it having become impossible to transact any business in some securities, while in all descriptions a severe depression of prices occurred. In the afternoon a recovery in the stock market was due to several rumors, but principally to the report that Mr. Adams had expressed his opinion that the act of the San Jacinto would be disavowed by the Washington Cabinet. On the 30th of November (to-day) all the London papers, with the single exception of The Morning Star, put the alternative of reparation by the Washington Cabinet or war. Having summed up the history of the events from the arrival of the La Plata to the present day, I shall now proceed to recording opinions. There were, of course, two points to be considered on the one hand the law, on the other hand the policy, of the seizure of the Southern Commissioners on board an English mail steamer. As to the legal aspect of the affair, the first difficulty mooted by the Tory press and The Morning Chronicle was that the United States had never recognized the Southern Secessionists as belligerents, and, consequently, could not claim belligerent rights in regard to them. This quibble was at once disposed of by the Ministerial press itself. Hence, whether or not the United States recognize the Confederates as belligerents, they have the right to insist upon England submitting to all the duties and inconveniences of a neutral in maritime warfare. Consequently, with the exceptions mentioned, the whole London press acknowledges the right of the San Jacinto to overhaul, visit, and search the Trent, in order to ascertain whether she carried goods or persons belonging to the category of contraband of war, The Times s insinuation that the English law of decisions was given under circumstances very different from those which now occur; that steamers did not then exist, and mail vessels, carrying letters wherein all the nations of the world have immediate interest, were unknown; that we (the English) were fighting for existence, and did in those days what we should not allow others to do, was not seriously thrown out. Palmerston s private Moniteur, The Morning Post, declared on the same day that mail steamers were simple merchantmen, not sharing the exemption from the right of search of men-of-war and transports. The right of search, on the part of the San Jacinto, was in point of fact, conceded by the London press as well as the law officers of the Crown. The objection that the Trent, instead of sailing from a belligerent to a belligerent port, was, on the contrary, bound from a neutral to a neutral port, fell to the ground by Lord Stowell s decision that the right of search is intended to ascertain the destination of a ship. In the second instance, the question arose whether by firing a round shot across the bows of the Trent, and subsequently throwing a shell, bursting close to her, the San Jacinto had not violated the usages and courtesies appurtenant to the exercise of the right of visitation and search. It was generally conceded by the London press that, since the details of the event have till now been only ascertained by the depositions of one of the parties concerned, no such minor question could influence the decision to be arrived at by the British Government. The right of search, exercised by the San Jacinto, thus being conceded, what had she to look for? For contraband of war, presumed to be conveyed by the Trent. What is contraband of war? Are the dispatches of a belligerent Government contraband of war? Are the persons carrying those dispatches contraband of war? And, both questions being answered in the affirmative, do those dispatches and the bearers of them continue to be contraband of war, if found on a merchant ship bound from a neutral port to a neutral port? The London press admits that the decisions of the highest legal authorities on both sides of the Atlantic are so contradictory, and may be claimed with such appearance of justice for both the affirmative and the negative, that, at all events, a prima facie case is made out for the San Jacinto. Concurrently with this prevalent opinion of the English press, the English Crown lawyers have altogether dropped the material question, and only taken up the formal question. They assert that the law of nations was not violated in substance, but in form only. They have arrived at the conclusion that the San Jacinto failed in seizing, on her own responsibility, the Southern Commissioners, instead of taking the Trent to a Federal port and submitting the question to a Federal Prize-Court, no armed cruiser having a right to make himself a judge at sea. A violation in the procedure of the San Jacinto is, therefore, all that is imputed to her by the English Crown lawyers, who, in my opinion, are right in their conclusion. It might be easy to unearth precedents, showing England to have similarly trespassed on the formalities of maritime law; but violations of law can never be allowed to supplant the law itself. The question may now be mooted, whether the reparation demanded by the English Government that is, the restitution of the Southern Commissioners be warranted by an injury which the English themselves avow to be of form rather than of substance? A lawyer of the Temple, in the to-day s Times, remarks, in respect to this point: Still, if the American Government must concede, as it seems to me, that Capt. Wilkes has committed a violation of maritime law, whether formal or material, their fair fame and their interest ought alike to prevent them from nibbling at the terms of the satisfaction to be given to the injured party. They ought to remember that they do the work of the Secessionists in embroiling the United States in a war with England, that such a war would be a godsend to Louis Bonaparte in his present difficulties, and would, consequently, be supported by all the official weight of France; and, lastly, that, what with the actual force under the command of the British on the North American and West Indian stations, what with the forces of the Mexican Expedition, the English Government would have at its disposal an overwhelming maritime power. As to the policy of the seizure in the Bahama Channel, the voice not only of the English but of the European press is unanimous in expressions of bewilderment at the strange conduct of the American Government, provoking such tremendous international dangers, for gaining the bodies of Messrs. Mason, Slidell & Co., while Messrs. Yancey and Mann are strutting in London. The Times is certainly right in saying: The people of the United States having magnanimously submitted to a curtailment of their own liberties in order to save their country, will certainly be no less ready to turn the tide of popular opinion in England by openly avowing, and carefully making up for, an international blunder the vindication of which might realize the boldest hopes of the rebels.

Karl Marx in the New-York Tribune 1861

https://www.marxists.org/archive/marx/works/1861/12/19.htm

The friends of the United States on this side of the Atlantic anxiously hope that conciliatory steps will be taken by the Federal Government. They do so not from a concurrence in the frantic crowing of the British press over a war incident, which, according to the English Crown lawyers themselves, resolves itself into a mere error of procedure, and may be summed up in the words that there has been a breach of international law, because Capt. Wilkes, instead of taking the Trent, her cargo, her passengers, and the Commissioners, did only take the Commissioners. Nor springs the anxiety of the well-wishers of the Great Republic from an apprehension lest, in the long run, it should not prove able to cope with England, although backed by the civil war; and, least of all, do they expect the United States to abdicate, even for a moment, and in a dark hour of trial, the proud position held by them in the council of nations. The motives that prompt them are of quite a different nature. In the first instance, the business next in hand for the United States is to crush the rebellion and to restore the Union. The wish uppermost in the minds of the Slaveocracy and their Northern tools was always to plunge the United States into a war with England. The first step of England as soon as hostilities broke out would be to recognise the Southern Confederacy, and the second to terminate the blockade. Secondly, no general, if not forced, will accept battle at the time and under the conditions chosen by his enemy. The very reasons accounting for the eagerness of England to seize upon any decent pretext for war at this 'only moment' ought to withhold the United States from forwarding such a pretext at this 'only moment.' You go not to war with the aim to do your enemy 'the minimum of harm,' and, even to confer upon him by the war, 'an incidental and partial compensation.' The opportunity of the moment would all be on one side, on the side of your foe. Is there any great strain of reasoning wanted to prove that an internal war raging in a State is the least opportune time for entering upon a foreign war? At every other moment the mercantile classes of Great Britain would have looked upon a war against the United States with the utmost horror. Now, on the contrary, a large and influential party of the mercantile community has for months been urging on the Government to violently break the blockade, and thus provide the main branch of British industry with its raw material. The fear of a curtailment of the English export trade to the United States has lost its sting by the curtailment of that trade having already actually occurred. "They" (the Northern States), says The Economist, "are wretched customers, instead of good ones." The vast credit usually given by English commerce to the United States, principally by the acceptance of bills drawn from China and India, has been already reduced to scarcely a fifth of what it was in 1857. Last, not least, Decembrist France, bankrupt, paralyzed at home, beset with difficulty abroad, pounces upon an Anglo-American war as a real godsend, and, in order to buy English support in Europe, will strain all her power to support "Perfidious Albion" on the other side of the Atlantic. Read only the French newspapers. The pitch of indignation to which they have wrought themselves in their tender care for the "honor of England," their fierce diatribes as to the necessity on the part of England to revenge the outrage on the Union Jack, their vile denunciations of everything American, would be truly appalling, if they were not ridiculous and disgusting at the same time. Lastly, if the United States give way in this instance, they will not derogate one iota of their dignity. England has reduced her complaint to a mere error of procedure, a technical blunder of which she had made herself systematically guilty in all her maritime wars, but against which the United States have never ceased to protest, and which President Madison, in his message inaugurating the war of 1812, expatiated upon as one of the most shocking breaches of international law. If the United States may be defended in paying England with her own coin, will they be accused for magnanimously disavowing, on the part of a single American captain, acting on his own responsibility, what they always denounced as a systematic usurpation on the part of the British Navy! In point of fact, the gain of such a procedure would be all on the American side. England, on the one hand, would have acknowledged the right of the United States to capture and bring to adjudication before an American prize court every English ship employed in the service of the Confederation. On the other hand, she would, once for all, before the eyes of the whole world, have practically resigned a claim which she was not brought to desist from either in the peace of Ghent, in 1814, or the transactions carried on between Lord Ashburton and Secretary Webster in 1842.The question then comes to this: Do you prefer to turn the "untoward event" to your own account, or, blinded by the passions of the moment, turn it to the account of your foes at home and abroad? Since this day week, when I sent you my last letter, British consols have again lowered, the decline, compared with last Friday, amounting to 2 per cent, the present prices being 89 3/4 to 7/8 for money and 90 to 1/8 for the new account on the 9th of January. This quotation corresponds to the quotation of the British consols during the first two years of the Anglo-Russian war. This decline is altogether due to the warlike interpretation put upon the American papers conveyed by the last mail, to the exacerbating tone of the London press, whose moderation of two days' standing was but a feint, ordered by Palmerston, to the dispatch of troops for Canada, to the proclamation forbidding the export of arms and materials for gunpowder, and lastly, to the daily ostentatious statements concerning the formidable preparations for war in the docks and maritime arsenals. Of one thing you may be sure, Palmerston wants a legal pretext for a war with the United States, but meets in the Cabinet councils with a most determinate opposition on the part of Messrs. Gladstone and Milner Gibson, and, to a less degree, of Sir Cornewall Lewis. "The noble viscount" is backed by Russell, an abject tool in his hands, and the whole Whig Coterie. If the Washington Cabinet should furnish the desired pretext, the present Cabinet will be sprung, to be supplanted by a Tory Administration. The preliminary steps for such a change of scenery have been already settled between Palmerston and Disraeli. Hence the furious war-cry of The Morning Herald and The Standard, those hungry wolves howling at the prospect of the long-missed crumbs from the public almoner. Palmerston's designs may be shown up by calling into memory a few facts. It was he who insisted upon the proclamation, acknowledging the Secessionists as belligerents, on the morning of the 14th of May, after he had been informed by telegraph from Liverpool that Mr. Adams would arrive at London on the night of the 13th May. He, after a severe struggle with his colleagues, dispatched 3,000 men to Canada, an army ridiculous, if intended to cover a frontier of 1,500 miles, but a clever sleight-of-hand if the rebellion was to be cheered, and the Union to be irritated. He, many weeks ago, urged Bonaparte to propose a joint armed intervention "in the internecine struggle," supported that project in the Cabinet council, and failed only in carrying it by the resistance of his colleagues. He and Bonaparte then resorted to the Mexican intervention as a pis aller. That operation served two purposes, by provoking just resentment on the part of the Americans, and by simultaneously furnishing a pretext for the dispatch of a squadron, ready, as The Morning Post has it, "to perform whatever duty the hostile conduct of the Government of Washington may require us to perform in the waters of the Northern Atlantic." At the time when that expedition was started, The Morning Post, together with The Times and the smaller fry of Palmerston's press slaves, said that it was a very fine thing, and a philanthropic thing into the bargain, because it would expose the slave- holding Confederation to two fires -- the Anti-Slavery North and the Anti-Slavery force of England and France. And what says the very same Morning Post, this curious compound of Jenkins and Rhodomonte, of plush and swash, in its to-day's issue, on occasion of Jefferson Davis's address? Hearken to the Palmerston oracle: I may remark that the Nord of December 3 -- a Russian paper, and consequently a paper initiated into Palmerstons designs -- insinuates that the Mexican expedition was from the first set on foot, not for its ostensible purpose, but for a war against the United States. Gen. Scott's letter had produced such a beneficent reaction in public opinion, and even on the London Stock Exchange, that the conspirators of Downing Street and the Tuileries found it necessary to let loose the Patrie, stating with all the airs of knowledge derived from official sources that the seizure of the Southern Commissioners from the Trent was directly authorized by the Washington Cabinet.

The Progress of Feelings in England

https://www.marxists.org/archive/marx/works/1861/12/25.htm

As a relaxation in the evenings I have been reading Appian on the Roman Civil Wars, in the original Greek text. A very valuable book. The chap is an Egyptian by birth. Schlosser says he has "no soul," probably because he goes to the roots of the material basis for these civil wars. Spartacus is revealed as the most splendid fellow in the whole of ancient history. Great general (no Garibaldi), noble character, real representative of the ancient proletariat. Pompeius, reiner Scheisskerl [an utter rotter]; got his undeserved fame by snatching the credit, first for the successes of Lucullus (against Mithridates), then for the successes of Sertorius (Spain), etc., and as Sulla's "young man," etc. As a general he was the Roman Odilon Barrot. As soon as he had to show what he was made of--against Caesar--a lousy good-for-nothing. Caesar made the greatest possible military mistakes --deliberately mad--in order to bewilder the philistine who was opposing him. An ordinary Roman general--say Crassus --would have wiped him out six times over during the struggle in Epirus. But with Pompeius everything was possible. Shakespeare, in his Love's Labour Lost, seems to have had an inkling of what Pompey really was.

Letters: Marx-Engels Correspondence 1861

https://www.marxists.org/archive/marx/works/1861/letters/61_02_27-abs.htm

The news of the pacific solution of the Trent conflict was, by the bulk of the English people, saluted with an exultation proving unmistakably the unpopularity of the apprehended war and the dread of its consequences. It ought never to be forgotten in the United States that at least the working classes of England, from the commencement to the termination of the difficulty, have never forsaken them. To them it was due that, despite the poisonous stimulants daily administered by a venal and reckless press, not one single public war meeting could be held in the United Kingdom during all the period that peace trembled in the balance. The only war meeting convened on the arrival of the La Plata, in the cotton salesroom of the Liverpool Stock Exchange, was a corner meeting where the cotton jobbers had it all to themselves. Even at Manchester, the temper of the working classes was so well understood that an insulated attempt at the convocation of a war meeting was almost as soon abandoned as thought of. Wherever public meetings took place in England, Scotland, or Ireland, they protested against the rabid war cries of the press, against the sinister designs of the Government, and declared for a pacific settlement of the pending question. In this regard, the two last meetings held, the one at Paddington, London, the other at N ewcastle u pon Tyne, are characteristic. The former meeting applauded Mr. Washington Wilkes s argumentation that England was not warranted in finding fault with the seizure of the Southern Commissioners'; while the Newcastle meeting almost unanimously carried the resolution firstly, that the Americans had only made themselves guilty of a lawful exercise of the right of search and seizure; secondly, that the captain of the Trent ought to be punished for his violation of English neutrality, as proclaimed by the Queen. In ordinary circumstances, the conduct of the British workingmen might have been anticipated from the natural sympathy the popular classes all over the world ought to feel for the only popular Government in the world. Under the present circumstances, however, when a great portion of the British working classes directly and severely suffers under the consequences of the Southern blockade; when another part is indirectly smitten by the curtailment of the American commerce, owing, as they are told, to the selfish protective policy of the Republicans; when the only remaining democratic weekly, Reynolds s paper, has sold itself to Messrs. Yancey and Mann, and week after week exhausts its horse-powers of foul language in appeals to the working classes to urge the Government, for their own interests, to war with the Union under such circumstances, simple justice requires to pay a tribute to the sound attitude of the British working classes, the more so when contrasted with the hypocritical, bullying, cowardly, and stupid conduct of the official and well-to-do John Bull. What a difference in this attitude of the people from what it had assumed at the time of the Russian complication! Then The Times, The Post, and the other Yellowplushes of the London press, whined for peace, to be rebuked by tremendous war meetings all over the country. Now they have howled for war, to be answered by peace meetings denouncing the liberticide schemes and the Pro-Slavery sympathy of the Government. The grimaces cut by the augurs of public opinion at the news of the pacific solution of the Trent case are really amusing. In the first place, they must needs congratulate themselves upon the dignity, common sense, good will, and moderation, daily displayed by them for the whole interval of a month. They were moderate for the first two days after the arrival of the La Plata, when Palmerston felt uneasy whether any legal pretext for a quarrel was to be picked. But hardly had the crown lawyers bit upon a legal quibble, when they opened a charivari unheard of since the anti-Jacobin war. The dispatches of the English Government left Queenstown in the beginning of December. No official answer from Washington could possibly be looked for before the commencement of January. The new incidents arising in the interval told all in favor of the Americans. The tone of the Transatlantic Press, although the Nashville affair might have roused its passions, was calm. All facts ascertained concurred to show that Capt. Wilkes had acted on his own hook. The position of the Washington Government was delicate. If it resisted the English demands, it would complicate the civil war by a foreign war. If it gave way, it might damage its popularity at home, and appear to cede to pressure from abroad. And the Government thus placed, carried, at the same time, a war which must enlist the warmest sympathies of every man, not a confessed ruffian, on its side. Common prudence, conventional decency, ought, therefore, to have dictated to the London press, at least for the time separating the English demand from the American reply, to anxiously abstain from every word calculated to heat passion, breed ill-will, complicate the difficulty. But no! That inexpressibly mean and groveling press, as William Cobbett, and he was a connoisseur, calls it, really boasted of having, when in fear of the compact power of the United States, humbly submitted to the accumulated slights and insults of Pro-Slavery Administrations for almost half a century, while now, with the savage exultation of cowards, they panted for taking their revenge on the Republican Administration, distracted by a civil war. The record of mankind chronicles no self-avowed infamy like this. One of the yellow-plushes, Palmerston s private Moniteur The Morning Post finds itself arraigned on a most ugly charge from the American papers. John Bull has never been informed on information carefully withheld from him by the oligarchs that lord it over him that Mr. Seward, without awaiting Russell s dispatch, had disavowed any participation of the Washington Cabinet in the act of Capt. Wilkes. Mr. Seward s dispatch arrived at London on December 19. On the 20th December, the rumor of this secret spread on the Stock Exchange. On the 21st, the yellow-plush of The Morning Post stepped forward to gravely herald that the dispatch in question does not in any way whatever refer to the outrage on our mail packet. In The Daily News, The Morning Star, and other London journals, you will find yellow-plush pretty sharply handled, but you will not learn from them what people out of doors say. They say that The Morning Post and The Times, like the Patrie and the Pays, duped the public not only to politically mislead them, but to fleece them in the monetary line on the Stock Exchange, in the interest of their patrons. The brazen Times, fully aware that during the whole crisis it had compromised nobody but itself, and given another proof of the hollowness of its pretensions of influencing the real people of England, plays to-day a trick which here, at London, only works upon the laughing muscles, but on the other side of the Atlantic, might be misinterpreted. The popular classes of London, the mob , as the yellow-plush call them, have given unmistakable signs-have even hinted in newspapers-that they should consider it an exceedingly seasonable joke to treat Mason (by the by, a distant relative of Palmerston, since the original Mason had married a daughter of Sir W. Temple), Slidell & Co. with the same demonstrations Haynau received on his visit at Barclay s brewery. The Times stands aghast at the mere idea of such a shocking incident, and how does it try to parry it? It admonishes the people of England not to overwhelm Mason, Slidell & Co. with any, sort of public ovation! The Times knows that its to-day s article will form the laughing-stock of all the tap-rooms of London. But never mind! People on the other side of the Atlantic may, perhaps, fancy that the magnanimity of The Times has saved them from the affront of public ovations to Mason, Slidell & Co., while, in point of fact, The Times only intends saving those gentlemen from public insult! So long as the Trent affair was undecided, The Times, The Post, The Herald, The Economist, The Saturday Review, in fact the whole of the fashionable, hireling press of London, had tried its utmost to persuade John Bull that the Washington Government, even if it willed, would prove unable to keep the peace, because the Yankee mob would not allow it, and because the Federal Government was a mob Government. Facts have now given them the lie direct. Do they now atone for their malignant slanders against the American people? Do they at least confess the errors which yellow-plush in presuming to judge of the acts of a free people, could not but commit? By no means. They now unanimously discover that the American Government, in not anticipating England s demands, and not surrendering the Southern traitors as soon as they were caught, missed a great occasion, and deprived its present concession of all merit. Indeed, yellow plush! Mr. Seward disavowed the act of Wilkes before the arrival of the English demands, and at once declared himself willing to enter upon a conciliatory course a ; and what did you do on similar occasions? When, on the pretext of impressing English sailors on board American ships a pretext not at all connected with maritime belligerent rights, but a downright, monstrous usurpation against all international law-the Leopard fired its broadside at the Chesapeake, killed six, wounded twenty-one of her sailors, and seized the pretended Englishmen on board the Chesapeake, what did the English Government do? That outrage was perpetrated on the 20th of June, 1807. The real satisfaction, the surrender of the sailors, &C., was only offered on November 8, 1812, five years later. The British Government, it is true, disavowed at once the act of Admiral Berkeley, as Mr. Seward did in regard to Capt. Wilkes; but, to punish the Admiral, it removed him from an inferior to a superior rank. England, in proclaiming her Orders in Council, distinctly confessed that they were outrages on the rights of neutrals in general, and of the United States in particular; that they were forced upon her as measures of retaliation against Napoleon, and that she would feel but too glad to revoke them whenever Napoleon should revoke his encroachments on neutral rights. Napoleon did revoke them, as far as the United States were concerned, in the Spring of 1810. England persisted in her avowed outrage on the maritime rights of America. Her resistance lasted from 1806 to 23d of June, 1812 after, on the 18th of June, 1812, the United States had declared war against England. England abstained, consequently, in this case for six years, not from atoning for a confessed outrage, but from discontinuing it. And this people talk of the magnificent occasion missed by the American Government! Whether in the wrong or in the right, it was a cowardly act on the part of the British Government to back a complaint grounded on pretended technical blunder, and a mere error of procedure, by an ultimatum, by a demand for the surrender of the prisoners. The American Government might have reasons to accede to that demand; it could have none to anticipate it. By the present settlement of the Trent collision, the question underlying the whole dispute, and likely to again occur the belligerent rights of a maritime power against neutrals has not been settled. I shall, with your permission, try to survey the whole question in a subsequent letter. For the present, allow me to add that, in my opinion, Messrs. Mason and Slidell have done great service to the Federal Government. There was an influential war party in England, which, what for commercial, what for political reasons, showed eager for a fray with the United States. The Trent affair put that party to the test. It has failed. The war passion has been discounted on a minor issue, the steam has been let off, the vociferous fury of the oligarchy has raised the suspicions of English democracy, the large British interests connected with the United States have made a stand, the true character of the civil war has been brought home to the working classes, and last, not least, the dangerous period when Palmerston rules single-headed without being checked by Parliament, is rapidly drawing to an end. That was the only time in which an English war for the slaveocrats might have been hazarded. It is now out of question.

Articles by Marx and Engels in Die Presse 1862

https://www.marxists.org/archive/marx/works/1862/02/01.htm

Some time before the tables began to dance, China this living fossil started revolutionizing. By itself there was nothing extraordinary in this phenomenon, since the Oriental empires always show an unchanging social infra-structure coupled with unceasing change in the persons and tribes who manage to ascribe to themselves the political super-structure. China is ruled by a foreign dynasty. Why should there not be initiated, after 300 years, a movement to overthrow it? From the start, the movement possessed primarily a religious character; but this it had in common with all Oriental movements. The immediate causes for the emergence of the movement were close at hand: European intervention, Opium Wars, consequently a shattering of the existing government, the outflow of silver into foreign lands, disturbances of the economic balance through import of foreign goods, etc. Paradoxically, it seems to me, opium acted as a stimulant, not as a tranquilizer. What is original in this Chinese revolution are only its bearers. They are not conscious of any task, except the change of dynasty. They have no slogans. They are an even greater scourge to the population than the old rulers. It seems that their vocation is nothing else than to set against the conservative disintegration [of China], its destruction, in grotesque horrifying form, without any seeds for a renaissance. For the characterization of these God s Advocates the following excerpts from a letter of Mr. Harvey (English Consul in Ningpo) to Mr. Bruce, the English Ambassador in Pekin, will suffice. Doubtless the Taiping impersonates the devil in the manner in which he has been represented in Chinese phantasy. But only in China was such a sort of devil possible. It is the consequence of a fossil form of social life.

Colonialism and Modernization by Karl Marx 1862

https://www.marxists.org/archive/marx/works/1862/07/colonialism-modernization.htm

... As for subscriptions to your essay, I shall do all I possibly can, but expect little success. The ragtag and bobtail that make up the various societies with the exception of the Workers Educational Association which has no funds whatever are all constitutionally disposed, and even favour the Prussian National Association. Those fellows would rather give money to suppress an essay like yours. I must tell you, these Germans, young and old, are all very clever, robust, prudent and practical men; they consider people like you and me immature fools who have still not been cured of their revolutionary fantasies. And that riff-raff is as bad at home as it is here abroad. During my stay in Berlin and elsewhere I convinced myself that any attempt to influence that mob by means of literature was absolutely futile. The self-complacent stupidity of those fellows, who regard their press, that woebegone press, as an admirable elixir of life, is simply incredible. Add to this that mental lassitude: caning is the only means to resurrect the ordinary German who, ever since he lost his philosophical illusions and took to moneymaking, and moreover to the idea of Little Germany and practical constitutionalism , has become a superficial impulsive clown...

Marx-Engels Correspondence 1862

https://www.marxists.org/archive/marx/works/1862/letters/62_02_26.htm

||XX-1291a| According to Hobbes science, not operative labour, is the mother of the arts. The product of mental labour science always stands far below its value, because the labour-time needed to reproduce it has no relation at all to the labour-time required for its original production. For example, a schoolboy can learn the binominal theorem in an hour. Labour power: Productive and unproductive labour: ||XXII-1346| Petty, A Treatise of Taxes, and Contributions, London, 1667. Our friend Petty has quite a different population theory from Malthus. According to him a check ought to be put upon the breeding faculties of parsons, and the Celibacy again put upon them. All this belongs to the [sectional] productive and unproductive labour. a) Parsons: b) Merchants and Retailers: c)Lawyers, physicians, officials, etc.: d) Paupers (supernumeraries): Population wealth: On (a) above (Parsons). Petty handles the priests with exquisite irony: Origin of surplus-value and how to compute it. His treatment is somewhat confused, but in all the grappling with ideas striking passages can be found here and there. Petty distinguishes between natural price, political price, true price currant (p. 67). By natural price he means in fact value, and it is only this that concerns us here, since ||1348| the determination of surplus-value depends on the determination of value. In this treatise he in fact determines the value of commodities by the comparative quantity of labour they contain. a) The first question is, what is the value of a commodity, or more particularly, of corn? ) The second point, which has now to be examined, is the value of labour. The value of labour is therefore determined by the necessary means of subsistence. The labourer is impelled to surplus production and surplus-labour only by being forced to use the whole of the labour-power within his capacity in order to get even as much as be just needs to live. However, the cheapness or dearness of his labour is determined by two factors: natural fertility and the standard of expenditure (needs) conditioned by the climate. g) For Petty the surplus exists only in two forms: rent of land or rent of money (usury). The latter he derives from the former. For him, as later for the Physiocrats, the first is the true form of surplus-value (but at the same time he explains that corn is intended to cover all necessaries of life, as in the Lord s Prayer <Our Father> the word Bread doth ). In developing his ideas he presents rent (the surplus-value) not only as the excess drawn by the employer beyond the necessary time of labour, but also as the excess of surplus-labour of the producer himself over his wages and the replacement of his own capital. In fact for Petty, therefore, since the value of corn is determined by the labour-time contained in it, and the rent is equal to the total product minus wages and seed, rent is equal to the surplus-produce in which the surplus-labour is materialised. Rent here includes profit; the latter is not yet separated from rent. In the same ingenious way Petty goes on to ask: The difference in the kind of labour, Petty expressly notes, is here quite immaterial; all that matters is the labour-time. After thus explaining rent which here is equivalent to the total surplus-value, profit included and its expression in money, he then sets out, again in a very brilliant way, to determine the money value of land. After resolving rent into surplus-labour and consequently surplus-value, Petty explains that land is nothing but the capitalised rent, that is to say, a definite number of years rent or the total amount of the rents for a definite number of years. In fact, rent is capitalised or reckoned as the value of land in this way: Let one acre yield an annual rent of 10. If the rate of interest is 5 per cent, then 10 represents the interest on a capital of 200, and, as the interest at 5 per cent replaces the capital in 20 years, the value of the acre would be 200 (2O 10). Capitalisation of rent therefore depends on the rate of interest. If the rate of interest were 10 per cent, it would represent the interest on a capital of 100 or ten years purchase. But as Petty starts from the rent of land as the general form of surplus-value, which includes profit, he cannot take the rate of interest on capital as something given; on the contrary, he has to deduce it from rent as a special form (as Turgot also does-quite consistently from his own standpoint). In what way then is he to determine the number of years the number of years rent which forms the value of land? A man is only interested in buying as many yearly rentals as the years during which lie has to take care of himself and his immediate posterity; that is, as long as an average man, grandfather, father and child, lives, and on the English reckoning this is twenty-one years. Therefore what lies beyond the twenty-one years usus fructus has no value for him. Consequently he pays for the usus fructus for twenty-one years, and this constitutes the value of the land. In his ingenious way he gets himself out of the difficulty; but the important thing here is, firstly, that rent, as the expression of the total agricultural surplus-value, is derived not from the land but from Labour, [and is presented as] the surplus of labour in excess of what is necessary for the subsistence of the labourer; secondly, that the value of land is nothing but the rent purchased in advance for a certain number of years a transmuted form of rent itself, in which for example twenty-one years surplus-value (or labour) appears as the value of the land; in a word, the value of land is nothing but capitalised rent. Such is Petty s deep insight into the matter. From the standpoint of the buyer of rent (i.e., of land) rent thus appears merely as interest on his capital used to buy it; and in this form rent has become completely unrecognisable and appears as interest on capital. After Petty has thus determined the value of land and the value of the annual rental, he is able to derive the rent of money or usury as a secondary form. Here interest is presented as determined by the price of rent, whereas on the contrary the price of rent or the purchase value of land is determined by interest. But this is quite consistent, as rent is presented as the general form of surplus-value and therefore interest on money must be derived from it as a secondary form. Differential rent. Of this too the first notion is to be found in Petty. He derives it not from the different fertility of pieces of land of the same size, but from the different position, [the different] distance from the market of pieces of land of equal fertility, which as we know is one element in differential rent. He says: ||1351| As great need of Money heightens Exchange, so doth great need of Corn raise the price of that likewise, and consequently of the Rent of the Land that bears Corn (here therefore he says explicitly that the price of corn determines rent, it being implicit in the earlier analysis that rent does not determine the value of corn) and lastly of the Land itself; as for example, if the Corn which feedeth London, or an Army, be brought forty miles together,* then the Corn growing within a mile of London, or the quarters of such Army, shall have added unto its natural price, so much as the charge of bringing it thirty nine miles doth amount unto Hence it comes to pass, that Lands intrinsically alike near populous places, such as where the Perimeter of the Area that feeds them is great, will not only yield more Rent for these Reasons, but also more years purchase than in remote places , etc. (p. 29). Petty also mentions the second cause of differential rent the differing fertility of land and therefore the differing productivity of labour on equal areas of land: Petty s exposition of differential rent is therefore better than that of Adam Smith. |XXII-1351|| ||XXII-1397| [Petty,] A Treatise of Taxes, and Contributions, London, 1667. Supplementary points. 1. On the quantity of circulating money which a nation needs, pp. 16-17. His view of total production is shown by the following passage: In his analysis of rent and of its valuation in money, for which he takes as the basis equal labours (quantities), Petty remarks: ||1398| 2. What he was much preoccupied with is the natural Par between Land and Labour : For this reason Petty seeks the natural values of the Fee-Simple of Land , after he has found the monetary expression of rent. Running alongside of each other through his work there are three ways of determining value: a) The magnitude of value, determined by equal labour-time, labour being here considered as the source of value. b) Value as the form of social labour. Hence money is the true form of value, although in other passages he knocks down all the illusions of the Monetary system. He is therefore defining the concept. c) Labour as the source of exchange-value is confused with labour as the source of use-value; which presupposes material provided by nature (land). In fact, he cuts the Par between labour and land by describing the Fee-simple of the latter as capitalised rent therefore not treating land as material provided by nature for concrete labour. 3. With reference to the rate of interest he says: 4. In regard to rent: surplus-value consequent on the greater productivity of labour: ([By increase of labour] he means here the price or wages of labour.) 5. Raising [the value] of money (Chapter XIV). 6. The passage quoted earlier if you allow double, then he works but half so much, etc. must be taken to mean: If the labourer received for six hours the value of six hours, then he would receive double what he now receives the value of six for twelve. He would then work only six, which is a loss to the Publick , etc . Petty, An Essay Concerning the Multiplication of Mankind (1682). Division of labour (pp. 35-36). [Petty, The] Political Anatomy of Ireland (1672) and Verbum Sapienti (London edition 1691). 1. This brings me to the most important Consideration in Political Oeconomies, viz, how to make a Par and Equation between Lands and Labour, so as to express the Value of any thing by either alone (pp. 63-64). In fact, the task in this connection is only to resolve the value of land itself into labour. ||1399| 2. This work was written later than the one examined earlier. This later statement is quite Physiocratic. But what Petty is searching for here in the statistics of Ireland is not the common measure of value, but the measure of value in the sense that money is the measure of value. 3. Quantity of money and wealth of the nation (Verbum Sapienti, p. 13). 4. Capital. 5. Productive power of labour 6. Purpose of men and goal (p. 24). 7. On money, see also the Quantulumcunque (1682). |XXII-1399|| ||XXII-1397| By comparing North s and Locke s writings with Petty s Quantulumcunque (1682), A Treatise of Taxes, and Contributions (1662), [and The Political] Anatomy of Ireland (1672), their indebtedness to Petty can be seen in connection with (1) lowering of interest: (2) raising and abasing of money; (3) North s calling interest the rent of money, etc. North and Locke wrote their works at the same time and on the same occasion: Lowering of Interest and Raising of money. But [they have] opposite views. With Locke it is the want of money that is responsible for the high rate of interest and in general for the fact that things do not fetch their real prices, and the revenues to be paid out of them. North shows the opposite, that it is not want of money but of capital or revenue. We find in his works the first definite concept of stock or capital, or rather of money as a mere form of capital, in so far as it is not means of circulation. In Sir Dudley North s writings we find the first correct conception of interest as opposed to Locke s idea. |XXII-1397|| ||XX-1291a| Taking Locke s general doctrine of labour together with his doctrine of the origin of interest and rent for he considers surplus-value only in these specific forms surplus-value is nothing but another person s labour, surplus-labour, which land and capital the conditions of labour enable their owners to appropriate. And ownership of a greater quantity of conditions of labour than one person can himself put to use with his own labour is, according to Locke, a political invention that contradicts the law of nature on which private property is founded. ||1292a| <For Hobbes too labour is the sole source of all wealth, apart from those gifts of nature which are to be found already in a consumable state. God (nature) either freely giveth, or for labour selleth to mankind (Leviathan) [In: The English Works of Thomas Hobbes , now first collected and edited by Molesworth, Vol. III, London, 1839, p. 232]. But for Hobbes it is the sovereign who distributes property in land at his pleasure.> The relevant passages [in Locke] are as follows: Labour gives things almost all their value <value here is equivalent to use-value, and labour is taken as concrete labour, not as a quantum; but the measuring of exchange-value by labour is in reality based on the fact that the labourer creates use-value>. The remainder of use-value which cannot be resolved into labour is the gift of nature, and hence in its essence common property. What Locke therefore tries to show is not the contradiction that property can nevertheless be acquired by other procedures than labour but how, in spite of the common property in nature, individual property could be created by individual labour. Of the products of the earth useful to the life of man ninety-nine hundredths are wholly to be put on the account of labour (p. 234). One limit to property is therefore the limit of personal labour; the other, that a man should not amass more things than he can use. The latter limit however is extended by exchange of perishable products for money (apart from other exchanges): Thus arises the inequality of individual property, though the limit of personal labour remains. We must now compare with this the following passage from Locke s work on interest, not forgetting that according to him natural law makes personal labour the limit of property: In this passage Locke has in part the polemical interest of showing landed property that its rent is in no way different from usury. Both transfer that Profit, that** was the Reward of one Man s Labour, into another Man s Pocket through the unequal distribution of the conditions of production. Locke s view is all the more important because it was the classical expression of bourgeois society s ideas of right as against feudal society, and moreover his philosophy served as the basis for all the ideas of the whole of subsequent English political economy. |XX-1293a|| ||XXIII-1418| Sir Dudley North: Discourses upon Trade, etc., London, 1691. (Supplementary notebook C). This work, like Locke s economic writings, is in direct connection with and directly based on Petty s works. The work is mainly concerned with commercial capital, and so it is not relevant here, though it shows masterly skill in the field with which it deals. It is particularly remarkable that from the time of the Restoration of Charles II up to the middle of the eighteenth century there were continual complaints from the landlords about the fall in rents (just as the price of wheat continually declined especially from? onwards). Although the industrial capitalist class played a considerable part in the compulsory reduction of the rate of interest (from the time of Culpeper and Sir Josiah Child), the real protogonist of this measure was the landed interest. The value of land and the raising of it were proclaimed to be in the national interest. (Just as on the other hand from about 1760 the rise in rents, in the value of land and in the price of corn and provisions, and the complaints of the manufacturers on this score, form the basis of the economic investigations on this subject). With few exceptions it is the struggle between moneyed interest and landed interest that fills the century from 1650 to 1750, as the nobility, who lived in the grand style, saw with disgust how the usurers had got their hands on them and, with the building up of the modern credit system and the national debt at the end of the seventeenth century, faced them with overwhelming power in the sphere of legislation, etc. Already Petty speaks of the landlords complaints about the fall in rents and their opposition to the improvements (look up the passage). He defends the usurer as against the landlord and puts rent of money and rent of land on the same footing. Locke reduces both to exploitation of labour. He takes the same standpoint as Petty. Both oppose the compulsory regulation of interest. The landed interest had noted that the value of land rose when interest fell. At a given level of rent, its capitalised expression, i.e., the value of land, falls or rises in inverse relation to the rate of interest. The third writer to follow this line of Petty s is Sir Dudley North, in the work referred to above. This is the first form in which capital starts its revolt against landed property, as in fact usury was one of the principal agents in the accumulation of capital i.e., through its co-proprietorship in the landlord s revenues. But industrial and commercial capital go more or less hand in hand with the landlords against this outmoded form of capital. Interest. North seems to have been the first to have a correct conception of interest, for by stock, as will be seen from the passages next quoted, he means not only money, but capital (as indeed even Petty distinguishes between stock and money. Locke considered that interest was determined exclusively by the quantity of money; so did Petty. See the passages in Massie on this.). Price and money. As the price is nothing but the equivalent of the commodity expressed in money, and, when we are dealing with a sale, the commodity realised in money that is, it represents the commodity as exchange-value in order to change it subsequently into a use-value again it is one of the earliest recognitions of the fact that in this transaction we are dealing with gold and silver only as a form of existence of the exchange-value of commodities, as a phase in their metamorphosis, not with gold and silver as such. North puts this very felicitously for his time. Further: Capital is value which produces surplus-value, whereas in the building up of a hoard the crystallised form of exchange-value as such is the aim. One of the earliest discoveries of the classical economists is therefore the antithesis between the formation of a hoard and using money to make profit, that is to say, the presentation of money as capital. <Similarly, John Bellers, Essays about the Poor, Manufactures, Trade, Plantations, and Immorality, etc., London, 1699, says: ||1420| Money as world-money: The quantity of money that can circulate is determined by the exchange of commodities. Conversion of money into bullion, and vice versa (p.18) (Supplementary notebook C, p. 13). Valuation and weighing of money. Oscillatory movement (Supplementary notebook C, p.14). The usurer and landed interest and trade: ||XIII-670a| Whether it were not wrong to suppose land itself to be wealth? And whether the industry of the people is not first to be considered, as that which constitutes wealth, which makes even land and silver to be wealth, neither of which would have any value, but as means and motives to industry? (The Querist, by Dr. George Berkeley, London, 1750, Query 38). |XIII-670a|| ||XX-1293a| Massie s anonymous work An Essay on the Governing Causes of the Natural Rate of Interest appeared in 1750. The second part of Hume s Essays, which contains the [essay] Of Interest published 1752, that is, two years later. Massie therefore has priority. Hume attacks Locke, Massie attacks both Petty and Locke, both of whom still held the view that the level of interest depends on the quantity of money, and that in fact the real object of the loan is money (not capital). Massie laid down more categorically than did Hume, that interest is merely a part of profit. Hume is mainly concerned to show that the value of money makes no difference to the rate of interest, since, given the proportion between interest and money-capital 6 per cent for example, that is, 6, rises or falls in value at the same time as the value of the 100 (and. therefore, of one pound sterling) rises or falls, but the proportion 6 is not affected by this. Let us start with Hume. The rate of interest depends on the demand from borrowers and the supply by lenders, that is, on demand and supply, but after that essentially on the level of profits arising from commerce (l.c., p. 329). High interest and high profit are both the expression of the small advance of commerce and industry, not of the scarcity of gold and silver (l.c., p.329). And low interest of the opposite. ||1294a| In a state, therefore, where there is nothing but a landed interest (or as he says later, landed gentry and peasants ) the borrowers must be numerous, and interest high (p. 330), because wealth which is only for enjoyment is driven by boredom to seek pleasures, while on the other hand production, except for agriculture, is very limited. The opposite is the case, when commerce has developed. The passion for gain entirely [dominates the] merchant. He knows no such pleasure as that of seeing the daily increase of his fortune . (The passion for exchange-value, abstract wealth, weighs with him far more than that for use-values.) <Unproductive labour: [Joseph Massie,] An Essay on the Governing Causes of the Natural Rate of Interest; wherein the Sentiments of Sir William Petty and Mr. Locke, on that Head, are considered, London, 1750. ||XXI-1300| Rich people, instead of employing their Money themselves, [..,] let it out to other People for them to make Profit of, reserving for the Owners a Proportion of the Profits so**** made: But when the Riches of n Country are dispersed into so many Hands, and so equally divided, as not to leave many People enough to maintain two Families, by employing it in Trade, there can be little borrowing; for 20,000 l.***** when it belongs to one Man, may be lent, because the Interest of it will keep a Family, but if it belongs to ten Men, it cannot he lent, because the Interest will not keep ten Families (pp. 23-24). Why then was interest 4 per cent instead of 8 as it had been earlier in England? Because English merchants at that time get* double the Profits they now make [p. 51]. Why 3 per cent in Holland, 5 and 6 in France, Germany, Portugal, 9 per cent in the West and East Indies, 12 in Turkey? But what is the fall in profit due to? Massie, even more definitely than Hume, presents interest as a mere part of profit; both attribute the fall in interest to the accumulation of capitals (Massie [speaks] especially of competition) and the fall in profits resulting from this. Both [say] equally little about the origin of the Profit of trade itself. |XXI-1301|| ||XXIII-1433| This is the simplest form of the Tableau conomique. 1. Money circulation (assuming payment is made only annually). The money circulation starts out from the spending class, the landlords who have no commodities to sell, who buy without selling. They buy to the amount of 1 milliard from the productive class, to whom they send back the milliard in money received in payment for rent. (This disposes of one-fifth of the agricultural produce.) They buy to the amount of 1 milliard from the sterile class, who in this way get 1 milliard in money. (This disposes of half the product of manufacture.) With the 1 milliard, the sterile class buy means of subsistence from the productive class; so that 1 milliard in money thus flows back to the latter. (This disposes of a second fifth of the agricultural produce.) With the same milliard in money the productive class buy l milliard in manufactured products; this replaces for them one-half of their advances. (This disposes of the second half of the produce of manufacture). The sterile class buy ||1434| raw materials with the same milliard in money. (This disposes of another one-fifth of the agricultural produce.) In this way the milliards in money have flowed back to the productive class. So what remains is two-fifths of the agricultural produce. One-fifth is consumed in kind, but in what form is the second one-fifth accumulated? That is to be shown later. 2. Even from Quesnay s point of view, according to which the whole sterile class in fact consist only of wage-labourers, the falsity of the assumptions made is evident from the Tableau itself. The original advances (fixed capital) made by the productive class are assumed to be five times the size of the annual advances. In the case of the sterile class this item is not mentioned at all which naturally does not prevent it from existing. Moreover, it is wrong to say that the reproduction is equal to 5 milliards; the Tableau itself shows it to be 7 milliards; 5 in the case of the productive class and 2 in the case of the sterile class. The product of the sterile class is equal to 2 milliards. This product consists of 1 milliard in raw materials (which therefore partly enter into the product, and partly replace the wear and tear of the machinery which has entered into the value of the product) and 1 milliard in means of subsistence, which have been consumed in working them up. They sell this entire product to the landlords and the productive class, in order firstly to replace the advance (in raw materials), secondly to obtain agricultural means of subsistence. Therefore not a farthing s worth of the manufactured products is left for their own consumption, still less for interest or profit. This in fact was noticed by Baudeau (or Le Trosne); he explains it by the sterile class selling their product above its value, so that what they sell for 2 milliards is equivalent to 2 milliards minus x. Their profit, and even what they consume in manufactured goods as necessary means of subsistence, is therefore explained only by the raising of the price of the commodities above their value. And here the Physiocrats necessarily fall back on the Mercantile system s profit upon alienation. This is why free competition between the manufacturers is so very essential, so that they do not take too great advantage of the productive class, the agriculturists. On the other hand this free competition is necessary in order that agricultural produce may be sold at a good price , that is, that it may rise above its native price by sale abroad the assumption being a country which exports wheat, etc. Advances and capital are explicitly stated to be identical. Accumulation of capitals as the principal condition. ||XXII-1399| Buat (Comte du), l ments de la politique, ou Recherche des vrais principes de l conomie sociale, (6 volumes), London, 1773. This feeble and diffuse writer, who takes the outward form of Physiocracy for its essence and glorifies the landed aristocracy and in fact accepts it [Physiocracy] only in so far as it serves this purpose would not have to be mentioned at all, but for the fact that the brutal characteristics of the bourgeois emerge so sharply in his work; quite as sharply, perhaps, as in Ricardo s writings later. His error in restricting the net product to rent makes no difference to this. What Buat says is repeated by Ricardo in relation to the net product in general. The labourers belong to the incidental expenses and exist only in order that the owners of the net product may form society . (See the relevant passages.) The free labourer s lot is conceived as only a changed form of slavery; but this is necessary so that the higher strata may form society . < Arthur Young too sees the net product, surplus-value, as the purpose of production.> ||1400| In this connection we may recall the passage in Ricardo, directed against Adam Smith, for whom that capital is the most productive which employs the greatest number of labourers. On this, compare Buat t. VI, pp. 51-52, 68-70. Also on the labouring class and slavery t. II, pp. 288, 297, 309; t. III, pp. 74, 95-96, 103; t. VI, pp. 43, 51; on the necessity for these labourers to work surplus-time, and on the meaning of the strict n cessaire t. VI, pp. 52-53. The one passage to be quoted here because it deals well with the prattle about the risk that the capitalist always runs: ||XXIII-1449| The Essential Principles of the Wealth of Nations, illustrated, in Opposition to some False Doctrines of Dr. Adam Smith, and others, London, 1797. This man knew of Anderson, for he prints in his appendix an extract from Anderson s Agricultural Report for the County of Aberdeen. This is the only important English work directly supporting the Physiocratic teaching. William Spence, Britain Independent of Commerce, 1807, is a mere caricature. This same fellow in 1814-15 was one of the most fanatic defenders of the landed interest on the basis of Physiocracy which teaches free trade. The fellow is not to be confused with Thomas Spence, the deadly enemy of Private Property in Land. The work [The Essential Principles] contains firstly a very excellent and compressed resum of the Physiocratic doctrine. He is right in tracing the origin of this view to Locke and Vanderlint, and he describes the Physiocrats as those who very systematically, though not correctly, illustrated the doctrine (p. 4). (See also on this p. 6; notebook H, pp. 32-33.) The summary quoted there brings out very nicely how the privation theory which the later apologists, and partly even Smith, made the basis for the formation of capital arose precisely from the Physiocratic view that no surplus-value is created in industry, etc.: Production of surplus-value to be clearly distinguished from its transfer. And this is the great merit of Physiocracy. The Physiocrats put themselves the question: how is surplus-value (for him [the anonymous writer] it is revenue) produced and reproduced? The question how it is reproduced on an enlarged scale, that is, increased, comes up only in the second place. Its category, the secret of its production, ||1450| must first be revealed. Surplus- value and commercial capital. The Physiocrats explain the profit of industry as profit upon alienation (that is, in the Mercantilist way). This Englishman therefore draws the right conclusion that this profit is only a gain when industrial commodities are sold abroad. From the Mercantilist premise he draws the right Mercantilist conclusion. Very good presentation of the reasons for Holland s wealth. Fisheries. (He should also have mentioned stock-raising.) Monopoly of the spices of the East. Carrying trade. Lending money abroad. (Supplementary notebook H, pp. 36-37). There are only four essential classes. Productive class or cultivators. Manufacturers. Defenders. The class of instructors, which he substitutes for the Physiocratic tithe owners or priests, for every civil society must be fed, clothed, defended and instructed (pp. 50-51). The mistake of the Economists is that they ||1451| The landlords as such are not only not productive, but not even an essential class of society. See his further treatment of this, which is very good, [in] Supplementary notebook H, pp. 38-39 and this polemic against the receivers of land rent from the standpoint of the Physiocrats, as the final conclusion from their doctrine, is very important. [The author] shows that the real tax on land is Turkish (l.c., p. 59). The landlord taxes not only improvements of land, but often the presumption of future improvement (pp. 63-64). Tax on rents (p. 65). The Physiocratic doctrine anciently established in England, Ireland, feudal Europe, Empire of the Mogul (pp. 93-94). The landlord as tax-imposer (p. 118). The limitations of Physiocracy break through in the following (lack of understanding of the division of labour): Let it be assumed that a clockmaker or calico manufacturer cannot sell his clock or calico. [Then he would be in difficult position. That however shows] that a manufacturer only enriches himself by being a seller (it shows only that he produces his product as a commodity and that when he ceases to be a seller, his profits (and what of the profits of the farmer who is not a seller?) are immediately at a stand, because they are not natural profits, but artificial. The cultivator may exist, and thrive, and multiply, without selling any thing (pp. 38-39). (But then he must also be a manufacturer.) [Why does the author speak only of a clockmaker or a calico manufacturer? It can equally well be] assumed that a producer of coal, iron, flax, indigo, etc., cannot sell these products, or even that a producer of corn cannot sell his corn. B ard de l Abbaye, cited above, is very good on this. He [the anonymous author] has to stress production [for] immediate consumption as against the production of commodities very much in contradiction with the Physiocratic view that exchange-value was the principal thing. But that runs right through the work of this fellow. It is the bourgeois view within the pre-bourgeois way of looking at things. [He comes out] against Arthur Young s high price, [which the latter regards] as important for the prosperity of agriculture; but this is at the same time polemics against the Physiocrats (l.c., pp. 65-78 and 118). Surplus-value cannot be derived from the nominal raising of the price on the part of the seller. This is similar to Vanderlint s arguments: [He is] against the farm system, and for long leases, because landownership will otherwise only hinder production and improvements (pp. 118-23). (Irish Right of Tenantry.) |XXIII-1451|| ||V-182| A philosopher produces ideas, a poet poems, a clergyman sermons, a professor compendia and so on. A criminal produces crimes. If we look a little closer at the connection between this latter branch of production and society as a whole, we shall rid ourselves of many prejudices. The criminal produces not only crimes but also criminal law, and with this also the professor who gives lectures on criminal law and in addition to this the inevitable compendium in which this same professor throws his lectures onto the general market as commodities. This brings with it augmentation of national wealth, quite apart from the personal enjoyment which as a competent Witness, Herr Professor Roscher, [tells] us the manuscript of the compendium brings to its originator himself. The criminal moreover produces the whole of the police and of criminal justice, constables, judges, hangmen, juries, etc.; and all these different lines of business, which form equally many categories of the social division of labour, develop different capacities of the human spirit, create new needs and new ways of satisfying them. Torture alone has given rise to the most ingenious mechanical inventions, and employed many honourable craftsmen in the production of its instruments. The criminal produces an impression, partly moral and partly tragic, as the case may be, and in this way renders a service by arousing the moral and aesthetic feelings of the public. He produces not only compendia on Criminal Law, not only penal codes and along with them legislators in this field, but also art, belles-lettres, novels, and even tragedies, as not only M llner s Schuld and Schiller s R uber show, but also [Sophocles ] Oedipus and [Shakespeare s] Richard the Third. The criminal breaks the monotony and everyday security of bourgeois life. In this way he keeps it from stagnation, and gives rise to that uneasy tension and agility without which even the spur of competition would get blunted. Thus he gives a stimulus to the productive forces. While crime takes a part of the superfluous population off the labour market and thus reduces competition among the labourers up to a certain point preventing wages from falling below the minimum the struggle against crime absorbs another part of this population. Thus the criminal comes in as one of those natural counterweights which bring about a correct balance and open up a whole perspective of useful occupations. The effects of the criminal on the development of productive power can be shown in detail. Would locks ever have reached their present degree of excellence had there been no thieves? Would the making of bank-notes have reached its present perfection had there been no ||183| forgers? Would the microscope have found its way into the sphere of ordinary commerce (see Babbage) but for trading frauds? Doesn t practical chemistry owe just as much to adulteration of commodities and the efforts to show it up as to the honest zeal for production? Crime, through its constantly new methods of attack on property, constantly calls into being new methods of defence, and so is as productive as strikes for the invention of machines. And if one leaves the sphere of private crime: would the world-market ever have come into being but for national crime? Indeed, would even the nations have arisen? And hasn t the Tree of Sin been at the same time the Tree of Knowledge ever since the time of Adam? In his Fable of the Bees (1705) Mandeville had already shown that every possible kind of occupation is productive, and had given expression to the line of this whole argument: Only Mandeville was of course infinitely bolder and more honest than the philistine apologists of bourgeois society. |V-183|| ||XXI-1317| We have seen not only how capital produces, but how it itself is produced, and how, as an essentially altered relation, it emerges from the process of production and how it is developed in it. On the one hand capital transforms the mode of production; on the other hand this changed form of the mode of production and a particular stage in the development of the material forces of production are the basis and precondition the premise for its own formation. Since living labour through the exchange between capital and labourer is incorporated in capital, and appears as an activity belonging to capital from the moment that the labour-process begins, all the productive powers of social labour appear as the productive powers of capital, just as the general social form of labour appears in money as the property of a thing. Thus the productive power of social labour and its special forms now appear as productive powers and forms of capital, of materialised labour, of the material conditions of labour which, having assumed this independent form, are personified by the capitalist in relation to living labour. Here we have once more the perversion of the relationship, which we have already, in dealing with money, called fetishism. The capitalist himself only holds power as the personification of capital. (In Italian book-keeping this role of his as a capitalist, as personified capital, is even always contrasted with him as a mere person, in which capacity he appears only as a personal consumer and debtor of his own capital.) The productivity of capital consists in the first instance even if one only considers the formal subsumption of labour under capital in the compulsion to perform surplus-labour, labour beyond the immediate need; a compulsion which the capitalist mode of production shares with earlier modes of production, but which it exercises and carries into effect in a manner more favourable to production. Even from the standpoint of this purely formal relation the general form of capitalist production, which is common both to its less developed stage and to its more developed stage the means of production, the material conditions of labour material of labour, instruments of labour (and means of subsistence) do not appear as subsumed to the labourer, but the labourer appears as subsumed to them. He does not make use of them, but they make use of him. And it is this that makes them capital. Capital employs labour. They are not means for him to produce products whether in the form of direct means of subsistence, or of means of exchange, commodities. But he is a means for them partly to maintain their value, partly to create surplus-value, that is, to increase it, absorb surplus-labour. Already in its simple form this relation is an inversion personification of the thing and materialisation of the person; for what distinguishes this form from all previous forms is that the capitalist does not rule over the labourer through any personal qualities he may have, but only in so far as he is capital ; his domination is only that of materialised labour over living labour, of the labourer s product over the labourer himself. The relation grows still more complicated and apparently more mysterious because, with the development of the specifically capitalist mode of production, it is not only these directly material things <all products of labour; considered as use-values, they are both material conditions of labour and products of labour; considered as exchange-values, they are materialised general labour-time or money> that get up on their hind legs to the labourer and confront him as capital , but [also] the forms of socially developed labour co-operation, manufacture (as a form of division of labour), the factory (as a form of social labour organised on machinery as its material basis) all these appear as forms of the development of capital, and therefore the productive powers of labour built up on these forms of social labour consequently also science and the forces of nature appear as productive powers of capital. In fact, the unity [of labour] in co-operation, the combination [of labour ] through the division of labour, the use for productive purposes in machine industry of the forces of nature and science alongside the products of labour all this confronts the individual labourers themselves as something extraneous and objective, as a mere form of existence of the means of labour that are independent of them and control them, just as the means of labour themselves [confront them,] in their simple visible form as materials, instruments, etc., as functions of capital and consequently of the capitalist. The social forms of their own labour or the forms of their own ||1318| social labour are relations that have been formed quite independently of the individual labourers; the labourers, as subsumed under capital, become elements of these social formations but these social formations do not belong to them. They therefore confront them as forms of capital itself, as combinations belonging to capital, as distinct from their individual labour-power, arising from capital and incorporated in it. And this takes on a form that is all the more real the more on the one hand their labour-power itself becomes so modified by these forms that it is powerless as an independent force, that is to say, outside this capitalist relationship, and that its independent capacity to produce is destroyed. And on the other hand, with the development of machinery the conditions of labour seem to dominate Labour also technologically while at the same time they replace labour, oppress it, and make it superfluous in its independent forms. In this process, in which the social character of their labour confronts them to a certain degree as capitalised (as for example in machinery the visible products of labour appear as dominating labour), the same naturally takes place with the forces of nature and science, the product of general historical development in its abstract quintessence they confront the labourers as powers of capital. They are separate in fact from the skill and knowledge of the individual labourer and although, in their origin, they too are the product of labour wherever they enter into the labour-process they appear as embodied in capital. The capitalist who makes use of a machine need not understand it. (See Ure.) But science realised in the machine appears as capital in relation to the labourers. And in fact all these applications of science, natural forces and products of labour on a large scale, these applications founded on social labour, themselves appear only as means for the exploitation of labour, as means of appropriating surplus-labour, and hence confront labour as powers belonging to capital. Capital naturally uses all these means only to exploit labour; but in order to exploit it, it must apply them in production. And so the development of the social productive powers of labour and the conditions for this development appear as acts of capital, towards which the individual labourer not only maintains a passive attitude, but which take place in opposition to him. Capital itself has a double character, since it consists of commodities: 1. Exchange-value (money); but [it is] self-expanding value, value which because it is value creates value, grows as value, receives an increment. This [growth] resolves itself into the exchange of a given quantity of materialised labour for a greater quantity of living labour, 2. Use-value; and here it shows itself through its specific relations in the labour-process. But precisely here it is no longer merely material of labour and means of labour to which belongs labour, which have absorbed labour, but along with labour [capital includes] also the social combinations [of labour] and the development of the means of labour corresponding to these social combinations. Capitalist production first develops on a large scale tearing them away from the individual independent labourer both the objective and subjective conditions of the labour-process, but it develops them as powers dominating the individual labourer and extraneous to him. Thus capital becomes a very mysterious being. |1318|| ||1320| Capital is therefore productive: (1) as a force compelling surplus-labour, (2) as the absorber and appropriator (personification) of the productive powers of social labour and of the general social productive forces, such as science. The question arises, how or for what reason does labour as opposed to capital appear productive or as productive labour, since the productive powers of labour are transposed into capital, and the same productive power cannot be counted twice, once as the productive power of labour and the second time as the productive power of capital? <Productive power of labour productive power of capital. But labour-power is productive through the difference between its value and the value which it creates.> Only bourgeois narrow-mindedness, which regards the capitalist forms of production as absolute forms hence as eternal, natural forms of production can confuse the question of what is productive labour from the standpoint of capital with the question of what labour is productive in general, or what is productive labour in general; and consequently fancy itself very wise in giving the answer that all labour which produces anything at all, which has any kind of result, is by that very fact productive labour. [Firstly:] Only labour which is directly transformed into capital is productive; that is, only labour which makes variable capital a variable magnitude and consequently [makes the total capital C] equal to C+ . If the variable capital before its exchange with labour is equal to x, so that we have the equation y=x, then the labour which transforms x into x+h, and consequently out of y=x makes y =x+h, is productive labour. This is the first point to be elucidated. [That is,] labour which produces surplus-value or serves capital as agency for the creation of surplus-value, and hence for manifesting itself as capital, as self-expanding value. Secondly:The social and general productive powers of labour are productive powers of capital; but these productive powers relate only to the labour-process, or affect only the use-value. They represent properties inherent in capital as a thing, as its use-value. They do not directly affect exchange-value. Whether a hundred work together, or each one of the hundred works by himself, the value of their product is equal to a hundred days labour, whether represented in a large or small quantity of products; that is to say, the productivity of the labour does not affect the value. ||1321| The varying productivity of labour affects exchange-value only in one way. If the productivity of labour is increased for example in a single branch of labour for instance, if weaving with power-looms instead of hand-looms becomes no longer exceptional, and if the weaving of a yard with the power-loom requires only half the labour-time required with the hand-loom, then twelve hours labour of a hand-loom weaver is no longer represented in a value of twelve hours, but in one of six, since the necessary labour-time has now become six hours. The hand-loom weaver s twelve hours now only [represent ] six hours of social labour-time, although he still works twelve hours as he did before. But this is not what we are dealing with here. As against this, take another branch of production, for example type-setting, in which up to now no machinery is used. Twelve hours in this branch produce just as much value as twelve hours in branches of production in which machinery, etc., is developed to the utmost. Hence labour as producing value always remains the labour of the individual, but expressed in the form of general labour. Consequently productive labour as labour producing value always confronts capital as labour of the individual labour-power, as labour of the isolated labourer, whatever social combinations these labourers may enter into in the process of production. While therefore capital, in relation to the labourer, represents the social productive power of labour, the productive labour of the workmen, in relation to capital, always represents only the labour of the isolated labourer. Thirdly: Whereas the extortion of surplus-labour and the appropriation to itself of the social productive powers of labour seem to be a natural property of capital hence a property springing from its use-value it seems on the contrary to be a natural property of labour to manifest its own social productive powers as productive powers of capital and its own surplus[-product] as surplus-value, as the self-expansion of capital. These three points must now be examined, and from them we must deduce the distinction between productive and unproductive labour. [On (1).] The productivity of capital consists in the fact that it confronts labour as wage-labour, and the productivity of labour consists in the fact that it confronts the means of labour as capital. We have seen that money is transformed into capital that is , a certain exchange-value is transformed into self-expanding exchange-value, into value plus surplus-value through one part of it being converted into commodities which serve labour as means of labour (raw materials, instruments, in short, the material conditions of labour), and another part being used for the purchase of labour-power. However, it is not this first exchange between money and labour-power, or the mere purchase of the latter, which transforms money into capita]. This purchase incorporates in the capital the use of the labour-power for a certain time, or makes a certain quantity of living labour one of the modes of existence of capital, so to speak, the entelechy of the capital itself. In the actual production process the living labour is transformed into capital through the fact that on the one hand it reproduces the wages that is, the value of the variable capital and on the other hand it creates surplus-value; and through this process of transformation the whole sum of money is transformed into capital, although the part of it which varies directly is only the part expended in wages. If the value was previously equal to c+v, now it is equal to c+(v+x), which is the same thing as (c+v)+x; or in other words: the original sum of money or magnitude of value has expanded, has shown itself to be value which at the same time maintains itself and also increases. <This has to be noted: the circumstance that only the variable part of the capital produces its increment in no way alters the fact that through this process the whole original value has expanded, has grown greater by a surplus-value, and that therefore the whole original sum of money has been transformed into capital. For the original value was equal to c+v (constant and variable capital). In the process it becomes c+(v+x); the latter is the reproduced part, which has come into existence through the transformation of the living labour into materialised labour a transformation which is conditioned and initiated through the exchange of v for labour-power, or its transformation into wages. But c+(v+x)=c+v (the original capital)+x. Moreover the transformation of v into v+x, and therefore of (c+v) into (c+v)+x, could only take place through the transformation of a part of the money into c, The one part can only be transformed into variable capital through the other part being transformed into constant capital.> In the actual process of production the labour is in reality transformed into capital, but this transformation is conditioned by the original exchange between money and labour-power. It is through this direct transformation of labour into materialised labour, belonging not to the labourer but to the capitalist, that money is first transformed into capital including that part of it which has received the form of means of production, or conditions of labour. Up to that point, the money whether it exists in its own form or in the form of commodities (products) of a kind that can serve as means of production of new commodities is only an sich* capital. ||1322| Only this definite relation to labour transforms money or commodities into capital, and that labour is productive labour which through this its relation to the conditions of production to which corresponds a definite conduct in the actual process of production transforms money or commodities into capital; that is to say, which maintains and increases the value of materialised labour rendered independent in relation to labour-power. Productive labour is only a concise term for the whole relationship and the form and manner in which labour-power figures in the capitalist production process. The distinction from other kinds of labour is however of the greatest importance, since this distinction expresses precisely the specific form of the labour on which the whole capitalist mode of production and capital itself is based. Productive labour is therefore in the system of capitalist production labour which produces surplus-value for its employer, or which transforms the objective conditions of labour into capital and their owner into a capitalist: that is to say, labour which produces its own product as capital. So when we speak of productive labour, we speak of socially determined labour, labour which implies a quite specific relation between the buyer and the seller of the labour. Now although the money which is in the hands of the buyer of labour-power (or the commodities in his possession: [the supply] of means of production and means of subsistence for the labourer) only becomes capital through this process, is only transformed into capital in this process and therefore these things are not capital before they enter into the process, but are only destined to be capital they are nevertheless an sich capital. They are in their essence capital because of the independent form in which they confront labour-power and labour-power confronts them a relationship which conditions and ensures the exchange with labour-power and the subsequent process of the actual transformation of labour into capital. They have from the outset the specific social character in relation to the labourers which makes them into capital and gives them command over labour. They are therefore pre-conditions confronting labour as capital. Productive labour, therefore, can be so described when it is directly exchanged for money as capital, or, which is only a more concise way of putting it, is exchanged directly for capital, that is, for money which in its essence is capital, which is destined to function as capital, or confronts labour-power as capital. The phrase: labour which is directly exchanged for capital, implies that labour is exchanged for money as capital and actually transforms it into capital. The significance of the direct nature of the exchange will be seen more clearly in a moment. Productive labour is therefore labour which reproduces for the labourer only the previously determined value of his labour-power, but as an activity creating value increases the value of capital; in other words, which confronts the labourer himself with the values it has created in the form of capital. In the exchange between capital and labour, as we saw in examining the production process, two essentially different though interdependent phases have to be distinguished. First: The first exchange between capital and labour is a formal process, in which capital figures as money and labour power as commodity. From a conceptual or legal standpoint the sale of labour-power takes place in this first process, although the labour is paid for only after it has been performed at the end of the day, of the week, etc. This in no way alters this transaction, in which the labour-power is sold. What in this transaction is directly sold is not a commodity in which labour has already realised itself, but the use of the labour-power itself, and therefore in fact the labour itself, since the use of the labour-power is its activity labour. It is therefore not an exchange of labour mediated through an exchange of commodities. When A sells boots to B, both exchange labour, the first, labour realised in boots, the second, labour realised in money. But in this first exchange, on one side materialised labour in its general social form, that is, money, is exchanged for labour which as yet exists only as a power; and what is brought and sold is the use of this power, that is, the labour itself, although the value of the commodity sold is not the value of the labour (a meaningless phrase) but the value of the labour-power. What takes place therefore is a direct exchange between materialised labour and labour power, which in fact resolves itself into living labour; that is, between materialised labour and living labour. The wage the value of the labour-power appears, as explained earlier as the direct purchase price, the price of labour. In this first phase the relation between Labourer and capitalist is that of seller and buyer of a commodity. The capitalist pays the value of the labour-power, that is, the value of the commodity which he buys. At the same time, however, the labour-power is only bought because the labour which it can perform, and undertakes to perform, is more than the labour required for the reproduction of its labour-power; therefore the labour performed by it represents a greater value than the value of the labour-power. ||1323| Secondly: The second phase of the exchange between capital and labour in fact has nothing to do with the first, and strictly speaking is not an exchange at all. In the first phase there is exchange of money for commodity exchange of equivalents and labourer and capitalist confront each other only as owners of commodities. Equivalents are exchanged. (That is to say, it makes no difference to the relation when they are exchanged; and whether the price of the labour is above or below the valve of the labour-power or is equal to it alters nothing in the transaction. It can therefore take place in accordance with the general law of commodity exchange.) In the second phase there is no exchange at all. The owner of money has ceased to be a buyer of commodities and the labourer has ceased to be a seller of commodities. The owner of money now functions as capitalist. He consumes the commodity which he has bought, and the worker supplies it, since the use of his labour-power is his labour itself. Through the earlier transaction the labour itself has become part of materialised wealth. The labourer performs it, but it belongs to capital and is now only a function of the latter. It is performed therefore directly under the control and direction of capital; and the product in which it is materialised is the new form in which the capital appears, or in which rather it actually realises itself as capital. In this process, therefore, labour is directly materialised, is transformed directly into capital, after it has been formally incorporated in capital through the first transaction. And indeed more labour is here transformed into capital than the capital which had earlier been expended on the purchase of labour-power. In this process a part of unpaid labour is appropriated, and only thereby does the money transform itself into capital. But although in this phase no exchange in fact takes place, the result, abstracting from the means that brought it about, is that in the process taking both phases together a certain quantity of materialised labour has exchanged for a greater quantity of living labour. This is expressed in the result of the process by the fact that the labour which has materialised itself in its product is greater in quantity than the labour materialised in the labour-power, and hence greater than the materialised labour paid to the labourer; or in other words by the fact that in the actual process the capitalist gets back not only the part of the capital which he laid out in wages, but a surplus-value which costs him nothing. The direct exchange of labour for capital here signifies: (1) the direct transformation of the Labour into capital, into a material component part of capital in the production process; (2) the exchange of a certain quantity of materialised labour for the same quantity of living labour [plus] a surplus quantity of living labour which is appropriated without exchange. The statement that productive labour is labour which is directly exchanged with capital embraces all these phases, and is only a derivative formula expressing the fact that it is labour which transforms money into capital, which is exchanged with the conditions of production as capital, that therefore in its relationship with these conditions of production labour is not faced by them as simple conditions of production, nor does it face the conditions of production as labour in general that has no specific social character. This statement covers: (1) the relation of money and labour-power to each other as commodities, purchase and sale as between the owner of money and the owner of labour-power; (2) the direct subsumption of labour under capital; (3) the real transformation of labour into capital in the production process, or what is the same thing, the creation of surplus-value for capital. Two kinds of exchange take place between labour and capital. The first expresses merely the purchase of labour-power and therefore in reality of labour and therefore of its product; the second, the direct transformation of living labour into capital, in other words the materialisation of living labour as the realisation of capital. The result of the capitalist production process is neither a mere product (use-value) nor a commodity, that is, a use-value which has a certain exchange-value. Its result, its product, is the creation of surplus-value for capital, and consequently the actual transformation of money or commodity into capital which before the production process they were only in intention, in their essence, in what they were destined to be. In the production process more labour is absorbed than has been bought. This absorption, ||1324| this appropriation of another s unpaid labour, which is consummated in the production process, is the direct aim of the capitalist production process; for what capital as capital (hence the capitalist as capitalist) wants to produce is neither an immediate use-value for individual consumption nor a commodity to be turned first into money and then into a use-value. Its aim is the accumulation of wealth, the self-expansion of value, its increase; that is to say, the maintenance of the old value and the creation of surplus-value. And it achieves this specific product of the capitalist production process only in exchange with labour, which for that reason is called productive labour. Labour which is to produce commodities must be useful labour; it must produce a use-value, it must manifest itself in a use-value. And consequently only labour which manifests itself in commodities, that is, in use-values, is labour for which capital is exchanged. This is a self-evident premise. But it is not this concrete character of labour, its use-value as such that it is for example tailoring labour, cobbling, spinning, weaving, etc. which forms its specific use-value for capital and consequently stamps it as productive labour in the system of capitalist production. What forms its specific use-value for capital is not its specific useful character, any more than it is the particular useful properties of the product in which it is materialised. But what forms its specific use-value for capital is its character as the element which creates exchange-value, abstract labour; and in fact not that it represents some particular quantity of this general labour, but that it represents a greater quantity than is contained in its price, that is to say, in the value of the labour-power. For it [capital], the use-value of labour-power is precisely the excess of the quantity of labour which it performs over the quantity of labour which is materialised in the labour-power itself and hence is required to reproduce it. Naturally, it supplies this quantity of labour in the determinate form inherent in it as labour which has a particular utility, such as spinning labour; weaving labour, etc. But this concrete character, which is what enables it to take the form of a commodity, is not its specific use-value for capital. Its specific use-value for capital consists in its quantity as labour in general, and in the difference, the excess, of the quantity of labour which it performs over the quantity of labour which it costs. A certain sum of money x becomes capital in that it appears in its product as x+h; that is to say, in that the quantity of labour contained in it as product is greater than the quantity of labour which it originally contained. And this is the result of the exchange between money and productive labour; in other words, only that labour is productive which, exchanged with materialised labour, enables the latter to take the form of an increased quantity of materialised labour. The capitalist production process, therefore, is not merely the production of commodities. It is a process which absorbs unpaid labour, which makes raw materials and means of labour the means of production into means for the absorption of unpaid labour. It follows from what has been said that the designation of labour as productive labour has absolutely nothing to do with the determinate content of the labour, its special utility, or the particular use-value in which it manifests itself. The same kind of labour may be productive or unproductive. For example Milton, who wrote Paradise Lost for five pounds, was an unproductive labourer. On the other hand, the writer who turns out stuff for his publisher in factory style, is a productive labourer. Milton produced Paradise Lost for the same reason that a silk worm produces silk. It was an activity of his nature. Later he sold the product for 5. But the literary proletarian of Leipzig, who fabricates books (for example, Compendia of Economics) under the direction of his publisher, is a productive labourer; for his product is from the outset subsumed under capital, and comes into being only for the purpose of increasing that capital. A singer who sells her song for her own account is an unproductive labourer. But the same singer commissioned by an entrepreneur to sing in order to make money for him is a productive labourer; for she produces capital. ||1325| Here different questions must be distinguished. Whether I buy a pair of trousers or whether I buy cloth and get a tailor to come to my house and pay him for this service (that is, his tailoring labour) in converting this cloth into trousers, is a matter of complete indifference to me, if all I am interested in is the trousers. I buy the trousers from the merchant-tailor instead of taking the latter course, because this latter course is more expensive, and the trousers cost less labour and are therefore cheaper when the capitalist tailor produces them than when I get them made by a jobbing tailor. But in both cases I transform the money with which I buy the trousers not into capital but into trousers; and in both cases it is for me only a matter of using the money as mere means of circulation, that is, of transforming it into this particular use-value. Here therefore the money does not function as capital, although in one case it exchanges for a commodity and in the other case it buys labour itself as a commodity. It functions only as money, and more precisely, as means of circulation. On the other hand the jobbing tailor [who works for me at my home] is not a productive labourer, although his labour provides me with the product, the trousers, and him with the price of his labour, the money. It may be that the quantity of labour performed by the jobbing tailor is greater than that contained in the price which he gets from me. And this is even probable, since the price of his labour is determined by the price which the productive tailor gets. This however is all the same so far as I am concerned. Once the price has been fixed, it is a matter of complete indifference to me whether he works eight or ten hours. What I am concerned with is only the use-valve, the trousers; and naturally, whether I buy them one way or the other, I am interested in paying as little as possible for them, but in one case neither less nor more than in the other; in other words, I am interested in paying only the normal price for them. This is an outlay for my consumption; not an increase but a diminution of my money. It is in no way a means to my enrichment, any more than any other way of spending money for my personal consumption is a means to enrichment for me. One of the savants of Paul de Kock may tell me that without buying trousers, just as without buying bread, I cannot live, and therefore also I cannot enrich myself; that the purchase of the trousers is therefore an indirect means, or at least a condition, for my enrichment in the same way as the circulation of my blood or the process of breathing are conditions for my enrichment. But neither the circulation of my blood nor my breathing in themselves make me any the richer; on the contrary, they both presuppose a costly assimilation of food; if that were not necessary, there would be no poor devils about. The mere direct exchange of money for labour therefore does not transform money into capital or labour into productive labour. What then is the special character of this exchange? How is it different from the exchange of money for productive labour? On the one hand, in that the money is spent as money, as the independent form of exchange-value, which is to be transformed into a use-value, into means of subsistence, into an object for personal consumption. The money therefore does not become capital, but on the contrary, it loses its existence as exchange-value in order to be consumed and expended as use-value. On the other hand, the labour only has any interest for me as a use-value, as a service which converts cloth into trousers, as the service which its particular useful character provides for me. In contrast to this, the service which the same tailor employed by a merchant-tailor renders to this capitalist does not consist at all in the fact that he converts cloth into trousers, but that the necessary labour-time materialised in a pair of trousers is say twelve hours, while the wage that the journeyman tailor gets is equivalent to six hours. The service which he renders the capitalist is therefore that he works six hours for nothing. That this takes place in the form of making trousers only conceals the real relationship. As soon as the merchant-tailor can, he therefore tries to transform the trousers again into money, that is, into a form in which the determinate character of tailoring labour has entirely disappeared and in which the service rendered is consequently expressed in the fact that instead of a labour-time of six hours, ||1326| expressed in a certain sum of money, there is now a labour-time of twelve hours, expressed in double that sum of money. I buy the tailoring labour for the service it renders me as tailoring labour, in order to satisfy my need for clothing and consequently to serve one of my needs. The merchant-tailor buys it as a means to making two talers out of one. I buy it because it produces a particular use-value, renders me a particular service. He buys it because it produces more exchange-value than it costs, as a mere means for exchanging less labour for more labour. Where the direct exchange of money for labour takes place without the latter producing capital, where it is therefore not productive labour, it is bought as service, which in general is nothing but a term for the particular use-value which the labour provides, like any other commodity; it is however a specific term for the particular use-value of labour in so far as it does not render service in the form of a thing, but in the form of an activity, which however in no way distinguishes it for example from a machine, for instance a clock. Do ut facias, facio ut facias, facio ut des, do ut des are here forms that can be used quite indifferently to describe the same relation, while in capitalist production the do ut facias expresses a quite specific relation between the material value which is given and the living activity which is appropriated. Because therefore in the purchase of services the specific relation between labour and capital is in no way involved, being either completely obliterated or altogether absent, it is naturally the favourite form used by Say, Bastiat and their consorts to express the relation between capital and labour. The question how the value of these services is regulated and how this value itself is determined by the laws governing wages has nothing to do with the examination of the relation we are considering, and belongs to the chapter on wages. It follows that the mere exchange of money for labour does not make the latter productive labour, and that on the other hand the content of this labour at first makes no difference. The labourer himself can buy labour, that is, commodities, which are provided in the form of services; and the expenditure of his wages on such services is an expenditure which in no way differs from the expenditure of his wages on any other commodities. The service which he buys may be more or less necessary for example, the service of a physician or of a priest, just as he may buy either bread or gin. As buyer that is, as representative of money confronting commodity the labourer is in absolutely the same category as the capitalist where the latter appears only as buyer, that is to say, where there is no more in the transaction than the conversion of money into the form of commodity. How the price of these services is determined, and what relation it has to wages proper, how far it is regulated by the laws of the latter and how far it is not, are questions to be considered in the treatment of wages, and are quite irrelevant for our present inquiry. If thus the mere exchange of money for labour does not transform the latter into productive labour, or, what is the same thing, does not transform the former into capital, so also the content, the concrete character, the particular utility of the labour, seems at first to make no difference as we have just seen, the same labour of the same journeyman tailor is in one case productive, in the other not. Certain services, or the use-values, resulting from certain forms of activity or labour are embodied in commodities; others on the contrary leave no tangible result existing apart from the persons themselves who perform them; in other words, their result is not a vendible commodity. For example, the service a singer renders to me satisfies my aesthetic need; but what I enjoy exists only in an activity inseparable from the singer himself, and as soon as his labour, the singing, is at an end, my enjoyment too is at an end. I enjoy the activity itself its reverberation on my ear. These services themselves, like the commodities which I buy, may be necessary or may only seem necessary for example, the service of a soldier or physician or lawyer; or they may be services which give me pleasure. But this makes no difference to their economic character. If I am healthy and do not need a doctor or am lucky enough not to have to be involved in a lawsuit, then I avoid paying out money for medical or legal services as I do the plague. ||1328| Services may also be forced on me the services of officials, etc. If I buy the service of a teacher not to develop my faculties but to acquire some skill with which I can earn money or if others buy this teacher for me and if I really learn something (which in itself is quite independent of the payment for the service), then these costs of education, just as the costs of my maintenance, belong to the costs of production of my labour-power. But the particular utility of this service alters nothing in the economic relation; it is not a relation in which I transform money into capital, or by which the supplier of this service, the teacher, transforms me into his capitalist, his master. Consequently it also does not affect the economic character of this relation whether the physician cures me, the teacher is successful in teaching me, or the lawyer wins my lawsuit. What is paid for is the performance of the service as such, and by its very nature the result cannot be guaranteed by those rendering the service. A large proportion of services belongs to the costs of consumption of commodities, as in the case of a cook, a maid, etc. It is characteristic of all unproductive labours that they are at my command as in the case of the purchase of all other commodities for consumption only to the same extent as I exploit productive labourers. Of all persons, therefore, the productive labourer has the least command over the services of unproductive labourers. On the other hand, however, my power to employ productive labourers by no means grows in the same proportion as I employ unproductive labourers, but on the contrary diminishes in the same proportion, although [one has ] most to pay for the compulsory services (State, taxes). Productive labourers may themselves in relation to me be unproductive labourers. For example, if I have my house re-papered and the paper-hangers are wage-workers of a master who sells me the job, it is just the same for me as if I had bought a house already papered; as if I had expended money for a commodity for my consumption, But for the master who gets these labourers to hang the paper, they are productive labourers, for they produce surplus-value for him. |1328|| ||1333| How very unproductive, from the standpoint of capitalist production, the labourer is who indeed produces vendible commodities, but only to the amount equivalent to his own labour-power, and therefore produces no surplus-value for capital can be seen from the passages in Ricardo saying that the very existence of such people is a nuisance. This is the theory and practice of capital. ||1336| We have seen: This process of production is not only a process of the production of commodities, but a process of the production of surplus-value, the absorption of surplus-labour and hence a process of production of capital. The first formal act of exchange between money and labour or capital and labour is only potentially the appropriation of someone else s living labour by materialised labour. The actual process of appropriation takes place only in the actual production process, behind which lies as a past stage that first formal transaction in which capitalist and labourer confront each other as mere owners of commodities, as buyer and seller. For which reason all vulgar economists like Bastiat go no further than that first formal transaction, precisely in order by this trick to get rid of the specific capitalist relation. The distinction is shown in a striking way by the exchange of money for unproductive labour. Here money and labour exchange with each other only as commodities. So that instead of this exchange forming capital, it is expenditure of revenue. |1336|| ||1328| What then is the position of independent handicraftsmen or peasants who employ no labourers and therefore do not produce as capitalists? Either, as always in the case of peasants <but for example not in the case of a gardener whom I get to come to my house>, they are producers of commodities, and I buy the commodity from them in which case for example it makes no difference that the handicraftsman produces it to order while the peasant produces his supply according to his means. In this capacity they confront me as sellers of commodities, not as sellers of labour, and this relation therefore has nothing to do with the exchange of capital for labour; therefore also it has nothing to do with the distinction between productive and unproductive labour, which depends entirely on whether the labour is exchanged for money or for money as money as capital. They therefore belong neither to the category of productive nor of unproductive labourers, although they are producers of commodities. But their production does not fall under the capitalist mode of production. It is possible that these producers, working with their own means of production, not only reproduce their labour-power but create surplus-value, while their position enables them to appropriate for themselves their own surplus-labour or a part of it (since a part of it is taken away from them in the form of taxes, etc.). And here we come up against a peculiarity that is characteristic of a society in which one definite mode of production predominates, even though not all productive relations have been subordinated to it. In feudal society, for example (as we can best observe in England because the system of feudalism was introduced here from Normandy ready made and its form was impressed on what was in many respects a different social foundation), relations which were far removed from the nature of feudalism were given a feudal form; for example, simple money relations in which there was no trace of mutual personal service as between lord and vassal, It is for instance a fiction that the small peasant held his land in fief. It is exactly the same in the capitalist mode of production. The independent peasant or handicraftsman is cut up into two persons*. As owner of the means of production he is capitalist; as labourer he is his own wage-labourer. As capitalist he therefore pays himself his wages and draws his profit on his capital; that is to say, he exploits himself as wage-labourer, and pays himself, in the surplus-value, the tribute that labour owes to capital. Perhaps he also pays himself a third portion as landowner (rent), in exactly the same way, as we shall see later, that the industrial capitalist, when he works with his own ||1329| capital, pays himself interest, regarding this as something which he owes to himself not as industrial capitalist but qua capitalist pure and simple. The determinate social character of the means of production in capitalist production expressing a particular production relation has so grown together with, and in the mode of thought of bourgeois society is so inseparable from, the material existence of these means of production as means of production, that the same determinateness (categorical determinateness) is assumed even where the relation is in direct contradiction to it. The means of production become capital only in so far as they have become separated from labourer and confront labour as an independent power. But in the case referred to the producer the labourer is the possessor, the owner, of his means of production. They are therefore not capital, any more than in relation to them he is a wage-labourer. Nevertheless they are looked on as capital, and he himself is split in two, so that he, as capitalist, employs himself as wage-labourer. In fact this way of presenting it, however irrational it may be on first view, is nevertheless so far correct, that in this case the producer in fact creates his own surplus-value <on the assumption that he sells his commodity at its value>, in other words, only his own labour is materialised in the whole product. But that he is able to appropriate for himself the whole product of his own labour, and that the excess of the value of his product over the average price for instance of his day s labour is not appropriated by a third person, a master, he owes not to his labour which does not distinguish him from other labourers but to his ownership of the means of production. It is therefore only through his ownership of these that he takes possession of his own surplus-labour, and thus bears to himself as wage-labourer the relation of being his own capitalist. Separation appears as the normal relation in this society. Where therefore it does not in fact apply, it is presumed and, as has just been shown, so far correctly; for (as distinct for example from conditions in Ancient Rome or Norway or in the north-west of the United States) in this society unity appears as accidental, separation as normal; and consequently separation is maintained as the relation even when one person unites the separate functions. Here emerges in a very striking way the fact that the capitalist as such is only a function of capital, the labourer a function of labour-power. For it is also a law that economic development distributes functions among different persons; and the handicraftsman or peasant who produces with his own means of production will either gradually be transformed into a small capitalist who also exploits the labour of others, or he will suffer the loss of his means of production <in the first instance the latter may happen although he remains their nominal owner, as in the case of mortgages> and be transformed into a wage-labourer. This is the tendency in the form of society in which the capitalist mode of production predominates. In considering the essential relations of capitalist production it can therefore be assumed that the entire world of commodities, all spheres of material production the production of material wealth are (formally or really) subordinated to the capitalist mode of production <for this is what is happening more and more completely; [since it] is the principal goal, and only if it is realised will the productive powers of labour be developed to their highest point>. On this premise which expresses the limit [of the process] and which is therefore constantly coming closer to an exact presentation of reality all labourers engaged in the production of commodities are wage-labourers, and the means of production in all these spheres confront them as capital. It can then be said to be a characteristic of productive labourers, that is, labourers producing capital, that their labour realises itself in commodities, in material wealth. And so productive labour, along with its determining characteristic which takes no account whatever of the content of labour and is entirely independent of that content would be given a second, different and subsidiary definition. Non-material production, even when it is carried on purely for exchange, that is, when it produces commodities, may be of two kinds: 1. It results in commodities, use-values, which have a form different from and independent of producers and consumers; these commodities may therefore exist during an interval between production and consumption and may in this interval circulate as vendible commodities, such as books, paintings, in a word, all artistic products which are distinct from the artistic performance of the artist performing them. Here capitalist production is applicable only to a very restricted extent: as for example when a writer of a joint work say an encyclopaedia exploits a number of others as hacks. ||1330 | In this sphere for the most part a transitional form to capitalist production remains in existence, in which the various scientific or artistic producers, handicraftsmen or experts work for the collective trading capital of the book-trade a relation that has nothing to do with the capitalist mode of production proper and even formally has not yet been brought under its sway. The fact that the exploitation of labour is at its highest precisely in these transitional forms in no way alters the case. 2. The production cannot be separated from the act of producing, as is the case with all performing artists, orators, actors, teachers, physicians, priests, etc. Here too the capitalist mode of production is met with only to a small extent, and from the nature of the case can only be applied in a few spheres. For example, teachers in educational establishments may be mere wage-labourers for the entrepreneur of the establishment; many such educational factories exist in England. Although in relation to the pupils these teachers are not productive labourers, they are productive labourers in relation to their employer. He exchanges his capital for their labour-power, and enriches himself through this process. It is the same with enterprises such as theatres, places of entertainment, etc. In such cases the actor s relation to the public is that of an artist, but in relation to his employer he is a productive labourer. All these manifestations of capitalist production in this sphere are so insignificant compared with the totality of production that they can be left entirely out of account. With the development of the specifically capitalist mode of production, in which many labourers work together in the production of the same commodity, the direct relation which their labour bears to the object produced naturally varies greatly. For example the unskilled labourers in a factory referred to earlier have nothing directly to do with the working up of the raw material. The workmen who function as overseers of those directly engaged in working up the raw material are one step further away; the works engineer has yet another relation and in the main works only with his brain, and so on. But the totality of these labourers, who possess labour-power of different value (although all the employed maintain much the same level) produce the result, which, considered as the result of the labour-process pure and simple, is expressed in a commodity or material product; and all together, as a workshop, they are the living production machine of these products just as, taking the production process as a whole, they exchange their labour for capital and reproduce the capitalists money as capital, that is to say, as value producing surplus-value, as self-expanding value. It is indeed the characteristic feature of the capitalist mode of production that it separates the various kinds of labour from each other, therefore also mental and manual labour or kinds of labour in which one or the other predominates and distributes them among different people. This however does not prevent the material product from being the common product of these persons, or their common product embodied in material wealth; any more than on the other hand it prevents or in any way alters the relation of each one of these persons to capital being that of wage-labourer and in this pre-eminent sense being that of a productive labourer. All these persons are not only directly engaged in the production of material wealth, but they exchange their labour directly for money as capital, and consequently directly reproduce, in addition to their wages, a surplus-value for the capitalist, Their labour consists of paid labour plus unpaid surplus-labour. In addition to extractive industry, agriculture and manufacture, there exists yet a fourth sphere of material production, which also passes through the various stages of handicraft industry, manufacture and mechanical industry; this is the transport industry, transporting either people or commodities. The relation of productive labour that is, of the wage-labourer to capital is here exactly the same as in the other spheres of material production. Moreover, here a material change is effected in the object of labour a spatial change, a change of place. In the case of the transport of people this takes the form only of a service rendered to them by the entrepreneur. But the relation between buyer and seller of this service has nothing to do with the relation of the productive labourer to capital, any more than has the relation between the buyer and seller of yarn. If on the other hand we consider the process in relation to commodities, ||1331| in this case there certainly takes place, in the labour-process, a change in the object of labour, the commodity. Its spatial existence is altered, and along with this goes a change in its use-value, since the location of this use-value is changed. Its exchange-value increases in the same measure as this change in use-value requires labour an amount of labour which is determined partly by the wear and tear of the constant capital, that is, the total materialised labour which enters into the commodity, and partly by the quantity of living labour, as in the process of increasing the value of all other commodities. When the commodity has reached its destination, this change which has taken place in its use-value has vanished, and is now only expressed in its higher exchange-value, in the enhanced price of the commodity. And although in this case the real labour has left no trace behind it in the use-value, it is nevertheless realised in the exchange-value of this material product; and so it is true also of this industry as of other spheres of material production that the labour incorporates itself in the commodity, even though it has left no visible trace in the use-value of the commodity. Here we have been dealing only with productive capital, that is, capital employed in the direct process of production. We come later to capital in the process of circulation. And only after that, in considering the special form assumed by capital as merchant s capital, can the question be answered as to how far the labourers employed by it are productive or unproductive. |XXI-1331|| ||XVIII-1140| The first section Production Process of Capital to be divided in the following way: 1. Introduction. Commodity. Money. 2. Transformation of money into capital. 3. Absolute surplus-value. (a) Labour-process and the process of producing surplus-value. (b) Constant capital and variable capital. (c) Absolute surplus-value. (d) Struggle for the normal working-day. (e) Simultaneous working-days (number of simultaneously employed labourers). Amount of surplus-value and rate of surplus-value (magnitude and height?). 4. Relative surplus-value. (a) Simple co-operation. (b) Division of labour. (c) Machinery. etc. 5. Combination of absolute and relative surplus-value. Relation (proportion) between wage-labour and surplus-value. Formal and real subsumption of labour under capital. Productivity of capital. Productive and unproductive labour. 6. Reconversion of surplus-value into capital. Primitive accumulation. Wakefield s colonial theory. 7. Result of the production process. (Either under 6 or under 7 the change in the form of the law of appropriation can be shown.) 8. Theories of surplus-value. 9. Theories of productive and unproductive labour. |XVIII-1140|| ||XVIII-1139| The third section Capital and Profit to be divided in the following way: 1. Conversion of surplus-value into profit. Rate of profit as distinguished from rate of surplus-value. 2. Conversion of profit into average profit. Formation of the general rate of profit. Transformation of values into prices of production. 3. Adam Smith s and Ricardo s theories on profit and prices of production. 4. Rent (illustration of the difference between value and price of production). 5. History of the so-called Ricardian law of rent. 6. Law of the fall of the rate of profit. Adam Smith, Ricardo, Carey. 7. Theories of profit. (Query: whether Sismondi and Malthus should also be included in the Theories of Surplus-Value.) 8. Division of profit into industrial profit and interest. Merchant s capital. Money-capital. 9. Revenue and its sources. The question of the relation between the processes of production and distribution also to be included here. 10. Reflux movements of money in the process of capitalist production as a whole. 11. Vulgar economy. 12. Conclusion. Capital and wage-labour. |XVIII-1139||. ||XVIII-1109| In the second chapter of Part III, on Capital and Profit , where the formation of the general rate of profit is dealt with, the following must be considered: 1. Different organic composition of capitals, partly conditioned by the difference between variable and constant capital in so far as this arises from the stage of production the absolute quantitative relations between machinery and raw materials on the one hand, and the quantity of labour which sets them in motion. These differences relate to the labour-process. The differences between fixed and circulating capital arising from the circulation process have also to be considered differences which lead to variations in the increase of value, in a given period of time, as between different spheres. 2. Differences in the relative value of the parts of different capitals which do not arise from their organic composition. These arise from the difference of value particularly of the raw materials, even assuming that the raw materials absorb an equal quantity of labour in two different spheres. 3. The result of those differences is diversity of the rates of profit in different spheres of capitalist production. It is true only for capitals of equal composition, etc., that the rate of profit is the same and the quantity of profit is in proportion to the size of the capital employed. 4. For the total capital, however, what has been explained in Chapter I holds good. In capitalist production each capital is assumed to be a unit, an aliquot part of the total capital. Formation of the general rate of profit (competition). 5. Transformation of values into prices of production. Difference between value, cost-price, and production price. 6. To take up also the Ricardian point: the influence of general variations in wages on the general rate of profit and hence on prices of production. |XVIII-1109|| * In the manuscript: are . Ed. * In the manuscript: Am besten sie zum Bauen van Strassen, Br cken, Bergwerken etc. zu verwenden. Ed. * In the manuscript: than upon instead of then about the . Ed. * In the manuscript: thither . Ed. * In the manuscript: puts . Ed. * In the manuscript: which might men . Ed. ** In the manuscript: which . Ed. * In the manuscript: and . Ed. * In the manuscript: deal . Ed. ** In the manuscript this is followed by the word: very . Ed. *** In the manuscript this is followed by the word: very . Ed. * In the manuscript: viz . Ed. ** In the manuscript: to the farther increase of commerce . Ed. *** In the manuscript this is followed by the word: true . Ed. **** In the manuscript: to be . Ed. ***** In the manuscript: 2,000 . Ed. * In the manuscript: got . Ed. ** In the manuscript: by a decrease of foreign trade . Ed. *** In the manuscript: Commerce . Ed. * In the manuscript: am gr ssten, interest am h chsten . Ed. ** In the manuscript: motives . Ed. *** In the manuscript: the . Ed. * Commodity exchange. Ed. * In the manuscript: this . Ed * In the manuscript: the . Ed. ** In the manuscript: sellers not enriched . Ed. * In the manuscript: destroyed . Ed. * In essence. Ed. * In the manuscript: to . Ed. * In small enterprises the employer is often his own labourer (Storch, [Cours d conomie politique], t. I, Petersburg edition, p. 242).

Economic Manuscripts: Theories of Surplus-Value, Addenda to Part 1

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/add1.htm

||XII-580b| The proposition that corn produces its own demand etc.[a] casually advanced by Adam Smith, later repeated by Malthus with considerable pomposity in his theory of rent and partly used as the basis of his theory of population, is very concisely expressed in the following passage: Hence Rodbertus s fantasy that seeds etc. do not enter as an item of capital (into the farmer s calculations],[b] is refuted by the hundreds of treatises, some written by farmers themselves, that appeared in the eighteenth century (particularly since the 60s of that century). But on the contrary, it would be correct to say that rent is an item of expenditure for the farmer. He[c] reckons rent among the costs of production (and it does belong to his costs of production). As soon as capital takes possession of agriculture, the farming-capitalist himself regards rent only as a deduction from profit and the whole of surplus-value is for him essentially profit: ||XIII-670a| The landed and trading interests are eternally jarring, and jealous of each other s advantages ([Nathaniel Forster], An Enquiry into the Causes of the Present High Price of Provisions, London, 1767, p. 22, note). |XIII-670a|| ||XIII-669b| Hopkins (passage to be looked up)[d] naively [describes] rent of land as the original form of surplus-value, and profit as derived from this. He writes: Even those improvements in agriculture which bring about reduced costs of production and eventually a fall in prices, but which first so long as prices have not yet fallen [call forth] a temporary rise of agricultural profit, almost never fail, Similar ideas were expressed by Anderson even earlier.[g] |XIII-670a|| ||XIII-670a| Calculated on the total capital the [rate of] profit of the larger capital, which employs more constant capital (machinery, raw material) and relatively less living labour, will be lower than that of the smaller [amount of] profit yielded by the smaller capital employing more living labour in proportion to the total capital. The [relative] decrease in variable capital and the relative increase in constant capital, although both parts are growing, is only another expression for the increased productivity of labour. |XIII-670a|| [a] See this volume, p. 354 et seqq. Ed. [b] See this volume, pp. 45-55. Ed. [c] Arbuthnot, the author of the anonymous pamphlet. Ed. [d] See this volume, p. 55 and Note 20. Ed. [e] The reference is to the land which has been worked and improved. Ed. [f] Carey wrote: from its use . Ed. [g] See this volume, pp. 144-45. Ed.

Economic Manuscripts: Theories of Surplus-Value, Addenda to Part 2

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/add2.htm

||XV-891| The form of revenue and the sources of revenue are the most fetishistic expression of the relations of capitalist production. It is their form of existence as it appears on the surface, divorced from the hidden connections and the intermediate connecting links. Thus the land becomes the source of rent, capital the source of profit, and labour the source of wages. The distorted form in which the real inversion is expressed is naturally reproduced in the views of the agents of this mode of production. It is a kind of fiction without fantasy, a religion of the vulgar. In fact, the vulgar economists by no means to be confused with the economic investigators we have been criticising translate the concepts, motives, etc., of the representatives of the capitalist mode of production who are held in thrall to this system of production and in whose consciousness only its superficial appearance is reflected. They translate them into a doctrinaire language, but they do so from the standpoint of the ruling section, i.e., the capitalists, and their treatment is therefore not na ve and objective, but apologetic. The narrow and pedantic expression of vulgar conceptions which are bound to arise among those who are the representatives of this mode of production is very different from the urge of political economists like the Physiocrats, Adam Smith and Ricardo to grasp the inner connection of the phenomena. However, of all these forms, the most complete fetish is interest-bearing capital. This is the original starting-point of capital money and the formula M C M' is reduced to its two extremes M M' money which creates more money. It is the original and general formula of capital reduced to a meaningless r sum . The land or nature as the source of rent, i.e., landed property, is fetishistic enough. But as a result of a convenient confusion of use-value with exchange-value, the common imagination is still able to have recourse to the productive power of nature itself, which, by some kind of hocus-pocus, is personified in the landlord. Labour as the source of wages, that is, of the worker s share in his product, which is determined by the specific social form of labour; labour as the cause of the fact that the worker by means of his labour buys the permission to produce from the product (i.e., from capital considered in its material aspect) and has in labour the source by which a part of his product is returned to him in the form of payment made by this product as his employer this is pretty enough. But the common conception is in so far in accord with the facts that, even though labour is confused with wage-labour and, consequently, wages, the product of wage-labour, with the product of labour, it is nevertheless obvious to anybody who has common sense that labour itself produces its own wages. Capital, insofar as it is considered in the production process, still continues to a certain extent to be regarded as an instrument for acquiring the labour of others. This may be treated as right or wrong , as justified or not justified, but here the relation of the capitalist to the worker is always presupposed and assumed. Capital, insofar as it appears in the circulation process, confronts the ordinary observer mainly in the form of merchant capital, that is, a kind of capital which is engaged only in this operation, hence profit in this field is in part linked with a vague notion of general swindling, or more specifically, with the idea that the merchant swindles the industrial capitalist in the same way as the industrial capitalist swindles the worker, or again that the merchant swindles the consumer, just as the producers swindle one another. In any case, profit here is explained as a result of exchange, that is, as arising from a social relation and not from a thing. On the other hand, interest-bearing capital is the perfect fetish. It is capital in its finished form as such representing the unity of the production process and the circulation process and therefore yields a definite profit in a definite period of time. In the form of interest bearing capital only this function remains, without the mediation of either production process or circulation process. Memories of the past still remain in capital and profit, although because of the divergence of profit from surplus-value and the uniform profit yielded by all capitals that is, the general rate of profit capital becomes ||892| very much obscured, something dark and mysterious. Interest-bearing capital is the consummate automatic fetish, the self-expanding value, the money-making money, and in this form it no longer bears any trace of its origin. The social relation is consummated as a relation of things (money, commodities) to themselves. This is not the place for a more detailed examination of interest and its relation to profit; nor is it the place for an examination of the ratio in which profit is divided into industrial profit and interest. It is clear that capital, as the mysterious and automatically generating source of interest, that is, source of its [own] increase, finds its consummation in capital and interest. It is therefore especially in this form that capital is imagined. It is capital par excellence. Since, on the basis of capitalist production, a certain sum of values represented in money or commodities actually in money, the converted form of the commodity makes it possible to extract a certain amount of labour gratis from the workers and to appropriate a certain amount of surplus-value, surplus labour, surplus product, it is obvious that money itself can be sold as capital, that is, as a commodity sui generis, or that capital can be bought in the form of commodities or of money. It can be sold as the source of profit. I enable someone else by means of money, etc., to appropriate surplus-value. Thus it is quite in order for me to receive part of this surplus-value. Just as land has value because it enables me to intercept a portion of surplus-value, and I therefore pay for this land only the surplus-value which can be intercepted thanks to it, so I pay for capital the surplus-value which is created by means of it. Since, in the capitalist production process, the value of capital is perpetuated and reproduced in addition to its surplus-value, it is therefore quite in order that, when money or commodities are sold as capital, they return to the seller after a period of time and he does not alienate it [capital] in the same way as he would a commodity but retains ownership of it. In this way, money or commodities are not sold as money or commodities, but in their second power, as capital, as self-increasing money or commodities. Capital is not only increased, but is preserved in the total process of production. It therefore remains capital for the seller and comes back to him. The sale consists in the fact that another person, who uses the capital as productive capital, has to pay its owner a certain part of his profit, which he only makes through this capital. Like land, it is rented out as a value-creating thing which in this process of generating value is preserved and continually returned, and therefore can also be returned to the original seller. It is only capital in virtue of its return to him. Otherwise he would sell it as a commodity or buy with it as money. In any case, the form considered in itself (in fact, it [money] is alienated periodically as a means for exploiting labour, for making surplus-value) is this, that the thing now appears as capital and capital appears as a mere thing; the whole result of the capitalist production and circulation process appears as a property inherent in a thing, and it depends on the owner of money, i.e., of the commodity in its constantly exchangeable form, whether he expends it as money or rents it out as capital. We have here the relation of capital as principal to itself as yield, and the profit which it yields is measured against its own value, which (in accordance with the nature of capital) is not diminished in this process. It is thus clear why superficial criticism in exactly the same way as it wants to maintain commodities and combats money now turns its wisdom and reforming zeal against interest-bearing capital without touching upon real capitalist production, but merely attacking one of its consequences. This polemic against interest-bearing capital, undertaken from the standpoint of capitalist production, a polemic which today parades as socialism , occurs, incidentally, as a phase in the development of capital itself, for example, in the seventeenth century, when the industrial capitalist had to assert himself against the old-fashioned usurer who, at that time, still [confronted] him as a superior power. ||893| The complete objectification, inversion and derangement of capital as interest-bearing capital in which, however, the inner nature of capitalist production, [its] derangement, merely appears in its most palpable form is capital which yields compound interest . It appears as a Moloch demanding the whole world as a sacrifice belonging to it of right, whose legitimate demands, arising from its very nature, are however never met and are always frustrated by a mysterious fate. The characteristic movement of capital, both in the production and in the circulation processes, is the return of the money or commodity to its starting-point to the capitalist. This expresses, on the one hand, the real metamorphosis, the conversion of the commodity into its conditions of production, and the conversion of the conditions of production back into the form of the commodity i.e., reproduction, and, on the other hand, the formal metamorphosis, the conversion of the commodity into money and of the money back into the commodity. Finally, the multiplication of value: M C M'. The original value, which is however increased during the process, always remains in the possession of the same capitalist. Only the forms change in which he possesses it: money, commodity, or the form of the production process itself. In the case of interest-bearing capital, this return of capital to its starting-point acquires a quite external aspect, divorced from the real movement whose form it is. A spends his money not as money but as capital. No change takes place here in the money. It only changes hands. Its real conversion into capital takes place only while it is in the hands of B. But it has become capital for A as a result of the transfer of the money from A s hands into those of B. The real return of capital from the production and circulation process takes place for B. But for A, the return takes place in the same way as the alienation did. The money passes from B back again to A. He lends the money instead of spending it. In the real production process of capital, each particular movement of money expresses an aspect of reproduction, whether it be the conversion of money into labour, the conversion of the finished commodity into money (the end of the act of production) or the reconversion of the money into commodities (renewal of the production process, recommencement of reproduction). The movement of money when it is lent as capital, that is, when it is not converted into capital but enters into circulation as capital, expresses nothing more than the transfer of the same money from one person to another. The property rights remain with the lender, but the possession is transferred to the industrial capitalist. For the lender, however, the conversion of the money into capital begins at the moment when he spends it as capital instead of spending it as money, i.e., when he hands it over to the industrial capitalist. (It remains capital for him even if he does not lend it to the industrial capitalist but to a spendthrift, or to a worker who cannot pay his rent. The whole pawnshop business [is based on this].) True, the other person converts it into capital, but this is an operation beyond that in which the lender and the borrower are involved. This development is effaced, is not visible, is not directly included in it. Instead of the real conversion of money into capital, there appears only the empty form of this process. Just as in the case of labour-power, the use-value of money here becomes that of creating exchange-value, more exchange-value than it itself contains. It is lent as self-expanding value, as a commodity, but a commodity which, precisely because of this quality, differs from commodities as such and therefore also possesses a specific form of alienation. The starting-point of capital is the commodity owner, the owner of money, in short, the capitalist. Since in the case of capital both starting-point and point of return coincide, it returns to the capitalist. But the capitalist exists here in a dual form, as the owner of capital and as the industrial capitalist who really converts money into capital. The capital actually issues ||894| from him [the industrial capitalist] and returns again to him. But only as possessor. The capitalist exists in a dual form juridically and economically. The capital as property consequently returns to the juridical capitalist the left-handed Sam. But the return of the capital, which includes the maintenance of its value and establishes it as a self-maintaining and self-perpetuating value, is indeed brought about by intermediate steps for capitalist II but not for capitalist I. In this case therefore, the return is not the consequence and result of a series of economic processes but is effected by a particular juridical transaction between buyer and seller, by the fact that it is lent instead of being sold, and therefore it is alienated only temporarily. What is sold is, in fact, its use-value, whose function in this case is to produce exchange-value, to yield profit, in other words to produce more value than it itself contains. As money it does not change through being used. It is however expended as money and it flows back as money. The form in which it returns depends on the mode of reproduction of the capital. If it is loaned as money, then it comes back in the form of circulating capital, that is, its whole value is returned plus surplus-value, in this case, that part of surplus-value or of profit which consists of interest; the sum of money loaned plus the additional amount which has arisen from it. If it is loaned out in the form of machinery, buildings, etc., in short, in a material form in which it functions as fixed capital in the process of production, then it returns in the form of fixed capital, as an annuity, that is, for example, as an annual amount equal to the replacement of the wear and tear, i.e., equal to that part of the value which has entered the circulation process, plus that part of the surplus-value which is calculated as profit (in this case a part of the profit, interest) on the fixed capital (not insofar as it is fixed capital, but insofar as in general it is capital of a definite amount). In profit as such, surplus-value, and consequently its real source, is already obscured and mystified: 1) Because, considered from the formal standpoint, profit is surplus-value calculated on the whole of the capital advanced, so that each part of capital fixed and circulating laid out on raw materials, machinery or labour, yields an equal amount of profit. 2) Because, just as in the case of a single given capital of 500, for example, every fifth part yields 10 per cent, if the surplus-value amounts to 50, so now, as a result of the establishment of the general rate of profit, every capital of 500 or 100, no matter which sphere it operates in, irrespective of the relative proportions of variable and constant capital, no matter how varied the periods of turnover, etc., will yield the same average profit say 10 per cent in the same period of time as any other capital under quite different organic conditions. Because, therefore, the profit of individual capitals regarded in isolation and the surplus-value which is produced by them in their own sphere of production become in fact different magnitudes. It is true that point 2 merely develops further what has already been implied in point 1. The basis of interest however is this already externalised form of surplus-value, i.e., its existence as profit. This form differs from its first simple aspect, in which it still reveals the umbilical cord of its birth, and is, at first sight, by no means recognisable as a form of surplus-value. Interest directly presupposes not sur-plus-value, but profit, of which it is merely a part placed in a special category or division. It is therefore much more difficult to recognise surplus-value in interest than in profit, since interest is directly connected with surplus-value only in the form of profit. The time needed for the return of capital depends on the real production process; in the case of interest-bearing capital, its return as capital appears to depend merely on the agreement between lender and borrower. So that the return of the capital in this transaction no longer appears to be a result determined by the production process, but it seems that the capital never loses the form of money for a single instant. These transactions are nevertheless determined by the real returns. But this is not evident in the transaction. ||895| Interest, as distinct from profit, represents the value of mere ownership of capital i.e., it transforms the ownership of money (of a sum of values, commodities, whatever the form may be) in itself, into ownership of capital, and consequently commodities or money as such into self-expanding values. The conditions of labour are of course capital, only insofar as they confront the labourer as his non-property and consequently function as someone else s property. But they can function in this way only in contradiction to labour. The antagonistic existence of these conditions in relation to labour makes their owners capitalists, and turns these conditions owned by them into capital. But capital in the hands of moneyed capitalist A does not have this contradictory character which turns it into capital and which therefore makes ownership of money appear as ownership of capital. The concrete distinct form by means of which money or a commodity is converted into capital is obliterated. Moneyed [capitalist] A does not confront the worker at all, but only another capitalist capitalist B. What he sells him is actually the use of the money, the results it will produce when converted into productive capital. But in fact it is not the use which he sells directly. If I sell a commodity, then I sell a specific use-value. If I buy money with commodities, then I buy the functional use-value which money, as the converted form of commodities, possesses. I do not sell the use-value of the commodity along with its exchange-value, nor do I buy the particular use-value of the money along with the money itself. But money as money before its conversion into and its function as capital, a function which it does not perform while it is in the hands of the moneylender has no other use-value than that which it possesses as a commodity (gold, silver, its material substance) or as money which is the converted form of a commodity. What the moneylender sells in actual fact to the industrial capitalist, what really happens in the transaction, is simply this: he transfers the ownership of the money to the industrial capitalist for a certain period of time. He disposes of his ownership title for a certain term, and as a result the industrial capitalist has bought the ownership for a certain period. Thus his money appears to be capital before it is sold and the mere ownership of money or a commodity separated from the capitalist production process is regarded as capital. The fact that it becomes capital only after it has been disposed of, makes no difference, any more than the use-value of cotton is altered by the fact that its use-value only emerges after it has been disposed of to the spinner or that the use-value of meat only becomes apparent after it has been transferred from the butcher s shop to the consumer s table. Hence money, once it is not spent on consumption, and commodities, once they are not used as means of consumption by their owners, transform those who possess them into capitalists and are in themselves separated from the capitalist production process and even before their conversion into productive capital capital, that is, they are selfexpanding, self-maintaining and self-increasing value. It is their immanent attribute to create value, to yield interest, just as the attribute of the pear tree is to produce pears. And it is as such an interest-bearing thing that the money-lender sells his money to the industrial capitalist. Because money preserves itself, i.e., is value which preserves itself, the industrial capitalist can return it at any time fixed by contract. Since it produces a definite amount of surplus-value, interest, annually, or rather since value accrues to it over any period of time, he can also pay back this surplus-value to the lender annually or in any other conventionally established period of time. Money as capital yields surplus-value daily in exactly the same way as wage-labour. While interest is simply a part of the profit established under a special name, it appears here as [the surplus-value specifically created by] capital as such, separated from the production process, and consequently [due] only to the mere ownership of capital, the ownership of money and commodities, separated from the relations which give rise to the contradiction between this property and labour, thus turning it into capitalist property. [Interest seems to be] a specific kind of surplus-value the generation of which is due to the mere ownership of capital and therefore to an intrinsic characteristic of capital; whereas on the contrary, industrial profit appears to be a mere addition which the borrower obtains by employing capital productively, that is, by exploiting the workers with the help of the capital borrowed (or, as people also say, by his work as a capitalist, the function of the capitalist being equated here with labour, and even identified with wage-labour, since the industrial capitalist, by really taking part in the ||896| production process, appears in fact as an active agent in production, as a worker, in contrast to the idle, inactive moneylender whose function of property owner is separate from and outside the production process). Thus it is interest, not profit, which appears to be the creation of value arising from capital as such and therefore from the mere ownership of capital; consequently it is regarded as the specific revenue created by capital. This is also the form in which it is conceived by the vulgar economists. In this form all intermediate links are obliterated, and the fetishistic feature of capital, as also the concept of the capital-fetish, is complete. This form arises necessarily, because the juridical aspect of property is separated from its economic aspect and one part of the profit under the name of interest accrues to capital which is completely separated from the production process, or to the owner of this capital. To the vulgar economist who desires to represent capital as an independent source of value, a source which creates value, this form is of course a godsend, a form in which the source of profit is no longer recognisable and the result of the capitalist process separated from the process itself acquires an independent existence. In M C M' an intermediate link is still retained. In M M' we have the incomprehensible form of capital, the most extreme inversion and materialisation of production relations. A general rate of interest corresponds naturally to the general rate of profit. It is not our intention to discuss this further here, since the analysis of interest-bearing capital does not belong to this general section but to that dealing with credit. However the observation that the average rate of profit appears much less as a palpable, solid fact than does the rate of interest is important for the elaboration of this aspect of capital. True, the rate of interest fluctuates continuously. [It may be] 2 per cent today (on the money market for the industrial capitalist and this is all we are discussing), 3 per cent tomorrow, and 5 per cent the day after. But it is 2 per cent, 3 per cent, 5 per cent for all borrowers. It is a general condition that every sum of money of 100 yields 2 per cent, 3 per cent or 5 per cent, while the same value in its real function as capital yields very different amounts of real profit in the different spheres of production. The real profit deviates from the ideal average level, which is established only by a continuous process, a reaction, and this only takes place during long periods of circulation of capital. The rate of profit is in certain spheres higher in some years, while it is lower in succeeding years. Taking the years together, or taking a series of such evolutions, one will in general obtain the average profit. Thus it never appears as something directly given, but only as the average result of contradictory oscillations. It is different with the rate of interest. In its generality, it is a fact which is established daily, a fact which the industrial capitalist regards as a pre-condition and an item of calculation in his operations. The average rate of profit exists indeed only as an ideal average figure, insofar as it serves to estimate the real profit; it exists only as an average figure, as an abstraction, insofar as it is established as something which is in itself complete, definite, given. In reality, however, it exists only as the determining tendency in the movement of equalisation of the real, different rates of profit, whether of individual capitals in the same sphere or of different capitals in the different spheres of production. ||897| What the lender demands of the capitalist is calculated on the general (average) rate of profit, not on individual deviations from it. Here the average becomes the pre-condition. The rate of interest itself varies, but does so for all borrowers. A definite, equal rate of interest, on the other hand, exists not only on the average but in actual fact (even though it is accompanied by variations between minimum and maximum rates according to whether or not the borrower is first-rate) and the deviations appear rather as exceptions brought about by special circumstances. The meteorological bulletins do not indicate the state of the barometer more exactly than stock-exchange bulletins do the state of interest rates, not for this or that capital, but for the capital available on the money market, that is, capital available for lending. This is not the place to go into the reasons for this greater stability and equality of the rate of interest on loan capital in contradistinction to the less tangible form of the general rate of profit. Such a discussion belongs to the section on credit. But this much is obvious: the fluctuations in the rate of profit in every sphere quite apart from the special advantages which individual capitalists in the same sphere of production may enjoy depend on the existing level of market prices and their fluctuations around cost-prices. The difference in the rates of profit in the various spheres can only be discerned by comparison of the market prices in the different spheres, that is, the market prices of the different commodities, with the cost-prices of these commodities. A decline in the rate of profit below the ideal average in any particular sphere, if prolonged, suffices to bring about a withdrawal of capital from this sphere, or to prevent the entry of the average amount of new capital into it. For it is the inflow of new, additional capital, even more than the redistribution of capital already invested, that equalises the distribution of capital in the different spheres. The surplus profit in the different spheres, on the other hand, is discernible only by comparison of the market prices with cost-prices. As soon as any difference becomes apparent in one way or another, then an outflow or inflow of capital from or to the particular spheres [begins]. Apart from the fact that this act of equalisation requires time, the average profit in each sphere becomes evident only in the average profit rates obtained, for example, over a cycle of seven years, etc., according to the nature of the capital. Mere fluctuations below and above [the general rate of profit] if they do not exceed the average extent and do not assume extraordinary forms, are therefore not sufficient to bring about a transfer of capital, and in addition the transfer of fixed capital presents certain difficulties. Momentary booms can only have a limited effect, and are more likely to attract or repel additional capital than to bring about a redistribution of the capital invested in the different spheres. One can see that all this involves a very complex movement in which, on the one hand, the market prices in each particular sphere, the relative cost-prices of the different commodities, the position with regard to demand and supply within each individual sphere, and, on the other hand, competition among the capitalists in the different spheres, play a part, and, in addition, the speed of the equalisation process, whether it is quicker or slower, depends on the particular organic composition of the different capitals (more fixed or circulating capital, for example) and on the particular nature of their commodities, that is, whether their nature as use-values facilitates rapid withdrawal from the market and the diminution or increase of supply, in accordance with the level of the market prices. In the case of money capital on the other hand, only two sorts of buyers and sellers, only two types of demand and supply, confront each other on the money market. On the one side, the borrowing class of capitalists on the other, the money-lenders. The commodity has only one form money. All the different forms assumed by capital according to the different spheres of production or circulation in which it is invested, are obliterated here. It exists here in the undifferentiated, always identical form, that of independent exchange-value, i.e., of money. Here competition between the different spheres ceases; they are all lumped together as borrowers of money, and capital too confronts them all in a form in which it is still indifferent to the way it is utilised. Whereas productive capital ||898| emerges only in the movement of competition between the different spheres as the joint capital of the whole class, capital here actually as regards the pressure exerted acts as such in the demand for capital. On the other hand, money capital (the capital on the money market) really possesses the form which enables it as a common element, irrespective of its particular employment, to be distributed amongst the different spheres, amongst the capitalist class, according to the production needs of each separate sphere. With the development of large-scale industry, moreover, money capital, insofar as it appears on the market, is represented less and less by the individual capitalist, the owner of this or that parcel of capital available on the market, but is concentrated, organised and is [subject] in quite a different way from real production to the control of a banker who represents the capital. So that insofar as the form of the demand is concerned, the pressure of a class confronts it [loan capital]; and as far as supply is concerned, it appears as loan capital en masse, the loan capital of society, concentrated in a few reservoirs. These are some of the reasons why the general rate of profit appears as a hazy mirage in contrast to the fixed rate of interest which, although it fluctuates in magnitude, nevertheless fluctuates in the same measure for all borrowers and therefore always confronts them as something fixed, given; just as money despite the changes in its value has the same value for all commodities. Just as the market prices of commodities fluctuate daily, which does not prevent them from being quoted daily, so it is with the rate of interest, which is likewise quoted regularly as the price of money. This is the established price of capital, for capital is here offered as a special kind of commodity money and consequently its market price is established in the same way as that of all other commodities. The rate of interest is therefore always expressed as the general rate of interest, as a fixed amount [to be paid] for a certain amount of money; whereas the rate of profit within a particular sphere may vary although the market prices of commodities are the same (depending on the conditions under which individual capitals produce the same commodities; since the individual rate of profit does not depend on the market price of the commodity but on the difference between the market price and the cost-price) and it is equalised in the different spheres in the course of operations only as a result of constant fluctuations. In short, only in moneyed capital, the capital which can be lent, does capital become a commodity, whose quality of self-expansion has a fixed price, which is quoted as the prevailing rate of interest. Thus capital acquires its pure fetish form in interest-bearing capital, and indeed in its direct form of interest-bearing money capital (the other forms of interest-bearing capital, which do not concern us here, are in turn derived from this form and presuppose it). Firstly, as a result of its continuous existence as money, a form in which all its determining features are obliterated and its real elements invisible; in this form it represents merely independent exchange-value, value which has become independent. The money form is a transient form in the real process of capital. On the money market capital always exists in this form. Secondly, the surplus-value it produces, which [here] again assumes the form of money, seems to accrue to capital as such, consequently to the mere owner of money capital, i.e., of capital separated from its process. Here M C M' becomes M M', and just as its form here is the undifferentiated money form (for money is precisely the form in which the differences between commodities as use-values are obliterated, consequently also the differences between productive capitals, which are made up of the conditions of existence of these commodities, the particular forms of the productive capitals themselves are obliterated) so the surplus-value it produces, the surplus money which it is or which it becomes, appears as a definite rate measured by the amount of the money. If the rate of interest is 5 per cent, then 100 used as capital becomes 105. This is the quite tangible form of self-expanding value or of money-making money, and at the same time the quite irrational form, the incomprehensible, mystified form. In the discussion of capital we started from M C M, of which M M' was only the result. We now find M M' as the subject. Just as growth is characteristic of trees, so money-bearing ( )[a] is characteristic of capital in this, its pure form as money [capital]. The incomprehensible superficial form we encounter and which has therefore constituted the starting-point of our analysis, is found again as the result of the process in which the form of capital is gradually more and more alienated and rendered independent of its inner substance. ||899| We started with money as the converted form of the commodity. What we arrive at is money as the converted form of capital, just as we have perceived that the commodity is the pre-condition and the result of the production process of capital. This aspect of capital, which is the most fantastic and at the same time comes nearest to the popular notion of it, is both regarded as the basic form by the vulgar economists and made the first point of attack by superficial critics; the former, partly because the inner connections are least apparent here and capital emerges in a form in which it appears to be an independent source of value, partly because its contradictory character is totally concealed and effaced in this form and no contradiction to labour [is evident]. On the other hand, [capital is subjected to] attack because it is the form in which it is at its most irrational and provides the easiest point of attack for the vulgar socialists. The polemic waged by the bourgeois economists of the seventeenth century (Child, Culpeper and others) against interest as an independent form of surplus-value merely reflects the struggle of the rising industrial bourgeoisie against the old-fashioned usurers, who monopolised the pecuniary resources at that time. Interest-bearing capital in this case is still an antediluvian form of capital which has yet to be subordinated to industrial capital and to acquire the dependent position which it must assume theoretically and practically on the basis of capitalist production. The bourgeoisie did not hesitate to accept State aid in this as in other cases, where it was a question of making the traditional production relations which it found, adequate to its own. It is clear that any other kind of division of profit between various kinds of capitalists, that is, increasing the industrial profit by reducing the rate of interest and vice versa, does not affect the essence of capitalist production in any way. The kind of socialism which attacks interest-bearing capital as the basic form of capital not only remains completely within the bounds of the bourgeois horizon. Insofar as its polemic is not a misconceived attack and criticism prompted by a vague notion and directed against capital itself, though identifying it with one of its derived forms, it is nothing but a drive, disguised as socialism, for the development of bourgeois credit and consequently only expresses the low-level of development of the existing conditions in a country where such a polemic can masquerade as socialist and is itself only a theoretical symptom of capitalist development although this bourgeois striving can assume quite startling forms such as that of cr dit gratuit [b] for example. The same applies to Saint-Simonism with its glorification of banking (Cr dit mobilier later). The commercial and interest-bearing forms of capital are older than industrial capital, which, in the capitalist mode of production, is the basic form of the capital relations dominating bourgeois society and all other forms are only derived from it or secondary: derived as is the case with interest-bearing capital; secondary means that the capital fulfils a special function (which belongs to the circulation process) as for instance commercial capital. In the course of its evolution, industrial capital must therefore subjugate these forms and transform them into derived or special functions of itself. It encounters these older forms in the epoch of its formation and development. It encounters them as antecedents, but not as antecedents established by itself, not as forms of its own life-process. In the same way as it originally finds the commodity already in existence, but not as its own product, and likewise finds money circulation, but not as an element in its own reproduction. Where capitalist production has developed all its manifold forms and has become the dominant mode of production, interest-bearing capital is dominated by industrial capital, and commercial capital becomes merely a form of industrial capital, derived from the circulation process. But both of them must first be destroyed as independent forms ||900| and subordinated to industrial capital. Violence (the State) is used against interest-bearing capital by means of compulsory reduction of interest rates, so that it is no longer able to dictate terms to industrial capital. But this is a method characteristic of the least developed stages of capitalist production. The real way in which industrial capital subjugates interest-bearing capital is the creation of a procedure specific to itself the credit system. The compulsory reduction of interest rates is a measure which industrial capital itself borrows from the methods of an earlier mode of production and which it rejects as useless and inexpedient as soon as it becomes strong and conquers its territory. The credit system is its own creation, and is itself a form of industrial capital which begins with manufacture and develops further with large-scale industry. The credit system originally is a polemical form directed against the old-fashioned usurers (goldsmiths in England, Jews, Lombards, and others). The seventeenth-century writings in which its first mysteries are discussed are all produced in this polemical form. Commercial capital is subordinated to industrial capital in various ways or, what amounts to the same thing, [it becomes] a function of the latter, it is industrial capital engaged in a special function. The merchant, instead of buying commodities, buys wage-labour with which he produces the commodities which he intends to sell on the market. But commercial capital thereby loses the fixed form which it previously possessed in contrast to production. This was the way the medieval guilds were undermined by manufacture and the handicrafts confined to a narrower sphere. The merchant in the Middle Ages was simply a dealer in commodities produced either by the town guilds or by the peasants (apart from sporadic areas where manufacture developed, for instance in Italy and Spain). The transformation of the merchant into an industrial capitalist is at the same time the transformation of commercial capital into a mere form of industrial capital. The producer, conversely, becomes a merchant. For example, the cloth producer himself buys material in accordance with the size of his capital, etc., instead of gradually obtaining his material in small amounts from the merchant and working for him. The conditions of production enter into the process [of production] as commodities which he himself ha s bought. And instead of producing for individual merchants or for particular customers, he now produces for the world of commerce. In the first form, the merchant dominates production and commercial capital dominates the handicrafts and rural domestic industry which it sets in motion. The crafts are subordinated to him. In the second form, production becomes capitalist production. The producer is himself a merchant, merchant capital now acts as an intermediary only in the circulation process, thus fulfilling a definite function in the reproduction process of capital. These are the two forms. The merchant as such becomes a producer, an industrialist. The industrialist, the producer, becomes a merchant. Originally, trade is the pro-condition for the transformation of guild, rural domestic and feudal agricultural production into capitalist production. It develops the product into a commodity, partly by creating a market for it, partly by giving rise to new commodity equivalents and partly by supplying production with new materials and thereby initiating new kinds of production which are based on trade from the very beginning because they depend both on production for the market and on elements of production derived from the world market. As soon as manufacture gains strength (and this applies to an even greater extent to large-scale industry), it in turn creates the market, conquers it, opens up, partly by force, markets which it conquers, however, by means of its commodities. From now on, trade is merely a servant of industrial production for which a constantly expanding market has become a very condition of existence, since constantly expanding mass production, circumscribed not by the existing limits of trade (insofar as trade is only an expression of the existing level of demand), but solely by the amount of capital available and the level of productivity of the workers, always floods the existing market and consequently seeks constantly to expand and remove its boundaries. Trade is now the servant of industrial capital, and carries out one of the functions emanating from the conditions of production of industrial capital. During its first stages of development, industrial capital seeks to secure a market and markets by force, by the colonial system (together with the prohibition system). The industrial capitalist faces the world market; [he] therefore compares ||901| and must constantly compare his own cost-prices with market prices not only at home, but also on the whole market of the world. He always produces taking this into account. In the earlier period this comparison is carried out only by the merchants, thus enabling merchant capital to dominate over productive [capital]. |901|| ||902| Interest is therefore nothing but a part of the profit (which, in its turn, is itself nothing but surplus-value, unpaid labour), which the industrial capitalist pays to the owner of the borrowed capital with which he works , either exclusively or partially. Interest is a part of profit of surplus-value which, established as a special category, is separated from the total profit under its own name, a separation which is by no means based on its origin, but only on the manner in which it is paid out or appropriated. Instead of being appropriated by the industrial capitalist himself although he is the person who at first holds the whole surplus-value in his hands no matter how it may be distributed between himself and other people under the names of rent, industrial profit and interest this part of the profit is deducted by the industrial capitalist from his own revenue and paid to the owner of capital. If the rate of profit is given, then the relative level of the rate of interest depends on the ratio in which profit is divided between interest and industrial profit. If the ratio of this division is given, then the absolute level of the rate of interest (that is, the ratio of interest to capital) depends on the rate of profit. It is not intended to investigate here how this ratio is determined. This belongs to the section dealing with the real movement of capital, i.e., of capitals, while we are concerned here with the general forms of capital. The formation of interest-bearing capital, its separation from industrial capital, is a necessary product of the development of industrial capital, of the capitalist mode of production itself. Money (a sum of value, which is always convertible into the conditions of production) or the conditions of production into which it can be converted at any time and of which it is only the converted form money employed as capital, commands a definite quantity of other people s labour, more labour than it itself contains. It not only preserves its value in exchange with labour, but increases it, produces surplus-value. The value of money or of commodities as capital is not determined by the value they possess as money or as commodities, but by the amount of surplus-value which they produce for their owners. The product of capital is profit. On the basis of capitalist production, whether money is spent as money or as capital depends only on the different ways in which money is employed. Money (a commodity) in itself is capital on the basis of capitalist production (just as labour-power in itself is labour) since, first, it can be converted into the conditions of production and is, as it exists, only an abstract expression of them, their existence as value; and secondly, the material elements of wealth in themselves possess the property of being capital because their opposite wage-labour which turns them into capital is present as the basis for social production. Rent is likewise simply a name for a part of the surplus-value which the industrialist has to pay out, in the same way as interest is another part of surplus-value which, although it accrues to him (like rent), has to be handed over to someone else. But the great difference here is the following: through landed property, the landowner prevents capital from making the value of agricultural products equal to their cost-price. Monopoly of landed property enables the landowner to do this. It enables him to pocket the difference between value and cost-price. On the other hand as far as differential rent is concerned this monopoly enables the landowner to pocket the excess of the market value over the individual value of the product of a particular piece of land; in contrast to the other spheres of production, where this difference in the form of surplus profit flows into the pockets of the capitalists who operate under more favourable conditions than the average conditions which satisfy the greater part of demand, thus determining the bulk of production and consequently regulating the market value of each particular sphere of production. Landed property is a means for grabbing a part of the surplus-value produced by industrial capital. On the other hand, loan capital to the extent that the capitalist operates with borrowed capital is a means for producing the whole of the ||903| surplus-value. That money (commodities) can be loaned out as capital means nothing more than that it is itself capital. The abolition of landed property in the Ricardian sense, that is, its conversion into State property so that rent is paid to the State instead of to the landlord, is the ideal, the heart s desire, which springs from the deepest, inmost essence of capital. Capital cannot abolish landed property. But by converting it into rent [which is paid to the State] the capitalists as a class appropriate it and use it to defray their State expenses, thus appropriating in a roundabout way what cannot be retained directly. Abolition of interest and of interest-bearing capital, on the other hand, means the abolition of capital and of capitalist production itself. As long as money (commodities) can serve as capital, it can be sold as capital. It is therefore quite in keeping with the views of the petty-bourgeois Utopians that they want to keep commodities but not money, industrial capital but not interest-bearing capital, profit but not interest. There are not two different kinds of capital interest-bearing and profit-yielding but the selfsame capital which operates in the process of production as capital, produces a profit which is divided between two different capitalists one standing outside the process, and, as owner, representing capital as such <but it is an essential condition of this capital that it is represented by a private owner; without this it does not become capital as opposed to wage-labour>, and the other representing operating capital, capital which takes part in the production process. The further ossification or transformation of the division of profit into something independent appears in such a way that the profit on every single capital and therefore also the average profit based on the equalisation of capitals is split or divided into two component parts separated from, or independent of, each other, namely, interest and industrial profit, which is now sometimes called simply profit or acquires new names such as wages of labour of superintendence, etc. If the rate of profit (average profit) is 15 per cent and the rate of interest (which, as we have seen, is always established in the general form) is 5 per cent (the general rate being always quoted in the money market as the value or price of money), then the capitalist even when he is the owner of the capital and has not borrowed any part of it, so that the profit does not have to be divided between two capitalists considers that 5 per cent of the 15 per cent represents interest on his capital, and only 10 per cent represents the profit he makes by the productive employment of the capital. This 5 per cent interest, which he as an industrial capitalist owes to himself as owner of the capital, is due to his capital as such, and consequently it is due to him as owner of the capital as such (which is at one and the same time the existence of capital in itself, or the existence of capital as the capitalist, as property which debars other people from owning it), capital abstracted from the production process as opposed to operating capital, capital involved in the production process, and to the industrial capitalist as representative of this operating, working capital. Interest is the fruit of capital insofar as it does not work or operate, and profit is the fruit of working , operating capital. This is similar to the way in which the farming capitalist who is at the same time also a landowner, the owner of the soil which he exploits in capitalist fashion assigns that part of his profit which constitutes rent, this surplus profit, to himself not as capitalist but as landowner, attributing it not to capital but to landed property so that he, the capitalist, owes himself rent as a landowner. Thus one aspect of capital confronts another aspect of the same capital just as rigidly as do landed property and capital which, in fact, constitute the separate claims to appropriation of other people s labour which are based on two essentially different means of production. If, on the one hand, five partners own a cotton mill which represents a capital of 100,000 and yields a profit of 10 per cent, that is, 10,000, then each of them gets a fifth of the profit or 2,000. On the other hand, if a single capitalist invested the same amount of capital in a mill and made the same amount of profit 10,000 he would not consider that he received 2,000 profit as a partner and the other 8,000 company profit for the nonexistent four partners. Consequently, in itself the mere division of profit between different ||904| capitalists who have different legal claims on the same capital and who are in one way or another joint owners of the same capital, does not by any means establish different categories for the separate portions. Why then should the accidental division between lender and borrower of capital do so? Prima facie it is simply a question of the division of profit when there are two owners of the capital with different titles a prima facie legal, but not economic aspect. In itself it makes no difference at all whether a capitalist produces with his own or with other people s capital or in what proportion he uses his own capital to that of other people. How does it happen that this division of profit into [industrial] profit and interest does not appear as an accidental division, dependent on the accident whether or not the capitalist really has a share with someone else, or on whether he by chance is operating with his own or with someone else s capital, but that, on the contrary, even when he operates exclusively with his own capital, he in any case splits himself into two into a mere owner of capital and into a user of capital, into capital which is outside the production process and capital which takes part in the production process, into capital which as such yields interest and capital which yields profit because it is used in the production process? There is a real reason at the root of this. Money (as an expression of the value of commodities in general) in the [production] process appropriates surplus-value, no matter what name it bears or whatever parts it is split into, because it is already presupposed as capital before the production process. It maintains, produces and reproduces itself as capital in the process [of production] and moreover on a continually expanding scale. Once the capitalist mode of production is given and work is undertaken on this basis and within the social relations which correspond to it, that is, when it is not a question of the process of formation of capital, then even before the [production] process begins money as such is capital by its very nature, which, however, is only realised in the process and indeed only becomes a reality in the process itself. If it did not enter into the process as capital it would not emerge from it as capital, that is, as profit-yielding money, as self-expanding value, as value which produces surplus-value. It is the same as with money. For example, this coin is nothing but a piece of metal. It is only money in virtue of its function in the circulation process. But if the existence of the circulation process of commodities is presupposed, the coin not only functions as money, but as such it is in every single case a pre-condition for the circulation process before it enters into it. Capital is not only the result of, but the pre-condition for, capitalist production. Money and commodities as such are therefore latent capital, potential capital; this applies to all commodities insofar as they are convertible into money, and to money insofar as it is convertible into those commodities which constitute the elements of the capitalist process of production. Thus money as the pure expression of the value of commodities and of the conditions of labour is itself as capital antecedent to capitalist production. What is capital regarded not as the result of, but as the prerequisite for, the process [of production]? What makes it capital before it enters the process so that the latter merely develops its immanent character? The social framework in which it exists. The fact that living labour is confronted by past labour, activity is confronted by the product, man is confronted by things, labour is confronted by its own materialised conditions as alien, independent, self-contained subjects, personifications, in short, as someone else s property and, in this form, as employers and commanders of labour itself, which they appropriate instead of being appropriated by it. The fact that value whether it exists as money or as commodities and in the further development the conditions of labour confront the worker as the property of other people, as independent properties, means simply that they confront him as the property of the non-worker or, at any rate, that, as a capitalist, he confronts them [the conditions of labour] not as a worker but as the owner of value, etc., as the subject in which these things possess their own will, belong to themselves and are personified as independent forces. Capital as the prerequisite of production, capital, not in the form in which it emerges from the production process, but as it is before it enters it, [is] the contradiction in which it is confronted by labour as the labour of other people and in which capital itself, as the property of other people, confronts labour. It is the contradictory social framework which is expressed in it and which, separated from the [production] process itself, ||905| expresses itself in capitalist property as such. This aspect separated from the capitalist production process itself of which it is the constant result, and as its constant result it is also its constant prerequisite manifests itself in the fact that money [and] commodities are as such, latently, capital, that they can be sold as capital, and that in this form they represent the mere ownership of capital, and the capitalist as the mere owner, apart from his capitalist functions. Money and commodities considered as such constitute command over other people s labour, and therefore self-expanding value and a claim to the appropriation of other people s labour. It is thus quite obvious that the title to and the means for the appropriation of other people s labour is this relationship and not some kind of labour or equivalent supplied by the capitalist. Interest therefore appears as the surplus-value due to capital as capital, to the mere ownership of capital, as the surplus-value derived by capital from the production process because it enters it as capital, and therefore due to capital as such independently of the production process, although it is only realised in the production process; capital thus already contains the surplus-value in a latent form. On the other hand, industrial profit [appears] as the portion of surplus-value accruing to the capitalist not as the owner of capital, but as the operating owner representing the operating capital. In the same way as everything in this mode of production appears to be upside down, so likewise does the final reversal in the relation of interest to profit, so that the portion of profit separated under a special heading [interest] appears as the product intrinsically belonging to capital, and industrial profit appears as a mere addition appended to it. Since the moneyed capitalist in fact receives his part of the surplus-value only as owner of capital, while he himself remains outside the production process; since the price of capital that is, of the mere title to ownership of capital is quoted on the money market as the rate of interest in the same way as the market price of any other commodity; since the share of surplus-value which capital as such, the mere ownership of capital, secures is thus of a stable magnitude, whereas the rate of profit fluctuates, at any given moment it varies in the different spheres of production and within each sphere it is different for the individual capitalists, partly because the conditions under which they produce are more or less favourable, partly because they exploit labour in capitalist fashion with different degrees of circumspection and energy, and partly because they cheat buyers or sellers of commodities with different degrees of luck and cunning (profit upon expropriation, alienation) it therefore appears natural to them, whether they are or are not owners of the capital involved in the production process, that interest is something due to capital as such, to the ownership of capital, to the owner of capital, whether they themselves own the capital or someone else; industrial profit, on the other hand, appears to be the result of their labour. As operating capitalists as real agents of capitalist production they therefore confront themselves or others representing merely idle capital, as workers they consequently confront themselves and others as property owners. And since they are, as matters stand, workers, they are in fact wage-workers, and because of their superiority they are simply better-paid workers, which they owe partly also to the fact that they pay themselves their wages. Whereas, therefore, interest and interest-bearing capital merely express the contradiction of materialised wealth as against labour, and thereby its existence as capital, this position is turned upside down in the consciousness of men because, prima facie, the moneyed capitalist does not appear to have any relations with the wage-worker, but only with other capitalists, while these other capitalists, instead of appearing to be in opposition to the wage-workers, appear rather as workers, in opposition to themselves or to other [capitalists] considered as mere owners of capital, representing the mere existence of capital. The individual capitalist, moreover, can either lend his money as capital or employ it himself as capital. Insofar as he obtains interest on it, he only receives for it the price which he would receive if he did not operate as a capitalist, if he did not work . It is clear, therefore, that what he really gets from the production process insofar as it is only interest is due to capital alone, not to the production process itself and ||906| not to himself as a representative of operating capital. Hence also the pretty phrases used by some vulgar economists to the effect that, if the industrial capitalist did not get any profit in addition to interest, he would lend his capital out for interest and become a rentier, so that all capitalists would stop producing and all capital would cease operating as capital, but nevertheless it would still be possible to live on the interest. In similar vein, Turgot has already [said] that if the capitalist received no interest, be would buy land (capitalised rent) and live off rent. But in this case the interest would still be derived from surplus-value, since for the Physiocrats rent represents the real surplus-value. Whereas in that vulgarised concept things are turned upside down. Another fact should be noted. Interest is part of the costs for the industrial capitalist who has borrowed money, the term costs is here used in the sense that it represents the value advanced. For example, a capital of 1,000 does not enter the capitalist production process as a commodity worth 1,000 but as capital, this means that if a capital of 1,000 yields 10 per cent interest per annum, then it enters into the annual product as a value of 1,100. This shows clearly that the sum of values (and the commodities in which it is embodied) becomes capital not only in the production process but that, as capital, it is antecedent to the production process and therefore already contains within itself the surplus-value due to it as mere capital. For the industrial capitalist who operates with borrowed capital, interest, in other words capital as capital and it is this only insofar as it yields surplus-value (so that if it is worth 1,000 as a commodity, for example, it is worth 1,100 as capital, i.e., 1,000+1,000/10, C+C/x) enters into his costs. If the product only yielded interest, this, though it would be a surplus over and above the value of the capital employed, regarded as a mere commodity, would not be a surplus over and above the value of the commodity considered as capital, for the capitalist has to pay out this surplus-value; it is part of his outlay, part of the expenses he has incurred in order to produce the commodities. As far as the industrialist who operates with his own capital is concerned, he pays the interest on his capital to himself and regards the interest as part of his outlay. In fact, what he has advanced is not simply a capital of 1,000 for example, but the value of 1,000 as capital, and this value would be 1,050 if the rate of interest were 5 per cent. This is moreover no idle consideration as far as he is concerned. For the 1,000 used as capital would yield him 1,050 if he lent it out instead of employing it productively. Thus, insofar as he advances the 1,000 to himself as capital, he is advancing himself 1,050. Il faut bien se rattraper sur quelqu un et fusse-t-il sur lui m me![c] The value of commodities worth 1,000 is 1,050 as capital. This means that capital is not a simple quantity. It is not a simple commodity, but a commodity raised to a higher power; not a simple magnitude, but a proportion. It is a proportion of the principal, a given value, to itself as surplus-value. The value of C is C (1+1/x) (for one year) or C+C/x. It is no more possible by means of the elementary rules of calculation to understand capital, that is, the commodity raised to a higher power, or money raised to a higher power, than it is to understand or to calculate the value of x in the equation ax=n. Just as in the case of interest, part of the profit, of the surplus-value produced by capital, appears to have been advanced by the capitalist, so also in agricultural production another part of surplus-value rent appears to have been advanced. This seems to be less obviously irrational because in this case rent appears to be the annual price of the land which thus enters into production as a commodity. A price of land is indeed even more irrational than a price of capital, but this is not apparent in the form as such. Because in this case the land appears to be the use-value of a commodity and the rent its price. (The irrationality consists in this, that land, i.e., something which is not the product of human labour, has a price, that is, a value expressed in money and consequently a value, and is therefore to be regarded as materialised social labour.) Considered purely formally, land, just as any other commodity, is expressed in two ways, as use-value and as exchange-value, and the exchange-value is expressed nominally as price, that is, as something which the commodity as use-value is absolutely not. On the other hand, in the statement: [a capital of] 1,000 equals 1,050, or 50 is the annual price of 1,000, something is compared with itself, exchange-value with exchange-value, and the exchange-value as something different from itself is supposed to be its own price, that is, the exchange-value expressed in money. ||907| Thus two forms of surplus-value interest and rent, the results of capitalist production enter into it as prerequisites, as advances which the capitalist himself makes; for him, therefore, they do not represent any surplus-value, i.e., any surplus over and above the advances made. As far as these forms of surplus-value are concerned, it appears to the individual capitalist that the production of surplus-value is a part of the production costs of capitalist production, and that the appropriation of other people s labour and of the surplus over and above the value of the commodities consumed in the process (whether these enter into the constant or into the variable capital) is a dominating condition of this mode of production. To a certain extent this applies also to average profit, insofar as it constitutes an element of cost-price, and hence a condition of supply, of the very creation of the commodity. Nevertheless, the industrial capitalist rightly regards this surplus, this part of surplus-value although it constitutes an element of production as a surplus over his costs; he does not regard it as belonging to his advances in the same way as interest and rent. In critical moments, profit too confronts the capitalist in fact as a condition of production, since he curtails or stops production when profit disappears or is reduced to a marked degree as a result of a fall in prices. Hence the nonsensical pronouncements of those who consider the different forms of surplus-value to be merely forms of distribution; they are just as much forms of production. |907|| ||937| It might appear that in the trinity land rent, capital profit (interest), labour wages, the last group is the most rational. At least it states the source from which wages flow. But it is on the contrary the most irrational of them all, and the basis for the other two, in the same way as wage-labour in general presupposes land in the form of landed property and the product in the form of capital. Only when labour confronts its conditions [of production] in this form, is it wage-labour. As wage-labour it is defined by the formula labour wages. Since wages here appear to be the specific product of labour, its sole product (and they are indeed the sole product of labour for the wage-worker), the other parts of value rent and profit (interest) appear to flow just as necessarily from other specific sources. And just as that part of the value of the product which consists of wages [is conceived] as the specific product of labour, so those parts of value which are made up of rent and profit must be regarded as specific results of agencies for which they exist and to which they accrue, that is, as offspring of the earth and of capital, respectively. |937|| ||910| Let us consider the road travelled by capital before it appears in the form of interest-bearing capital. In the immediate process of production, the matter is fairly simple. Surplus-value has not as yet assumed a separate form, apart from the fact that it is surplus-value as distinct from the value which is equivalent to the value reproduced in the product. In the same way as value in general consists of labour, so surplus-value consists of surplus labour, unpaid labour. Hence surplus-value is only measured by that part of capital which really changes its value the variable capital, i.e., the capital which is laid out in wages. Constant capital appears only as the condition enabling the variable part of capital to operate. It is quite simple: if with 100, i.e., the labour of 10 [men], one buys the labour of 20 [men] (that is, commodities in which the labour of 20 [men] is embodied), the value of the product will be 200 and the surplus-value will amount to 100, equal to the unpaid labour of 10 [men]. Or, supposing 20 men worked half a day each for themselves and half for capital 20 half-days equal 10 whole ones the result would be the same as if only 10 men were paid and the others worked for the capitalist gratis. Here, in this embryonic state, the relationship is still very obvious, or rather it cannot be misunderstood. The difficulty is simply to discover how this appropriation of labour without any equivalent arises from the law of commodity exchange out of the fact that commodities exchange for one another in proportion to the amount of labour-time embodied in them and, to start with, does not contradict this law. ||911| The circulation process obliterates and obscures the connection. Since here the mass of surplus-value is also determined by the circulation time of capital, an element foreign to labour-time seems to have entered. Finally, in capital as the finished phenomenon, as it appears as a whole, [as] the unity of the circulation and the production process, as the expression of the reproduction process as a definite sum of values which produces a definite amount of profit (surplus-value) in a definite time, a definite period of circulation in capital in this form the production and circulation processes exist only as a reminiscence and as aspects which determine the surplus-value equally, thereby disguising its simple nature. Surplus-value now appears as profit. This profit is, first, received for a definite period of circulation of capital, and this period is distinct from the labour-time; it is, secondly, surplus-value calculated and drawn not on that part of capital from which it originates directly, but quite indiscriminately on the total capital. In this way its source is completely concealed. Thirdly, although the mass of profit is still quantitatively identical in this first form of profit with the mass of surplus-value produced by the individual capital, the rate of profit is, from the very beginning, different from the rate of surplus-value; since the rate of surplus-value is s/v and the rate of profit is s/c+v. Fourthly, if the rate of surplus-value is presumed given, it is possible for the rate of profit to rise or to fall and even to move in the opposite direction to the rate of surplus-value. Thus, surplus-value in the first form of profit already assumes a form which not only makes it difficult to perceive that it is identical with surplus-value, i.e., surplus labour, but appears directly to contradict this view. Furthermore, as a result of the conversion of profit into average profit, the establishment of the general rate of profit and, in connection with it and determined by it, the conversion of values into cost-prices, the profit of the individual capital becomes different from the surplus-value produced by the individual capital in its particular sphere of production, and different, moreover, not only in the way it is expressed i.e., rate of profit as distinct from rate of surplus-value but it becomes substantially different, that is, in this context, quantitatively different. Profit does not merely seem to be different, but is now in fact different from surplus-value not only with regard to the individual capital but also with regard to the total capital in a particular sphere of production. Capitals of equal magnitude yield equal profits; in other words, profit is proportional to the size of the capital. Or profit is determined by the amount of capital advanced. The relation of profit to the organic composition of capital is completely obliterated and no longer recognisable in all these formulae. On the other hand, it is quite obvious that capitals of the same magnitude which set in motion very different amounts of labour, thus commanding very different amounts of surplus labour and consequently producing very different amounts of surplus-value, yield the same amount of profit. Indeed, the basis itself the determination of the value of commodities by the labour-time embodied in them appears to be invalidated as a result of the conversion of values into cost-prices. In this quite alienated form of profit and in the same measure as the form of profit hides its inner core, capital more and more acquires a material form, is transformed more and more from a relationship into a thing, but a thing which embodies, which has absorbed, the social relationship, a thing which has acquired a fictitious life and independent existence in relation to itself, a natural-supernatural entity; in this form of capital and profit it appears superficially as a ready-made pre-condition. It is the form of its reality, or rather its real form of existence. And it is the form in which it exists in the consciousness and is reflected in the imagination of its representatives, the capitalists. This fixed and ossified (metamorphosed) form of profit (and thereby of capital as its producer, for capital is the cause and profit is the result; capital is the reason, profit is the effect; capital is the substance, profit is the adjunct; capital is capital only insofar as it yields profit, only insofar as it is a value which produces profit, an additional value) and therefore also of capital as its cause, capital which maintains itself and expands by means of profit the external aspect of this ossified form is strengthened even more by the fact that the same process of the equalisation of capital, which gives profit the form of average profit, separates part of it in the form of rent as something independent of it and arising from a different foundation, the land. It is true that rent originally emerges as a part of profit which the farmer pays to the landlord. But since this surplus profit is not pocketed by the farmer, and the capital he employs does not differ in any way as capital from other capitals (it is precisely because surplus profit is not derived from capital as such that the farmer pays it to the landlord), the land itself appears to be the source of this part of the value of the commodity (its surplus-value) and the landlord [appears to represent] the land only ||912| as a juridical person. If the rent is calculated on the capital advanced, then a thread still remains which indicates its origin as a distinct part of profit, that is, of surplus-value in general. (The position is, of course, quite different in a social order where landed property exploits labour directly. In that case, it is not difficult to recognise the origin of surplus wealth.) But the rent is paid on a definite area of land; it is capitalised in the value of the land; this value rises and falls in accordance with the rise or fall of rent. The rise or fall of rent is calculated with regard to a piece of land which remains unchanged (whereas the amount of capital operating on it changes); the difference in the types of land is reflected in the amount of rent which has to be paid for a given yardage, the total rental is calculated on the total area of the land in order to determine the average rental, for example, of a square yard. Rent, like every phenomenon created by capitalist production, appears at the same time as a stable, given pre-condition existing at any particular moment, and thus, it is for each individual an independently existing magnitude. The farmer has to pay rent, so much per acre of land, according to the quality of the land. If its quality improves or deteriorates, then the rent he has to pay on so many acres rises or falls. He has to pay rent for the land quite irrespective of the capital he employs on it, just as he has to pay interest irrespective of the profit he makes. The calculation of rent on industrial capital is another important formula of political economy which demonstrates the inner connection between rent and profit, its basis. But this connection does not appear in reality, for the calculation of rent is based on the real area of land, the intermediate links are thereby eliminated and rent acquires its externalised independent aspect. It is an independent form only in this externalisation, in its complete separation from its antecedents. So many square yards of land bring in so much rent. In this formula, in which rent, a part of surplus-value, is represented in relation to a particular natural element, independent of human labour, not only the nature of surplus-value is completely obliterated, because the nature of value itself is obliterated; but, just as the source of rent appears to be land, so now profit itself appears to be due to capital as a particular material element of production. Land is part of nature and brings in rent. Capital consists of products and these bring in profit. That one use-value which is produced brings in profit, while another which is not produced brings in rent are simply two forms in which things produce value, and the one form is just as comprehensible and as incomprehensible as the other. It is clear that, as soon as surplus-value [is split up] into different, separate parts, related to various production elements such as nature, products, labour which only differ physically, that is, as soon as in general surplus-value acquires special forms, separate from one another, independent of one another and regulated by different laws, the common unit surplus-value and consequently the nature of this common unit, becomes more and more unrecognisable and does not manifest itself in the appearance but has to be discovered as a hidden mystery. This assumption of independent forms by the various parts and their confrontation as independent forms is completed as a result of each of these parts being related to a particular element as its measure and its special source; in other words, each part of surplus-value is conceived as the effect of a special cause, as an adjunct of a particular substance. Thus profit is related to capital, rent to land, wages to labour. These ready-made relations and forms, which appear as pre-conditions in real production because the capitalist mode of production moves within the forms it has created itself and which are its results, confront it equally as ready-made pre-conditions in the process of reproduction. As such, they in fact determine the actions of individual capitalists, etc., and provide the motives, which are reflected in their consciousness. Vulgar political economy does nothing more than express in doctrinaire fashion this consciousness, which, in respect of its motives and notions, remains in thrall to the appearance of the capitalist mode of production. And the more it clings to the shallow, superficial appearance, only bringing it into some sort of order, the more it considers that it is acting naturally and avoiding all abstract subtleties. ||913| In connection with the circulation process dealt with above[d] it has to be added that the categories arising out of the circulation process crystallise as attributes of particular sorts of capital, fixed, circulating and so on, and thus appear as definite material attributes of certain commodities. In the final state in which profit, assumed as something given, appears in capitalist production, the innumerable transformations and intervening stages through which it passes are obliterated and unrecognisable, and consequently the nature of capital is also unrecognisable. This state becomes even more rigid owing to the fact that the same process which gives it its final finish causes part of the profit to confront it as rent, thus transforming profit into a particular aspect of surplus-value, an aspect based on capital as a special material instrument of production, in exactly the same way as rent is based on land; thus this state, separated from its inner essence by a mass of invisible intermediate links, reaches an even more externalised form, or rather the form of absolute externalisation, in interest-bearing capital, in the separation of interest from profit in interest-bearing capital as the simple form of capital, the form in which capital is antecedent to its own reproduction process. On the one hand, this expresses the absolute form of capital M M', self-expanding value. On the other hand, the intermediate link C, which still exists in genuine merchant capital whose formula is M C M', has disappeared. Only the relation of M to itself and measured by itself remains. It is capital expressly removed, separated from the process, as an antecedent it stands outside the process whose result it is and through which alone it is capital. {[Here] the fact is disregarded that interest may be a mere transfer and need not represent real surplus-value, as, for example, when money is lent to a spendthrift , i.e., for consumption. The position may be similar when money is borrowed in order to make payments. In both cases it is loaned as money, not as capital, but it becomes capital to its owner through the mere act of lending it out. In the second case, [if it is used to] discount [bills] or as a loan on temporarily not vendible commodities, it can be associated with the circulation process of capital, the necessary conversion of commodity capital into money capital. Insofar as the acceleration of this conversion process such acceleration is a general feature of credit speeds up reproduction, and therefore the production of surplus-value, the money lent is capital. On the other hand, insofar as it only serves to pay debts without accelerating the reproduction process, perhaps even limiting it or making it impossible, it is a mere means of payment, only money for the borrower, and for the lender it is, in fact, capital independent of the process of capital. In this case interest, like profit upon expropriation, is a fact independent of capitalist production the production of surplus-value. It is in these two forms of money money as means of purchase of commodities intended for consumption and as means of payment of debts that interest, like profit upon expropriation, constitutes a form which, although it is reproduced in capitalist production, is nevertheless independent of it and [represents] a form of interest which belongs to earlier modes of production. It is in the nature of capitalist production, however, that money (or commodities) can exist as capital and can be sold as capital outside the production process, and that this can also be the case with the older forms, which are not converted into capital but only serve as money. The third of the older forms of interest-bearing capital is based on the fact that capitalist production does not as yet exist, but that profit is still acquired in the form of interest and the capitalist appears as a mere usurer. This implies: first, that the producer still works independently with his own means of production, and that the means of production do not yet work with him[e] (even if slaves form a part of these means of production, for in these circumstances slaves do not constitute a separate economic category any more than draught animals do; there is at best a physical difference between them, i.e., dumb instruments, and speaking and feeling instruments); secondly, that the means of production belong only nominally to the producer; in other words, that because of some incidental circumstances he is unable to reproduce them from the proceeds of the sale of his commodities. These forms of interest-bearing capital occur, consequently, in all social formations which include commodity and money circulation, whether slave labour, serf labour or free labour is predominant in them. In the last-mentioned form, the producer pays the capitalist his surplus labour in the form of interest, which therefore includes profit. We have here the whole of ||914| capitalist production without its advantages, the development of the social forms of labour and of the productivity of labour to which they give rise. This form is very prevalent among peasant nations who already have to buy a portion of the necessaries of life and means of production as commodities (alongside whom, therefore, separate urban industries already exist) and who, in addition, have to pay taxes, rent, etc., in money.} Interest-bearing capital functions as such only insofar as the money lent is really converted into capital and produces a surplus of which interest constitutes a part. This does not however invalidate the fact that interest and interest-bearing have become attributes of it independently of the [production] process. Any more than the use-value of cotton as cotton is nullified by the fact that it has to be spun or used in some other way, in order to demonstrate its useful properties. And thus capital [demonstrates] its capacity to yield interest only by becoming part of the production process. But labour-power likewise demonstrates its capacity to produce value when it functions as labour, is realised as labour in this process. This does not rule out that, in itself, as a faculty, it is a value-creating activity and does not merely become such as a result of the process, but rather is antecedent to the process. It is bought as such. A person can buy it without setting it to work (as, for example, when a theatre manager hires an actor not in order to give him a role in a play, but to prevent him from performing in a rival theatre). Whether or not a man who buys labour-power uses its faculty for which he pays, i.e., its faculty to create value, is of no concern to the man who sells it, and makes no difference to the commodity sold, just as it makes no difference whether the man who buys capital uses it as such, that is, employs the quality of creating value which is inherent in it, in the [production] process. What he pays for in these two cases is the surplus-value and the capacity of maintaining its own value potentially, by the very nature of the commodity bought contained in the capital in the one case and in the labour-power in the other. This is why the capitalist who operates with his own capital regards part of the surplus-value as interest, that is, as surplus-value which is yielded by the production process, because it has been brought into the production process by the capital independently of the process. Rent and the relationship land rent may appear as a much more mysterious form than that of interest, [and the relationship] capital interest. But the irrational element in rent is not formulated in such a way that it expresses a relation of capital itself. Since land itself is productive (of use-value) and is itself a living productive force (of use-value or for the creation of use-values), it is possible either superstitiously to confuse use-value with exchange-value, i.e., to confuse it with a specific social form of the labour contained in the product. In this case, the reason for the irrationality lies in itself, since rent as a particular category is independent of the capitalist process as such. Or enlightened political economy may deny altogether that rent is a form of surplus-value, because it is not connected with either labour or capital, and declare that it is merely a surcharge which the landowner is able to make as a result of his monopoly of landownership. The position is different in the case of interest-bearing capital. Here it is a question not of a relation which is alien to capital, but of the capital relation itself; of a relation which arises out of capitalist production, is specific to it, and expresses the essence of capital; of an aspect of capital in which it appears as capital. Profit is still related to operating capital, to the process in which surplus-value (and profit itself) is produced. Whereas in profit the form of surplus-value has become alienated, strange, so that its simple form and therefore its substance and source of origin are not immediately discernible, this is not the case in interest-bearing capital; on the contrary it is precisely this alienated form which is presupposed and declared to be the essential feature of interest. The alienated form has assumed an independent and rigid existence as something antagonistic to the real nature of surplus-value. The relationship of capital to labour is obliterated in interest-bearing capital. In fact, interest presupposes profit, of which it is only a part. The way in which surplus-value ||915| is divided into interest and profit and distributed between different sorts of capitalists is actually a matter of complete indifference to the worker. Interest is definitely regarded as the offspring of capital, separate, independent and outside the capitalist process itself. It is due to capital as capital. It enters into the production process and therefore proceeds from it. Capital is impregnated with interest. It does not derive interest from the production process, but brings it into it. The surplus of profit over interest, the amount of surplus-value which capital derives solely from the production process, i.e., the surplus-value it produces as operating capital, acquires a separate form, namely, that of industrial profit (employer s profit, industrial or commercial, depending on whether the stress is laid on the production process or the circulation process), in contrast to interest, a value created by capital in itself and due to capital, to capital as capital. Thus even the last form of surplus-value, which to some extent recalls its origin, is separated and conceived not only as an alienated form, but as one which is in direct contradiction to its origin; consequently the nature of capital and of surplus-value as well as that of capitalist production in general is, finally, completely mystified. Industrial profit, in contradistinction to interest, represents capital in the [production] process in contradistinction to capital outside the process, capital as a process in contradistinction to capital as property; it therefore represents the capitalist as functioning capitalist, as representative of working capital as opposed to the capitalist as mere personification of capital, as mere owner of capital. He thus appears as working capitalist in contrast to himself as capitalist, and further, as worker in contrast to himself as mere owner. Consequently, insofar as any relation between surplus-value and the process is still preserved, or apparent, this is done precisely in the form in which the very notion of surplus-value is negated. Industrial profit is resolved into labour, not into unpaid labour of other people but into wage-labour, into wages for the capitalist, who in this case is placed into the same category as the wage-worker and is merely a more highly paid worker, just as in general wages vary greatly. Money is indeed not converted into capital as a result of the fact that it is exchanged against the material conditions required for the production of the commodity, and that in the labour process these conditions materials of labour, instruments of labour and labour begin to ferment, act on one another, combine with one another, undergo a chemical process and form the commodity like a crystal as a result of this process. The outcome of this would be no capital, no surplus-value. This abstract form of the labour process is common to all modes of production whatever their social form or their particular historical character. The process only becomes a capitalist process, and money is converted into capital only: 1) if commodity production, i.e., the production of products in the form of commodities, becomes the general mode of production; 2) if the commodity (money) is exchanged against labour-power (that is, actually against labour) as a commodity, and consequently if labour is wage-labour; 3) this is the case however only when the objective conditions, that is (considering the production process as a whole), the products, confront labour as independent forces, not as the property of labour but as the property of someone else, and thus in the form of capital. Labour as wage-labour and the conditions of labour as capital (that is, consequently, as the property of the capitalist; they are themselves properties personified in the capitalist and whose property in them, their property in themselves, they represent as against labour) are expressions of the same relationship, only seen from opposite poles. This condition of capitalist production is its invariable result. It is its antecedent posited by itself. Capitalist production is antecedent to itself and is therefore posited with its conditions as soon as it has evolved and functions in circumstances appropriate to it. However, the capitalist production process is not just a production process pure and simple. The contradictory, socially determined feature of its elements evolves, becomes reality only in the process itself, and this feature is the predominant characteristic of the process, which it turns precisely into that socially determined mode of production, the capitalist process of production. ||916| The formation process of capital when capital, i.e., not any particular capital, but capital in general, only evolves is the dissolution process, the parting product of the social mode of production preceding it. It is thus a historical process, a process which belongs to a definite historical period. This is the period of its historical genesis. (In the same way the existence of the human race is the result of an earlier process which organic life passed through. Man comes into existence only when a certain point is reached. But once man has emerged, he becomes the permanent pre-condition of human history, likewise its permanent product and result, and he is pre-condition only as his own product and result.) It is here that labour must separate itself from the conditions of labour in their previous form, in which it was identical with them. It becomes free labour only in this way and only thus are its conditions converted into capital and confront it as such. The process of capital becoming capital or its development before the capitalist production process exists, and its realisation in the capitalist process of production itself belong to two historically different periods. In the second, capital is taken for granted, and its existence and automatic functioning is presupposed. In the first period, capital is the sediment resulting from the process of dissolution of a different social formation. It is the product of a different [formation], not the product of its own reproduction, as is the case later. The existing basis on which capitalist production works is wage-labour, which is however at the same time reproduced continuously by it. It is therefore based also on capital, the form assumed by the conditions of labour, as its given prerequisite, a prerequisite however which, like wage-labour, is its continuous presupposition and its continuous product. On this basis, money, for example, is, as such, capital because the conditions of production in themselves confront labour in an alienated form, they confront it as someone else s property and thus dominate it. Then capital can also be sold as a commodity which has this attribute, that is, it can be sold as capital, as is the case when capital is loaned at interest. But while thus the aspect of the specific social determination of capital and of capitalist production a specific social determination which is expressed juridically in capital as property, in capital property as a special form of property is established, and interest, therefore, appears as that part of surplus-value which is produced by capital in this determinate form, independent of this determination considered as the determination of the process as a whole, then the other part of surplus-value, the surplus of profit over interest, industrial profit, must obviously represent value which does not arise from capital as such, but from the production process separated from its social determination, which has indeed already found its special mode of existence in the formula, capital interest. Separated from capital, however, the production process becomes labour process in general. [Consequently] the industrial capitalist as distinct from himself as capitalist, that is, the industrialist in contradistinction to himself as capitalist, i.e., owner of capital, is thus merely a simple functionary in the labour process; he does not represent functioning capital, but is a functionary irrespective of capital, and therefore a particular representative of the labour process in general, a worker. In this way, industrial profit is happily converted into wages and is equated with ordinary wages, differing from them only quantitatively and in the special form in which they are paid, i.e., that the capitalist pays wages to himself instead of someone else paying them to him. The nature of surplus-value (and therefore of capital) is not only obliterated in this final division of profit into interest and industrial profit, but it is definitely presented as something quite different. Interest represents part of surplus-value; it is merely a portion of profit which is separated and classified under a special name, the portion which accrues to the person who merely owns the capital, the portion he intercepts. But this merely quantitative division is turned into a qualitative division which transforms both parts in such a way that not even a trace of their original essence seems to remain. ||917| This is first of all confirmed by the fact that interest does not appear as a division which makes no difference to production, and takes place only occasionally when the industrialist operates with someone else s capital. Even when he operates with his own capital his profit is split into interest and industrial profit, thereby transforming the mere quantitative division into a qualitative one which does not depend on the accidental circumstance whether the industrialist owns or does not own his capital; the qualitative division arises out of the nature of capital and of capitalist production itself. There exist not simply two portions of profit distributed to two different persons, but two separate categories of profit which are related in different ways to capital and consequently to different determinate aspects of capital. Apart from the reasons mentioned earlier, this assumption of an independent existence is established all the more easily since interest-bearing capital appears on the scene as a historic form before industrial capital and continues to exist alongside it in its old form and it is only in the course of the development of industrial capital that the latter subordinates it to capitalist production by turning it into a special form of industrial capital. The mere quantitative division thus becomes a qualitative one. Capital is itself divided. Insofar as it is a prerequisite of capitalist production, insofar, therefore, as it expresses a specific social relation, the alienated form of the conditions of labour, it is realised in interest. It realises its character as capital in interest. On the other hand, insofar as it operates in the process, this process appears as something separate from its specific capitalist character, from its specific social determination as mere labour process in general. Therefore, insofar as the capitalist plays any part in it, he does so not as a capitalist for this aspect of his character is allowed for in interest but as a functionary of the labour process in general, as a worker, and his wages take the form of industrial profit. It is a special type of labour labour of superintendence but after all types of labour in general differ from one another. Thus the nature of surplus-value, the essence of capital and the character of capitalist production are not only completely obliterated in these two forms of surplus-value, they are turned into their opposites. But even insofar as the character and form of capital are complete [it is] nonsensical [if] presented without any intermediate links and expressed as the subjectification of objects, the objectification of subjects, as the reversal of cause and effect, the religious quid pro quo, the pure form of capital expressed in the formula M M'. The ossification of relations, their presentation as the relation of men to things having a definite social character is here likewise brought out in quite a different manner from that of the simple mystification of commodities and the more complicated mystification of money. The transubstantiation, the fetishism, is complete. Thus interest in itself expresses precisely the existence of the conditions of labour as capital in their social contradiction and in their transformation into personal forces which confront labour and dominate labour. It sums up the alienated character of the conditions of labour in relation to the activity of the subject. It represents the ownership of capital or mere capital property as the means for appropriating the products of other people s labour, as the control over other people s labour. But it presents this character of capital as something belonging to it apart from the production process itself and by no means as resulting from the specific determinate form of the production process itself. Interest presents capital not in opposition to labour, but, on the contrary, as having no relation to labour, and merely as a relation of one capitalist to another; consequently, as a category which is quite extrinsic to, and independent of, the relation of capital to labour. The division of the profit amongst the capitalists does not affect the worker. Thus interest, the form of profit which is the special expression of the contradictory character of capital, is an expression in which this contradiction is completely obliterated and explicitly left out of account. Apart from expressing the capacity of money, commodities, etc., to expand their own value, interest, insofar as it presents surplus-value as something deriving from money, commodities, etc., as their natural fruit, is therefore merely a manifestation of the mystification of capital in its most extreme form; insofar as it at all represents a social relation as such, it expresses ||918| merely relations between capitalists, and by no means relations between capital and labour. On the other hand, the existence of this form of interest gives the other part of profit the qualitative form of industrial profit, of wages for the labour of the industrial capitalist not in his capacity as capitalist, but as a worker (industrialist). The particular functions which the capitalist as such has to perform in the labour process and which are incumbent precisely on him as distinct from the workers, are represented as mere labour functions, He produces surplus-value not because he works as a capitalist, but because he, the capitalist, also works. It is just as if a king, who, as king, has nominal command of the army, were to be assumed to command the army not because he, as the owner of the kingship, commands, plays the role of commander-in-chief, but on the contrary that he is king because he commands, exercises the function of commander-in-chief. If thus one part of surplus-value, i.e., interest, is completely separated from the process of exploitation, then the other part, that is, industrial profit, emerges as its direct opposite, not as appropriation of other people s labour, but as the creation of value by one s own labour. This part of surplus-value is therefore no longer surplus-value, but its opposite, an equivalent given for labour performed. Since the alienated character of capital, its opposition to labour, is displayed outside the exploitation process, that is, outside the sphere where the real action of this alienation takes place, all the contradictory features are eliminated from this process itself. Consequently, real exploitation, the sphere where these contradictory features are put into practice and where they manifest themselves in reality, appears as its exact opposite, as a substantially different kind of labour, which belongs however to the same socially determined form of labour wage-labour to the same category of labour. The work of the exploiter is identified here with the labour which is exploited. This conversion of one part of profit into industrial profit arises, as we have seen, from the conversion of the other part into interest. The social form of capital that it is property devolves on the latter part; on the former part devolves the economic function of capital, its function in the labour process, but detached, abstracted from the social form, the contradictory form in which it exercises this function. How this is further justified by learned reasoning is to be examined in greater detail in connection with the apologetic interpretation of profit as [remuneration for] labour of superintendence. Here the capitalist is equated with his manager, as Adam Smith already noted. Industrial profit does indeed include some part of wages in those cases where the manager does not draw them. Capital appears in the production process as the director of labour, as its commander (captain of industry) and thus plays an active role in the labour process. But insofar as these functions arise out of the specific form of capitalist production that is, out of the domination of capital over labour as its labour and, therefore, over the workers as its instruments, out of the nature of capital, which appears as the social entity, the subject of the social form of labour personified in it [capital] as power over labour this work (it may be entrusted to a manager) which is linked with exploitation is, of course, labour which, in the same way as that of the wage-worker, enters into the value of the product; just as in the case of slavery, the labour of the overseer has to be paid for like that of a worker. If man attributes an independent existence, clothed in a religious form, to his relationship to his own nature, to external nature and to other men so that he is dominated by these notions, then he requires priests and their labour. With the disappearance of the religious form of consciousness and of these relationships, the labour of the priests will likewise cease to enter into the social process of production. The labour of priests will end with the existence of the priests themselves and, in the same way, the labour which the capitalist performs qua capitalist, or causes to be performed by someone else, will end together with the existence of the capitalists. (The example of slavery has to be amplified by quotations.) Incidentally, these apologetics aimed at reducing profit to wages, i.e., the wages of superintendence, boomerang on the apologists themselves, for English ||919| socialists have rightly declared: Well, in future, you shall only draw the wages usually paid to managers. Your industrial profit should not be reduced to wages of superintendence or direction of labour merely in words, but in practice. <It is of course impossible to examine in detail this nonsense and twaddle with all its contradictions. For example, industrial profit rises and falls in inverse [proportion] to interest or rent. The superintendence of labour, the particular amount of labour really performed by the capitalist, has however nothing whatever to do with it, any more than with the decline in wages. This kind of wages has the peculiarity that it falls and rises in inverse proportion to real wages (insofar as the rate of profit is determined by the rate of surplus-value, and insofar as all the conditions of production remain unchanged, it is determined exclusively by this). But little contradictions of this kind do not prevent the apologetic vulgarian from regarding them as identical. The labour performed by the capitalist remains absolutely the same whether he pays low or high wages, whether the worker receives high or low wages. Just as the wages paid for a working-day do [not] affect the amount of labour involved. Moreover, the worker works more intensively when he gets better wages. The labour of the capitalist, on the other hand, is something strictly determined, it is determined both qualitatively and quantitatively by the amount of labour he has to direct, not by the wages paid for this labour. He can no more intensify his labour than the cotton operative can work up more cotton than is available in the mill.> And they[f] add: the function of the manager, the labour of superintendence, can now be bought on the market in the same way as any other kind of labour-power, and is relatively just as cheap to produce and therefore to buy. Capitalist production itself has brought about that the labour of superintendence walks the streets, separated completely from the ownership of capital, whether one s own or other people s. It has become quite unnecessary for capitalists to perform this labour of superintendence. It is actually available, separate from capital, not in the sham separation which exists between the industrial capitalist and the moneyed capitalist, but that between industrial managers, etc., and capitalists of every sort. The best demonstration of this are the co-operative factories built by the workers themselves. They are proof that the capitalist as functionary of production has become just as superfluous to the workers as the landlord appears to the capitalist with regard to bourgeois production. Secondly: Insofar as the labour of the capitalist does not arise from the [production] process as a capitalist production process, and therefore disappears automatically with the disappearance of capital, i.e., insofar as it is not simply a name for the function of exploiting other people s labour, but insofar as it arises from the social form of labour co-operation, division of labour, etc. it is just as independent of capital as is this form [of labour] itself once it has stripped off its capitalist integument. To assert that this labour, as capitalist labour, as the function of the capitalist, is necessary, only shows that the vulgarian cannot conceive the social productive forces and the social character of labour developed within the framework of capital as something separate from the capitalist form, from the form of alienation, from the antagonism and contradiction of its aspects, from its inversion and quid pro quo. (And this is precisely what we say.) |XV-919|| ||XVIII-1142| <The capitalist s real profit is largely profit upon expropriation and the individual labour of the capitalist has an especially wide scope in this field, where it is not a question of the creation of surplus-value but of the distribution of the aggregate profit of the whole class of capitalists among the individual members in the field of commerce. This does not concern us here. Certain kinds of profit, those based on speculation for example, are restricted merely to this field. It is therefore quite impossible to examine them here. It is an indication of the bovine stupidity of vulgar economy that (particularly in order to represent profit as wages ) it confuses this with profit insofar as it originates in surplus-value. See the worthy Roscher, for example. It is thus quite natural that, when dealing with the division of the aggregate profit of the whole capitalist class, such asses should mix up the items in the accounts and grounds for compensation of capitalists in different spheres of production with the grounds for the exploitation of the workers by the capitalists, with the grounds, so to speak, for the origin of profit as such.> |XVIII-1142|| ||XV-919| It is in interest-bearing capital in the division of profit into interest and [industrial] profit that capital finds its most objectified form, its pure fetish form, and the nature of surplus-value is presented as something which has altogether lost its identity. Capital as an entity appears here as an independent source of value; as something which creates value in the same way as land [produces] rent, and labour wages (partly wages in the proper sense, and partly industrial profit). Although it is still the price of the commodity which has to pay for wages, interest and rent, it pays for them because the land which enters into the commodity produces the rent, the capital which enters into it produces the interest, and the labour which enters into it produces the wages, [in other words these elements] produce the portions of value which accrue to their respective owners or representatives ||920| the landowner, the capitalist, and the worker (wage-worker and industrialist). From this standpoint therefore, the fact that, on the one hand, the price of commodities determines wages, rent and interest and, on the other hand, the price of interest, rent and wages determines the price of commodities, is by no means a contradiction contained in the theory, or if it is, it is a contradiction, a vicious circle, which exists in the real movement. True, the rate of interest fluctuates, but only like the market price of any other commodity in accordance with the ratio of demand and supply. This by no means invalidates the notion of interest being inherent in capital just as the fluctuations in the prices of commodities do not invalidate prices as designations appropriate to commodities. Thus land, capital and labour on the one hand insofar as they are the sources of rent, interest and wages and these are the constituent elements of commodity prices appear as the elements which create value, and on the other hand, insofar as they accrue to the owner of each of these means for the production of value, i.e., insofar as he derives the portion of the value created by them, they appear as sources of revenue, and rent, interest and wages appear as forms of distribution. (As we shall see later, it is the result of stupidity that the vulgarians, as opposed to critical economy, in fact regard forms of distribution simply as different aspects of forms of production whereas the critical economists separate them and fail to recognise their identity.) In interest-bearing capital, capital appears to be the independent source of value or surplus-value it possesses as money or as commodities. And it is indeed this source in itself, in its material aspect. It must of course enter into the production process in order to realise this faculty; but so must land and labour. One can therefore understand why the vulgar economists prefer [the formula]: land rent; capital interest; labour wages, to that used by Smith and others for the elements of price (or rather for the parts into which it can be broken down) and where [the relation] capital profit figures, just as on the whole the capital relation as such is expressed in this form by all the classical economists. The concept of profit still contains the inconvenient connection with the [production] process, and the real nature of surplus-value and of capitalist production, in contra-distinction to their appearance, is still more or less recognisable. This connection is severed when interest is presented as the intrinsic product of capital and the other part of surplus-value, industrial profit, consequently disappears entirely and is relegated to the category of wages. Classical political economy seeks to reduce the various fixed and mutually alien forms of wealth to their inner unity by means of analysis and to strip away the form in which they exist independently alongside one another. It seeks to grasp the inner connection in contrast to the multiplicity of outward forms. It therefore reduces rent to surplus profit, so that it ceases to be a specific, separate form and is divorced from its apparent source, the land. It likewise divests interest of its independent form and shows that it is a part of profit. In this way it reduces all types of revenue and all independent forms and titles under cover of which the non-workers receive a portion of the value of commodities, to the single form of profit. Profit, however, is reduced to surplus-value since the value of the whole commodity is reduced to labour; the amount of paid labour embodied in the commodity constitutes wages, consequently the surplus over and above it constitutes unpaid labour, surplus labour called forth by capital and appropriated gratis under various titles. Classical political economy occasionally contradicts itself in this analysis. It often attempts directly, leaving out the intermediate links, to carry through the reduction and to prove that the various forms are derived from one and the same source. This is however a necessary consequence of its analytical method, ||921| with which criticism and understanding must begin. Classical economy is not interested in elaborating how the various forms come into being, but seeks to reduce them to their unity by means of analysis, because it starts from them as given premises. But analysis is the necessary prerequisite of genetical presentation, and of the understanding of the real, formative process in its different phases. Finally a failure, a deficiency of classical political economy is the fact that it does not conceive the basic form of capital, i.e., production designed to appropriate other people s labour, as a historical form but as a natural form of social production; the analysis carried out by the classical economists themselves nevertheless paves the way for the refutation of this conception. The position is quite different as regards vulgar political economy, which only becomes widespread when political economy itself has, as a result of its analysis, undermined and impaired its own premises and consequently the opposition to political economy has come into being in more or less economic, utopian, critical and revolutionary forms. For the development of political economy and of the opposition to which it gives rise keeps pace with the real development of the social contradictions and class conflicts inherent in capitalist production. Only when political economy has reached a certain stage of development and has assumed well-established forms that is, after Adam Smith does the separation of the element whose notion of the phenomena consists of a mere reflection of them take place, i.e., its vulgar element becomes a special aspect of political economy. Thus Say Separates the vulgar notions occurring in Adam Smith s work and puts them forward in a distinct crystallised form. Ricardo and the further advance of political economy caused by him provide new nourishment for the vulgar economist (who does not produce anything himself): the more economic theory is perfected, that is, the deeper it penetrates its subject-matter and the more it develops as a contradictory system, the more is it confronted by its own, increasingly independent, vulgar element, enriched with material which it dresses up in its own way until finally it finds its most apt expression in academically syncretic and unprincipled eclectic compilations. To the degree that economic analysis becomes more profound it not only describes contradictions, but it is confronted by its own contradiction simultaneously with the development of the actual contradictions in the economic life of society. Accordingly, vulgar political economy deliberately becomes increasingly apologetic and makes strenuous attempts to talk out of existence the ideas which contain the contradictions. Because he finds the contradictions in Smith relatively undeveloped, Say s attitude still seems to be critical and impartial compared, for example, with that of Bastiat, the professional conciliator and apologist, who, however, found the contradictions existing in the economic life worked out in Ricardian economics and in the process of being worked out in socialism and in the struggles of the time. Moreover, vulgar economy in its early stages does not find the material fully elaborated and therefore assists to a certain extent in solving economic problems from the standpoint of political economy, as, for example, Say, whereas a Bastiat needs merely to busy himself with plagiarism and attempts to argue away the unpleasant side of classical political economy. But Bastiat does not represent the last stage. He is still marked by a lack of erudition and a quite superficial acquaintance with the branch of learning which he prettifies in the interests of the ruling class. His apologetics are still written with enthusiasm and constitute his real work, for he borrows the economic content from others just as it suits his purpose. The last form is the academic form, which proceeds historically and, with wise moderation, collects the best from all sources, and in doing this contradictions do not matter; on the contrary, what matters is comprehensiveness. All systems are thus made insipid, ||922| their edge is taken off and they are peacefully gathered together in a miscellany. The heat of apologetics is moderated here by erudition, which looks down benignly on the exaggerations of economic thinkers, and merely allows them to float as oddities in its mediocre pap. Since such works only appear when political economy has reached the end of its scope as a science, they are at the same time the graveyard of this science. (That they look down in an equally superior manner on the phantasies of the socialists need hardly be stressed.) Even the genuine thought of a Smith or a Ricardo, and others not just their vulgar elements is made to appear insipid in these works and becomes a vulgarism. Professor Roscher is a master of this sort of thing and has modestly proclaimed himself to be the Thucydides of political economy. His identification of himself with Thucydides may perhaps be based on his conception of Thucydides as a man who constantly confuses cause with effect. In the form of interest-bearing capital it becomes quite obvious that capital without expending any labour appropriates the fruits of other people s labour. For it appears here in a form in which it is separated from the production process as such. But it can do this only because, in this form, it indeed enters by itself, without labour, into the labour process, as an element which in itself creates value, i.e., is a source of value. While it appropriates part of the value of the product without labour, it has also created it without labour, ex proprio sinu, out of itself. Whereas the classical, and consequently the critical, economists are exercised by the form of alienation and seek to eliminate it by analysis, the vulgar economists, on the other hand, feel completely at home precisely with the alienated form in which the different parts of value confront one another; just as a scholastic is familiar with God the Father, God the Son, and God the Holy Ghost, so are the vulgar economists with land rent, capital interest, and labour wages. For this is the form in which these relationships appear to be directly connected with one another in the world of phenomena, and therefore they exist in this form in the thoughts and the consciousness of those representatives of capitalist production who remain captive to it. The more the vulgar economists in fact content themselves with translating common notions into doctrinaire language, the more they imagine that their writings are plain, in accordance with nature and the public interest, and free from all theoretical hair-splitting. Therefore, the more alienated the form in which they conceive the manifestations of capitalist production, the closer they approach the nature of common notions, and the more they are, as a consequence, in their natural element. This, moreover, renders a substantial service to apologetics. For [in the formula:] land rent, capital interest, labour wages, for example, the different forms of surplus-value and configurations of capitalist production do not confront one another as alienated forms, but as heterogeneous and independent forms, merely different from one another but not antagonistic. The different revenues are derived from quite different sources, one from land, the second from capital and the third from labour. Thus they do not stand in any hostile connection to one another because they have no inner connection whatsoever. If they nevertheless work together in production, then it is a harmonious action, an expression of harmony, as, for example, the peasant, the ox, the plough and the land in agriculture, in the real labour process, work together harmoniously despite their dissimilarities. Insofar as there is any contradiction between them, it arises merely from competition as to which of the agents shall get more of the value they have jointly created. Even if this occasionally brings them to blows, nevertheless the outcome of this competition between land, capital and labour finally shows that, although they quarrel with one another ||923| over the division, their rivalry tends to increase the value of the product to such an extent that each receives a larger piece, so that their competition, which spurs them on, is merely the expression of their harmony. Herr Arnd, for example, says in criticism of Rau: By capital rent Herr Arnd means interest (op. cit., p. 123). According to this one might think that Adam Smith reduces national wealth to interest, rent and wages, whereas on the contrary he quite expressly declares that profit results from the use of capital and repeatedly and expressly states that interest insofar as it constitutes surplus-value at all is only a form derived from profit. Thus the vulgar economist reads into his sources the direct opposite of what they contain. Where Smith writes profit Arnd reads interest . It would be interesting to know what he supposes Adam Smith s interest to mean. This same circumspect developer of our science makes the following interesting discovery: This deserves to he called the rate of interest originating in the forest , and in the same work its inventor has rendered another service to our science as the philosopher of the dog tax . {Profit (including industrial profit) is proportionate to the amount of the capital advanced; on the other hand, the wages drawn by the industrial capitalist [stand] in inverse ratio to the amount of capital. [They are] considerable where the capital is small (because, in this case, the capitalist is something between an exploiter of other people s labour and a person who lives off his own labour), and insignificant where the capital is large, or they are quite independent of it in the case where a manager is [employed]. One part of the labour of superintendence merely arises from the antagonistic contradiction between capital and labour, from the antagonistic character of capitalist production, and belongs to the incidental expenses of production in the same way as nine-tenths of the labour occasioned by the circulation process. A conductor does not have to be the owner of the instruments used by the orchestra, nor is it one of his functions as a conductor to speculate on the subsistence costs of the members of the orchestra, or, in general, to have anything to do with their wages . It is very remarkable that economists like John Stuart Mill, who cling to the forms of interest and industrial profit in order to convert industrial profit into wages for superintendence of labour, admit along with Smith, Ricardo and all other economists worth mentioning, that the average rate of interest is determined by the average rate of profit, [which according to] Mill stands in inverse ratio to the rate of wages, and it is therefore nothing but unpaid labour, surplus labour. Two facts provide the best proof that the wages of superintendence do not enter [into the] average rate of profit at all. ||924| 1) That in co-operative factories, where the general manager receives a salary as in all other factories, and is responsible for the whole labour of superintendence the overseers themselves are simply workers the rate of profit is not below, but above, the average rate. 2) That where profit is continuously substantially above the average rate, as in individual, non-monopolised branches of business such as those of small shopkeepers, farmers, etc., this is correctly explained by the economists as being due to the fact that these people pay themselves their own wages. Where only the proprietor himself works, his profit consists of 1) the interest on his small capital; 2) his wages; 3) that part of the surplus time which, because of his capital, he is able to work for himself instead of for someone else; i.e., the part not already represented by interest. If, however, he employs workers, then their surplus labour has to be added. Of course the worthy Senior (Nassau) also converts industrial profit into wages of superintendence. But he forgets this humbug as soon as it is a question, not of doctrinaire phrases, but of practical struggles between workers and factory owners. Thus, he opposes the shortening of the working-day, because in a working-day of say 11 1/2 hours, the workers allegedly work only one hour for the capitalist, and the product of this one hour constitutes the capitalist s profit (apart from the interest for which they also work an hour according to his own calculation). Suddenly here industrial profit is equal to the value added by the unpaid labour-time of the worker and not to the value added by the labour which the capitalist performs in the production process of commodities. If industrial profit were the product of the capitalist s own labour, then Senior should not have deplored that the workers work only one hour for the capitalist for nothing instead of two, and even less should he have said that, if the workers worked only 10 1/2 hours instead of 11 1/2, there [would be] no profit at all. He should have said that if the workers worked only 10 1/2 hours instead of 11 1/2, the capitalist would not receive wages of superintendence for 11 1/2 hours but only for 10 1/2 hours, he would thus lose one hour s wages of superintendence. In which case the workers would answer that if ordinary wages for 10 1/2 hours have to suffice for them, then the higher wages the capitalist receives for 10 1/2 hours should suffice for him. It is incomprehensible how economists like John Stuart Mill, who are Ricardians and even express the principle that profit is equal to surplus-value, surplus labour, in the form that the rate of profit and wages stand in inverse ratio to one another and that the rate of wages determines the rate of profit (which is incorrect when put in this form), suddenly convert industrial profit into the individual labour of the capitalist instead of into the surplus labour of the worker, unless the function of exploitation of other people s labour is called labour by them, the result of this is indeed that the wages of this labour are exactly equal to the amount of other people s labour appropriated, in other words, they depend directly on the degree of exploitation, not on the degree of exertion that this costs the capitalist. (Insofar as this function of exploitation really requires labour in the course of capitalist production, it is represented by the wages of general managers.) I say that it is incomprehensible that, after they as Ricardians have reduced profit to its real element, they allow themselves to be misled by the antithesis of interest and industrial profit which is simply a disguised form of profit and is merely regarded as an independent form due to ignorance of the nature of profit. Only because one part of profit, interest, appears to be due to capital as a thing, an automatically functioning, automatically creating thing, apart from the production process, the other part appears as industrial profit, as arising from the activity taking place in the process (really the active process, this however also includes the activity of the operating capitalist) and therefore as due to the labour of the capitalist. Consequently, because capital and the surplus-value which arises from it and is called interest are considered mysteries. This view, which clearly arises from notions reflecting the most superficial aspects of the external form of capital, is the exact opposite of Ricardo s view and altogether inconsistent with his conception of value. Insofar as capital is value, its value is determined by the labour contained in it before it enters into the [production] process. Insofar as it enters the process as a thing, it does so as use-value, and as such, it can never create exchange-value, whatever its use. One can see how splendidly the Ricardians understand their own master. In relation to the moneyed capitalist, the industrial capitalist, who embodies functioning capital and therefore actually squeezes out surplus labour, is of course quite justified in pocketing a part of this surplus. In relation to the moneyed capitalist, he is a worker, but a worker who is a capitalist, in other words, an exploiter of other people s labour. ||925| But in relation to the workers it is strange to plead that the exploitation of their labour costs the capitalist labour and that, therefore, they have to pay him for this exploitation; it is the plea of the slave-driver addressed to the slave.} Every pre-condition of the social production process is at the same time its result, and every one of its results appears simultaneously as its pre-condition. All the production relations within which the process moves are therefore just as much its products as they are its conditions. The more one examines its nature as it really is, [the more one sees] that in the last form it becomes increasingly consolidated, so that independently of the process these conditions appear to determine it, and their own relations appear to those competing in the process as objective conditions, objective forces, aspects of things, the more so as, in the capitalist process, every element, even the simplest, the commodity for example, is already an inversion and causes relations between people to appear as attributes of things and as relations of people to the social attributes of things. < Interest is the remuneration for the productive employment of savings; profit, properly so called, is the remuneration for the agency for superintendence during this productive employment[g] (The Westminster Review, Vol. V, January April 1826, p. 107). Thus interest here is declared to be remuneration for the fact that money, etc., is employed as capital; it therefore arises from capital as such, which is remunerated for its quality qua capital. Industrial profit, on the other hand, is remuneration for the function of the capital or capitalist during this productive employment , i.e., in the production process itself.> |925|| ||925| Interest is only a part of profit, the part which is paid to the owner of capital by the industrial, functioning capitalist. Since he can appropriate surplus labour only by means of capital (money, commodities), etc., he has to hand over a portion of it to the man who makes capital available to him. And the lender, who wants to enjoy the advantages of money as capital without letting it function as capital, can do this only by being content with a part of the profit. They are in fact co-partners, one of them being the juridical owner of the capital, and the other, while he employs it, the economic owner. But since the profit only arises from the production process, is only its result and has first to be produced, interest is in fact merely a claim on part of the surplus labour which has yet to be performed, a title to future labour, a claim on a portion of the value of commodities which do not as yet exist, it is therefore only the result of a production process which takes place during the period at the end of which the interest only falls due. ||926| Capital is bought (that is, it is lent at interest) before it is paid for. Money functions here as means of payment as it does in relation to labour-power, etc. The price of capital i.e., interest enters therefore just as much into the advances made by the industrialist (and into the advances made to himself where a man is operating with his own capital) as the price of cotton which, for example, is bought today, but for which he has to pay perhaps in six weeks time. This fact is in no way altered either by the fluctuations in the rate of interest the market price of money or the fluctuations in the market prices of other commodities. On the contrary. The market price of money the name for interest-bearing capital as money capital is fixed on the money market by competition between buyer and seller, by demand and supply, like the price of any other commodity. The struggle between the moneyed and industrial capitalists is simply a struggle over the division of the profit, over the share which is to accrue to each of the two sections when the division is made. The relationship (demand and supply), like each of its two extremes, is itself a result of the production process or, in common parlance, [is determined] by the business situation existing at the time, the actual position in which the reproduction process and its elements find themselves. But, formally and apparently, it is this struggle which determines the price of capital (i.e., interest) before capital enters into the production process. This determination, moreover, occurs outside the real production process, and depends on factors independent of the process; this price determination appears rather as one of the conditions within which the process has to take place. Thus the struggle appears not only to establish the property title to a definite part of the future profit, but to cause this part not to emerge as a result of the production process, but on the contrary to enter into it as a pre-condition, as the price of capital, just as the prices of commodities or wages enter into it as pre-conditions, although in the course of the reproduction process they in fact continuously emerge from it. Each component of the price of a commodity, insofar as it appears as an advance as an already existing commodity price which enters into the production price ceases to represent surplus-value as far as the industrial capitalist is concerned. That part of the profit which thus enters into the production process as the price of capital is reckoned as part of the cost of the outlay; it therefore no longer appears to be surplus-value and is converted from a product of the process into one of its given pre-conditions a condition of production which as such enters into the process in an independent form and determines its result. (If, for example, the rate of interest falls, and the situation obtaining on the market requires a reduction in the price of commodities below cost-price, the industrialist can lower the commodity price without reducing the rate of industrial profit; he can indeed lower the price and secure a higher industrial profit, which, however, will be regarded by the man operating only with his own capital as a fall in the rate of profit, a reduction in the gross profit. Everything which appears as a given condition of production, such as the prices of commodities, wages, capital the market prices of these elements affects the determination of the market price of the commodity at any particular time; the real cost-price of a particular commodity is established only within the fluctuations of the market prices, and is only the self-equalisation of these market prices, just as the value of commodities is only established as a result of the equalisation of the cost-prices of all the different commodities. Thus, the vicious circle of the vulgarian, whether he is a theoretician regarding matters from the capitalist standpoint or is in fact a capitalist namely, that the prices of commodities determine wages, interest, profit and rent and that, on the other hand, the prices of labour, interest, profit and rent determine the prices of commodities is merely an expression of the circular movement in which the general laws assert themselves in contradictory fashion in the real movement and in appearance.) A part of the surplus-value interest thus appears as the market price of capital, which enters into the [production] process, and is therefore regarded not as surplus-value but as a condition of production. Thus, the fact that two sets of capitalists share the surplus-value, one set remaining outside the production process and the other participating in it, is presented in such a way that one part of surplus-value is due to capital outside the process and the other part to capital within the process. The fact that the division [of the surplus-value] is established beforehand is presented as the independence of one part from the other, as the independence of one part from the production process itself; and finally as the immanent attribute of things, money, commodities, but of these things as capital; this again appears not as the expression of a relationship, but in such a way that this money, these commodities are technologically intended for the labour process and because of this they become capital. Defined in this way, they are the simple elements of the labour process itself ||927| and as such they are capital. There is nothing mysterious at all in the fact that the value of the commodity is made up partly of the value of the commodities contained in it, partly of the value of the labour that is to say, the paid labour partly of the unpaid but none the less salable labour, and that the part of its value which consists of unpaid labour i.e., its surplus-value is in turn divided into interest, industrial profit and rent; in other words, the person who produces and first of all takes possession of the whole of this surplus-value has to hand over portions of it to others, one portion to the landlord, another to the owner of the capital, and he keeps the third for himself; he does so however under a name industrial profit which distinguishes it from interest and rent, and from surplus-value and profit. The breakdown of surplus-value, that is, of part of the value of commodities, into these special headings or categories, is very understandable and does not conflict in the least with the law of value. But the whole matter is mystified because these different parts of surplus-value acquire an independent form, because they accrue to different people, because the titles to them are based on different elements, and finally because of the autonomy with which certain of these parts of surplus-value confront the production process as its conditions. From parts into which value can be divided, they become independent elements which constitute value, they become component parts. This is what they are as far as market prices are concerned. They really become the constituent elements of the market price. How their apparent independence as conditions of the process is regulated by the inherent law and that they are only apparently independent, does not become evident at any moment in the course of the production process, nor does it operate as a determining conscious motive. Exactly the opposite. The highest consistency which can be assumed by this semblance of results taking the form of independent conditions becomes firmly established when parts of surplus-value in the form of prices of the conditions of production are included in the price. And this is the case with regard to both interest and rent. They are part of the outlay of the industrial capitalist and the farmer. They seem here to represent not unpaid surplus labour, but paid surplus labour, that is, surplus labour for which an equivalent is paid during the production process, although not to the worker whose surplus labour it is, but to other people, i.e., the owners of capital and of land. They constitute surplus labour as far as the worker is concerned, but they are equivalents as regards the capitalist [who lends the money] and the landowner to whom they have to be paid. Interest and rent therefore appear not as surplus-value, and still less as surplus labour, but as prices of the commodities capital and land , for they are paid to the capitalist and the landowner only in their capacities as owners of commodities, only as owners and sellers of these commodities. That part of the value of the commodity which represents interest, therefore, appears as reproduction of the price paid for capital, and that part which represents rent appears as reproduction of the price paid for the land. These prices therefore become constituent parts of the total price. This does not merely appear to be the case to the industrial capitalist; for him interest and rent really constitute part of his outlay, and whereas, on the one hand, they are determined by the market price of his commodity as the market price it is a determination of a commodity in which a social process or the result of a social process appears as a particular aspect belonging to the commodity, and the up and down of this process, its movement, appears as the fluctuations of the commodity price on the other hand, the market price is determined by them, in just the same way as the market price of cotton determines the market price of yarn and, on the other hand, the market price of yarn determines the demand for cotton, hence the market price of cotton. Since parts of surplus-value, i.e., interest and rent, enter into the production process as the prices of commodities of the commodity land and the commodity capital they exist in forms which not only conceal, but which disavow their real origin. That surplus labour, unpaid labour, constitutes just as essential an element of the capitalist production process as paid labour, is expressed by the fact that factors of production land and capital distinct from labour have to be paid for, in other words, that costs besides the price of the commodities advanced and wages enter into the price. Parts of surplus-value interest and rent appear here as costs, as advances made by the exploiting capitalist. Average profit enters into the production price of commodities as a determining factor and thus already here surplus-value [appears to be] not a result, but a condition, not one of the parts into which the value of the commodity is divided, but a component part of its price. But average profit, like the production price itself, acts rather as a determining ideal and at the same time appears as surplus over and above the advances made ||928| and as a price which is different from the cost-price properly speaking. Whether or not [average profit is obtained] and whether it is higher or lower than the profit corresponding to the market price that is, corresponding to the direct result of the [production] process determines the reproduction process, or rather the scale of reproduction; it determines whether more or less of the capital existing in this or that sphere of production is withdrawn or invested; it also determines the ratio in which newly accumulated capital flows into these particular spheres, and finally, to what extent these particular spheres act as buyers in the money market. On the other hand, as interest and rent, the separate portions of surplus-value in a quite definite form become pre-conditions for the individual production prices and are anticipated in the form of advances. <Advances, that is, what is paid out by the capitalist, may be defined as costs. Profit accordingly appears as a surplus over these costs. This applies to the individual prices of production. And consequently, one can call the prices determined by the advances cost-prices. Costs of production can be defined as prices determined by the average profit that is, the price of the capital advanced plus the average profit since this profit is the condition for reproduction, a condition which regulates the supply and the distribution of capital amongst the various spheres of production. These prices are production prices. Finally, the real amount of labour (materialised and immediate labour) it costs to produce a commodity, is its value. It constitutes the real production cost of the commodity itself. The price which corresponds to it is simply the value expressed in money. The term cost of production is used alternately in all three senses.> If no surplus-value were produced, then of course together with surplus-value the part of it which is called interest would also cease to exist, and so would the part which is called rent; the anticipation of surplus-value would likewise come to an end, in other words, it would no longer constitute a part of the costs of production in the shape of the price of commodities. The existing value entering into the production process would not emerge from it as capital at all, and accordingly, could not enter into the reproduction process as capital, nor be lent out as capital. It is thus the continuous reproduction of the same relations the relations which postulate capitalist production that not only causes them to appear as the social forms and results of this process, but at the same time as its continual prerequisites. But they are these only as prerequisites continually posited, created, produced by the process itself. This reproduction is therefore not conscious reproduction; on the contrary, it only manifests itself in the continuous existence of these relations as prerequisites and as conditions dominating the production process. The parts, for example, into which the commodity value can be divided are turned into its component parts which confront one another as independent parts, and they are consequently also independent in relation to their unity, which on the contrary appears to be a compound of these parts. The bourgeois sees that the product continually becomes the condition of production. But he does not perceive that the production relations themselves, the social forms in which he produces and which he regards as given, natural relations, are the continuous product and only for that reason the continuous prerequisite of this specific social mode of production. The different relations and aspects not only become independent and assume a heterogeneous mode of existence, apparently independent of one another, but they seem to be the direct properties of things; they assume a material shape. Thus the participants in capitalist production live in a bewitched world and their own relationships appear to them as properties of things, as properties of the material elements of production. It is however in the last, most derivative forms forms in which the intermediate stage has not only become invisible but has been turned into its direct opposite that the various aspects of capital appear as the real agencies and direct representatives of production. Interest-bearing capital is personified in the moneyed capitalist, industrial capital in the industrial capitalist, rent-bearing capital in the landlord as the owner of the land, and lastly, labour in the wage-worker. They enter into the competitive struggle and into the real process of production as these rigid forms, personified in independent personalities that appear at the same time to be mere representatives of personified things. Competition presupposes this externalisation. These forms conform to its nature and have come into being in the natural evolution of competition, and on the surface competition appears to be ||929| simply the movement of this inverted world. Insofar as the inner connection asserts itself in this movement, it appears as a mysterious law. The best proof is political economy itself, a science which seeks to rediscover the hidden connection. Everything enters into competition in this last, most externalised form. The market price, for example, appears to be the dominant factor here, just as the rate of interest, rent, wages, industrial profit appear to be the constituents of value, and the price of land and the price of capital appear as given items with which one operates. We have seen how Adam Smith first reduces value to wages, profit (interest) and rent, and then, conversely, presents these as independent constituent elements of commodity prices. He expresses the secret connection in the first version and the outward appearance in the second. If one comes still closer to the surface of the phenomenon, then, in addition to the average rate of profit, interest and even rent can be represented as constituent parts of commodity prices (that is, of market prices). Interest can be so represented quite directly, since it enters into the cost-price. Rent as the price of land may not determine the price of the product directly, but it determines the method of production, whether a large amount of capital is concentrated on a small area of land, or a small amount of capital is spread over a large area of land, and whether this or that type of product is produced e.g., cattle or corn the market price of which covers the rent most effectively, for the rent must be paid before the term stipulated by contract expires. In order that rent should not bring about a reduction in industrial profit, pasture is turned into arable land and arable land into pasture, etc. Rent therefore determines the market prices of individual commodities not directly, but only indirectly, by influencing the proportions in which the various types of commodities are produced in such a way that demand and supply will produce the best price for each so that rent can be paid. Even though rent does not directly determine the market price of corn, for example, it determines directly the market price of cattle, etc., in short, of commodities produced in the spheres where rent is not regulated by the market prices of their products but where the market prices of products are regulated by the amount of rent borne by the grain-producing land. The price of meat, for example, is always too high in industrially developed countries, that is, it is not only far above its production price, but above its value. For the price must cover not only the cost of production, but also the rent which the land would carry if corn were grown on it. Otherwise, meat produced by large-scale stock-breeding where the organic composition of capital approximates more closely [to the composition of capital in industry] or may have an even greater preponderance of constant capital over variable capital could only pay a very small amount of absolute rent, or even none at all. The rent which it pays, and which enters directly into its price, is, however, determined by the absolute plus the differential rent which the land would pay as arable land. This differential rent, moreover, does not exist here in most cases. The best proof is that meat pays rent on the kind of land where corn does not. If, therefore, profit enters into the production price as a determining factor, it can be said that wages, interest arid, to a certain degree, rent constitute determining elements of the market price and certainly of the production price. Of course, ultimately everything can be reduced to value which is determined by labour-time, for on the whole the movement of interest is determined by profit, while corn rent on the other hand is determined partly by the rate of profit, partly by the value of the product and the equalisation of the different values produced on different kinds of land to the market value; the rate of profit, however, is determined partly by wages, partly by the productivity of labour in those spheres of production which produce constant capital in the last analysis therefore by the level of wages and the productivity of labour; wages, however, are the equivalent of a part of the commodity (that is, [they are] equal to the paid portion of labour contained in the commodity, and profit is equal to the unpaid portion of labour contained in the commodity). Finally, the productivity of labour can affect the price of commodities only in two ways, either it affects their value, i.e., reduces it, or it affects their surplus-value, that is, increases it. Cost-price is nothing but the value of the capitals advanced plus the surplus-value they produce distributed amongst the different spheres according to the quota of the total capital which each sphere represents. Thus, cost-price resolves into value if one considers the total capital and not the individual spheres. On the other hand, the market prices in each sphere are continually reduced to the cost-price as a result of the competition between the capitals of the different spheres. Competition amongst the capitalists in each individual sphere seeks to reduce the market price of commodities to their market value. Competition between capitalists of different spheres reduces market values to common cost-prices. Ricardo opposes Smith s establishment of value out of the parts of value which are determined by itself. But he is not consistent. Otherwise it would have been impossible for him to argue with Smith whether profit, wages and rent or, as he says, merely profit and wages, enter into price, that is, enter as constituent parts. Regarded analytically, they enter into it as soon as they are paid. He ought to have put it in this way: The price of every commodity is reducible to profit and wages, the prices of some commodities (and of very many, indirectly) are reducible to profit, rent and wages. But no commodity price is constituted by them ||930| for they are not independent factors acting of their own accord, having a definite magnitude, and making up the value of commodities; on the contrary, when the value is given, it can be divided into those parts in many different proportions. The magnitude of value is not determined by the addition or combination of given factors i.e., profit, wages and rent but one and the same magnitude of value, a given amount of value, is broken down into wages, profit and rent, and according to different circumstances it is distributed between these three categories in very different ways. Assuming that the production process repeats itself continuously under the same conditions, in other words, that reproduction takes place under the same conditions as production, which presupposes that productivity of labour remains unchanged, or at least that variations in productivity do not alter the relationships of the different factors of production; thus, even if the value of commodities were to rise or fall as a result of changes in productivity, the distribution of the value of commodities amongst the different factors of production would remain the same. In that case, although it would not be theoretically accurate to say that the different parts of value determine the value or price of the whole [output], it would be useful and correct to say that they constitute it insofar as one understands by constituting the formation of the whole by adding up the parts. The value would be divided at a steady and constant rate into [pre-existing] value and surplus-value, and the [newly created] value would be resolved at a constant rate into wages and profit, the profit again being broken down at a constant rate into interest, industrial profit and rent. It can therefore be said that P the price of the commodity is divided into wages, profit (interest) and rent, and, on the other hand, wages, profit (interest) and rent are the constituents of the value or rather of the price. This uniformity or similarity of reproduction the repetition of production under the same conditions does not exist. Productivity itself changes and changes the conditions [of production]. The conditions, on their part, change productivity. But the divergences are reflected partly in superficial oscillations which even themselves out in a short time, partly in a gradual accumulation of divergences which either lead to a crisis, [to a] violent, seeming restoration of the old relationships, or very gradually assert themselves and are recognised as a change in the conditions. Interest and rent, which anticipate surplus-value, presuppose that the general character of reproduction will remain the same. And this is the case as long as the capitalist mode of production continues. Secondly, it is presupposed moreover that the specific relations of this mode of production remain the same during a certain period, and this is in fact also more or less the case. Thus the result of production crystallises into a permanent and therefore prerequisite condition of production, that is, it becomes a permanent attribute of the material conditions of production. It is crises that put an end to this apparent independence of the various elements of which the production process continually consists and which it continually reproduces. <What value is for the genuine economist the market price is for the practical capitalist, that is, in each case the primary factor of the whole movement.> The form of interest-bearing capital characteristic of and in accordance with capitalist production is credit. It is a form created by capitalist production itself. (The subordination of commercial capital [by the capitalist mode of production] does not in fact require such a new creation since commodity and money, and the circulation of commodities and money, remain the elementary prerequisites of capitalist production and are only turned into absolute prerequisites; commercial capital, on the one hand, is therefore the general form of capital and, on the other hand, insofar as it represents capital in a specific function capital which operates exclusively in the circulation process its determination by productive capital does not in any way alter its form.) The equalisation of values to cost-prices occurs only because the individual capital functions as a commensurate part of the total capital of the whole class and, on the other hand, because the total capital of the class is distributed amongst the various individual spheres according to the needs of production. This is brought about by means of credit. Credit not only makes this equalisation possible and facilitates it, but one part of capital in the form of moneyed capital appears in fact to be the material common to the whole class and employed by it. This is one purport of credit. The other is the continual attempt made by capital to shorten the metamorphoses which it has to undergo in the circulation process, to anticipate the circulation time, its transformation into money, etc., and in this way to counteract its own ||931| limitations. Finally, the function of accumulating, insofar as it is not conversion [of revenue] into capital but the supply of surplus-value in the form of capital, becomes, in part, the responsibility of a special class, in part everything accumulated by society in this sense becomes accumulation of capital and is placed at the disposal of the industrial capitalists. Operations of this kind take place at a very large number of isolated points in society, [their results] are concentrated and collected in certain reservoirs. Money which lies idle due to freezing of the commodities in the metamorphosis, is thus converted into capital. Land rent and capital interest are irrational expressions insofar as rent is defined as the price of land and interest as the price of capital. The common origin [of all these different revenues] is still recognisable in the forms of interest-bearing capital, rent-bearing capital, profit-bearing capital, since, in general, capital involves appropriation of surplus labour; so that these different forms merely express the fact that the surplus labour produced by capital is, as concerns capital in general, divided between two types of capitalists, and in the case of agricultural capital, it is divided between capitalist and landlord. Rent as the (annual) price of land and interest as the price of capital are just as irrational as -3. The latter form contradicts the number in its simple, elementary form just as those do in the case of capital in its simple form of commodities and money. They are in the converse sense irrational. Land rent, i.e., rent as the price of land, defines land as a commodity, a use-value which has a value whose monetary expression is its price. But a use-value which is not the product of labour cannot have a value; in other words, it cannot be defined as the materialisation of a definite quantity of social labour, as the social expression of a certain quantity of labour. It is nothing of the kind. Only if it is the product of concrete labour can use-value take the form of exchange-value become a commodity. Only under this condition can concrete labour, for its part, be expressed as social labour, value. Land and price are incommensurable magnitudes, nevertheless they are supposed to bear a certain relation to each other. Here a thing which has no value has a price. Interest as the price of capital, on the other hand, expresses the converse irrationality. Here a commodity which has no use-value has a dual value, it has a value in the first place and in addition a price, which is different from this value. For capital is, to begin with, nothing but a sum of money or a quantity of commodities equal to a certain sum of money. If the commodity is lent out as capital, then it is nothing but a sum of money in camouflaged form. For what is lent as capital is not so many pounds of cotton, but so much money whose value exists in the form of cotton. The price of the capital is therefore related to it only as the existence of a sum of money, that is, a certain value expressed in money and existing in the form of exchange-value. How is it possible for a value to have a price apart from the price which is expressed in its own money form? Price after all is the value of the commodity as distinct from its use-value. Price in contradistinction to the value of the commodity, price as the value of a sum of money (for price is simply the expression of value in money) is therefore a contradiction in terms. This irrationality of expression (the irrationality of the thing itself arises from the fact that, as regards interest, capital as the prerequisite appears divorced from its own process, in which it becomes capital and consequently self-expanding value, and that, on the other hand, rent-bearing capital exists only as agricultural capital, as capital which only yields rent in a particular sphere, and this form in which it appears is transmitted to the element that differentiates it in general from industrial capital), this irrationality of expression is so much felt by the vulgarian that he falsifies both expressions in order to make them appear rational. He asserts that interest is paid on capital insofar as it is use-value, and therefore talks about the utility which the products or means of production have for reproduction and of the utility which capital has as a material element of the labour process. But, after all, its utility, its use-value, already exists in its form as a commodity and without this it would not be a commodity and would have no value. As money, it is the expression of the value of commodities and is ||932| convertible into them in proportion to their own value. But if I convert money into a machine, into cotton, etc., then I convert it into use-values of the same value. The conversion is concerned only with the value form. As money, it has the use-value of being convertible into any other commodity, a commodity, however, of the same value. As a result of this transformation, the value of money changes no more than that of the commodity when it is converted into money. The use-value of the commodities into which I can convert money does not give the money, in addition to its value, a price which is different from its value. If, however, I presuppose the conversion and assert that the price is paid for the use-value of the commodities, then the use-value of the commodities is not paid for at all or is only paid insofar as their exchange-value is paid for. How the use-value of any commodity is utilised, whether it enters into individual or industrial consumption, has absolutely no bearing on its exchange-value. It only determines who will buy it the industrial capitalist or the immediate consumer. The productive usefulness of a commodity can therefore account for the fact that the commodity has exchange-value at all, for the labour embodied in the commodity is paid for only if it has use-value. Otherwise it is not a commodity it is a commodity only as the unity of use-value and exchange-value. But this use-value can by no means account for the fact that as exchange-value or as price, it has in addition another and different price as well. One can see how the vulgarian wants to get over the difficulty here by seeking to convert capital that is, the money or the commodity insofar as these have a specifically different form from themselves as money or commodity into a mere commodity, in other words, by disregarding precisely the specific difference which has to be explained. He does not wish to say that capital is a means for the exploitation of surplus labour and that it therefore represents greater value than the value contained in it. Instead he says: It has more value than its own value because it is an ordinary commodity like any other, that is, it possesses a use-value. Here capital is identified with commodity, whereas the point to be explained is how the commodity can function as capital. The vulgarian, insofar as he does not echo the Physiocrats, deals with land in the opposite way. In the previous case, he converted capital into a commodity in order to explain the difference between capital and commodity and the conversion of the commodity into capital. Now he converts land into capital because the capital relation as such is more in tune with his ideas than the price of land. Rent can be regarded as interest on capital. For example, if the rent is 20 and the rate of interest is 5, then it can be said that this 20 is interest on a capital of 400. And in fact the land then sells at 400, which simply amounts to the sale of the rent for a period of 20 years. This payment of the anticipated 20 years rent is thus the price of the land. The land is thereby converted into capital. The annual payment of 20 merely represents 5 per cent interest on the capital which was paid for the land. And in this way, the formula land rent is converted into capital interest, which, for its part, is transmogrified into payment for the use-value of commodities, that is, into the relationship of use-value to exchange-value. The more analytical vulgarians understand that the price of land is nothing more than an expression for the capitalisation of rent; [that] in fact [it is] the purchase price of rent for a number of years and that it is determined by the prevailing rate of interest. They understand that rent is antecedent to this capitalisation of rent and that, on the other hand, it is therefore impossible to explain rent by its own capitalisation. They therefore deny the existence of rent itself by asserting that it is interest on the capital invested in the land. This does not prevent them from admitting that land in which no capital is invested carries rent, any more than it prevents them from admitting that equal amounts of capital invested in land of different fertility yield different amounts of rent, or that unequal amounts of capital invested in land of unequal fertility may yield the same amounts of rent. [They admit] that likewise the capital invested in land if indeed it is to account for the rent paid for the land may yield perhaps five times as much interest, that is, five times as much rent, as is yielded by the same amount of capital invested as fixed capital in industry. One perceives that here the difficulty is always eliminated by disregarding it and substituting a relationship expressing the opposite of the specific difference which has to be explained, and therefore, in any case, not expressing the difference at all. |932|| ||935| Proudhon s polemic against Bastiat on the question of interest is characteristic both of the manner in which the vulgarian defends the categories of political economy and of the way in which superficial socialism (Proudhon s polemic hardly deserves the name) attacks them. We shall return to this in the section on the vulgarians. Here only a few preliminary remarks. The return movement [of money] should not have shocked Proudhon as being something peculiar if he understood anything at all about the movement of capital. Neither should the surplus-value contained in the returning amount. This is a characteristic feature of capitalist production. <For Proudhon however, as we shall see, the surplus is a surcharge. Altogether his criticism is that of a novice, he has not mastered the first elements of the science he intends to criticise. Thus, he has never understood that money is a necessary aspect of the commodity (see Part I). Here he even confuses money and capital because loan capital appears as money capital in the form of money.> What might have struck him was not the surplus for which no equivalent was paid, since surplus-value and capitalist production is based on it is value which has cost no equivalent. This is not a specific feature of interest-bearing capital. The specific feature insofar as we are considering the form of the movement is only the first phase, that is, precisely the opposite of what Proudhon has in mind, namely, that the lender hands over the money without receiving an equivalent for it at the outset and that, therefore, the return of the capital with interest, as regards the transaction between borrower and lender, [is not related to] the metamorphoses which capital undergoes and which, insofar as they are mere metamorphoses of economic form, consist of a series of exchanges, conversion of commodities into money and conversion of money into commodities; insofar as they are real metamorphoses, that is, elements of the production process, they coincide with industrial consumption. Here consumption itself constitutes a phase of the movement of economic forms. But what money in the hands of the lender does not do, it does in the hands of the borrower who really employs it as capital. It performs its real movement as capital in the hands of the borrower. It returns to him as money plus profit, money plus 1/x money. The movement between lender and borrower only expresses the starting-point and the final point of capital. It is money when it passes from the hands of A into those of B. It becomes capital in B s hands, and as such, after undergoing a certain revolution, it returns with profit. This interlude, the real process, which comprises both the circulation process and the production process, is not connected with the transaction between borrower and lender. It [the transaction] recommences only after the money has been realised as capital. The money now passes back into the hands of the lender along with a surplus, which, however, comprises only part of the surplus realised by the borrower. The equivalent which the borrower receives is industrial profit, that is, the part of the surplus which he retains and which he appropriates only by means of the money borrowed. All this is not visible in the transaction between him and the lender. This is limited to two acts. Transfer from A s hands into those of B. Interval during which the money remains in B s hands. After this interval the money along with interest returns into A s hands. If one examines merely this form the transaction between A and B then one regards the mere form of capital without the intervening stage: a certain amount of money a is handed over and after a certain period returns as a+1/xa without the assistance of any intermediate link apart from the period of time which elapses between the departure of the sum of money a and its return as a+1/xa. And it is in this abstract form, which, indeed, exists as an independent movement alongside the real movement of capital, opens it and closes it, that Mr. Proudhon considers the matter in hand, so that everything inevitably remains incomprehensible to him. If instead of buying and selling, lending in this form were to be abolished, then, according to Proudhon, the surplus would disappear. In fact only the division of the surplus between two sets of capitalists would disappear. But this division can and must be constantly generated anew whenever it is possible to convert commodities or money into capital, and, on the basis of wage-labour, this is always possible. In order that it should be impossible for commodities and money to become capital and therefore be lent as capital in posse, they must not confront wage-labour. If they are thus not to confront it as commodities and money and consequently labour itself is not to become a commodity, then that amounts to a return to pre-capitalist modes of production ||936| in which it [labour] does not become a commodity, and for the greater part still exists in the form of serf or slave labour. On the basis of free labour, this is only possible where the workers are the owners of their means of production. Free labour develops within the framework of capitalist production as social labour. To say that they are the owners of the means of production amounts to saying that these belong to the united workers and that they produce as such, and that their own output is controlled jointly by them. But wanting to preserve wage-labour and thus the basis of capital, as Proudhon does, and at the same time to eliminate the drawbacks by abolishing a secondary form of capital, reveals the novice. Gratuit du Cr dit. Discussion entre M. Fr. Bastiat et M. Proudhon, Paris, 1850. He regards lending as something evil because it is not a sale. To lend at interest is the ability to sell the same object again and again and always to receive a price for it without ever relinquishing ownership of the object which one sells (op. cit., p. 9) (First Letter written by Chev , one of the editors of La Voix du Peuple). What confuses him is that the object (money or a house, for example) does not change owners as in the case of buying and selling. But he does not see that when money is handed over, no equivalent is received in return; that, on the contrary, in the real [production] process, in the form and on the basis of exchange, not only an equivalent, but a surplus which is not paid for, is returned; insofar as exchange, exchange of things, takes place, no change of values occurs, the same person remains the owner of the same value, and insofar as there is a surplus, there is no exchange. When the exchange of commodity and money begins again, the surplus is already absorbed in the commodity. Proudhon does not understand how profit, and consequently interest as well, arise from the law of the exchange of values. House , money , etc., ought therefore to be exchanged not as capital , but as commodities at cost-price (op. cit., pp. 43-44). Mr. Proudhon s hatters do not appear to be capitalists but journeymen. The worthy Proudhon confuses money as a means of circulation with money as capital in Letter IX (pp. 144-52) and therefore concludes that capital in France yields 160 per cent, namely, 1,600 million interest annually in State debts, mortgages, etc., on a capital of one thousand million, i.e., the amount of currency circulating in France Further: Because capital is lent out in the form of money, Proudhon believes that money capital, that is, currency, possesses this specific attribute. Everything should be sold but nothing lent. In other words: In the same way as he wanted commodities to exist but did not want them to become money , so here he wants commodities, money, to exist but they must not develop into capital. When all phantastic forms have been stripped away, this means nothing more than that there should be no advance from small, petty-bourgeois peasant and artisan production to large-scale industry. What mischief is caused when such philosophical German terms as subjective fall into the hands of a Proudhon. The bourgeois social forms are subjective for him. And the subjective, and moreover erroneous, abstraction that, because the exchange-value of commodities expresses a proportion, it expresses every possible proportion between commodities and does not express a third thing to which the commodities are proportional this false subjective abstraction is the social point of view ||937| according to which not only commodity and money, but commodity, money and capital are identical. Thus, from this social point of view , all cats are indeed grey. Finally there is also the surplus in the form of morality: With which moral precept the surplus is naturally defined very nicely. |937|| ||937| Luther, who lived in the period of the dissolution of medieval civil society into the elements of modern society a process which was accelerated by world trade and the discovery of new gold deposits naturally knew capital only in its two antediluvian [forms] of interest-bearing capital and merchant capital. Whereas in its early phase capitalist production, haying gained strength, seeks to subordinate interest-bearing capital to industrial capital by force this was in fact done first of all in Holland, where capitalist production in the form of manufacture and large-scale trade first blossomed, and in England in the seventeenth century it was, partly in very naive terms, declared to be the primary requisite of capitalist production on the other hand, during the transition to capitalist production, the first step is the recognition that usury , the old-fashioned form of interest-bearing capital, is a condition of production, a necessary production relation; in the same way as later on its justification is recognised by industrial capital, which regards it as flesh of its own flesh, as soon as industrial capital subordinates interest-bearing capital to itself (eighteenth century, Bentham). Luther is superior to Proudhon. The difference between lending and selling does not confuse him, for he perceives that usury exists equally in both. The most striking feature of his polemic is that he makes his main point of attack the fact that interest is an innate element of capital. I. Books on trade and usury written in 1524. [Von Kauffshandlung und Wucher in] Part VI of Luther s Works, Wittenberg, 1589. (This was written on the eve of the Peasant War.) [About] trade (merchant capital): [On] usury. Interest-bearing capital: <II. Eyn Sermon auf das Evangelion von dem reichen Mann und armen Lazaro etc., Wittemberg, 1555 [A Sermon on the Gospel of the Rich Man and Poor Lazarus, etc.]. Here Luther tells us how usurer s capital arises, [through] the ruination of the citizens (small townspeople and peasants), the gentry, the nobility and the princes. On the one hand, the usurer comes into possession of the surplus labour and, in addition, the conditions of labour of plebeians, peasants, members of craft guilds, in short, of the small commodity producers who need money in order, for example, to make payments before they convert their commodities into money, and who have to buy certain of their conditions of labour, etc. On the other hand, the usurer appropriates rent from the owners of rent, that is, from the prodigal, pleasure-seeking rich. Usury is a powerful means for establishing the pro-conditions for industrial capital a mighty agency for separating the conditions of production from the producers, insofar as it has the twofold result, firstly, of establishing independent fortunes in the form of money, secondly, of appropriating the conditions of labour to itself, that is, ruining the owners of the old conditions of labour, just like the merchant. And both have the common feature that they acquire an independent fortune, that is, they accumulate in their hands in the form of money claims part of the annual surplus labour, [part] of the conditions of labour [and also part] of the accumulated annual labour. The money actually in their hands constitutes only a small portion of both the annual and the annually accumulated wealth and circulating capital. That they acquire fortunes means that a significant portion of both the annual production and the annual revenue accrues to them, and this is payable not in kind, but in the converted form, in money. Consequently, insofar as money does not circulate actively as currency, is not in movement, it is accumulated in their hands. They also hold some of the reservoirs of circulating money and to an even larger extent they hold and accumulate titles to products, but in the form of money titles, titles to commodities converted into money. ||939| On the one hand, usury leads to the ruin of feudal wealth and property; on the other hand, it brings about the ruin of petty-bourgeois, small-peasant production, in short, of all forms in which the producer is still the owner of his means of production. The worker in capitalist production does not own the means of production, [he owns] neither the land he cultivates nor the tools with which he works. This alienation of the conditions of production corresponds here, however, to a real change in the mode of production itself. The tool becomes a machine, and the worker works in the workshop, etc. The mode of production no longer tolerates the dispersal of the means of production connected with small property, just as it does not tolerate the dispersal of the workers themselves. In capitalist production, usury can no longer separate the conditions of production from the workers, from the producers, because they have already been separated from them. Usury centralises property, especially in the form of money, only where the means of production are scattered, that is, where the worker produces more or less independently as a small peasant, a member of a craft guild (small trader), etc. As peasant or artisan, whether the peasant is or is not a serf, or the artisan is or is not a member of a craft guild. The usurer here not only appropriates the part of the surplus labour belonging to the bondsman himself, or in the case of the free peasant, etc., the whole surplus labour, but he also appropriates the instruments of production, though the peasant, etc., remains their nominal owner and treats them as his property in the process of production. This kind of usury rests on this particular basis, on this mode of production, which it does not change, to which it attaches itself as a parasite and which it impoverishes. It sucks it dry, enervates it and compels reproduction to be undertaken under constantly more atrocious conditions. Thus the popular hatred of usury, especially under the conditions prevailing in antiquity, where this form of production in which the conditions of production are the property of the producer was at the same time the basis of the political relationships, of the independence of the citizen. This comes to an end as soon as the worker no longer possesses any conditions of production. And with it the power of the usurer likewise comes to an end. On the other hand, insofar as slavery predominates or [insofar as] the surplus labour is consumed by the feudal lord and his retainers and they fall prey to the usurer, the mode of production also remains the same, only it becomes more oppressive. The debt-ridden slave-holder or feudal lord squeezes more out because he himself is being squeezed dry. Or, finally, he makes way for the usurer, who becomes a landowner, etc., like the eques,[h] etc., in Ancient Rome. In place of the old exploiter, whose exploitation was to some extent a means of political power, there appears a coarse, money-hunting parvenu. But the mode of production itself remains unchanged. The usurer in all pro-capitalist modes of production has a revolutionary impact only in the political sense, in that he destroys and wrecks the forms of property whose constant reproduction in the same form constitutes the stable basis of the political structure. [The usurer] has a centralising [effect] as well, but only on the basis of the old mode of production, thus leading to the disintegration of society apart from the slaves, serfs, etc., and their new masters into a mob. Usury can continue to exist for a long time in Asiatic forms of society without bringing about real disintegration, but merely giving rise to economic decay and political corruption. It is only in an epoch where the other conditions for capitalist production exist free labour, a world market, dissolution of the old social connections, a certain level of the development of labour, development of science, etc. that usury appears as one of the factors contributing to the establishment of the new mode of production; and at the same time causing the ruin of the feudal lords, the pillars of the anti-bourgeois elements, and the ruin of small-scale industry and agriculture, etc., in short, as a factor leading to the centralisation of the conditions of production in the form of capital. The fact that the usurers, merchants, etc., possess monetary fortunes simply means that the wealth of the nation, insofar as it takes the form of commodities or money, is concentrated in their hands. At the outset capitalist production has to fight against usury to the extent that the usurer himself does not become a producer. With the establishment of capitalist production the domination of the usurer over surplus labour, a domination which depends on the continued existence of the old mode of production, ceases. The industrial capitalist collects surplus-value directly in the form of profit; he has also already seized part of the means of production and he appropriates part of the annual accumulation directly. From this moment, and especially as soon as industrial and commercial wealth develops, the usurer that is, the lender at interest is a person who is differentiated from the industrial capitalist only as the result of the division of labour, but is subordinated to industrial capital. ||940| III. An die Pfarrherrn wider den Wucher zu predigen. Vermanung, Wittemberg, 1540 (without pagination). [Discusses] trading (buying, selling) and lending. (Unlike Proudhon, Luther is not deceived by these differences of form.) <One can see from the above that usury increased greatly in Luther s time and was already justified as a service (Say, Bastiat). Even the formulation of competition or harmony existed already: Everyone serves his fellows. In the world of antiquity, during the better period, usury was forbidden (i.e., interest was not allowed). Later [it was] lawful, and very prevalent. Theoretically the view always [predominated] that interest in itself is wicked (as was stated by Aristotle). In the Christian Middle Ages, it was a sin and prohibited by the canon . Modern times. Luther. The Catholic-pagan view still [prevailed]. Usury became very widespread (as a result partly of the monetary needs of the government, [partly] of the development of trade and manufacture, [and the] necessity to convert the products into money). But its civic justification is already asserted. Holland. The first apologia for usury. It is also here that it is first modernised and subordinated to industrial or commercial capital. England. Seventeenth century. The polemics are no longer directed against usury as such, but against the amount of interest, and the fact that it dominates credit. The desire to establish the form of credit. Regulations are imposed. Eighteenth century. Bentham. Unrestricted usury is recognised as an element of capitalist production.> [A few more extracts from Luther s An die Pfarrherrn wider den Wucher zu predigen.] Interest as compensation for loss. <An excellent picture, it fits the capitalist in general, who pretends that what he has taken from others and brought into his den, emanates from him, and by causing it to go backwards he gives it the semblance of having come from his den.> A highly picturesque and striking description of both the character of old-fashioned usury, on the one hand, and of capital in general, on the other, with the imagined loss , the indemnification which naturally accrues to money and commodities, the general phrases about usefulness, the pious air of the usurer who is not like the rest of men , the appearance of giving when one is taking, and of letting out when one is pulling in, etc. The involuntary alienation of feudal landed property develops along with the development of usury and money. ||944| According to Thomas Culpeper (1641), Josiah Child (1670) and Paterson (1694) wealth depends on the self-imposed reduction in the rate of interest on gold and silver. [This rule] was observed in England for almost two centuries (Charles Ganilh, (Des syst mes d conomie politique , seconde d., tome premier, Paris, 1821, pp. 58-59]). When Hume in opposition to Locke declared that the rate of interest is regulated by the rate of profit, he had a much higher development of capitalism in mind. This was even more true of Bentham when he wrote his defence of usury towards the end of the eighteenth century. A reduction in the rate of interest was imposed by law from the time of Henry VIII to that of Queen Anne. The enormous rates of interest in the Middle Ages (insofar as they were not paid by the feudal aristocracy, etc.) were based in the towns, in very large measure, on the gigantic profits upon alienation which the merchants and urban craftsmen made out of country people, whom they cheated. In Rome, as in the entire ancient world apart from merchant cities, like Athens and others, which were particularly developed industrially and commercially [high interest was] a means used by the big landowners not only for expropriating the small proprietors, the plebeians, but for appropriating their persons. Usury was originally permitted freely in Rome. The Law of the Twelve Tables (303 A.U.C.[p]) fixed interest on money at 1 per cent per year (Niebuhr says 10 per cent). This law was promptly infringed Duilius (398 A.U.C.) reduced the rate of interest to l per cent again unciario foenore[q] It was limited to 1/2 per cent in the year 408, and in 413 lending at interest was totally prohibited as a result of a referendum initiated by the Tribune Genucius It is not surprising that in a republic in which the citizens were forbidden to carry on industry and both wholesale and retail trade, trading in money should also be prohibited (Dureau de la Malle, [ conomie politique des Romains,] t. II, [Paris, 1840,] pp. 259-61). This lasted for 300 years until the fall of Carthage. It then [became legal to charge up to] 12 per cent, but the usual rate of annual interest was 6 per cent (loc. cit., p. 261). Justinian fixed the rate of interest at 4 per cent; in Trajan s time the legal rate of interest was 5 per cent, usura quincunx.[r] In Egypt the legal commercial interest was 12 per cent in 146 B.C. (loc. cit., pp. 262-63). |944|| ||950a| James William Gilbart in his The History and Principles of Banking (London, 1834) says the following with regard to interest. In the seventeenth century, Josiah Child in his Brief Observations concerning Trade and Interest of Money, and Thomas Culpeper in his Trait contre l usure (1621) likewise, attacks Thomas Manley (author of the tract Interest of Money Mistaken) whom he calls the champion of the usurers . Naturally the point of departure like that of all the arguments of English economists of the seventeenth century was the wealth of Holland where there was a low rate of interest. Child considers that this low rate of interest is the cause of wealth. Manley declares that it is only the result [of wealth]. He appears here as the direct champion of industrial and commercial capital. |XV-950b|| [a] Tokos to bear, produce, the product; figuratively: interest on money lent. Ed. [b] Free credit. Ed. [c] One must, after all, recover what is due to oneself, even if one takes it out of one s own pocket. Ed. [d] See this volume, pp. 480-81. Ed. [e] This can also mean: the means of production do not yet work with it , i.e., capital. Ed. [f] The English socialists. Ed. [g] Marx gives this passage in his own words. Ed. [h] Knight. Ed. [i] There is no remedy where that which was regarded as unvirtuous becomes the habit. Ed. [j] The poor man. Ed. [k] Twofold compensation, for the loss incurred and for the gain missed. Ed. [l] Not real but imagined losses. Ed. [m] Making a necessity out of an accident. Ed. [n] Arithmetical equality. Ed. [o] In evil promises. Ed. [p] A.U.C. anno urbis conditae in the year of the founding of the City, used to express the date since the foundation of Rome (753 B.C.). Ed. [q] Increase by one twelfth (one ounce). Ed. [r] Interest of five twelfths (five ounces). Ed. [s] In Marx s manuscript this sentence reads (in German) as follows: But in the Middle Ages the population was wholly agricultural. And in this case, just as under a feudal government , etc. Ed. [t] Marx quotes this and the following passages from the French translation of Child s work Trait s sur le commerce et sur les avantages qui r sultent de la r duction de l interest de l argent, Amsterdam et Berlin, 1754. Ed.

Economic Manuscripts: Theories of Surplus-Value, Addenda to Part 3

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/add3.htm

||VI-220| All economists share the error of examining surplus-value not as such, in its pure form, but in the particular forms of profit and rent. What theoretical errors must necessarily arise from this will be shown more fully in Chapter III, in the analysis of the greatly changed form which surplus-value assumes as profit. Before the Physiocrats, surplus-value that is, profit in the form of profit was explained purely from exchange, the sale of the commodity above its value. Sir James Steuart on the whole did not get beyond this restricted view; he must rather be regarded as the man who reproduced it in scientific form. I say in scientific form . For Steuart does not share the illusion that the surplus-value which accrues to the individual capitalist from selling the commodity above its value is a creation of new wealth. He distinguishes therefore between positive profit and relative profit. Positive profit arises from augmentation of labour, industry and ingenuity . How it arises from this Steuart makes no attempt to explain. The further statement that the effect of this profit is to augment and swell the public good seems to indicate that Steuart means by it nothing but the greater mass of use-values produced in consequence of the development of the productive powers of labour, and that he thinks of this positive profit as quite distinct from capitalists profit which always presupposes an increase of exchange-value. This interpretation is fully confirmed by his further exposition. He says to wit: The price of goods therefore comprises two elements that are completely different from each other; firstly their real value, secondly, the profit upon alienation, the profit realised through their transfer to another person, their sale. ||221| This profit upon alienation therefore arises from the price of the goods being greater than their real value, or from the goods being sold above their value. Gain on the one side therefore always involves loss on the other. No addition to the general stock is created. Profit, that is, surplus-value, is relative and resolves itself into a vibration of the balance of wealth between parties . Steuart himself rejects the idea that surplus-value can be explained in this way. His theory of vibration of the balance of wealth between parties , however little it touches the nature and origin of surplus-value itself, remains important in considering the distribution of surplus-value among different classes and among different categories such as profit, interest and rent. That Stuart limits all profit of the individual capitalist to this relative profit , profit upon alienation, is shown by the following: From this it is clear that: The profit of the manufacturer , of the individual capitalist, is always relative profit, always profit upon alienation, always derived from the excess of the price of the commodity over its real value, from its sale above its value. If therefore all commodities were sold at their value, no profit would exist. Steuart wrote a special chapter on this; he examines in detail: Steuart on the one hand rejects the conception of the Monetary and Mercantile systems, according to which the sale of commodities above their value, and the profit resulting therefrom, creates surplus-value, a positive increase of wealth. On the other hand he holds to their view that the profit of the individual capital is nothing but this excess of the price over the ||222| value, the profit upon alienation. This however according to him is only relative, the gain on the one side being compensated by the loss on the other, and consequently this movement is nothing more than a vibration of the balance of wealth between parties . In this respect Steuart is therefore the rational expression of the Monetary and Mercantile systems. His service to the theory of capital is that he shows how the process of separation takes place between the conditions of production, as the property of a definite class, and labour-power. He gives a great deal of attention to this genesis of capital without as yet seeing it directly as the genesis of capital, although he sees it as a condition for large-scale industry. He examines the process particularly in agriculture; and he rightly considers that manufacturing industry proper only came into being through this process of separation in agriculture. In Adam Smith s writings this process of separation is assumed to be already completed. (Steuart s book [appeared in] 1767 in London, Turgot s [R flexions sur la formation et la distribution des richesses was written in] 1766, Adam Smith s [An Inquiry into the Nature and Causes of the Wealth of Nations] 1775.)

Economic Manuscripts: Theories of Surplus-Value, Chapter 1

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch01.htm

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

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch02.htm

[See Adam Smith Archive.] Adam Smith, like all economists worth speaking of, takes over from the Physiocrats the conception of the average wage, which he calls the natural price of wages. Adam Smith expressly states that the development of the productive powers of labour does not benefit the labourer himself. He says (1. I, ch. VIII [An Inquiry into the Nature and Causes of the Wealth of Nations] edit. McCulloch, London, 1828): Here Adam Smith very acutely notes that the really great development of the productive power of labour starts only from the moment when it is transformed into wage-labour, and the conditions of labour confront it on the one hand as landed property and on the other as capital. The development of the productive power of labour thus begins only under conditions in which the labourer himself can no longer appropriate its result. It is therefore quite useless to investigate how this growth of productive powers might have influenced or would influence wages , taken here as equal to the product of labour, on the hypothesis that the product of labour (or the value of this product) belonged to the labourer himself. Adam Smith is very copiously infected with the conceptions of the Physiocrats, and often whole strata run through his work which belong to the Physiocrats and are in complete contradiction with the views specifically advanced by him. This is so, for example, in the theory of rent, etc. For our present purpose we can completely disregard these passages in his writings, which are not characteristic of himself, but in which he is a mere Physiocrat. In the first part of this work, when dealing with the analysis of the commodity, I have already pointed out Adam Smith s inconsistency in his treatment of how exchange-value is determined. In particular, [I have shown] how he sometimes confuses, and at other times substitutes, the determination of the value of commodities by the quantity of labour required for their production, with its determination by the quantity of living labour with which commodities can be bought, or, what is the same thing, the quantity of commodities with which a definite quantity of living labour can be bought. Here he makes the exchange-value of labour the measure for the value of commodities. In fact, he makes wages the measure; for wages are equal to the quantity of commodities bought with a definite quantity of living labour, or to the quantity of labour that can be bought by a definite quantity of commodities. The value of labour, or rather of labour-power, changes, like that of any other commodity, and is in no way specifically different from the value of other commodities. Here value is made the measuring rod and the basis for the explanation of value so we have a vicious circle. From the exposition that follows, however, it will be seen that this vacillation and this jumbling up of completely heterogeneous determinations of value do not affect Smith s investigations into the nature and origin of surplus-value, because in fact, without even being aware of it, whenever he examines this question, he keeps firmly to the correct determination of the exchange-value of commodities that is, its determination by the quantity of labour or the labour-time expended on them. |244|| ||VII-283a| <Many examples can be given to show how often in the course of his work, when he is explaining actual facts, Smith treats the quantity of labour contained in the product as value and determining value. Some of these are quoted by Ricardo. His whole doctrine of the influence of the division of labour and improved machinery on the price of commodities is based on it. Here one passage will be enough to cite. In ch. XI, l. I Adam Smith speaks of the cheapening of many manufactured goods in his time, as compared with earlier centuries, and he concludes with the words: ||VI-245| Secondly, however, this contradiction in Adam Smith and his passing from one kind of explanation to another is based upon something deeper, which Ricardo, in exposing this contradiction, overlooked or did not rightly appreciate, and therefore also did not solve. Let us assume that all workers are producers of commodities, and not only produce their commodities but also sell them. The value of these commodities is determined by the necessary labour-time contained in them. If therefore the commodities are sold at their value, the labourer buys with one commodity, which is the product of twelve hours labour-time, another twelve hours labour-time in the form of another commodity, that is to say, twelve hours labour-time which is embodied in another use-value. The value of his labour is therefore equal to the value of his commodity; that is, it is equal to the product of twelve hours labour-time. The selling and buying again, in a word, the whole process of exchange, the metamorphosis of the commodity, alters nothing in this. It alters only the form of the use-value in which this twelve hours labour-time appears. The value of labour is therefore equal to the value of the product of labour. In the first place, equal quantities of materialised labour are exchanged in the commodities in so far as they are exchanged at their value. Secondly, however, a certain quantity of living labour is exchanged for an equal quantity of materialised labour, because, firstly, the living labour is materialised in a product, a commodity, which belongs to the labourer, and secondly, this commodity is in turn exchanged for another commodity which contains an equally large quantity of labour. In fact, therefore, a certain quantity of living labour is exchanged for an equal amount of materialised labour. Thus it is not only commodity exchanging for commodity in the proportion in which they represent an equal quantity of materialised labour-time, but a quantity of living labour exchanging for a commodity which represents the same quantity of labour materialised. On this assumption the value of labour (the quantity of commodities which can he bought with a given quantity of labour, or the quantity of labour which can be bought with a given quantity [of commodities]) could serve as the measure of the value of a commodity just as well as the quantity of labour contained in it, since the value of labour always represents the same quantity of materialised labour as the living labour requires for the production of this commodity; in other words, a definite quantity of living labour-time would always command a quantity of commodities which represents an equal amount of materialised labour-time. But in all modes of production and particularly in the capitalist mode of production in which the material conditions of labour belong to one or several classes, while on the other hand nothing but labour-power belongs to another class, the working class, what takes place is the opposite of this. The product or the value of the product of labour does not belong to the labourer. A definite quantity of living labour does not command the same quantity of materialised labour, or a definite quantity of labour materialised in a commodity commands a greater quantity of living labour than is contained in the commodity itself. But as Adam Smith quite correctly takes as his starting-point the commodity and the exchange of commodities, and thus the producers initially confront each other only as possessors of commodities, sellers of commodities and buyers of commodities, he therefore discovers (so it seems to him) that in the exchange between capital and wage-labour, ||246| materialised labour and living labour, the general law at once ceases to apply, and commodities (for labour too is a commodity in so far as it is bought and sold) do not exchange in proportion to the quantities of labour which they represent. Hence he concludes that labour-time is no longer the immanent measure which regulates the exchange-value of commodities, from the moment when the conditions of labour confront the wage-labourer in the form of landed property and capital. He should on the contrary, as Ricardo rightly points out, have drawn the opposite conclusion, that the expressions quantity of labour and value of labour are now no longer identical, and that therefore the relative value of commodities, although determined by the labour-time contained in them, is not determined by the value of labour, since that was only correct so long as the latter expression remained identical with the former. Later on, when we deal with Malthus, we can show how wrong and absurd it would be, even when the labourer appropriated his own product, i.e., the value of his own product, to make this value or the value of labour the measure of value, in the same sense in which labour-time or labour itself is the measure of value and the value-creating element. For even in that case the labour which can be bought with a commodity cannot serve as a measure in the same sense as the labour contained in it. One would be merely an index to the other. In any case Adam Smith feels the difficulty of deducing the exchange between capital and labour from the law that determines the exchange of commodities, since the former apparently rests on quite opposite and contradictory principles. And indeed the contradiction could not be solved so long as capital was set directly against labour instead of against labour-power. Adam Smith was well aware that the labour-time expended on the reproduction and maintenance of labour-power is very different from the labour which it [i.e., labour-power] itself can perform. Thus he himself quotes from Cantillon s Essai sur la nature du commerce: On the other hand it is strange that Adam Smith did not grasp how little the objection he raises has to do with the law that determines the exchange of commodities for each other. That commodities A and B exchange in proportion to the labour-time contained in them is in no way upset by the proportions in which the producers A or B divide the products A and B, or rather their value, between themselves. If a part of A goes to the landowner, another to the capitalist, and a third part to the labourer, no matter what the share of each may be, this does not alter the fact that A itself exchanges with B according to its value. The relation between the labour-time contained in commodities A and B is in no way affected by how the labour-time contained in A and B is appropriated by various persons. When the exchange of broadcloth for linen has been accomplished, the producers of broadcloth will share in the linen in a proportion equal to that in which they previously shared in the broadcloth ([Karl Marx], Mis re de la Philosophie, p. 29). It is this, too, that later the Ricardians rightly maintained against ||247| Adam Smith. Thus the Malthusian John Cazenove says: But since the distribution of the value of the product between capitalist and worker is itself based on an exchange between commodities commodities and labour-power Adam Smith is justifiably startled. The fact that he had also made the value of labour, or the extent to which a commodity (or money) can purchase labour, the measure of value, has a disturbing effect on Smith s argument when he comes to the theory of prices, shows the influence of competition on the rate of profit, etc.; it deprives his work of all unity, and even excludes a number of essential questions from his inquiry. As we shall soon see, however, it did not affect his exposition of surplus-value in general, because here he keeps consistently to the correct determination of value by the labour-time expended in different commodities. So now to his treatment of the question. But first we must mention one other circumstance. Adam Smith mixes up different things. First he states in Book I, Ch. V: Further: They (the goods) contain the value of a certain quantity of labour, which we exchange ||248| for what is supposed at the time to contain the value of an equal quantity It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command ([ibid., p. 33], [Garnier] l. I, ch. V, pp. 60 61). It can be seen that in all these passages Adam Smith confuses the labour of other people with the produce of this labour. The exchange-value of the commodity which anyone possesses consists after the division of labour in the commodities belonging to someone else which he can buy, i.e., in the quantity of someone else s labour which is contained in them, the quantity of someone else s materialised labour. And this quantity of the labour of others is equal to the quantity of labour that is contained in his own commodity. As he expressly says: It emphasis here is on the change brought about by the division of labour: that is to say, that wealth no longer consists in the product of one s own labour, but in the quantity of the labour of others which this product commands, the social labour which it can buy, the quantity of which is determined by the quantity of labour it itself contains. In fact, only the concept of exchange-value is here involved that my labour now counts only as social labour, and consequently its product determines my wealth by its command over an equal quantity of social labour. My commodity, which contains a definite quantity of necessary labour-time, gives me command over all other commodities of equal value, and therefore over an equal quantity of the labour of others realised in other use-values. The emphasis here lies on the equalisation, brought about through the division of labour and exchange-value, of my labour with the labour of others, in other words, with social labour (the fact that my labour too, or the labour contained in my commodities, is already socially determined, and has fundamentally changed its character, escapes Adam), and not at all on the difference between materialised labour and living labour, and the specific laws of their exchange. In fact, Adam Smith is here saying nothing more than that the value of commodities is determined by the labour-time contained in them, and that the wealth of the owner of commodities consists in the quantity of social labour at his disposal. However, the equating here of labour and product of labour ||249| in fact provides the first occasion for the confusion between the determination of the value of commodities by the quantity of labour contained in them, and the determination of their value by the quantity of living labour that they can buy, in other words, their determination by the value of labour. When Adam Smith says: He might just as well have said: it is in proportion to the quantity of social labour contained in his own commodity or fortune; as indeed he also says: (The word value is here superfluous and meaningless.) The false conclusion emerges already in this Chapter V, when for example he says: What is true of labour itself and consequently of its measure, labour-time that the value of commodities is always proportionate to the labour-time realised in them, no matter how the value of labour may change is here claimed for this changing value of labour itself. Here Adam Smith is examining only commodity exchange in general: the nature of exchange-value, of the division of labour and of money. The parties to the exchange still confront each other only as owners of commodities. They buy the labour of others in the form of a commodity, just as their own labour appears in the form of a commodity. The quantity of social labour which they command is therefore equal to the quantity of labour contained in the commodity with which they themselves make the purchase. But when in the following chapters he comes to the exchange between materialised labour and living labour, between capitalist and worker, and then stresses that the value of the commodity is now no longer determined by the quantity of labour it itself contains, but by the quantity which is different from this of living labour of others which it can command, i.e., buy, he is not in fact saying by this that commodities themselves no longer exchange in proportion to the labour-time they contain; but that the increase of wealth, the increase of the value contained in the commodity, and the extent of this increase, depends upon the greater or less quantity of living labour which the materialised labour sets in motion. And put in this way it is correct. Smith, however, remains unclear on this point. ||250| In Chapter VI of Book I Adam Smith passes on from those relations in which it is assumed that the producers confront one another only as sellers and possessors of commodities to the relations of exchange between those who possess the conditions of labour and those who possess labour-power alone. That is to say, the labour-time necessary to produce different commodities determines the proportion in which they exchange for one another, or their exchange-value. Consequently, on this assumption the labourer is a mere seller of commodities, and one commands the labour of another only in so far as he buys the other s commodity with his commodity. He thus commands with his commodity only so much of the other s labour as is contained in his own commodity, since both exchange only commodities against each other, and the exchange-value of the commodities is determined by the labour-time or quantity of labour they contain. But, Adam continues: Stop, before we follow the passage further. In the first place, whence come the industrious people who possess neither means of subsistence nor materials of labour people who are hanging in mid air? If we strip Smith s statement of its na ve phrasing, it means nothing more than: capitalist production begins from the moment when the conditions of labour belong to one class, and another class has at its disposal only labour-power. This separation of labour from the conditions of labour is the precondition of capitalist production. Secondly, however, what does Adam Smith mean when he says that the employers of labour set labourers to work in order to make a profit by the sale of their work, or by what their labour ||251| adds to the value of the materials ? Does he mean by this that the profit comes from the sale, that the commodity is sold above its value that is, what Steuart calls profit upon alienation, which is nothing but a vibration of wealth between parties?* Let him answer for himself. We shall return to this hazarding later (see notebook VII, p. 173) in the chapter on the apologetic accounts of profit.29 This something given for the profits of the undertaker, when the complete work is exchanged, does it come from the sale of the commodity above its value, is it Steuart s profit upon alienation? Here therefore Adam Smith explicitly states: the profit which is made on the sale of the complete manufacture originates not from the sale itself, not from the sale of the commodity above its value, is not profit upon alienation. The value, that is, the quantity of labour which the workmen add to the material, falls rather into two parts. One pays their wages or is paid for through their wages. By this transaction the workmen give in return only as much labour as they have received in the form of wages. The other part forms the profit of the capitalist, that is, it is a quantity of labour which he sells without having paid for it. If therefore he sells the commodity at its value, that is, for the labour-time contained in it, in other words if he exchanges it for other commodities in accordance with the law of value, then his profit originates from the fact that he has not paid for a part of the labour contained in the commodity, but has nevertheless sold it. Adam Smith has thereby himself refuted the idea that the circumstance that the whole product of his labour no longer belongs to the labourer, that he is obliged to share it or its value with the owner of capital, invalidates the law that the proportion in which commodities exchange for each other, or their exchange-value, is determined by the quantity of labour-time materialised in them. Indeed, on the contrary, he traces the profit of the capitalist precisely to the fact that he has not paid for a part of the labour added to the commodity, and it is from this that his profit on the sale of the commodity arises. We shall see how further on Adam Smith even more explicitly derives profit from the labour performed by the workman over and above the quantity of labour with which he pays for his wages, that is to say, replaces it by an equivalent. Thereby he has recognised the true origin of surplus-value. At the same time he has expressly stated that it does not arise from the ||252| advanced funds, whose value however useful they may he in the real labour-process merely reappears in the product; but that it arises exclusively from the new labour which the workmen add to the materials in the new process of production, in which those funds figure as means of labour or instruments of labour. On the other hand, the phrase in exchanging the complete manufacture either for money, for labour, or for other goods is wrong (and arises from the confusion mentioned earlier). If he exchanges the commodity for money or for a commodity, his profit arises from his selling more labour than he has paid for, from the fact that he does not exchange an equal quantity of materialised labour for an equal quantity of living labour. Adam Smith therefore must not put the exchange either for money or for other goods on the same footing as the exchange of the complete manufacture for labour. For in the first exchange the surplus-value originates from the fact that the commodities are exchanged at their value, for the labour-time contained in them, which however is in part unpaid for. Here it is assumed that the capitalist does not exchange an equal quantity of past labour for an equal quantity of living labour; that the quantity of living labour appropriated by him is greater than the quantity of living labour he has paid for. Otherwise the workman s wage would be equal to the value of his product. The profit on the exchange of the complete manufacture for money or commodities, if they are exchanged at their value, arises therefore from the fact that the exchange between the complete manufacture and the living labour is subject to other laws; that no equivalents are exchanged here. These cases, therefore, must not be lumped together. Profit is consequently nothing but a deduction from the value which the workmen have added to the material of labour. They add to the material, however, nothing but a new quantity of labour. The workman s labour-time therefore resolves itself into two parts: one for which he has received an equivalent, his wages, from the capitalist; the other which he gives to him gratis and which constitutes the profit. Adam Smith rightly points out that only the part of the labour (value) which the workman newly adds to the material resolves itself into wages and profit, that is to say, the newly-created surplus-value in itself has nothing to do with the part of the capital which has been advanced (as materials and instruments). Adam Smith, who has thus reduced profit to the appropriation of the unpaid labour of others, at once goes on to say: And he refutes this false view of the labour of superintendence. We shall return to this later, in another chapter. Here it is only important to stress that Adam Smith very clearly recognises, brings out and expressly emphasises the contradistinction between his view of the origin of profit and this apologist view. After pointing out this contradistinction he proceeds: ||253| In this state of things the whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither is the quantity of labour commonly employed in acquiring or producing any commodity, the only circumstance which can regulate the quantity which it ought commonly to purchase, command or exchange for. An additional quantity, it is evident, must he due for the profits of the stock which advanced the wages and furnished the materials of that labour ([ibid., pp. 54 55], [Garnier] l.c., p. 99). This is quite correct. Given capitalist production, materialised Labour in the form of money or commodity always purchases, besides the quantity of labour which it itself contains, an additional quantity of living labour for the profits of the stock ; which however in other words means nothing but that it appropriates for nothing, appropriates without paying for it, a part of the living labour. Adam Smith is superior to Ricardo in that he so strongly emphasises how this change begins with capitalist production. On the other hand, he is inferior to Ricardo in that he is never able to free himself from the viewpoint though it is one he himself refuted by his own analysis that through this changed relation between materialised labour and living labour a change takes place in the determination of the relative value of commodities, which in relation to each other represent nothing but materialised labour, given quantities of realised labour. After thus presenting surplus-value in the one form, the form of profit, as part of the labour which the worker performs over and above the part of the labour which pays his wages, he does the same with the other form of surplus-value, rent of land. One of the objective conditions of labour alienated from labour, and therefore confronting it as other men s property, is capital; the other is the land itself, the land as landed property. Therefore after dealing with the owner of capital, Adam Smith continues: Like industrial profit proper, rent of land is only a part of the labour which is added by the labourer to the materials and which he gives up, hands over to the owner of the land without being paid for it; hence, only a part of the surplus-labour performed by him over and above the part of the labour-time which he works to pay his wages or to return an equivalent for the labour-time contained in his wages. Thus Adam Smith conceives surplus-value that is, surplus-labour, the excess of labour performed and realised in the commodity over and above the paid labour, the labour which has received its equivalent in the wages as the general category, ||254| of which profit in the strict sense and rent of land are merely branches. Nevertheless, he does not distinguish surplus-value as such as a category on its own, distinct from the specific forms it assumes in profit and rent. This is the source of much error and inadequacy in his inquiry, and of even more in the work of Ricardo. Another form in which surplus-value appears is interest on capital, interest on money. But this interest on money is always , Adam Smith says in the same chapter, a derivative revenue, which, if it is not paid from the profit which is made by the use of the money, must he paid from some other source of revenue (therefore either rent or wages. In the latter case, assuming the average wage, it does not originate from surplus-value but is a deduction from the wage itself or and in this form, as we shall later have occasion to see, it appears in undeveloped capitalist production it is only another form of profit) unless perhaps the borrower is a spendthrift, who contracts a second debt in order to pay the interest of the first ([ibid., p. 581, [Garnier], l. c., pp. 105 06). Interest is therefore either a part of the profit made with the capital lent; in this case it is only a secondary form of profit itself, a branch of profit, and thus only a further division between different persons of the surplus-value appropriated in the form of profit. Or it is paid out of rent. In which case the same holds good. Or the borrower pays the interest out of his own or someone else s capital. In which case it in no way constitutes surplus-value, but is merely a different distribution of existing wealth, vibration of the balance of wealth between parties, as in profit upon alienation. Excluding the latter case, when interest is not in any way a form of surplus-value (and excluding the case where it is a deduction from the wage or itself a form of profit; Adam Smith does not mention this latter case), interest is therefore only a secondary form of surplus-value, a mere part of profit or of rent (affecting merely their distribution), and therefore also is nothing but a part of unpaid surplus-Labour. |255| Thus whoever borrows money, which here means capital, either uses it himself as capital, and makes a profit with it. In this case the interest which he pays to the lender is nothing but a part of the profit under a special name. Or he consumes the borrowed money. Then he increases the wealth of the lender by reducing his own. What takes place is only a different distribution of the wealth that passes from the hand of the spendthrift into that of the lender, but there is no generation of surplus-value. In so far therefore as interest in any way represents surplus-value, it is nothing but a part of profit, which itself is nothing but a definite form of surplus-value, that is, unpaid labour. Finally, Adam Smith observes that in the same way all incomes of persons who live on the proceeds of taxes are paid either from wages, and are therefore a deduction from wages themselves; or have their source in profit and rent, thus representing only claims whereby various social strata share in the consumption of profit and rent, which themselves are nothing but different forms of surplus-value. Thus interest on money, along with taxes or revenues derived from taxes in so far as they are not deductions from wages themselves are merely shares in profit and rent, which are themselves in turn reducible to surplus-value, that is, unpaid labour-time. This is Adam Smith s general theory of surplus-value. In yet another passage Adam Smith sums up his views on the whole question, making it all the more clear how far he is from even attempting in any way to prove that the value added by the labourer to the product (after deducting the costs of production, the value of raw materials and of the instruments of labour) is no longer determined by the labour-time contained in the product, because the labourer does not himself appropriate this value in full, but has to share it the value or the product with the capitalist and the landowner. The way in which the value of a commodity is distributed among the producers of this commodity naturally alters nothing in the nature of this value or in the relative value of commodities to one another. Here therefore Adam Smith in plain terms describes rent and profit on capital as mere deductions from the workman s product or the value of his product, which is equal to the quantity of labour added by him to the material. This deduction however, as Adam Smith has himself previously explained, can only consist of that part of the labour which the workman adds to the materials, over and above the quantity of labour which only pays his wages, or which only provides an equivalent for his wages; that is, the surplus-labour, the unpaid part of his labour. (Therefore, incidentally, profit and rent or capital and landed property can never be a source of value.) We see the great advance made by Adam Smith beyond the Physiocrats in the analysis of surplus-value and hence of capital. In their view, it is only one definite kind of concrete labour agricultural labour that creates surplus-value. Therefore what they examine is the use-value of labour, not labour-time, general social labour, which is the sole source of value. In this special kind of labour, however, it is nature, the land, which in fact creates the surplus-value, consisting in an increase of (organic) matter the excess of the matter produced over the matter consumed. They see it, however, still in quite a restricted form and therefore distorted by fantastic ideas. But to Adam Smith, it is general social labour no matter in what use-values it manifests itself the mere quantity of necessary labour, which creates value. Surplus-value, whether it takes the form of profit, rent, or the secondary form of interest, is nothing but a part of this labour, appropriated by the owners of the material conditions of labour in the exchange with living labour. For the Physiocrats, therefore, surplus-value appears only in the form of rent of land. For Adam Smith, rent, profit and interest are only different forms of surplus-value. When I speak of surplus-value, in relation to the total sum of capital advanced, as profit on capital, this is because the capitalist directly engaged in production directly appropriates the surplus-labour, no matter under what categories he has subsequently to share this surplus-value with the landowner or with the lender of capital. Thus the farmer pays the landowner directly. And the manufacturer, out of the surplus-value he has appropriated, pays rent to the owner of the land on which the factory stands, and interest to the capitalist who has advanced capital to him. ||257| <There are now still to be examined: 1. Adam Smith s confusion of surplus-value with profit; 2. his views on productive labour; 3. how he makes rent and profit sources of value, and his false analysis of the natural price of commodities, in which the value of raw materials and instruments is not supposed to have a separate existence, and therefore not to be considered, apart from the price of the three sources of revenue.// Wages or the equivalent with which the capitalist buys the temporary disposal of labour-power are not a commodity in its immediate form, but the commodity metamorphosed, money, the commodity in its independent form as exchange-value, as the direct materialisation of social labour, of labour-time in general. With this money the labourer naturally buys commodities at the same price as any other possessor of money <disregarding here such details as, for example, that he buys on less favourable conditions and in worse circumstances, etc.> He faces the seller of commodities as does every other possessor of money as a buyer. He enters commodity circulation itself not as a labourer, but as pole Money facing pole Commodity, as possessor of commodity in its general, always exchangeable form. His money is once more transformed into commodities, which are to serve him as use-values, and in this process he buys commodities at the current market-price generally speaking, at their value, In this transaction he carries through only the act M C, which indicates a change of form, but, as a general rule, by no means a change in magnitude of value. Since however, by his labour materialised in the product, he has added not only as much labour-time as was contained in the money he received, he has paid not only an equivalent but has given surplus-labour gratis which is precisely the source of the profit he has thus in fact (the mediating process, the sale of his labour-power, is not relevant when we are dealing with the result) given a higher value than the value of the sum of money which forms his wages. In return, he has bought with more labour-time the quantity of labour realised in the money which comes to him as wages. It can therefore be said that in the same way he has indirectly bought all the commodities into which the money (which is only the independent expression of a definite quantity of social labour-time) he received is converted with more labour-time than they contain, although he buys them at the same price as any other buyer or possessor of a commodity in its first transformation. Conversely, the money with which the capitalist buys labour contains a smaller quantity of labour, less labour-time, than the quantity of labour or labour-time of the workman contained in the commodity produced by him. Besides the quantity of labour contained in this sum of money which forms the wage, the capitalist buys an additional quantity of labour for which he does not pay, an excess over the quantity of labour contained in the money he pays out. And it is precisely this additional quantity of labour which constitutes the surplus-value created by capital. But as the money ||258| with which the capitalist buys labour (in the actual result, even though mediated through exchange not with labour directly, but with labour-power) is nothing other than the transmuted form of all other commodities, their independent existence as exchange-value, it can equally well be said that all commodities in exchange with living labour buy more labour than they contain, It is precisely this more that constitutes surplus-value. It is Adam Smith s great merit that it is just in the chapters of Book I (chapters VI, VII, VIII) where he passes from simple commodity exchange and its law of value to exchange between materialised and living labour, to exchange between capital and wage-labour, to the consideration of profit and rent in general in short, to the origin of surplus-value that he feels some flaw has emerged. He senses that somehow whatever the cause may be, and he does not grasp what it is in the actual result the law is suspended: more labour is exchanged for less labour (from the labourer s standpoint), less labour is exchanged for more labour (from the capitalist s standpoint). His merit is that he emphasises and it obviously perplexes him that with the accumulation of capital and the appearance of property in land that is, when the conditions of labour assume an independent existence over against labour itself something new occurs, apparently (and actually, in the result) the law of value changes into its opposite. It is his theoretical strength that he feels and stresses this contradiction, just as it is his theoretical weakness that the contradiction shakes his confidence in the general law, even for simple commodity exchange; that he does not perceive how this contradiction arises, through labour-power itself becoming a commodity, and that in the case of this specific commodity its use-value which therefore has nothing to do with its exchange-value is precisely the energy which creates exchange-value. Ricardo is ahead of Adam Smith in that these apparent contradictions in their result real contradictions do not confuse him. But he is behind Adam Smith in that he does not even suspect that this presents a problem, and therefore the specific development which the law of value undergoes with the formation of capital does not for a moment puzzle him or even attract his attention. We shall see later how what was a stroke of genius with Adam Smith becomes reactionary with Malthus as against Ricardo s standpoint. Naturally, however, it is at the same time this deep insight of Adam Smith s that makes him irresolute and uncertain, cuts the firm ground from under his feet, and prevents him in contrast to Ricardo from reaching a consistent and comprehensive theoretical view of the abstract, general foundations of the bourgeois system. ||259| The above-quoted statement by Adam Smith that the commodity buys more labour than it contains, or that labour pays a higher value for the commodity than the latter contains, is thus formulated by Hodgskin: In this presentation Hodgskin reproduces both what is correct and what is confused and confusing in Adam Smith s view. We have seen how Adam Smith explains surplus-value in general, of which the rent of land and profit are only different forms and component parts. As he presents it, the part of capital which consists of raw material and means of production has nothing directly to do with the creation of surplus-value. The latter arises exclusively from the additional quantity of labour which the labourer gives over and above the part of his labour which forms only the equivalent for his wages. Therefore it is only that part of the capital advanced which consists in wages from which surplus-value directly arises, since it is the only part of capital which not only reproduces itself but produces an overplus. In profit, on the other hand, the surplus-value is calculated on the total amount of capital advanced, and besides this modification other new complications arise through the equalisation of profits in the various spheres of production of capital. Because Adam makes what is in substance an analysis of surplus-value, but does not present it explicitly in the form of a definite category, distinct from its special forms; he subsequently mixes it up directly with the further developed form, profit. This error persists with Ricardo and all his disciples. Hence arise (particularly with Ricardo, all the more strikingly because he works out the fundamental law of value in more systematic unity and consistency, so that the inconsistencies and contradictions stand out more strikingly) a series of inconsistencies, unresolved contradictions and fatuities, which the Ricardians (as we shall see later in the section on profit) attempt to solve with phrases in a scholastic way. Crass empiricism turns into false metaphysics, scholasticism, which toils painfully to deduce undeniable empirical phenomena by simple formal abstraction directly from the general law, or to show by cunning argument that they are in accordance with that law. At this point where we discuss Adam Smith we will give an example, because the confusion creeps in immediately not when he is dealing specifically with profit or rent those particular forms of surplus-value but where he is thinking of them only as forms of surplus-value in general, as deductions from the labour bestowed by the labourers upon the materials. ||260| After Adam Smith has said, in Book I, Chapter VI, The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced , he continues: He (the entrepreneur) could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him; and he could have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of his stock [ibid., p. 53]. We note first: surplus-value, the overplus which the entrepreneur makes over and above the amount of value required to replace his stock, is reduced by Adam Smith to that part of the labour which the workmen add to the materials over and above the quantity that pays their wages thus making this overplus arise purely from the part of the capital which is laid out in wages. Then, however, he immediately conceives this overplus in the form of profit that is, he thinks of it not in relation to the part of the capital from which it arises, but as an overplus over the total value of the capital advanced, upon the whole stock of materials and wages which he advanced . (It is oversight that the means of production are here left out of account). He therefore conceives surplus-value directly in the form of profit. Hence the difficulties that soon appear. The capitalist, Adam Smith says, could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him . Once capitalist relations are assumed, this is quite correct. The capitalist does not produce in order to satisfy his needs with the product; he produces with absolutely no direct regard for consumption. He produces in order to produce surplus-value. But this premise which amounts to no more than that, capitalist production being assumed, the capitalist produces for the sake of surplus-value is not made use of by Adam Smith to explain surplus-value, as some of his silly disciples subsequently did; that is to say, he does not explain the existence of surplus-value by the interests of the capitalist, by his desire for surplus-value. On the contrary, he has already derived surplus-value from the value which the workmen add to the materials over and above the value which they add in exchange for the wages they have received. But then he goes on at once: the capitalist would have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of the stock advanced. Here profit is no longer explained by the nature of surplus-value, but by the interest of the capitalist. Which is downright silly. Adam Smith does not sense that, by thus directly confusing surplus-value with profit and profit with surplus-value, he is upsetting the law of the origin of surplus-value which he has just established. ||261| If surplus-value is only the part of the value (or of the quantity of labour) added by the workman in excess of the part that he adds to the materials to replace the wages, why should that second part grow as the direct result of the value of the capital advanced being in one case greater than in the other? The contradiction becomes even clearer in the example which Adam Smith himself gives immediately following on this, in order to refute the view that profit is wages for the so-called labour of superintendence. For he says: From surplus-value in its general form we come straight to a general rate of profit, which has nothing directly to do with it. But let us pass on! In both manufactories twenty workmen are employed; in both their wages are the same, 300. Proof therefore that it is not perhaps a case of a higher kind of labour being employed in one as compared with the other, so that one hour s labour and therefore also one hour s surplus-labour would in one be equal to several hours surplus-labour in the other. On the contrary, the same average labour is assumed in both, as the equality of their wages shows. How then can the surplus-labour which the workers add, beyond the price of their wages, be worth seven times as much in one factory as in the other? Or why should the workers in one factory, because the materials they work up in it are seven times as costly as in the other, provide seven times as much surplus-labour as in the other, although in both factories they receive the same wages, and therefore work the same time to reproduce ||262| their wages? The seven times greater profit in the one manufactory as compared with the other or in general the law of profit, that it is in proportion to the magnitude of the capital advanced thus prima facie contradicts the law of surplus-value or of profit (since Adam Smith treats the two as identical) that it consists purely of the unpaid surplus-labour of the workmen. Adam Smith puts this down with quite na ve thoughtlessness, without the faintest suspicion of the contradiction it presents. All his disciples since none of them considers surplus-value in general, as distinct from its determinate forms followed him faithfully in this. With Ricardo, as already noted, it merely comes out even more strikingly. As Adam Smith resolves surplus-value not only into profit but also into the rent of land two particular kinds of surplus-value, whose movement is determined by quite different laws he should certainly have seen from this that he ought not to treat general abstract form as directly identical with any of its particular forms. With all later bourgeois economists, as with Adam Smith, lack of theoretical understanding needed to distinguish the different forms of the economic relations remains the rule in their coarse grabbing at and interest in the empirically available material. Hence also their inability to form a correct conception of money, in which what is in question is only various changes in the form of exchange-value, while the magnitude of value remains unchanged. Lauderdale, in Recherches sur la nature et l origine de la richesse publique (traduit par Lagentie de Lava sse, Paris, 1808), raises the objection to Adam Smith s exposition of surplus-value which he says corresponds with the views already advanced by Locke that according to it capital is not an original source of wealth, as Smith makes out, but only a derivative source. The relevant passages run: In so far as the value of the capital reappears in the product, it cannot he called a source of wealth . Here it is only as accumulated labour, as a definite quantity of materialised labour, that it adds its own value to the product. Capital is productive of value only as a relation, in so far as it is a coercive force on wage-labour, compelling it to perform surplus-labour, or spurring on the productive power of labour to produce relative surplus-value. In both cases it only produces value as ||263| the power of labour s own material conditions over labour when these are alienated from labour; only as one of the forms of wage labour itself, as a condition of wage labour. But in the sense commonly used by economists, as stored up labour existing in money or commodities, capital like all conditions of labour, even the unpaid natural forces functions productively in the labour-process, in the production of use-values, but it is never a source of value. It creates no new value, and only adds exchange-value to the product at all in so far as it has exchange-value, that is to say, only in so far as it itself consists in materialised labour-time, so that labour is the source of its value. Lauderdale is right in this respect that Adam Smith, after explaining the nature of surplus-value and of value, wrongly presents capital and land as independent sources of exchange-value. They are sources of revenue for their owners in so far as they are titles to a certain quantity of surplus-labour, which the labourer must perform over and above the labour-time required to replace his wages. Thus Adam Smith says for example: Wages, profit, and rent, are the three original sources of all revenue, as well as of all exchangeable value ([Wealth of Nations, O.U.P. edition, p. 57], [Garnier], l. I, ch. VI). Just as it is true that they are the three original sources of all revenue, so it is false that they also are the three original sources of all exchangeable value, since the value of a commodity is exclusively determined by the labour-time contained in it. After just presenting rent and profit as mere deductions from the value or from the labour added by the workman to the raw material, how can Adam Smith call them original sources of exchangeable value? (They can only be that in the sense that they set in motion the original source, that is to say, that they compel the workman to perform surplus-labour.) In so far as they are titles (conditions) for the appropriation of a part of the value, that is, of the labour materialised in the commodity, they are sources of income for their owners. But the distribution or appropriation of value is certainly not the source of the value that is appropriated. If this appropriation did not take place, and the workman received the whole product of his labour as his wage, the value of the commodities produced would be just the same as before, although it would not be shared with the landowner and the capitalist. The fact that landed property and capital are sources of income for their owners, that is, give them the power to appropriate a part of the values created by labour, does not make them sources of the value which they appropriate. But it is equally wrong to say that wages are an original source of exchangeable value, although wages, or rather the continuous sale of labour-power, is a source of income for the labourer. It is the labour and not the wages of the labourer that creates value. Wages are only already existing value, or if we consider the whole of production, the part of the value created by the labourer which he himself appropriates; but this appropriation does not create value. His wages can therefore rise or fall without this affecting the value of the commodity produced by him. |263|| ||265| <The following quotation should be added to what has been said above in regard to Adam Smith making the categories in which the value of the commodity is appropriated into sources of this value: After he has refuted the view that profit is only another name for the wages of the capitalist, or wages of labour of superintendence, he concludes: Adam Smith has just shown that the value added by the workmen to the materials is divided between them and the capitalists in the form of wages and profit; labour is therefore the only source of value, and the price of wages and the price of profits arise out of this source of value. But these prices themselves are not a source of value.// |265|| ||263| Here we will leave entirely out of account how far Adam Smith regards rent as a constituent element of the price of commodities. For our present inquiry this question is all the more unimportant because he treats rent just as he treats profit, as a mere part of surplus-value, a deduction from the labour added by the labourer to the raw material, and consequently ||264| in fact also as a deduction from profit, inasmuch as the total unpaid surplus-labour is directly appropriated by the capitalist in his relations with labour; it does not matter under what categories he may later have to share this surplus-value with owners of the conditions of production the landowner or the lender of capital. For the sake of simplicity we shall therefore speak only of wages and profit as the two categories into which newly-created value is divided. Let us assume that twelve hours of labour-time are materialised in a commodity (leaving out of account the value of the raw material and instruments of labour consumed in it.) We can express its value as such only in money. Let us therefore assume that twelve hours of labour-time are likewise materialised in five shillings. Thus the value of the commodity is five shillings. By the natural price of commodities Adam Smith understands nothing but their value expressed in money. (The market-price of the commodity, of course, stands either above or below its value. Indeed, as I shall show later, even the average price of commodities is always different from their value. Adam Smith, however, does not deal with this in his discussion of natural price. Moreover, neither the market-price nor still less the fluctuations in the average price of commodities can be comprehended except on the basis of an understanding of the nature of value.) If the surplus-value contained in the commodity is twenty per cent of its total value, or what amounts to the same thing, twenty-five per cent of the necessary labour contained in it, then this value of five shillings, the natural price of the commodity, can be resolved into four shillings wages and one shilling surplus-value (which here we will call profit, following Adam Smith). It would be correct to say that the magnitude of value of the commodity determined independently of wages and profit, or its natural price, can be resolved into four shillings wages (the price of the labour) and one shilling profit (the price of the profit). But it would he wrong to say that the value of the commodity arises from adding together or combining the price of the wages and the price of the profit which are regulated independently of the value of the commodity. If this were the case there would be absolutely no reason why the total value of the commodity should not be 8 shillings, 10 shillings, etc., according to whether one assumes the wages to be 5 shillings and the profit 3 shillings, and so on. When Adam Smith is examining the natural rate of wages or the natural price of wages, what guides his investigation? The natural price of the means of subsistence required for the reproduction of labour-power. But by what does he determine the natural price of these means of subsistence? In so far as he determines it at all, he comes back to the correct determination of value, namely, the labour-time required for the production of these means of subsistence. But when he abandons this correct course, he falls into a vicious circle. By what is the natural price of the means of subsistence determined, which determine the natural price of wages? By the natural price of wages , of profit , of rent , which constitute the natural price of those means of subsistence as of all commodities. And so in infinitum. The twaddle about the law of demand and supply of course does not help us out of this vicious circle. For the natural price or the price corresponding to the value of the commodity is supposed to exist just when demand meets supply, that is, when the price of the commodity does not stand above or below its value as a result of fluctuations in demand and supply; when, in other words, the cost-price of the commodity (or the value of the commodity supplied by the seller) is also the price which the demand pays. ||265| But as we have said: In investigating the natural price of wages Adam Smith in fact falls back at least in certain passages on the correct determination of the value of the commodity. On the other hand, in the chapter dealing with the natural rate or the natural price of profit he gets bogged down, so far as the real problem is concerned, in meaningless commonplaces and tautologies. In fact, at first it was the value of the commodity which he saw as regulating wages and profit and rent. Then however he sets to work the other way round (which was closer to what empirical observation showed and to everyday ideas), and now the natural price of commodities is supposed to be calculated and discovered by adding together the natural prices of wages, profit and rent. It is one of Ricardo s chief merits that he put an end to this confusion. We shall return to this point briefly when we are dealing with him. Here there is only this further point to be noted: the given magnitude of value of the commodity, serving as a fund for the payment of wages and profit, appears empirically to the industrialist in the form that a definite market-price for the commodity holds good for a shorter or longer time, in spite of all fluctuations in wages. It is necessary therefore to call attention to this peculiar train of thought in Adam Smith s book: first the value of the commodity is examined, and in some passages correctly determined so correctly determined that he traces out in general form the origin of surplus-value and of its specific forms, hence deriving wages and profit from this value. But then he takes the opposite course, and seeks on the contrary to deduce the value of commodities (from which he has deduced wages and profit) by adding together the natural prices of wages, profit and rent. It is this latter circumstance that is responsible for the fact that he nowhere correctly explains the influence of oscillations of wages, profit, etc., on the price of commodities since he lacks the basis [for such an explanation]. |VI-265|| |VIII-364|| <Adam Smith, Value and Its Component Parts. Smith s erroneous conception, see above, which he [develops] in spite of his originally correct view, is shown also in the following passage: ||VI-265| We come to another point, which is linked with the analysis of the price or value of the commodity (since the two are here still assumed to be identical). Let us assume that Adam Smith has calculated correctly that is to say, the value of the commodity being given, he has correctly resolved it into the constituent parts in which this value is distributed among the various agents of production but has not on the contrary tried to deduce value from the price of these constituent parts. Thus we shall leave this aside and also the one-sided way in which wages and profit are presented only as forms of distribution, and hence both as revenues in the same sense that their owners can consume. Apart from all this, Adam Smith himself raises a question, and this again shows his superiority over Ricardo not that he finds the right solution to the question he raises, but that he raises it at all. ||266| What Adam Smith says is: (Of all commodities, Adam Smith here takes corn, because in some commodities rent does not enter into the price as a constituent part.) <Here profit appears as the primary form, which also includes rent.// (Here it is perfectly preposterous that all of a sudden he says labour instead of wages, while he does not put landed property or capital for rent and profit.) But was it not equally obviously necessary to consider that just as the farmer included the price of the horse and the plough in the price of the corn, the horse breeder or the plough maker from whom the farmer bought the horse and the plough, would include in the price of the horse and the plough the price of the instruments of production (in the case of the former, perhaps another horse) and of raw materials such as feeding stuffs and iron, whereas the fund from which the horse breeder and plough maker paid wages and profit (and rent) consisted only in the new labour which they added in their sphere of production to the amount of value present in their constant capital? Since therefore Adam Smith admits, in relation to the farmer, that the price of his corn includes, besides the wages, profit and rent paid by him to himself and others, also a fourth constituent part which is different from these the value of the constant capital he has used up, such as horses, agricultural implements, etc. this must also hold good for the horse breeder and the manufacturer of agricultural implements; and it is of no avail for Adam Smith to send us from pillar to post. Incidentally, the example of the farmer is peculiarly unhappily chosen for sending us from pillar to post, for in this case the items of constant capital include one that does not at all need to be bought from somebody else, namely the seed; and does this constituent part of the value resolve itself into wages, profit or rent for anybody? But for the present let us proceed, and see whether Smith sticks to his view that the value of every commodity is resolvable into one or all of the sources of revenue: wages, profit, rent; and can therefore, being destined for consumption, be devoured or at any rate used up in one way or another for personal use (not industrial consumption). First ||267| another preliminary point. In the case for example of gathering berries and such like it can be assumed that their value consists entirely of wages, although here also as a rule some appliances, such as baskets and so on, are required as means of labour. But examples of this kind are quite irrelevant here, where we are dealing with capitalist production. To start with, once more the repetition of the view expressed in Book I, Chapter VI; Book II, Chapter II, (b. II, Garnier pp. 212 13) states: According to this, the whole value of any commodity resolves itself into revenue, and therefore falls to the share of one or another of the classes which live on this revenue, as a fund for consumption. Now since the total production of a country, each year for example, consists solely of the total of the values of the commodities produced, and since the value of each single one of these commodities is resolved into revenues, so also must their sum, the annual product of labour, the gross revenue, be consumable annually in this form. And so immediately after this passage Smith himself raises the point: This is in fact the necessary consequence. What is true of the individual commodity is necessarily true of the total sum of commodities. But quod non,* says Adam. He goes on: (But stop! Above he told us the direct opposite: in the case of the individual farmer we can distinguish a fourth part into which the value of his wheat for example resolves itself, namely the part which merely replaces the constant capital used up. This is directly true for the individual farmer. But when we go further into it, what is constant capital for him resolves itself at an earlier point, in another person s hand before it became capital in his, into wages, profit, etc., in a word, into revenue. Therefore if it is true that commodities, considered in the hands of an individual producer, contain one part of the value which does not form revenue, then it is untrue for all the inhabitants of a great country , because what in one person s hand is constant capital derives its value from the fact that it came from another person s hand as the aggregate price of wages, profit and rent. Now he says the direct opposite.) Adam Smith continues: ||268| The gross rent of a private estate comprehends whatever is paid by the farmer; the neat rent, what remains free to the landlord, after deducting the expense of management, of repairs, and all other necessary charges; or what, without hurting his estate, he can afford to place in his stock reserved for immediate consumption, or to spend upon his table, etc. His real wealth is in proportion, not to his gross, but to his neat rent [ibid., pp. 313 14]. (In the first place, Smith brings in here something improper. What the farmer pays as rent to the landowner, just as what he pays as wages to the labourers, is like his own profit, part of the value or price of the commodity, which resolves itself into revenue. The question is however whether the commodity contains yet another constituent part of its value. He admits this here, As he should admit it in the case of the farmer, but that should not pre-vent the latter s corn (i.e., the price or exchange-value of his corn) from being resolvable merely into revenue. Secondly, .a note in passing. The real wealth of which an individual farmer, considered as a farmer, can dispose, depends on his profit. But on the other hand, as owner of commodities he can sell the whole farm, or if the laud does not belong to him, he can sell all constant capital there is on it such as draught cattle, agricultural implements, etc. The value which he can realise in this way, therefore the wealth at his disposal, is conditioned by the value, that is the size of the constant capital belonging to him. However, he can only sell this again to another farmer, in whose hands it is not disposable wealth but constant capital. So we are still just where we were.) The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour (previously we were told that this total that is its value resolves itself into wages, profits and rents, nothing but different forms of net revenue); the neat revenue, what remains free to them, after deducting the expense of maintaining, first, their fixed, and, secondly, their circulating capital ; (so he now deducts instruments of labour and raw materials); or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption. (So now we learn that the price ox exchangeable value of the total stock of commodities, just as in the case of the individual capitalist, so also for the whole country, is resolvable into a fourth part which does not form a revenue fox anyone and cannot be resolved into wages, profit or rent.) Here Adam Smith once more shies away from the question which he has to answer the question concerning the fourth part of the total price of the commodity, which is not resolved into either wages, profit or rent. First something that is quite wrong: with makers of machinery, as with all other industrial capitalists, the labour which fashions the raw materials of the machine, etc., into the proper form in fact consists of necessary and surplus-labour, and therefore resolves itself not only into the wages of the workmen, but also into the profit of the capitalist. But the value of the materials and the value of the instruments with which they are fashioned by the workmen into the proper form, is resolvable into neither the one nor the other. That products which are destined by their nature not for individual consumption but for industrial consumption do not enter into the stock reserved for immediate consumption, has nothing at all to do with it. Seed, for example (that portion of the corn which serves for sowing), by its nature could also enter into the stock for consumption; but by its economic function it must enter into the stock for production. But furthermore it is quite wrong to say with regard to the products destined for individual consumption that both the full price and the product enter into the stock for consumption. Linen, for example, when not used for sail-cloth or other productive purposes, all goes as a product into consumption. But not its price, for one part of this price replaces the Linen yarn, another part looms and so on, and only a part of the price of the linen is converted into revenue of any kind. Just now Adam told us that the materials necessary for machines, profitable buildings, etc. can never make any part of this neat revenue , any more than the machines and so on fashioned from them can; presumably, therefore, they form a part of the gross revenue. Shortly afterwards, [Garnier] l. c., Chapter II of Book II, p. 220, he says on the contrary: Adam s twistings and turnings, his contradictions and wanderings from the point, prove that, once he had made wages, profit and rent the constituent component parts of exchangeable value or of the total price of the product, he had got himself stuck in the mud and had to get stuck. Say, who tries to hide his dull superficiality by repeating in absolute general phrases Smith s inconsistencies and blunders, says: The value of the total annual products is equal to the quantity of labour-time materialised in them. ||270| If this aggregate value is deducted from the annual product, then in fact, so far as value is concerned, there remains no value, and by this deduction both the net revenue and the gross revenue have come to a final end But Say thinks that the annually produced values are annually consumed. Hence for the whole nation there is no net product but only a gross product. In the first place, it is not true that the annually produced values are annually consumed. This is not the case for a large part of the fixed capital. A large part of the annually produced values enters into the labour-process without entering into the process of the formation of value, that is to say without their total value being annually consumed. But in the second place: a part of the annual consumption of values consists of values that are used not as the stock for consumption, but as means of production, and which are returned to production (either in the same form or in the form of an equivalent), just as they originated in production. The second part consists of the va1ues which can enter into individual consumption over and above the first part. These form the net product. Storch says of this trash of Say s: Ramsay (George) An Essay on the Distribution of Wealth (Edinburgh, 1836) remarks on the same subject, namely, Adam Smith s fourth part of the total price, or what I call constant capital as distinct from the capital laid out in wages: By fixed capital Ramsay in fact means not only instruments of production, etc., but also the raw material in short, what I call constant capital within each sphere of production. When Ricardo speaks of the division of the product into profit and wages, he always assumes that the capital advanced to production itself and consumed in it has been deducted. Nevertheless, on the main issue Ramsay is right. Because Ricardo does not make any further examination at all of the constant part of capital, and pays no attention to it, he makes gross errors and in particular confuses profit with surplus-value, besides errors in investigating oscillations in the rate of profit and so on. Let us hear now what Ramsay himself says: <What Ramsay here says on the rate of profit has to be considered in Chapter III, on profit. It is important that he rightly lays stress on this element. On the one hand what Ricardo says is correct that the cheapening of commodities which form constant capital (which Ramsay calls fixed capital) always depreciates a part of the existing capital. This is especially true of fixed capital proper machinery, etc. It is of no advantage to the individual capitalist that the surplus-value rises in relation to the total capital, if the rise in this rate has been due to a fall in the total value of his constant capital (which he already had before the depreciation). But this is true only to a very small extent for that part of the capital which consists of raw materials or completed commodities (which do not form part of the fixed capital). The existing amount of these that can be depreciated in this way is always only an insignificant magnitude compared with the total production. It holds good for each capitalist only to a slight extent for that part of his capital expended as circulating capital. On the other hand since the profit is equal to the proportion of the surplus-value to the total advanced capital, and since the quantity of labour that can be absorbed depends not on the value but on the quantity of raw materials and on the efficiency of the means of production not on their exchange-value but on their use-value it is clear that the greater the productivity of industry in the branches whose ||272| product enters into the formation of constant capital, the smaller the outlay of constant capital required to produce a given quantity of surplus-value; consequently the greater the proportion of this surplus-value to the whole advanced capital, and therefore the higher the rate of profit for a given amount of surplus-value.// (What Ramsay considers doubly replacement of product by product in the process of reproduction for the whole country, and replacement of value by value for the individual capitalist are two aspects, both of which, in relation to the individual capital, must be taken into account in the circulation process of capital, which is at the same time its reproduction process.) Ramsay did not solve the real difficulty which occupied Adam Smith s attention and entangled him in all kinds of contradictions. Put plainly, it is this: The whole capital (as value) resolves itself into labour, is nothing but a certain quantity of materialised labour. The paid labour, however, is equal to the wages of the labourers, the unpaid labour is equal to the capitalists profit. So the whole capital must be resolvable, directly or indirectly, into wages and profit. Or is labour somewhere performed which consists neither of wages nor profit, and merely has the purpose of replacing the values used up in production which are, however, the conditions of reproduction? But who performs this labour, since all labour performed by the labourer is resolved into two quantities, one which maintains his own power to produce, and the other which forms the profit of capital? To rid the problem of any spurious admixture, there is one more point to mention at the outset. When the capitalist transforms a part of his profit, of his revenue, into capital into means of labour and materials of labour both are paid for by that part of the labour which the labourer has performed gratis for the capitalist. Here we have a new quantity of labour forming the equivalent for a new quantity of commodities, commodities which as use-values consist of means of labour and materials of labour. This therefore enters into the accumulation of capital and presents no difficulty; we have here the growth of the constant capital beyond its previous limits, or the formation of new constant capital in excess of the amount of constant capital that already exists and must be replaced. The difficulty is the reproduction of the existing constant capital, not the formation of new constant capital in excess of what has to be reproduced. The new constant capital obviously originates in profit, and has existed for a moment in the form of revenue which is later transformed into capital. This part of the profit consists of the surplus labour-time, which, even without the existence of capital, must constantly be performed by society, in order to have at its disposal, so to speak, a fund for development, which the very increase of population makes necessary. <There is a good explanation of constant capital, but only in so far as concerns its use-value, in Ramsay s work, p. 166, which runs: So we must first start from the fact: new formation of constant capital as distinct from the reproduction of the existing constant capital flows from profit as its source; that is, assuming on the one hand that the wages only suffice for the reproduction of labour-power, and on the other that the whole surplus-value is embraced under the category profit , since it is the industrial capitalist who directly appropriates the whole surplus-value, [irrespective of] to whom and where he has to surrender some of it later. < the master* is the general distributor of the national revenue** who undertakes to pay to the labourers, the wages to the (moneyed) capitalist, the interest to the proprietor, the rent of his land (Ramsay, [l.c. I, pp. 218 19). In calling the whole surplus-value profit, we regard the capitalist: 1. as the person who immediately appropriates the whole surplus-value created; 2. as the distributor of that surplus-value between himself, the moneyed capitalist, and the proprietor of the soil.// ||VII-273| That this new constant capital arises from profit however means nothing but that it is due to a part of the surplus-labour of the labourers. Just as the savage, in addition to the time he needs for hunting, must necessarily use some time for making his bow; or just as in patriarchal agriculture, the peasant, in addition to the time spent in tilling the soil, must use a certain quantity of labour-time in producing most of his implements. But the question here is: Who is it that labours in order to replace the equivalent of the constant capital already expended in production? The part of the labour which the labourer performs for himself replaces his wages, or, considered in relation to the whole of production, creates his wages. On the other hand, his surplus-labour which forms the profit is in part a consumption fund for the capitalist, and in part is transformed into additional capital. But the capitalist does not replace the capital already used up in his own production out of this surplus-labour or profit. <Were this the case, the surplus-value would not be a fund for new capital formation, but for the maintenance of the old capital.// But the necessary labour which forms the wages and the surplus-labour which forms the profit make up the whole working-day, and no other labour is performed in addition to these. (The contingency of the capitalist s labour of superintendence is included in wages. In this aspect he is the wage-worker, even though not of another capitalist, yet of his own capital.) What then is the source, the labour, that replaces the constant capital? The part of the capital expended in wages is replaced (leaving surplus-labour out of account) by new production. The labourer consumes the wages, but he adds as much new labour as he has destroyed of old labour; and if we consider the whole working class, without allowing the division of labour to confuse us, he reproduces not only the same value but the same use-values, so that, according to the productivity of his labour, the same value, the same quantity of labour, is reproduced in a greater or smaller quantity of these same use-values. If we take society at any one moment, there exists simultaneously in all spheres of production, even though in very different proportions, a definite constant capital presupposed as a necessary condition of production that once for all belongs to production and must be given back to it, as seed must be given back to the land, It is true that the value of this constant part can fall or rise, depending on whether the commodities of which it is composed have to be reproduced at less or greater cost. This change in value, however, never alters the fact that in the process of production, into which it enters as a condition of production, it is a postulated value which must reappear in the value of the product. Therefore this change of value of the constant capital can here be ignored. In all circumstances it is a definite quantity of past, materialised labour, which passes into the value of the product as a determining factor. In order to bring out more clearly the nature of the problem, let us therefore assume that the production costs or the value of the constant part of the capital similarly remain unchanged, remain constant. It also makes no difference that for example the whole value of the constant capital may not pass into the products in a single year, but, as is the case with fixed capital, only passes into the aggregate products of a series of years. For the question here centres on that part of the constant capital which is actually consumed within the year, and therefore also must be replaced within the year. The question of the reproduction of the constant capital clearly belongs to the section on the reproduction process or circulation process of capital which however is no reason why the kernel of the matter should not be examined here. ||274| Let us first take the labourer s wages. He receives, then, a certain sum of money in which say ten hours labour are materialised, if he works 12 hours for the capitalist. These wages are converted into means of subsistence. These means of subsistence are all commodities. Assume that the price of these commodities is equal to their value, But in the value of these commodities there is one component part which covers the value of the raw materials they contain and the means of production used up in them. All the component parts of the value of these commodities taken together, contain, however, like the wages spent by the labourer, only ten hours labour. Let us assume that two-thirds of the value of these commodities consists of the value of the constant capital they contain, and one-third, on the other hand, of the labour which has finally made the product into a finished article for consumption. Thus the labourer, with his ten hours of living labour, replaces two-thirds of constant capital and one-third of living labour (added to the article in the course of the year). If there were no constant capital in the means of subsistence, the commodities, which he buys, the raw material in them would have cost nothing, and no instrument of labour would have been required to make them. In that case there are two possibilities. Either the commodities, as before, would contain ten hours labour; then the labourer replaces ten hours living labour by ten hours living labour. Or the same quantity of use-values into which his wages are converted and which he needed for the reproduction of his. labour-power would have cost only 3 1/3 hours labour (with no instrument of labour and no raw material which is itself a product of labour). In this case the labourer has only to perform 3 1/3 hours necessary labour, and his wages would in fact fall to 3 1/3 [hours ] materialised labour-time. Let us assume that the commodity is linen: 12 yards (the actual price does not matter here)=36 shillings or 1.16.0. Of this, let one-third be labour added, two-thirds for raw material (yarn) and wear and tear of machinery, Let the necessary labour-time= 0 hours; the surplus-labour therefore=2. Let one hour s labour, expressed in money,= 1 shilling. In this case the 12 hours labour =12 shillings, wages=10 shillings, profit=2 shillings. Let us assume that labourer and capitalist spent the whole of their wages and profit, that is 12 shillings (the total value that has been added to the raw material and machinery, the whole quantity of new labour-time materialised in the transformation of yarn into linen), on linen itself as a consumption article. (And it is possible that subsequently more than one labour day will be spent on their own product.) A yard of linen costs 3 shillings. With the 12 shillings labourer and capitalist together adding wages and profit together can only buy four yards of linen. These four yards of linen contain 12 hours labour, of which however only 4 are newly-added labour, 8 representing the labour realised in the constant capital. With the 12 hours labour wages and profit together buy only one-third of their total product, because two-thirds of this total product consist of constant capital. The 12 hours labour are divisible into 4+8, of which 4 replace themselves, while 8 independently of the labour added in the weaving process replace such labour as entered into the weaving process in already materialised form, as yarn and machinery. In regard to that part of the product, of the commodity, which exchanges against or is bought by wages and profit as an article of consumption (or for any other purpose, even reproduction, for the purpose for which the commodity is bought makes no difference to the transaction), it is therefore clear that the part of the value of the product which is formed by the constant capital is paid for from the fund of newly-added labour, which is resolved into wages and profit. How much or how little of constant capital and how much or how little of the labour added in the last production process is bought by wages and profit combined, in what proportions the labour last added and in what proportions the labour realised in constant capital is paid for, depends on the original proportions in which they entered as component parts of value into the finished commodity. To simplify matters we assume the proportion of two-thirds labour realised in constant capital to one-third newly-added labour. ||275| Now two things are clear: First. The proportion we have assumed in the case of the linen that is, in the case where labourer and capitalist realise wages and profit in the commodities they have themselves produced, when they buy back a part of their product this proportion remains the same when they expend the same quantity of value on other products. On the assumption that every commodity contains two-thirds of constant capital and one-third newly-added labour, wages and profit together could always only purchase one-third of the product. The 12 hours labour=four yards of linen. If these four yards of linen are transformed into money, then they exist as 12 shillings. If these 12 shillings are retransformed into some commodity other than linen, they buy a commodity of the value of 12 hours labour, of which 4 are newly-added labour, 8 labour realised in constant capital. Consequently, this proportion holds good generally provided the other commodities contain the same original proportion of labour last added and of labour realised in constant capital as linen. Secondly. If the daily newly-added labour= 12 hours, of these 12 hours only 4 replace themselves that is, the living, newly-added labour; while 8 pay for the labour realised in the constant capital. But who pays for the 8 hours of living labour which are not replaced by living labour? It is precisely the 8 hours of realised labour contained in the constant capital that are exchanged for the 8 hours of living labour. There is not the slightest doubt, therefore, that the part of the finished commodity which is bought by wages and profit combined which together however are nothing but the total quantity of labour newly added to the constant capital is replaced in all its elements: the newly-added labour contained in this part as well as the quantity of labour contained in the constant capital. Further, there is not the slightest doubt that the labour contained in the constant capital has here received its equivalent from the fund of living labour newly added to it. But now comes the difficulty. The total product of the 12 hours of weaving labour and this product is absolutely different from what this weaving labour has itself produced is 12 yards of linen, of the value of 36 hours labour or 36s. But wages and profit together, or the total labour-time of 12 hours can buy back only 12 of these 36 hours labour, or of the total product only 4 yards, not a piece more. What happens to the other 8 yards? (Forcade, Proudhon.) First we note that the 8 yards represent nothing but the constant capital advanced. It has however been given a changed form of use-value. It exists as a new product, no longer as yarn, loom, etc., but as linen. These 8 yards of linen, just like the 4 others which have been bought by wages and profit, contain considered as value one-third labour added in the weaving process, and two-thirds pre-existing labour materialised in the constant capital. In the case of the 4 yards previously discussed one-third of the newly-added labour covered the weaving labour contained in these 4 yards, that is, covered itself; two-thirds of the weaving labour on the other hand covered the constant capital the 4 yards contained. But now we have it the other way round: in the 8 yards of linen, two-thirds of the constant capital covers the constant capital they contain, and one-third of the constant capital covers the newly-added labour. What then happens to the 8 yards of linen, which have absorbed the value of the whole constant capital which has been maintained during the 12 hours weaving labour, or which went into the production process, but is now in the form of a product destined for direct, individual (not industrial) consumption? The 8 yards belong to the capitalist. Were he to consume them himself, besides the two-thirds of a yard representing his profit, ||276| then he could not reproduce the constant capital contained in the 12 hours weaving process; in general with regard to the capital contained in this 12 hours process he is no longer able to function as a capitalist. He therefore sells the 8 yards of linen, transforming them into money to the amount of 24 shillings, or 24 hours labour. But here we come to the difficulty. To whom does he sell them? Into whose money does he transform them? But we shall return to this in a moment. Let us first have a look at the further process. When he has transformed into money, sold, converted into the form of exchange-value, the 8 yards of linen that is to say, the part of the value of his product which is equal to the constant capital he advanced he buys again with it commodities of the same kind (with regard to their use-value) as those which originally composed his constant capital. He buys yarn and looms and so on. He divides the 24 shillings between raw materials and means of production, in the proportions in which these are required for the manufacture of new linen. His constant capital is therefore, as a use-value, replaced by new products of the same labour as that of which it originally consisted. The capitalist has reproduced the constant capital. This new yarn, looms, etc., however (on the assumption with which we began) likewise consist of two-thirds of constant capital and one-third of newly-added labour. While the first 4 yards of linen (newly-added labour and constant capital) have thus been paid for exclusively by newly-added labour, these 8 yards of linen are replaced by their own newly-produced elements of production, which consist partly of newly-added labour and partly of constant capital. Hence it seems that at least a part of the constant capital exchanges for constant capital in another form. The replacement of the products is real, because at the same time as the yarn is being worked up into linen, flax is being worked up into yarn and flax seed into flax; in the same way, while the loom is wearing out, a new loom is being made; and similarly, while the latter is being manufactured, new wood and iron is being produced. The elements are produced in one sphere of production at the same time as they are being worked up in the others. But in all these simultaneous processes of production, although each of them represents a higher stage of the product, constant capital is simultaneously being used up in varying proportions. The value of the finished product, the linen, therefore resolves itself into two parts, of which one repurchases the simultaneously produced elements of constant capital, while the other is expended on articles of consumption. For the sake of simplification no account is here taken of the retransformation of part of the profit into capital; that is, as throughout this inquiry, it is assumed that wages plus profit, or the total of the labour added to the constant capital, are consumed as revenue. The only question left is: Who buys the part of the total product with whose value the elements of constant capital that have meanwhile been newly produced are again bought? Who buys the 8 yards of linen? We assume, in order to leave no loopholes, that it is a type of linen specially intended for individual consumption, and is not, like perhaps sail-cloth, for industrial consumption. Here also the purely intermediary operations of commerce so far as they are only mediatory must be left completely out of account. For example, if the 8 yards of linen were sold to a merchant, and even if they pass through the hands of not one but twenty merchants and are twenty times bought and resold, then at the twentieth time they must at last be sold by the merchant to the actual consumer, who therefore actually pays the producer or the last, the twentieth merchant, who as far as the consumer is concerned represents the first merchant, that is to say, the actual producer. These intermediary transactions postpone or, if you like, mediate the final transaction, but they do not explain it. The question remains exactly the same whether it is: who buys the 8 yards of linen from the linen manufacturer, or: ||277| who buys them from the twentieth merchant into whose hand they have come through a series of exchanges? The 8 yards of linen, just as the first 4 yards, must pass into the fund for consumption. That is to say, they can only be paid for out of wages and profit, for these are the only sources of revenue for the producers, who figure here as the only consumers. The 8 yards of linen contain 24 hours labour. Let us now assume (taking 12 hours as the generally valid normal working-day) that labourer and capitalist in two other branches spend their whole wages and profit on linen, as labourer and capitalist in the weaving industry have done with their whole day s labour (the labourer his 10 hours, the capitalist the 2 hours surplus-value made on his labourer, that is, on 10 hours). Then the linen weaver would have sold the 8 yards, the value of his constant capital for 12 yards would be replaced, and this value could again be spent on the particular commodities of which the constant capital consists, because these commodities, yarn, loom, etc., available on the market, have been produced at the same time as yarn and loom were being worked up into linen. The simultaneous production of yarn and loom as products alongside the production process into which they enter as products but from which they do not emerge as products, explains how it is that the part of the value of the linen equal to the value of the material worked up into it [such as yarn], loom, etc. can be again transformed into yarn, loom, etc. If this production of the elements of linen did not proceed simultaneously with the production of the linen itself, the 8 yards of linen, even when they have been sold and transformed into money, could not be retransformed once more from money into the constant elements of linen.* On the other hand, however, although there may be new yarn, new looms, etc., on the market, and therefore production of new yarn and looms had taken place while finished yarn and finished loom were being transformed into linen in spite of the simultaneous production of yarn and loom alongside the production of the linen the 8 yards of linen cannot be retransformed into these material elements of constant capital for the weaving industry before they are sold, before they are converted into money. The continuous real production of the elements of linen, running side by side with the production of linen itself, therefore does not yet explain to us the reproduction of the constant capital, before we know whence comes the fund to buy the 8 yards of linen, to give them back the form of money, of independent exchange-value. In order to solve this last difficulty we have assumed that B and C which can stand for shoemaker and butcher have spent their total wages and profit, that is, the 24 hours labour-time which they have at their disposal, entirely on linen, And this gets us over our difficulty with A, the linen weaver. His whole product, the 12 yards of linen in which 36 hours labour is materialised, has been replaced by wages and profit alone that is, by the whole of the labour-time newly added to the constant capital in the spheres of production A, B and C. All the labour-time contained in the linen, both that already existing in its constant capital and that newly added in the weaving process, has been exchanged against labour-time which did not previously exist as constant capital in any sphere of production, but which was added simultaneously to the constant capital in the three production spheres A, B and C, in the last stage of production. Though therefore it is still wrong to say that the original value of the linen was composed of wages and profit alone since however it was made up of the value equal to the total of wages and profit, 12 hours weaving, and the 24 hours labour which, independently of the weaving process, was contained in the yarn, loom, in a word, the constant capital it would on the other hand be correct to say that the equivalent of the 12 yards of linen, the 36s, for which they have been sold, is composed of wages and profit alone; that is, not only the weaving labour but also the labour contained in yarn and loom are replaced entirely by newly-added labour, namely 12 hours labour in A, 12 hours in B and 12 hours in C. The value of the commodity sold is itself divided ||278| into newly-added labour (wages and profit) and pre-existing labour (value of the constant capital); that is the value for the seller (in fact [the value] of the commodity). On the other hand, the purchasing value, the equivalent given by the buyer to the seller, is made up entirely of newly-added labour, wages and profit. But as every commodity, before it is sold, is a commodity for sale and becomes money through a mere change of form, so every commodity, after it has been sold, would be made up of other component parts of value than it is composed of as a buying commodity (as money), which is absurd. Further: the labour performed by society for example in one year would not only cover itself so that if the total quantity of commodities is divided into two equal parts, one half of the year s labour would form an equivalent for the other half but the one-third of the labour, which forms the current year s labour in the total labour contained in the annual product, would cover three-thirds of the labour, would be equal to a magnitude three times greater than itself. This is still more absurd. In the above example we have shifted the difficulty, pushed it on from A to B and C. But this has only increased the difficulty, not made it simpler. In the first place, in dealing with A we had the way out that 4 yards, containing as much labour-time as had been added to the yarn, that is, the total wages and profit in A, were consumed in linen itself, in the product of A s own labour. With B and G this is not the case, since they consume the total labour-time added by them, their total wages and profit, in the product of sphere A, in linen, and so not in the product of B or C. They have therefore to sell not only the part of their product representing the 24 hours labour of constant capital, but also the part of their product which represents the 12 hours labour newly added to the constant capital. B must sell 36 hours labour, not only 24 like A. C is in same position as B. Secondly, in order to see A s constant capital, to get it off his hands and transform it into money, we need the whole newly-added labour not only of B but also of C. Thirdly, B and C cannot sell any part of their product to A, since the whole part of A which constitutes revenue has already been expended in A itself by the producers of A. Nor can they replace the constant part of A by any part of their own product, since on the assumption we have made their products are not production elements for A but commodities which enter into individual consumption. The difficulty increases at each further step. In order to exchange the 36 hours contained in A s product (that is, two-thirds or 24 hours in constant capital, one-third or 12 hours in newly-added labour) entirely for labour added to constant capital, A s wages and profit the 12 hours labour added in A one-third of the product had to be consumed by A itself. The other two-thirds of the total product=24 hours, represented the value contained in the constant capital. This value was exchanged for the total quantity of wages and profit or newly-added labour in B and C. But in order that B and C should be able, with the 24 hours in their products that make up their wages [and profit], to buy linen, they must sell these 24 hours in the form of their own products and in addition to replace the constant capital they must sell 48 hours of their own products. They have therefore to sell products of B and C to the amount of 72 hours, in exchange for the total quantity of profit and wages in the other spheres D, E, etc.; and this means (with a normal 12-hour day) that 12 6 hours (=72) or the labour added in six other spheres of production must be realised in the products B and C; ||279| that is, the profit and wages or the total labour added to their respective constant capital in D, E, F, G, H, I. In these circumstances the value of the total product of B+C would be paid for entirely in newly-added labour, that is, the aggregate wages and profit, in production spheres D, E, F, G, H, I. But in these six spheres the total product would then have to be sold (since no part of these products would be consumed by their producers themselves, as they have already put their whole revenue into products B and C), and no part of it could be accounted for within their own spheres; that is, the product of 6 36 hours labour=216, of which 144 represent constant capital and 72 (6 12) newly-added labour. Now in order in turn to transform the products of D, etc., similarly into wages and profit, that is, into newly-added labour, all the newly-added labour in the 18 spheres K1 K18, that is to say, the total sum of wages and profit in these 18 spheres, must be entirely expended on the products of spheres D, E, F, G, H, I. These 18 spheres K1 K18 would have to sell since they consumed none of their products themselves, but had already spent their entire revenue in the 6 spheres D I 18 36 hours labour or 648 hours labour, of which 18 12 or 216 are in newly-added labour, and 432 in labour contained in the constant capital. In order therefore to transform this total product of K1 K18 into the labour added or total wages and profit in other spheres, the labour added in the spheres L1 L54 would be required; that is to say, 12 54=648 hours labour. Spheres L1 L54, in order to exchange their total product which is equal to 1,944 hours (of which 648=12 54 is the newly-added labour and 1,296 hours labour is the labour contained in the constant capital) for newly-added labour, would have to absorb the newly-added labour of spheres M1 M162, for 162 12=1,944; these in their turn must absorb the newly-added labour of spheres N1 N486 and so on. This is the beautiful progression in infinitum which we arrive at if all products are resolved into wages and profit, newly-added labour if not only the labour added in the commodity but also its constant capital have to be paid for by newly-added labour in another sphere of production. In order to convert the labour-time contained in product A, 36 hours (one-third newly-added labour, two-thirds constant capital), into newly-added labour, that is, to have it paid for by wages and profit, we at first assumed that one-third of the product (whose value is equal to the total of wages and profit) was consumed or bought which is the same thing by the producers of A themselves. This was the progress. 1. Production sphere A. Product=36 hours labour. 24 hours labour, constant capital. 12 hours labour, newly added. One-third of the product consumed by the shareholders of the 12 hours, wages and profit, labourer and capitalist. There remain to be sold two-thirds of the product of A, equivalent to the 24 hours labour contained in the constant capital. 2. Production spheres B1 B2. Product=72 hours labour; of which 24, labour added, 48, constant capital. They buy with it the two-thirds of A s product, replacing the value of A s constant capital. But they have now to sell the 72 hours labour, of which the value of their total product consists. 3. Production spheres C1 C6. Product=216 hours labour; of which 72 added labour (wages and profit). They buy with it the entire product of B1 B2, But they have now to sell 216, of which 144 are constant capital. ||280| 4. Production spheres D1 D18 Product=648 hours labour, 216 labour added, and 432 constant capital. With the labour added they buy the total product of production spheres C1 C6=216. But they have to sell 648. 5. Production spheres E1 E54. Product=1,944 hours labour; 648 labour added and 1,296 constant capital. They buy the total product of production spheres D1 D18. But they have to sell 1,944. 6. Production spheres F1 F162. Product=5,832, of which 1,944 added labour and 3,888 constant capital. With the 1,944 they buy the product of E1 E54. They have to sell 5,832. 7. Production spheres G1 G486. In order to simplify the problem, only one working-day of 12 hours is assumed throughout, in every production sphere, divided between capitalist and labourer. It does not solve the problem to increase the number of working-days, but complicates it needlessly. So, to get a clearer picture of the law of this series: 1. A. Product=36 hours. Constant capital=24 hours. Total of wages and profit or newly-added labour=12 hours. The latter is consumed by capital and labour in the form of the product of A itself. A s product to be sold, equal to its constant capital,=24 hours. 2. B1 B2. We need here two days labour, that is, 2 production spheres, to pay for A s 24 hours. Product=2 36, or 72 hours, of which 24 hours labour and 48 constant capital. Product of B1 and B2 to be sold=72 hours labour, no part of it consumed in their own spheres. 6. C1 C6. We need here 6 days labour, because 72=12 6, and the total product of B1 B2 has to be consumed by the labour added in C1 C6. Product=6 36=216 hours labour, of which 72 newly added, 144 constant capital. 18. D1 D18. We need here 18 days labour because 216=12 18 so, since there is two-thirds constant capital per day s labour, 18 36 is the total product=648 (432 constant capital). And so on. The figures 1, 2, [etc.] placed at the beginning of paragraphs signify the working-days or the different kinds of labour in different production spheres, as we assumed one working-day in each sphere. Therefore: 1. A. Product=36 hours. Added labour 12 hours. Product to be sold (constant capital)=24 hours. Or: 1. A. Product to be sold or constant capital=24 hours. Total product 36 hours. Labour added 12 hours. Consumed in A itself. 2. B1 B2. Buys with added labour=24 hours A. Constant capital 48 hours. Total product 72 hours. 6. C1 C6. Buys with added labour 72 hours B1 B2 (=12 6). Constant capital 144, total product=216. Etc. ||281| Therefore: 1. A. Product=3 working-days (36 hours). 12 hours added labour. 24 hours constant capital. 2. B1 2. Product=2 3=6 working-days (72 hours). Added labour=12 2=24 hours. Constant capital=48=2 24 hours. 6. C1 6. Product=3 6 working-days=3 72 hours=216 hours labour. Added labour=6 12 hours (=72). Constant capital=2 72=144. 18. D1 18 Product=3 3 6 working-days= 3 18 working-days (=54 working-days)=648 hours labour. Added labour=12 18=216. Constant capital=432 hours labour. 54. E1 54 Product=3 54 working-days=162 working-days=1,944 hours labour. Added labour=54 working-days=648 hours labour; 1,296 constant capital. 162. F1 162. Product=3 162 working-days (=486)=5,832 hours labour, of which 162 working-days or 1,944 hours labour are added labour, and 3,888 constant capital. 486. G1 486. Product=3 486 working-days, of which 486 working-days or 5,832 hours labour are labour added, and 11,664 constant capital. Etc. Here we would already have the goodly total of 1+2+6+18+54+162+486 different working-days in different production spheres= 729 different production spheres, which already implies a considerably ramified society. In order to sell the total product of A (where only 12 hours labour=1 working-day is added to the constant capital of 2 working-days, and wages and profit consume their own product), that is, only the 24 hours constant capital and moreover to sell it again entirely for newly-added labour, for wages and profit we need 2 working-days in B1 and B2 which however require a constant capital of 4 working-days, so that the total product of B1 2=6 working-days. These must be all sold, because from here on it is assumed that each subsequent sphere does not consume any of its own product, but spends its profit and wages only on the product of the preceding spheres. In order to replace these 6 working-days of the product of B1 2, 6 working-days are necessary, which however presuppose a constant capital of 12 working-days. The total product of C1 6 therefore=18 working-days. In order to replace these by labour, 18 working-days D1 18 are necessary, which however presuppose a constant capital of 36 working-days; so that the product=54 working-days. To replace these, 54 working-days are needed, E1 54, which presuppose a constant capital of 108. Product= 162 working-days. Finally, to replace these, 162 working-days are needed, which however presuppose a constant capital of 324 working-days; that is, total product 486 working-days. This is F1 162. Finally, to replace this product of F1 162, we need 486 working-days (G1 486), which however presuppose a constant capital of 972 working-days. So the total product of G1 486=972+486=1,458 working-days. But now let us assume that with sphere G we reach an end to the shifting; and ||282| our progression would soon bring us to an end in any society. How would the matter stand then? We have a product comprising 1,458 working-days of which 486 newly-added labour and 972 labour realised in constant capital. The 486 working-days can then be spent in the previous sphere F1 162. But what is to buy the 972 working-days contained in the constant capital? Beyond G486 there is no new sphere of production and therefore no new sphere of exchange. In the spheres that lie behind it, except for F1 162, there is nothing to be ex-changed. Moreover, G1 486 has expended all its wages and profit up to the last centime in F1 162. Therefore the 972 working-days realised in the total product of G1 486, which are the equivalent of the constant capital it contains, remain unsaleable. It has thus not helped us at all to shift through nearly 800 branches of production the difficulty of the 8 yards of linen of sphere A, or the 24 hours labour, the 2 working-days, representing in its product the value of the constant capital. It is no use imagining that the reckoning would have a different result if perhaps A did not spend its whole wages and profits in linen, but spent a part of it on the product of B and C. The limit of the outlays, the hours of labour added which are contained in A, B, C, can always only command a labour-time equal to themselves. If they buy more of one product, then they buy less of the other. It would only confuse the reckoning, but in no way alter result. What then is to be done? In the above calculation we find: (one-third of A s product consumed by A itself) If the last 324 working-days ([F s] constant capital) in this account were equal to the constant capital which the farmer replaces for himself, subtracts from his product and returns to the land and so has not to be paid for by new labour then the account would balance. The riddle, however, would only he solved because a part of the constant capital replaces itself. In fact therefore we have had consumed 243 working-days, corresponding to the newly-added labour, The value of the final product, 486 working-days, is equal to the value of the total constant capital contained in A F, which is also 486 working-days. In order to account for this, we assume 486 days of new labour in G, from which however the only satisfaction we get is that instead of having to account for a constant capital of 486 days, ||283| we have to account for a constant capital of 972 working-days in G s product, which is equal to 1,458 working-days (972 constant capital+486 labour). If now we want to get out of our difficulty by supposing that G works without constant capital, so that the product is only equal to the 486 days of newly added labour, the account would of course be cleared; but we would have solved the problem of who pays for the part of the value contained in the product which forms the constant capital, by assuming a case in which the constant capital equals nil and hence forms no part of the value of the product. In order to sell A s total product entirely for newly-added labour, in order to resolve it into profit and wages, the whole of the labour added in A, B and C must be spent on the labour realised in product A. Likewise to sell the total product of B+C, all labour newly added in D1 D18 is needed. Similarly, to buy the total product of D1 D18, all labour added in E1 54. To buy the total product of E1 54, all labour added in F1-162. And finally, Ito buy] the total product of F1 162, the total labour-time added in G1 486. At the end, in these 486 production spheres represented by G1 486, the total labour-time added is equal to the total product of the 162 spheres F, and this total product which is replaced by labour is as large as the constant capital in A, B1 2, C1 6, D1 18, E1 54, F1 162, But the constant capital of sphere G, twice the size of the constant capital used in A F162, is not replaced and cannot be replaced. In fact we have found, on our assumption that in all production spheres the proportion of the newly-added to the pre-existing labour is 1:2, that always twice [as many] new production spheres [as all preceding ones taken together] must use all their new labour to buy the product of the preceding spheres the labour added of A and B1 2, to buy A s total product; the labour added of 18 D or D1 18 (2 9), to buy the product of C1 6, and so on. In short, that twice as much newly-added labour as the product itself contains is always needed, so that there must be twice as much newly-added labour in the last production sphere G as there actually is, in order to buy the total product. In a word, we find in the result of G what was already there in our starting-point A, that the newly-added labour cannot buy any greater quantity of its own product than it itself amounts to and that it cannot buy the labour pre-existing in the constant capital. It is therefore impossible for the value of the revenue to cover the value of the total product. But since, apart from the revenue, no fund exists from which this product sold by producers to (individual) consumers can be paid for, it is impossible for the value of the total product, minus the value of the revenue, ever to be sold, paid for or (individually) consumed. On the other hand it is necessary for every product to be sold and paid for at its price (on the assumption that price is here equal to value). For that matter, it might have been foreseen from the outset that introducing the acts of exchange, sales and purchases between different commodities or the products of different production spheres, would not bring us a step forward. In A, the first commodity, the linen, we had one-third or ||283a| 12 hours of newly-added labour and 2 12 or 24 hours of pre-existing labour in the [constant] capital. Wages and profit could only repurchase that part of the product of commodity A and therefore also of any equivalent of commodity A in any other product which is equal to 12 hours labour. They could not buy back their own constant capital of 24 hours, hence they could not repurchase the equivalent of this constant capital in any other commodity either. It is possible for the relation of added labour to constant capital to be different in commodity B. But however different the proportion may be of constant capital to newly-added labour in the various spheres of production, we can calculate the average, and so say that in the product of the whole society or of the whole capitalist class, in the total product of capital, the newly-added labour is equal to a, the labour pre-existing as constant capital is equal to b. In other words, the proportion of 1 : 2 which we assumed in A, the linen, is only a symbolical expression of a : b and is not intended to imply anything more than that a definite and definable relation of some kind or other exists between these two elements the living labour added in the current year or in any other period selected, and the past labour preexisting as constant capital. If the 12 hours added to the yarn buy not only linen, but for example linen only to the amount of 4 hours, then they could buy some other product to the amount of 8 hours, but they could never buy more than 12 hours altogether; and if they buy another product to the value of 8 hours, then 32 hours linen in all must be sold by A. The example A therefore holds good for the total capital of the entire society, and though the problem can be complicated by introducing the exchange of different commodities, the problem itself remains unchanged. Let us assume that A is the total product of society: then one-third of this total product can be bought by the producers for their own consumption, bought and paid for with the total of their wages and their profits, equal to the total newly-added labour, the amount of their aggregate revenue. They have no fund with which to pay for, to buy and consume, the other two-thirds. Just as the newly-added labour, the one-third which consists of profit and wages, is itself covered by its own product, or withdraws only that part of the value of the product which contains one-third of the total labour, newly-added labour or its equivalent, so must the two-thirds of pre-existing labour be covered by its own product. That is to say, the constant capital remains equal to itself and replaces itself out of that part of the value which represents the constant capital in the total product. The exchange between various commodities, the series of purchases and sales between different spheres of production, brings about a change in form only in the sense that the constant capitals in the various production spheres mutually replace each other in the proportion in which they were originally contained in them. We must now examine this more closely. |283a|| ||283b| This view that the annual product of the country is divided into wages and profits (rents, interest, etc., included in the latter) is expressed by Adam Smith, Book II, Chapter II, in examining the circulation of money and the credit system (on this, compare later Tooke), where he says: To this, as well as Tooke, we must come back later. Let us return to our example. The day s product of A, a linen weaving factory, was equal to 12 yards=36s.=36 hours labour, of which 12 are newly-added labour divisible into wages and profit, and 24 hours or 2 days equal to the value of the constant capital, which now however, instead of the old form of yarn and loom, exists in the form of linen, but in a quantity of linen equal to 24 hours=24s, In this there is the same quantity of labour as in the yarn and loom which it replaces, and with it therefore the same quantity of yarn and loom can be bought again (on the assumption that the value of yarn and loom has remained the same, that the productivity of labour in these branches of industry has not altered). The spinner and the loom maker must sell the whole of their year s or their day s product (which for our purpose here is the same thing) to the weaver, for he is the only person for whom their commodity has use-value, He is their only consumer. But if the weaver s constant capital is equal to 2 working-days (his daily consumed constant capital), then for one working-day of the weaver there are two working-days of spinner and machine maker 2 working-days which may themselves be divided in very different proportions into labour added and constant capital. But the total daily product of spinner and machine maker together (assuming that the machine maker makes only looms) constant capital and added labour together cannot amount to more than 2 days labour while that of the weaver, because of the 12 hours labour newly added by him, amounts to 3 working-days. It is possible that spinner and machine maker consume as much living labour-time as the weaver. Then the labour-time contained in their constant capital must be smaller. However that may be, they can in no case use the same quantity of labour (summa summarum) materialised and living, as the weaver. It would be possible for the weaver to use proportionately less living labour-time than the spinner (the latter for example would certainly use less than the flax-grower); in that case the excess of his constant capital over the variable part of his capital must be so much greater. ||284| The weaver s constant capital thus replaces the entire capital of the spinner and the loom maker, not only their own constant capital but the labour newly added in the spinning process and in the manufacture of machines. The new constant capital therefore here replaces other constant capitals completely and, besides that, the total amount of the labour newly added to them. By the sale of their commodities to the weaver, spinner and loom maker have not only replaced their constant capital, but have received payment for their newly-added labour. His constant capital replaces for them their own constant capital and realises their revenue (wages and profit together). In so far as the weaver s constant capital replaces for them only their own constant capital, which they have handed over to him in the forms of yarn and loom, constant capital in one form has only been exchanged for constant capital in another form. There has in fact been no change of value in the constant capital. Let us now go further back. The spinner s product is divided into two parts, flax, spindles, coal, etc., in a word his constant capital, and the newly-added labour; similarly for the machine maker s total product. When the spinner replaces his constant capital, he pays not only for the total capital of the spindle manufacturer, etc., but also for that of the flax-grower. His constant capital pays for the one part of their constant capital plus the labour added. Then as for the flax-grower, his constant capital after deducting agricultural implements, etc. consists of seed, manure, etc. We will assume as in agriculture must always be the case, more or less directly that this part of the farmer s constant capital is an annual deduction from his own product, which he must return each year, out of his own product, to the land that is, to production itself. Here we find a part of the constant capital which replaces itself and is never sold, and therefore also is never paid for, and is never consumed, never enters into individual consumption. Seed, etc., are the equivalent of so much labour-time. The value of the seed, etc., enters into the value of the total product; but the same value, because it is the same amount of products (on the assumption that the productivity of labour has remained the same), is also deducted again from the total product and returned to production, not entering into circulation. Here we have at least one part of the constant capital that which can be regarded as the raw material of agriculture which replaces itself. Here therefore is an important [branch I the most important branch in size and in the amount of capital it contains of the annual production in which an important part of the constant capital, the part which consists of raw materials (apart from artificial fertilisers, etc.), replaces itself and does not enter into circulation, and is therefore not replaced by any form of revenue. Therefore the spinner has not got to repay to the flax-grower this part of the constant capital (the part of the constant capital which is replaced and paid for by the flax-grower himself); nor has the weaver to pay for this to the spinner, nor the buyer of the linen to the weaver. Let us assume that all those who directly or indirectly participated in the production of the 12 yards of linen (=36 shillings=3 working-days or 36 hours labour) were paid in linen itself, It is clear in the first place that the producers of the elements of the linen, of the constant capital of the linen, could not consume their own product, since these products are produced for production and do not enter into immediate ||285| consumption. They must therefore spend their wages and profits on linen on the product which finally enters into individual consumption. What they do not consume in linen, they must consume in some other consumable product exchanged for linen. As much (in value) linen is therefore consumed by others as they consume in other consumable products instead of linen, It is the same as if they had themselves consumed it in linen, since as much as they consume in another product is consumed in linen by the producers of other products. The whole problem must therefore be cleared up, without any reference to exchange, by considering how the 12 yards of linen are divided up between all the producers who have taken part in its production or in the production of its elements. Spinner and loom maker, who we assume also makes spinning machinery, have added one-third in labour, their constant capital amounting to two-thirds of yarn and loom, Of the 8 yards of linen (or 24 hours) or 24s., which replace their total product, they can consequently consume 8/3 [yards], that is, 22/3 [yards] of linen or 8 hours labour or 8s. Therefore 51/3yards or 16 hours labour remain to be accounted for. 51/3 yards or 16 hours labour represent the constant capital of the spinner and of the loom maker. Let us assume that of the spinner s constant capital two-thirds is raw material and is spent on flax; then the flax-grower can consume these two-thirds entirely in linen, since his constant capital <but here we take the wear and tear of his implements of labour, etc., as equal to nil// is not put into circulation at all; he has already deducted it and reserved it for reproduction. He can therefore buy two-thirds of the 51/3 yards of linen or 16 hours labour, which is equal to 3 5/9 yards, or 102/3 hours labour. So there remains to be accounted for only 51/3 minus 35/9 yards, or 16 102/3 hours labour, that is, 17/9 yards or 51/3 hours labour. These 17/9 yards or 51/3 hours labour resolve themselves into the constant capital of the loom maker and the total product of the spinning machinery maker, who are assumed to be one person. ||286| Therefore once again: Of the weaver s constant capital let 3/4=yarn and 1/4=loom (means of production in general). The weaver thus pays 6 yards or 18 hours to the spinner and 2 yards or 6 hours to the machine maker, etc. Of the 8 which replace the weaver s constant capital, therefore, 2 yards(=6s.=6 hours) are consumed by the spinner 2/3 of a yard (2s.=2 hour s labour) by the maker of looms, etc. What remains for us to account for is thus 8 22/3yards=51/3 yards (=16s.=16 hours labour). These remaining 51/3 yards (=16s.=16 hours labour) are resolved as follows: We assume that in the 4 yards which represent the spinner s constant capital, that is, the elements of his yarn, 3/4 is the equivalent of the flax, and 1/4 of the spinning machine. The elements of the ||287| spinning machine will be reckoned in further on with the constant capital of the loom maker. The two are assumed to be the same person. Of the 4 yards which replace the spinner s constant capital, 3/4=3 yards are therefore resolved into flax. A considerable part of the constant capital in the flax, used in its production, has not however to be replaced; for the flax-grower has already returned it to the land in the form of seed, manure, fodder, cattle, etc. Therefore in the part of his product that he sells, only the wear and tear of his instruments of labour, etc., has to be included as constant capital. Here we must rate the labour added at two-thirds at least and the constant capital to be replaced at one-third at the most. Thus: Thus what we have still to account for is: 1 yard (3s., 3 hours labour), equal to the flax-grower s constant capital; 11/3 yards (4s., 4 hours labour), equal to the constant capital for the loom; finally 1 yard (3s., 3 hours labour) for the total product contained in the spinning machine. First what the machine maker can consume for the spinning machine has to be deducted: 1 yard 3s. 3 hours labour 2/3 yard 2s. 2 hours labour 1/3 yard 1s. 1 hour s labour 1/3 yard 1s. 1hour s labour Moreover, the agricultural machinery, the flax-grower s constant capital, has to be divided into its consumable and other parts: 1 yard 3s. 3 hours labour 2/3 yard 2s. 2 hours labour 1/3 yard 1s. 1 hour s labour 1/3 yard 1s. 1hour s labour If therefore we put together that part of the total product which represents machinery, it amounts to 2 yards for the loom, I yard for the spinning machine, 1yard for the agricultural machine, 4 yards in all (12s., 12 hours labour or 1/3 of the total product, 12 yards of linen), Of these 4 yards, the machine maker can consume 2/3 of a yard for the loom, 1/3 for the spinning machine, ditto 1/3 for the agricultural machinery, in all 11/3 yards. 22/3 yards are left, that is, 4/3 constant capital for the loom, 2/3 for the spinning machine, and 2/3 for the agricultural machine= 8/3=22/3 yards (=8s.=8 hours labour). This therefore forms the machine builder s constant capital which has to be replaced. Of what now does this constant capital consist? On the one hand, of its raw material, iron, wood, leather belting; and so on. But on the other hand, of that part of the machine he works with (which he may have built himself) which he uses in building machines and which gets worn out. Let us assume that the raw material amounts to two-thirds of the constant capital, and the machine-building machine to one-third. This latter one-third is to be examined later. The two-thirds for wood and iron ||288| amount to two-thirds of the 22/3 yards (or 22/3 yards=8/3 yards=24/9 yards), 1/3 of this=8/9; therefore 2/3=16/9 yards. Let us then assume that here [in the production of wood and iron] machinery is one-third and added labour two-thirds (since there is nothing for raw material); then two-thirds of the 16/9 yards replace labour added, and one-third machinery. Thus what is left again for machinery is 16/27 yard. The constant capital of the producers of iron and wood, in short, of the extractive industry, consists only of instruments of production which we here call machinery in general and not of raw material. Therefore 8/9 yard for the machine-building machine, 16/27 yard for the machinery used by the producers of iron and wood. So 24/27 + 16/27 = 40/27 = 113/27 yards. This therefore, has in turn to be put down to the machine builder s account. Machinery. 24/27 of a yard forms the replacement for the machine building machine. But this in turn is divided into raw material (iron, wood, etc.), the part of, the machinery used up in building the machine-building machine, and labour added. So, if each of the elements is one-third of the total, 8/27 of a yard would go for the labour added, and 16/27 of a yard would be left for the constant capital to be replaced in the machine-building machine, that is, 8/27 of a yard for raw material and 8/27 of a yard to replace the part of the value representing the machinery used up in working up this raw material (together 16/27 of a yard). On the other hand the 16/27 of a yard, which replace the iron and wood producers machinery, likewise consist of raw material, machinery and labour added. This last is equal to one-third, that is, equal to 16/27 3 = 16/81 of a yard, and the constant capital in this part of the machinery consists of 32/81 of a yard, of which 16/81 is for the raw material, 16/81 to make good the wear and tear of the machinery. Thus there remains in the machine builder s hands, as constant capital to make good the wear and tear of his machinery, 8/27 of a yard, with which he replaces the wear and tear of his machine-building machine, and 16/81 of a yard for the wear and tear of the iron and wood producers machinery that has to be replaced. Apart from this he had, for the replacement of his constant capital, 8/27 of a yard for the raw material (contained in the machine-building machine) and 16/81 for the raw material contained in the iron and wood producers machines. Of this, however, another two-thirds consist of labour added and one-third of machinery used up. Therefore two-thirds of the 24/81+16/81=49/81 is paid for labour, that is, (262/3)/81. Of this raw material, ||289| (131/3)/81 is again left to replace machinery. This (131/3)/81 of a yard therefore comes back to the machinery manufacturer. Now there would again be in the hands of the latter: 8/27 of a yard for the replacement of the wear and tear of the machine-building machine, 16/81 to replace the wear and tear of the iron, etc., producers machinery, and (131/3)/81 for the part of the value to replace the machinery in the raw material, iron, etc. And so we might go on calculating to infinity, with ever smaller fractions, but never able to divide the 12 yards of linen without a remainder. Let us briefly resume the course of our inquiry up to this point. We said at the start that in the different spheres of production there are different proportions as between the newly-added labour (which partly replaces the variable capital laid out in wages, and partly forms the profit, the unpaid surplus-labour) and the constant capital to which this labour is added. We could however assume an average proportion, for example, a labour added, b constant capital; or we could assume that the proportion of the latter to the former is 2 : 1 = 2/3 : 1/3. If this holds good in each production sphere of capital, we went on, then the labour added (wages and profit together) in one particular sphere of production can always only buy one-third of its own product, since wages and profit together form only one-third of the total labour-time realised in the product. But the other two-thirds of the product, which replace his constant capital, also belong to the capitalist. If he wishes to continue production, however, he must replace his constant capital, that is, retransform two-thirds of his product into constant capital. To do this, he must sell the two-thirds. But to whom? We have already deducted the one-third of the product that can be bought with the total of wages and profit. If this total represents 1 day s labour or 12 hours, then the part of the product whose value is equal to the constant capital represents 2 days labour or 24 hours. So we assume that [the second] one-third of the product is bought by profit and wages in another branch of production, and the last one-third is bought in turn by profit and wages in a third branch of production. But then we have exchanged the constant capital of Product I for wages and profit exclusively, that is, for newly-added labour, by making the whole labour added to Products II and III be consumed in the form of Product I. Of the six working-days contained in Products II and III, in both newly-added and pre-existing labour, none has been replaced or bought by the labour contained in either Product I or in Products II and III. So we had in turn to make the producers of other products spend all their labour added on Products II and III, and so on. Finally we had to come to a halt at a Product X, in which the labour added was as much as the constant capital of all the earlier products; but its own constant capital two-thirds larger, would be unsaleable. Thus we have not come one step forward with the problem. In the case of Product X, as in the case of Product I, the question remains: to whom is the part of the product sold which replaces the constant capital? Or is the one-third new labour added to the product to replace the one-third new labour plus the two-thirds pre-existing labour contained in the product? Is one-third to be equal to three-thirds? So from this it became clear that the shifting of the difficulty from Product I to Product II, etc., in a word, merely bringing in to the problem the exchange of commodities, was of no avail. ||290| So we had to pose the question in a different way. We assumed that the twelve yards of linen (=36s.=36 hours labour) were a product containing 12 hours labour or 1 working-day of the weaver (necessary labour and surplus-labour together, that is, the equivalent of the total of profit and wages), while two-thirds represented the value of the constant capital, yarn and machinery, etc., contained in the linen. We further assumed, in order to eliminate any recourse to quibbles and intermediate transactions, that the linen was of a kind destined only for individual consumption, and therefore could not serve in turn as raw material for some new product. By this we assumed that it was a product that had to be paid for from wages and pro fit, that it must be exchanged for revenue. And finally to simplify things we assume that no part of the profit is reconverted into capital, but that the whole profit is spent as revenue. As for the first 4 yards, the first one-third of the product, equal to the 12 hours labour added by the weaver, we soon settled that. They are resolved into wages and profit; their value is the same as the value of the weaver s total profit and wages. They are therefore consumed by him and his workmen themselves. This solution for the four yards is unconditionally valid. For if profit fit and wages are consumed not in linen but in some other product, this can only happen because the producers of some other product consume the part of it which is consumable by them in linen and not in their own product. If of the 4 yards of linen, for example, only 1 is consumed by the linen weaver himself, and 3 yards in meat, bread, and cloth, then just the same as before, the value of the 4 yards of linen is consumed by the linen weavers themselves; only they have consumed 3/4 of this value in the form of other commodities, while the producers of these other commodities have consumed in the form of linen the meat, bread and cloth consumable by them as wages and profit. <Here, as throughout this inquiry, it is of course always assumed that the commodity is sold and sold at its value.// But now comes the real problem. The weaver s constant capital exists now in the form of 8 yards of linen (=24 hours labour=24s.); if he wants to continue production, he must transform these 8 yards of linen into money, 24s., and with this 24s. he must buy newly-produced commodities, to be found on the market, of which his constant capital consists, To simplify the problem, let it be assumed that he does not replace his machinery within a period of years, but that every day, out of the proceeds of his product, he has to replace in kind the part of the machinery that is equal to the part of the value of the machinery worn out each day. He must replace the part of the product that is equal to the value of the constant capital it contains with the elements of this constant capital, or the material conditions of production for his labour. On the other hand, his prod-not, the linen, does not enter any other sphere of production as a condition of production, but passes into individual consumption. He can therefore replace the part of his product which represents his constant capital only by exchanging it for revenue or for the part of the value of the product of other producers which consists of wages and profit, consequently of newly-added labour. The problem is thus posed in its correct form. The question is only: in what conditions can it be solved? A difficulty that arose in our first presentation of it has now been partly overcome. Although in each sphere of production the labour added is equal to one-third, the constant capital on the assumption made to two-thirds, this one-third labour added or the total value of the revenue (of wages and profit; as already noted earlier, no account is here taken of the part of the profit which is again transformed into capital) is only consumable in the products of the branches of industry which work directly for individual consumption. The products of all other branches of industry can only be consumed as capital, can only enter into industrial consumption. ||291| The constant capital represented by the 8 yards (=24 hours=24s.) consists of yarn (raw material) and machinery. Let us say 3/4 raw material and 1/4 machinery. (Under raw material we can here also reckon all auxiliary materials such as oil, coal, etc. But for the sake of simplicity it is better to disregard these.) The yarn would cost 18s. or 18 hours labour=6 yards; the machinery 6s.=6 hours labour=2 yards. If therefore the weaver uses his 8 yards to buy yarn for 6 yards and machinery for 2 yards, with his constant capital of 8 yards he has covered not only the constant capital of the spinner and the loom manufacturer, but also the labour newly added by them. A part of what appears as the weaver s constant capital therefore represents newly-added labour on the part of the spinner and the machinery manufacturer, and consequently is for them not capital but revenue. Of the 6 yards of linen, the spinner can himself consume one-third=2 yards (equal to the labour newly added, profit and wages). But 4 yards replace for him only flax and machinery. Say 3 yards for flax, 1 yard for machinery. He must pass on the payment for these. Of the 2 yards the machinery manufacturer can himself consume two-thirds of a yard; but 4/3 only replace for him iron and wood, in a word, raw material, and the machinery used for building the machine. Say, of the 4/3 yards, 1 yard for raw material and 1/3 of a yard for machinery. Of the 12 yards of linen, we have consumed up to this point: first, 4 for the weaver, second, 2 for the spinner, and third, 2/3 for the machine builder; together 62/3, So 51/3 remain to be accounted for. And these 51/3 are distributed as follows: The spinner has to replace, out of the value of 4 yards, 3 for flax, 1 for machinery. The machinery manufacturer has to replace, out of the value of 4/3 yards, 1 for iron, etc., 1/3 for machinery (what he has himself used up in building the machines). The 3 yards for flax are therefore paid by the spinner to the flax-grower. In the case of the latter, however, there is the special feature that a part of his constant capital (namely, seed, manure, etc., in short all products of the land which he returns to the land) does not enter at all into circulation, and consequently does not need to be deducted from the product that he sells; this product on the contrary expresses only added labour, and consequently consists entirely of wages and profit (except for the part which replaces machinery, artificial fertilisers, etc.). So let us assume as before that one-third of the total product is labour added; then 1 yard of the 3 would come under this category. Taking as before for the 2 other yards that one-quarter is for machinery, that would be 2/4 yard. The other 6/4, on the other hand, would also be for labour added, since in this part of the flax-grower s product there is no constant capital, which he has already deducted earlier. So 2 2/4 yards would go for the flax-grower s wages and profit. What remains is 2/4 yard for replacement of machinery. <Thus of the 5 1/3 yards which we had to consume, 22/4 have gone (5 4/12 2 6/12 =2 10/12 = 2 5/6 yards).// This last 2/4 of a yard would therefore be used by the flax-grower to buy machinery. The machinery manufacturer s account would now stand like this: of the constant capital for the loom he had laid out 1 yard for iron, etc.; 1/3 of a yard for the wear and tear of the machine-building machine in producing the loom. In addition, however, the spinner buys from the machinery manufacturer spinning machinery for I yard, and the flax-grower buys from him agricultural implements for 2/4 of a yard. Of these 6/4 yards, the machinery manufacturer has to consume 1/3 for labour added, and to expend 2/3 for the constant capital laid out in the spinning machine and the agricultural implements. 6/4 however=18/12 So the machine builder would have 6/12 of a yard ||292| again for consumption, 12/12 or 1 yard to convert into constant capital. (Of the 2 5/6 yards not yet consumed, 1/2 yard therefore has gone. 14/6 yards are left, or 2 2/6, or 2 1/3 yards.) Of this yard the machinery manufacturer would have to expend 3/4 on raw material, iron and wood, etc., 1/4 to pay to himself for the replacement of the machine-building machine. So the total account would now stand like this: The 13/4 yards or 7/4 yards therefore buy from the iron and wood manufacturers iron and wood to this value. 7/4=21/12. But here a new question arises, In the case of the flax-grower, the raw material which is part of the constant capital did not enter into the product he sold, because it had already been deducted. In this case we must resolve the total product into labour added and machinery. If we even assumed that here the added labour was equal to two-thirds of the product, the machinery one-third, 14/12 would be consumable. And 7/12 would remain as constant capital for machinery. This 7/12 would come back to the machinery manufacturer. What was left of the 12 yards would then amount to 1/3+1/4 yard, which the machinery manufacturer would have to pay to himself for the wear and tear of his own machinery, and 7/12 of a yard, which the iron and wood manufacturers return to him for machinery. Hence 1/3+1/4 = 4/12+3/12 = 7/12. In addition, the 7/12 returned by the iron and wood manufacturers. (Together 14/12 =1 2/12 =1 1/6.) The iron and wood manufacturers machinery and instruments of labour must be bought from the machinery manufacturer, just as those of the weaver, the spinner and the flax-grower. Thus of the 7/12 of a yard, let one-third, equal to 2/12, be labour added. This 2/12 of a yard can therefore also be consumed. The remaining 5/12 (actually 4/12 and (2/3)/12, but there s no need to be so exact) represents the constant capital contained in the woodcutter s axe and the iron manufacturer s machinery, 3/4 pig-iron, wood, etc., and 1/4 machinery used up. (Of the 14/12 yards 12/12 is left, or 1 yard=3 hours labour=3s.) Therefore of the 1 yard, 1/4 of a yard for replacement of the machine-building machine and 3/4 of a yard for wood, iron, etc. Hence for the wear and tear of the machine-building machine 7/12 of a yard +1/4 of a yard = 7/12 + 3/12 = 10/12 of a yard. On the other hand it would now be quite pointless again to resolve the 3/4 of a yard for wood and iron into their component parts and to return a part of it once more to the machinery manufacturer, who would return a part of it again to the iron ||293| and wood manufacturers. Something would always be left over and a progression to infinity. Let us then take the problem as it now stands. 10/12 or 5/6 of a yard in value has to be replaced by the machinery manufacturer himself in the worn-out machine. 3/4 or 9/12 of a yard represents an equal amount of value in wood and iron. The machinery manufacturer has given it to the iron and wood manufacturers, in order to replace his raw material. We have in hand the residuum of 19/12 or 1 7/12 yards. The balance of 5/6 of a yard which the machinery manufacturer keeps for making good his wear and tear = 15/6, shillings=15/6 hours labour, that is, 2 3/6, or 2 1/2s., or 2 1/2 hours labour. The machinery manufacturer cannot accept any linen for this value; he would himself have to sell it again, in order with the 2s. 6d. to make good the wear and tear of his machinery, in a word, to make new machine-building machines. But to whom is he to sell it? To producers of other products (other than iron and wood)? But these producers have consumed in linen all that they were able to consume in this form. Only the 4 yards which constitute the weaver s wages and profit are exchangeable for other products (apart from those contained in the constant capital or the labour of which this capital consists). And we have already accounted for these 4 yards. Or is he to pay workers with it? But we have already deducted from his products all that labour has added to them, and we have taken it as all consumed in linen, To put the matter in another way: To simplify the calculation, say 4 yards=12s.=12 hours labour. Of this, for labour (profit and wages) one-third = 4/3 yards = 1 1/3 yards. 2 2/3 remain for constant capital. Of this, 3/4 for raw material, 1/4 for wear and tear of machinery. 2 2/3 = 8/3 = 32/12. A quarter of this= 8/12. This 8/12 of a yard for wear and tear of machinery is all that the machinery manufacturer is still burdened with. For he pays 24/12 or 2 yards to the iron and wood manufacturers for raw material. ||294| It is wrong, then, to charge the iron and wood manufacturers again for machinery, since all that they have to replace its machinery, namely 7/12 of a yard, has already been brought into the machinery manufacturer s account. In the latter s item, the whole of the machinery that they need for the production of iron and wood has already been included, and it therefore cannot come a second time into the reckoning. The last two yards for iron and wood (the residuum of 2 8/12) consist therefore entirely of labour, since there is no raw material used, and can therefore be consumed in linen. Thus the whole residuum is 8/12 of a yard or 2/3 of a yard for wear and tear of the machinery used by the machinery manufacturer. The whole problem was partly solved by the fact that the part of the farmer s constant capital, which does not itself consist of labour newly added or in machinery, does not circulate at all, but is already deducted, replaces itself in his own production, and therefore also apart from the machinery his whole circulating product consists of wages and profit and consequently can be consumed in linen. This was one part of the solution. The other part was that what appears in one sphere of production as constant capital, in other spheres of production appears as new labour added during the same year. What in the weaver s hand appears as constant capital consists in large part of the revenue of the spinner, machinery manufacturer, flax-grower and iron and wood producers (also of the collier, etc.; but for the sake of simplification this is not brought into it). (This is so clear that, for example, when the same manufacturer both spins and weaves, his constant capital seems to be smaller than that of the weaver and the labour added by him greater, that is to say, the part of his product which consists of labour added, revenue, profit and wages. Thus in the case of the weaver revenue was equal to 4 yards=12s.; constant capital 8 yards=24s. If he both spins and weaves, his revenue is equal to 6 yards. His constant capital also equals 6 yards; that is, 2 yards for loom, 3 yards flax, and I yard spinning machinery.) Thirdly, however, the solution so far found is that all producers who supply only raw material or means of production for the product which finally enters into individual consumption, cannot consume their revenue profit and wages, the [labour] newly added in their own product, but they can consume the part of the value of this product which represents revenue only in the consumable product, or, what is the same thing, [they have to exchange it] for a consumable product of other producers containing the same amount of value. Their newly-added labour enters into the final product as a component part of the value, but is only consumed in the form of the final product, while as a use-value it is contained in the final product as raw material or machinery used up. Hence the part of the problem which now remains to be solved is reduced to this: What happens to the 2/3 of a yard for the wear and tear [of the machine-building machine] not of the machines used in production, for these represent new labour, that is, new labour which gives the raw material (which has itself no raw material that costs anything) the form of new machinery but [what happens] to the depreciation of the machinery manufacturer s machine-building machine? Or to put it another way: Under what conditions can the machinery manufacturer consume the 2/3 of a yard=2s.=2 hours labour in linen, and at the same time replace his machinery? That is the real question. This takes place in fact. It necessarily takes place. Hence the problem: how is this phenomenon to be explained? ||295| Here we leave entirely out of account the part of the profit which is transformed into new capital (both circulating and fixed, variable and constant capital). It has nothing to do with our problem, for here new variable capital as well as the new constant capital are created and replaced by new labour (a part of the surplus-labour). So putting this case on one side, the total of labour newly added, in a year for example, is equal to the total of profit and wages, i.e., equal to the total of the annual revenue spent on products which enter into individual consumption, such as food, clothing, heating, dwelling-house, furniture, etc. The total of these products going into consumption is equal in value to the total labour added annually (to the total value of the revenue), This quantity of labour must be equal to the total labour contained in these products, both the added and the pre-existing labour. In these products not only the labour newly added, but also the constant capital they contain, must be paid for. Their value is therefore equal to the total of profit and wages. If we take linen as the example, then the linen represents for us the aggregate of the products entering into individual consumption annually. This linen must not only be equal to the value of all its elements of value, but its whole use-value must be consumable by the various producers who take their share of it. Its whole value must be resolvable into profit and wages, that is, labour newly added each year, although it consists of labour added and constant capital. This is partly explained, as we have said, by: First. A part of the constant capital required for the production of the linen does not enter into it, either as use-value or as exchange-value, This is the part of the flax which consists of seed, etc.; the part of the constant capital of the agricultural product which does not enter into circulation, but is directly or indirectly returned to production, to the land. This part replaces itself, so it does not need to be repaid out of the linen. <A peasant may sell his whole harvest, say 120 quarters. But then he must buy from another peasant for example 12 quarters of seed, and the latter has then to use as seed, out of his 120 quarters, 24 quarters instead of 12 quarters, 1/5 instead of 1/10 of his product. In both cases 24 quarters of the 240 quarters are given back to the land as seed. Of course, this makes a difference in the circulation. In the first case, where each deducts one-tenth, 216 quarters enter circulation. In the second case 120 quarters of the first and 108 quarters of the second enter circulation, that is, 228 quarters. As in the previous case, 216 quarters reach the actual consumers. Here therefore we have an example of the fact that the total of values as between dealers and dealers is greater than the total of values as between dealers and consumers.// (Moreover there is the same difference in all cases in which a part of the profit is transformed into new capital; moreover, transaction between dealers and dealers extend over many years, etc.) This part [of the raw material required] for the production of the linen, that is, the consumable products, therefore does not have to replace a considerable part of the constant capital required for its production. Secondly. A large part of the constant capital required for the linen, that is, for the annual consumable product, appears at one level as constant capital, at another level as labour newly added, and consequently in fact consists of profit and wages, revenue, for one, while the same sum of value appears as capital for another. Thus a part of [the weaver s] constant capital is reducible to the labour of the spinner, etc. ||296| Thirdly. In all the intermediate processes that are necessary to produce the consumable product, a large part of the products, apart from the raw material and certain auxiliary materials, never passes into the use-value, but only enters into the consumable product as a component part of its value such as machinery, coal, oil, tallow, leather belting, etc. In each of these processes which in fact always only produce the constant capital for the next stage in so far as, through the division of social labour, they take the form of separate branches of business the product of each stage is divided into one part representing the newly-added labour (consisting of profit and wages, and, with the proviso made above, forms revenue), and another part which represents the value of the constant capital consumed. It is therefore clear that in each of these spheres of production only that part of the product can be consumed by its own producers which represents wages and profit only that part which remains over after deducting the quantity of products equal to the value of the constant capital they contain. But none of these producers consumes any part whatever of the products of the previous stage, or of the products, of all the stages, which in fact produce nothing but constant capital for a further stage. Thus although the final product the linen, which represents all consumable products consists of newly-added labour and constant capital, and so the final producers of this consumable product can only consume that part of it which consists of the labour last added, of their total wages and profits, their revenue nevertheless all the producers of constant capital consume or realise their newly-added labour only in the consumable product. Thus although this consists of labour added and constant capital, its purchase price consists in addition to that part of the product which is equal to the quantity of labour last added of the total quantity of all the labour added in the production of its constant capital. They realise all added labour in the consumable product instead of in their own product so that in this respect it is the same as if the consumable product consisted entirely of wages and profit, of labour added. From the consumable product, the linen (the exchange of consumable products for each other and the previous transformation of the commodities into money makes no difference), the producers from whose sphere of production it emerges as a finished product themselves deduct the part of the product equal to their revenue equal to the labour last added by them, equal to the total wages and profit. With the other part of the consumable product they pay the component part of the value due to the producers who have directly supplied them with their constant capital. All of this part of their consumable product therefore covers the value of the revenue and constant capital of the producers of this constant capital in its nearest stage. The latter however keep only the part of the consumable product whose value is equal to their revenue. With the other part they pay in turn the producers of their constant capital, equal to revenue plus constant capital. The account, however, can only be settled if it is only revenue, newly-added labour, not constant capital, that has to be replaced by the last part of the linen, the consumable product. For on the assumption we have made the linen enters only into consumption and does not in turn form the constant capital of another phase of production. This has already been shown to be the case for a part of the product of agriculture. In general, it is only products that enter as raw materials into the final product of which it can be said that they are consumed as products. Other products enter into the consumable product only as component parts of value. The consumable product is bought by revenue, that is, by wages and profit. Its total value must therefore be resolvable into wages and profit, that is, into the labour added in all its stages. The question now arises: in addition to the part of the product of agriculture which is returned to ||297| production by its producers themselves seed, cattle, manure, etc. is there yet another part of the constant capital which does not enter into the consumable product as a component part of value, but is replaced in kind in the process of production itself? Fixed capital in all its forms can of course only be considered here to the extent that its value enters into production and is consumed. Apart from agriculture (including cattle-raising and fish farming, and forestry, in which reproduction is artificially organised) and so apart from all raw materials for clothing, actual means of sustenance and a large part of the products entering into fixed capital in industry, such as sails, rope, belting, etc. in mining there is the partial replacement of constant capital in kind out of the product, so that the part which enters into circulation does not have to replace this part of the constant capital. For example, in coal production some of the coal is used to work the steam-engine which pumps out water or raises coal. The value of the annual product is therefore partly equal to the part of the labour pre-existing in coal and consumed in producing the coal, and partly equal to the quantity of labour added (leaving out of account wear and tear of machinery, etc.). Of the total product, however, the part of the constant capital which consists in coal itself is directly deducted and returned to production. No one has to replace this part for the producer, because he replaces it himself. If the productivity of labour has neither fallen nor risen, then too the part of the value which this part of the product represents remains unchanged, and is equal to a definite aliquot part of the quantity of labour existing in the product partly pre-existing labour, partly labour added during the year. In the other mining industries too there is a partial replacement of the constant capital in kind. Waste products as for example cotton waste and so on are fed to the fields as fertiliser or become raw material for other branches of industry, as for example linen rags [in the production] of paper. In such cases, as in the former case, part of an industry s constant capital may be directly exchanged for the constant capital of another industry. For example, cotton for cotton waste used as fertiliser. In general, however, there is a cardinal difference between the production of machines and primary production (of raw materials: iron, wood, coal) and the other phases of production: in the latter, there is no interaction between them. Linen cannot be a part of the spinner s constant capital, nor can yarn (as such) be part of the constant capital of the flax-grower or machinery manufacturer. But the raw material of machinery apart from such agricultural products as leather belting, rope, etc. is wood, iron and coal, while on the other hand machinery in its turn enters as a means of production into the constant capital of the producers of wood, iron, coal, etc. In fact, therefore, both replace each other a part of their constant capital in kind, Here there is exchange of constant capital for constant capital. Here it is not merely a question of accounting. The producer of iron debits the machinery manufacturer for the wear and tear of the machinery used up in producing the iron and the machinery manufacturer debits [the producer of iron] for the wear and tear of his machinery in constructing the machines. Let the producers of iron and coal be the same person. First, he himself replaces the coal, as we have seen. Secondly, the value of his total product of iron and coal is equal to the value of the labour added plus the labour pre-existing in the worn-out machinery. After deducting from this total product the quantity of iron that replaces the value of the machinery, the quantity of iron which is left represents the labour added. The latter part forms the raw material of manufacturers of machinery, instruments, etc. The machinery manufacturer pays the iron manufacturer for this latter part in linen. In exchange for the first part, he supplies him with machinery to replace the old. On the other hand, the part of the machinery manufacturer s constant capital which represents the wear and tear of his machine-building machines, instruments, etc. and therefore consists neither of raw material (leaving out of account here the machinery used [in coal and iron production] ||298| and the part of the coal which replaces itself) nor of labour added, and so neither of wages or profit this wear and tear is in fact made good by the machinery manufacturer appropriating for himself one or two of his own machines to serve as machine-building machines, This part of his product merely comes to an excess consumption of raw material. For it does not represent labour newly added, since in the total product of the labour so many machines are equal to the value of the added, so many machines are equal to the value of the raw material, and so many machines are equal to the part of the value that was contained in machine-building machines, It is true that this last part does contain labour added. But in value this is equal to zero, since the labour contained in the raw material and in the machinery used up is not reckoned in the group of machines that represents labour added; and the part which replaces the new labour and machinery is not reckoned in the second group, which replaces the raw material; and consequently in the third part considered as value neither labour added nor raw material is contained, but this group of machines represents only the wear and tear of the machinery. The machinery of the machinery manufacturer himself is not sold. It is replaced in kind, deducted from the total product. Consequently the machines which he sells represent only raw material (which consists only of labour, if he has already been charged for the wear and tear of the raw material producer s machinery) and labour added, and therefore are resolvable into linen for himself and for the raw material producer. As for what specially concerns the relations between the machinery manufacturer and the producer of raw materials, the latter has deducted, in respect of the part of his machinery that has been wasted, a quantity of iron equal to its value. He exchanges this with the machinery manufacturer, so that each of them pays the other in kind, and this process has nothing to do with the division of revenue between them. So much for this question, to which we shall return in connection with the circulation of capital. In reality, the constant capital is replaced by being constantly produced anew and in part by reproducing itself. The part of the constant capital which enters into the consumable product is however paid for out of the living labour which enters into the non-consumable products. Because the latter labour is not paid for in its own products, it can resolve the whole consumable product into income. A part of the constant capital, considered as part of the annual product, is only seemingly constant capital. Another part, although it enters into the total product, does not enter into the consumable product either as a component part of its value or as a use-value, but is replaced in kind, remaining always incorporated in production. Here we have considered how the total consumable product is divided up and resolved into all the component parts of value and conditions of production that have entered into it. But always there are, simultaneously and side by side, the consumable product (which, in so far as it consists of wages, is equal to the variable part of capital), the production of the consumable product, and the production of all parts of the constant capital required for its production, whether it enters into it or not. In the same way, each capital is always simultaneously divided into constant and variable capital, and although the constant capital, like the variable, is continuously replaced by new products, it is always in existence in the same form, so long as production of the same kind goes on. ||299| The relation between the machinery manufacturer and the primary producers of iron, wood, etc. is that they in fact exchange with each other a part of their constant capital (which has nothing in common with the transformation of a part of the constant capital of one into revenue for the other), because their products although one is a previous stage for the other on both sides enter as means of production into the constant capital of the other. In return for the machinery which the producer of iron, wood, etc., needs, he gives the machine builder iron, wood, etc., to the value of the machine to be replaced. This part of the machine builder s constant capital is for him just the same as seed is for the peasant. It is part of his annual product which he replaces in kind for himself and which is not resolved into revenue for him. On the other hand, what is thus replaced for the machine builder in the form of raw material is not only the raw material contained in the iron producer s machine, but also the part of the value of this machine which consists of labour added and wear and tear of his own machinery. Thus it replaces for him not only the wear and tear of his own machinery, but can be regarded as accounting for (replacing) a part of the wear and tear contained in the other machines. It is true that this [machine sold] to the producer of iron also contains component parts of value equal to the raw material and the labour added. But on the other hand there is correspondingly less wear and tear to be accounted for in the other machines. This part of their constant capital that is, of the product of their annual labour which replaces only the part of the value of the constant capital representing wear and tear therefore does not enter into the machines which the machine builder sells to other industrialists, But as regards the wear and tear in these other machines, it is in fact replaced for the machine builder by the above-mentioned two-thirds of a yard of linen, the equivalent of 2 hours labour. With that, he buys pig-iron, wood, etc., to the same value, and replaces the wear and tear in another form of his constant capital [in the form] of iron. Thus a part of his raw material replaces for him the value of his wear and tear, in addition to the value of the raw material. This raw material, however, as far as the producer of iron, etc., is concerned, consists only of the labour-time added, as the machinery of these producers of raw materials (iron, wood, coal, etc.) has already been accounted for. Thus all the elements of the linen are resolved into a sum of quantities of labour equal to the amount of labour newly added, but not equal to the amount of the total labour contained in the constant capital and perpetuated by reproduction. That the quantity of labour consisting partly of living labour, partly of pre-existing labour, which forms the total of commodities which enter each year into individual consumption, and thus are consumed as revenue, cannot be greater than the labour added annually, is for that matter a tautology, For the revenue is equal to the total of profit and wages, which is equal to the total labour newly added, and is equal to the total of the commodities which contain an equal quantity of labour. The case of iron producer and machine builder is only one example. Between different spheres of production, where the products of each enter into the other as means of production, an exchange in kind takes place too (even though concealed by a series of money transactions) between the constant capital of the one and that of the other. In so far as this is the case, the consumers of the final product which enters into consumption have not got to replace this constant capital, since it has already been replaced. |299|| ||304| <For example: in the manufacture of locomotives, every day the waste amounts to whole wagon-loads of iron filings. These are collected and resold (or charged in account) to the same iron manufacturer who supplied the locomotive manufacturer with his principal raw material. The iron manufacturer again gives them solid form, adding new labour to them. However in the form in which he sends them back to the locomotive manufacturer, these filings represent the part of the value of the product which replaces raw material, In this way not the same filings but constantly a certain quantity of filings, move hither and thither between the two factories, This part forms in turn the raw material for each of the two branches of industry and, considered as value, only wanders from one shop to the other. Consequently it does not enter into the final product, but is a replacement in kind of the constant capital. In fact, every machine supplied by the machinery manufacturer, from the standpoint of value, is divided into raw material, labour added, and wear and tear of machinery, But the whole total that enters into the production of other spheres can only be equal in value to the total value of the machinery minus the part of the constant capital which is continually passing backwards and forwards between the machinery manufacturer and the iron manufacturer. One quarter of wheat sold by a peasant is as dear as another, and a quarter of wheat that is sold is no cheaper than one that is returned to the land in the form of seed. Still, if the product equals 6 quarters, and the quarter equals 3 each quarter containing component parts of value for labour added, raw material and machinery and if he has to use 1 quarter as seeds, he would only sell to consumers 5 quarters, equal to 15. They would therefore not pay for the part of the value contained in the 1 quarter of seed. And this is the point: how can the value of the product sold be equal to all the elements of value contained in it labour added and constant capital and how in spite of this does the consumer buy the product and yet not pay for the constant capital?// |304|| ||300| <In addition to the foregoing: The following quotation shows how little the insipid Say even understood what the question was: In fact, in the year that was past it would have had a revenue, but it would have none the next year. It is not true that the annual product of labour, of which the product of the annual labour forms only one part, consists of revenue. On the other hand, it is correct that this is the case with the part of the product which each year enters into individual consumption. The revenue, which consists only of added labour, is able to pay for this product, which consists partly of added and partly of preexisting labour; that is to say, the labour added in these products can pay not only for itself but also for the pre-existing labour, because another part of the product which also consists of labour added and pre-existing labour replaces only preexisting labour, only constant capital.// <To the points in Adam Smith s theory just discussed must be added that in his vacillations on the determination of value in addition to the apparent contradiction in regard to wages there is also confusion [of ideal: in so far as he confuses the measure of value as the immanent measure which at the same time forms the substance of value, with the measure of value in the sense that money is called a measure of value. With regard to the latter the attempt is then made to square the circle to find a commodity whose value does not change to serve as a constant measure for others. On the question of the relation of the measure of value as money to the determination of value by labour-time, see the first part of my work. This confusion is also to be found in Ricardo in certain passages.// |300|| ||299| Adam Smith s contradictions are of significance because they contain problems which it is true he does not solve, but which he reveals by contradicting himself. His correct instinct in this connection is best shown by the fact that his successors take opposing stands based on one aspect of his teaching or the other. * Marx refers to Garnier s French translation of Adam Smith s work from which he takes the quotation. All excerpts from Smith s Wealth of Nations quoted by Marx in French in the manuscript are printed in this edition in English as given in Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford University Press (O.U.P.) (The World s Classics), London 1928. In two volumes. Those passages which Marx has taken from Garnier s French translation are marked in the text Garnier . The French extracts used by Marx are printed in the Appendix. Ed. * The manuscript reads: Interchange of commodities and distribution must he kept distinct each other. Ed. * See pp. 41 42 of the present volume. Ed. * In the manuscript: The natural price (or necessary price) . Ed. ** In the manuscript: so . Ed. *** In the manuscript: Man muss immer zwischen den beiden unterscheiden. Ed. * Marx refers to the French translation from which he takes these passages. See Appendix, p. 427. Ed. * Not so. Ed. * All the same, nearer the right view than the others. [This was added by Marx in pencil.] Ed. * The beginning of the sentence has been translated by Marx into German and shortened as follows: Wie Vergleichen des Produkt und . Ed. ** In the manuscript: In . Ed. *** In the manuscript: all . Ed. **** In the manuscript: the . Ed. **** In the manuscript: the . Ed. ***** In the manuscript: Also upon two circumstances h ngt die rate of profit ab . Ed. * In the manuscript: return Ed. ** In the manuscript: whatever . Ed. * In the manuscript: master-capitalist . Ed. ** In the manuscript: wealth . Ed. * As for example is now the case with the yarn or cloth of the cotton manufacturers, as a result of the American Civil War. The mere sale of their product is no guarantee for them that it will be retransformed, since there is no cotton on the market.

Economic Manuscripts: Theories of Surplus-Value, Chapter 3

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch03.htm

We come now to the last controversial point in Adam Smith s writings which we have to consider: the distinction between productive and unproductive labour. ||300| In Adam Smith s definition of what he calls productive labour as distinguished from unproductive labour, we find the same two-sided approach as we have found on every question up to now. Jumbled together in his presentation we find two definitions of what he calls productive labour, and to begin with we will examine the first, the correct definition. Productive labour, in its meaning for capitalist production, is wage-labour which, exchanged against the variable part of capital (the part of the capital that is spent on wages), reproduces not only this part of the capital (or the value of its own labour-power), but in addition produces surplus-value for the capitalist, It is only thereby that commodity or money is transformed into capital, is produced as capital. Only that wage-labour is productive which produces capital. (This is the same as saying that it reproduces on an enlarged scale the sum of value expended on it, or that it gives in return more labour than it receives in the form of wages. Consequently, only that labour-power is productive which produces a value greater than its own.) The mere existence of a class of capitalists, and therefore of capital, depends on the productivity of labour: not however on its absolute, but on its relative productivity. For example: if a day s labour only sufficed to keep the worker alive, that is, to reproduce his labour-power, ||301| speaking in an absolute sense his labour would be productive because it would be reproductive; that is to say, because it constantly replaced the values ( equal to the value of its own labour-power) which it consumed. But in the capitalist sense it would not be productive because it produced no surplus-value. (It produced in fact no new value, but only replaced the old; it would have consumed it the value in one form, in order to reproduce it in the other. And in this sense it has been said that a worker is productive whose production is equal to his own consumption, and that a worker is unproductive who consumes more than he reproduces.) Productivity in the capitalist sense is based on relative productivity that the worker not only replaces an old value, but creats a new one; that he materialises more labour-time in his product than is materialised in the product that keeps him in existence as a worker. It is this kind of productive wage-labour that is the basis for the existence of capital. <Assuming, however, that no capital exists, but that the worker appropriates his surplus-labour himself the excess of values that he has created over the values that he consumes. Then one could say only of this labour that it is truly productive, that is, that it creates new values.> This conception of productive labour follows naturally from Adam Smith s view of the origin of surplus-value, that is, of the nature of capital. In so far as he holds to this conception he is following a course that was taken by the Physiocrats and even by the Mercantilists; he only frees it from misconceptions, and in this way brings out its inner kernel. Though wrong in thinking that only agricultural labour is productive, the Physiocrats put forward the correct view that from the capitalist standpoint only that labour is productive which creates a surplus value; and in fact a surplus value not for itself, but for the owner of the conditions of production; labour which produces a net product not for itself, but for the landowner, For the surplus-value or surplus labour-time is materialised in a surplus-produce or net product. (But here again they have a wrong conception of this; in as much as there is, for example, more wheat than labourers and farmers eat; but also in the case of cloth there is more than what the cloth manufacturers workman and master need for their own clothing.) Surplus-value itself is wrongly conceived, because they have a wrong idea of value and reduce it to the use-value of labour, not to labour-time, social, homogeneous labour. Nevertheless, there remains the correct definition that only the wage-labour which creates more value than it costs is productive. Adam Smith frees this definition from the wrong conception with which the Physiocrats linked it. If we go back from the Physiocrats to the Mercantilists, there too we find one aspect of their theory which contains the same view of productive labour, even though they were not conscious of it, The basis of their theory was the idea that labour is only productive in those branches of production whose products, when sent abroad, bring back more money than they have cost (or than had to be exported in exchange for them); which therefore enabled a country to participate to a greater degree in the products of newly-opened gold and silver mines. They saw that in these countries there was a rapid growth of wealth and of the middle class. What in fact was the source of this influence exerted by gold? Wages did not rise in proportion to the prices of commodities; that is, wages fell, and because of this relative surplus-labour increased and the rate of profit rose not because the labourer had become more productive, but because the absolute wage (that is to say, the quantity of means of existence which the labourer received) was forced down in a word, because the position of the workers grew worse. In these countries, therefore, labour was in fact more productive for those who employed it. This fact was linked with the influx of the precious metals; and it was this, though they were only dimly aware of it, which led the Mercantilists to declare that labour employed in such branches of production was alone productive. So, firstly, according to Barton, in the second half of the eighteenth century there was a repetition of the same phenomenon as that which, from the last third of the sixteenth century and in the seventeenth, has given the impulse to the Mercantile system. Secondly as only exported goods were measured in gold and silver on the basis of its reduced value, while those for home consumption continued to be measured in gold and silver according to its former value (until competition among the capitalists put an end to this measuring by two different standards), labour in the former branches of production appeared to be directly productive, that is, creating surplus-value, through the depression of wages below their former level. The second, wrong conception of productive labour which Smith develops is so interwoven with the correct one that the two follow each other in rapid succession in the same passage. To illustrate the first conception it is therefore necessary to tear the quotations into separate parts. In this passage and in its continuation to be quoted later, the contradictory definitions jostle each other even more closely what is in the main and pre-eminently understood by productive labour is labour which produces a surplus-value his master s profit in addition to the reproduction of the value of his (the labourer s) own maintenance . Also, the industrialist could not grow rich by employing a multitude of manufacturers (working men), unless the latter, in addition to the value which their own maintenance costs, added also a surplus-value. Secondly, however, in this passage Adam Smith treats as productive labour, labour which in general produces a value . ||303| Leaving this latter statement out of account for the moment, however, we will first cite other passages in which the first conception is partly repeated, partly formulated more sharply, but particularly also further developed. Here the productive labourer is quite explicitly one who not only produces for the capitalist the full value of the means of subsistence contained in his wages, but reproduces it for him with a profit . Only labour which produces capital is productive labour. Commodities or money become capital, however, through being exchanged directly for labour-power, and exchanged only in order to be replaced by more labour than they themselves contain. For the use-value of labour-power to the capitalist as a capitalist does not consist in its actual use-value, in the usefulness of this particular concrete labour that it is spinning labour, weaving labour, and so on. He is as little concerned with this as with the use-value of the product of this labour as such, since for the capitalist the product is a commodity (even before its first metamorphosis), not an article of consumption. What interests him in the commodity is that it has more exchange-value than he paid for it; and therefore the use-value of the labour is, for him, that he gets back a greater quantity of labour-time than he has paid out in the form of wages. Included among these productive workers, of course, are all those who contribute in one way or another to the production of the commodity, from the actual operative to the manager or engineer (as distinct from the capitalist), And so even the latest English official report on the factories explicitly includes in the category of employed wage-labourers all persons employed in the factories and in the offices attached to them, with the exception of the manufacturers themselves (see the wording of the report before the concluding part of this rubbish). Productive labour is here defined from the standpoint of capitalist production, and Adam Smith here got to the very heart of the matter, hit the nail on the head. This is one of his greatest scientific merits (as Malthus rightly observed, this critical differentiation between productive and unproductive labour remains the basis of all bourgeois political economy) that he defines productive labour as labour which is directly exchanged with capital; that is, he defines it by the exchange through which the conditions of production of labour, and value in general, whether money or commodity, are first transformed into capital (and labour into wage-labour in its scientific meaning). This also establishes absolutely what unproductive labour is. It is labour which is not exchanged with capital, but directly with revenue, that is, with wages or profit (including of course the various categories of those who share as co-partners in the capitalist s profit, such as interest and rent). Where all labour in part still pays itself (like for example the agricultural labour of the serfs) and in part is directly exchanged for revenue (like the manufacturing labour in the cities of Asia), no capital and no wage-labour exists in the sense of bourgeois political economy. These definitions are therefore not derived from the material characteristics of labour (neither from the nature of its product nor from the particular character of the labour as concrete labour), but from the definite social form, the social relations of production, within which the labour is realised. An actor, for example, or even a clown, according to this definition, is a productive labourer if he works in the service of a capitalist (an entrepreneur) to whom he returns more labour than he receives from him in the form of wages; while a jobbing tailor who comes to the capitalist s house and patches his trousers for him, producing a mere use-value for him, is an unproductive labourer. The former s labour is exchanged with capital, the latter s with revenue. The former s labour produces a surplus-value; in the latter s, revenue is consumed. Productive and unproductive labour is here throughout conceived from the standpoint of the possessor of money, from the standpoint of the capitalist, not from that of the workman; hence the nonsense written by Ganilh, etc., who have so little understanding of the matter that they raise the question whether the labour or service or function of the prostitute, flunkey, etc., brings in returns. |303|| ||304| A writer is a productive labourer not in so far as he produces ideas, but in so far as he enriches the publisher who publishes his works, or if he is a wage-labourer for a capitalist. The use-value of the commodity in which the labour of a productive worker is embodied may be of the most futile kind. The material characteristics are in no way linked with its nature which on the contrary is only the expression of a definite social relation of production. It is a definition of labour which is derived not from its content or its result, but from its particular social form. On the other hand, on the assumption that capital has conquered the whole of production and that therefore a commodity (as distinct from a mere use-value) is no longer produced by any labourer who is himself the owner of the conditions of production for producing this commodity that therefore only the capitalist is the producer of commodities (the sole commodity excepted being labour-power) then revenue must be exchanged either against commodities which capital alone produces and sells, or against labour, which just like those commodities is bought in order to be consumed; that is, only for the sake of its particular material characteristics, its use-value for the sake of the services which, through its particular material characteristics, it renders to its buyer and consumer. For the producer of these services the services rendered are commodities. They have a definite use-value (imaginary or real) and a definite exchange-value. For the buyer, however, these services are mere use-values, objects in which ||305| he consumes his revenue. These unproductive labourers do not receive their share of revenue (of wages and profits), their co-partnership in the commodities produced by productive labour, gratis: they must buy their share in them; but they have nothing to do with their production. It is, however, in any case clear: the greater the part of the revenue (wages and profit) that is spent on commodities produced by capital, the less the part that can be spent on the services of unproductive labourers, and vice versa. The determinate material form of the labour, and therefore of its product, in itself has nothing to do with this distinction between productive and unproductive labour. For example, the cooks and waiters in a public hotel are productive labourers, in so far as their labour is transformed into capital for the proprietor of the hotel. These same persons are unproductive labourers as menial servants, inasmuch as I do not make capital out of their services, but spend revenue on them. In fact, however, these same persons are also for me, the consumer, unproductive labourers in the hotel. To the extent that capital conquers the whole of production, and therefore the home and petty form of industry in short, industry intended for self-consumption, not producing commodities disappears, it is clear that the unproductive labourers, those whose services are directly exchanged against revenue, will for the most part be performing only personal services, and only an inconsiderable part of them (like cooks, seamstresses, jobbing tailors and so on) will produce material use-values. That they produce no commodities follows from the nature of the case. For the commodity as such is never an immediate object of consumption, but a bearer of exchange-value. Consequently only a quite insignificant part of these unproductive labourers can play a direct part in material production once the capitalist mode of production has developed. They participate in it only through the exchange of their services against revenue. This does not prevent, as Adam Smith remarks, the value of the services of these unproductive labourers being determined and determinable in the same (or an analogous) way as that of the productive labourers: that is, by the production costs involved in maintaining or producing them. Other factors also come into play in this connection, but they are not relevant here. ||306| The labour-power of the productive labourer is a commodity for the labourer himself. So is that of the unproductive labourer. But the productive labourer produces commodities for the buyer of his labour-power. The unproductive labourer produces for him a mere use-value, not a commodity; an imaginary or a real use-value. It is characteristic of the unproductive labourer that he produces no commodities for his buyer, but indeed receives commodities from him. It itself, as has been said, this distinction between productive and unproductive labour has nothing to do either with the particular speciality of the labour or with the particular use-value in which this special labour is incorporated. In the one case the labour is exchanged with capital, in the other with revenue. In the one case the labour is transformed into capital, and creates a profit for the capitalist; in the other case it is an expenditure, one of the articles in which revenue is consumed. For example, the workman employed by a piano maker is a productive labourer. His labour not only replaces the wages that he consumes, but in the product, the piano, the commodity which the piano maker sells, there is a surplus-value over and above the value of the wages. But assume on the contrary that I buy all the materials required for a piano (or for all it matters the labourer himself may possess them), and that instead of buying the piano in a shop I have it made for me in my house. The workman who makes the piano is now an unproductive labourer, because his labour is exchanged directly against my revenue. It is however clear that in the same measure as capital subjugates to itself the whole of production that is to say, that all commodities are produced for the market and not for immediate consumption, and the productivity of labour rises in this same measure there will also develop more and more a material difference between productive and unproductive labourers, inasmuch as the former, apart from minor exceptions, will exclusively produce commodities, which the latter, with minor exceptions, will perform only personal services. Hence the former class will produce immediate, material wealth consisting of commodities, all commodities except those which consist of labour-power itself. This is one of the aspects which lead Adam Smith to put forward other points of difference, in addition to the first and in principle determining specific difference between productive and unproductive labour. Thus, following through various associations of ideas, he says: To define the unproductive labourer we here have the following determinants, which at the same time reveal the links in Adam Smith s train of thought: Here productive of value or unproductive of value is used in a different sense from that in which these terms were used originally. The reference is no longer to the production of a surplus-value, which in itself implies the reproduction of an equivalent for the value consumed. But according to this presentation the labour of a labourer is called productive in so far as he replaces the consumed value by an equivalent, by adding to any material, through his labour, a quantity of value equal to that which was contained in his wages. Here the definition by social form, the determination of productive and unproductive labourers by their relation to capitalist production, is abandoned. From Chapter IX of Book IV (where Adam Smith criticises the doctrine of the Physiocrats), it can be seen that he came to make this aberration as a result partly of his opposition to the Physiocrats and partly under their influence. If a labourer merely replaces each year the equivalent of his wages, then for the capitalist he is not a productive labourer. He does indeed replace his wages, the purchase price of his labour. But the transaction is absolutely the same as if this capitalist had bought the commodity which this labourer produces. He pays for the labour contained in the constant capital and in the wages. He possesses the same quantity of labour in the form of the commodity as he had before in the form of money. Its money is not thereby transformed into capital. In this case it is the same as if the labourer himself owned his conditions of production. He must each year deduct the value of the conditions of production from the value of his annual product, in order to replace them. What he consumed or could consume annually would be that portion of the value of his product equal to the new labour added to his constant capital during the year. In this case, therefore, it would not be capitalist production. The first reason why Adam Smith calls this kind of labour productive is that the Physiocrats call it st rile * and nonproductive . ** Thus Adam Smith tells us in the chapter referred to: Here, therefore, Adam Smith falls back into the Physiocratic ||308| standpoint. The real productive labour , which produces a surplus-value and therefore a neat produce , is agricultural labour. He abandons his own view of surplus-value and accepts that of the Physiocrats. At the same time he asserts, as against the Physiocrats, that manufacturing (and according to him, also commercial) labour is nevertheless also productive, even if not in this highest sense of the word. He therefore drops the definition by social form, the definition of what a productive labourer is from the standpoint of capitalist production; and asserts, in opposition to the Physiocrats, that the non-agricultural, industrial class reproduces its own wages, that is, it does after all produce a value equal to the value it consumes, and thereby continues, at least, the existence of the stock or capital which employs it . Hence arises, under the influence of and in contradiction to the Physiocrats, his second definition of what is productive labour. As soon as capital has mastered the whole of production, revenue, in so far as it is at all exchanged against labour, will not be exchanged directly against labour which produces commodities, but against mere services. It is exchanged partly against commodities which are to serve as use-values, and partly against services, which as such are consumed as use-values. A commodity as distinguished from labour-power itself is a material thing confronting man, a thing of a certain utility for him, in which a definite quantity of labour is fixed or materialised. So we come to the definition already in essence contained in point I: a productive labourer is one whose labour produces commodities; and indeed such a labourer does not consume more commodities than he produces, than his labour costs. His labour fixes and realises itself in some such vendible commodity , in any vendible commodity which can replace the value of their wages and maintenance (that is, of the workers who produced these commodities). By producing commodities the productive worker constantly reproduces the variable capital which he constantly consumes in the form of wages. He constantly produces the fund which pays him, which maintains and employs him . In the first place. Adam Smith naturally includes in the labour which fixes or realises itself in a vendible and exchangeable commodity all intellectual labours which are directly consumed in material production. Not only the labourer working directly with his hands or a machine, but overlooker, engineer, manager, clerk, etc. in a word, the labour of the whole personnel required in a particular sphere of material production to produce a particular commodity, whose joint labour (co-operation) is required for commodity production. In fact they add their aggregate labour to the constant capital, and increase the value of the product by this amount. (How far is this true of bankers, etc.?) ||309| Secondly, Adam Smith says that on the whole, generally , this is not the case with the labour of unproductive labourers. Even though capital has conquered material production, and so by and large home industry has disappeared, and the industry of the small craftsman who makes use-values directly for the consumer at his home even then, Adam Smith knows quite well, a seamstress whom I get to come to my house to sew shirts, or workmen who repair furniture, or the servant who scrubs and cleans the house, etc., or the cook who gives meat and other things their palatable form, fix their labour in a thing and in fact increase the value of these things in exactly the same way as the seamstress who sews in a factory, the engineer who repairs the machine, the labourers who clean the machine, or the cook who cooks in a hotel as the wage-labourer of a capitalist. These use-values are also, potentially, commodities; the shirts may be sent to the pawnshop, the house resold, the furniture put up to auction, and so on. Thus these persons have potentially also produced commodities and added value to the objects on which they have worked. But this is a very small category among unproductive workers, and does not apply either to the mass of menial servants or to parsons, government officials, soldiers, musicians and so on. But however large or small the number of these unproductive labourers may be, this much at any rate is evident and is admitted by the limitation expressed in the phrase services which perish generally in the very instant of their performance , etc. that neither the special kind of labour nor the external form of its product necessarily make it productive or unproductive . The same labour can be productive when I buy it as a capitalist, as a producer, in order to create more value, and unproductive when I buy it as a consumer, a sender of revenue, in order to consume its use-value, no matter whether this use-value perishes with the activity of the labour-power itself or materialises and fixes itself in an object. The cook in the hotel produces a commodity for the person who as a capitalist has bought her labour the hotel proprietor; the consumer of the mutton chops has to pay for her labour, and this labour replaces for the hotel proprietor (apart from profit) the fund out of which he continues to pay the cook. On the other hand if I buy the labour of a cook for her to cook meat, etc., for me, not to make use of it as labour in general but to enjoy it, to use it as that particular concrete kind of labour, then her labour is unproductive, in spite of the fact that this labour fixes itself in a material product and could just as well (in its result) be a vendible commodity, as it in fact is for the hotel proprietor. The great difference (the conceptual difference) however remains: the cook does not replace for me (the private person) the fund from which I pay her, because I buy her labour not as a value-creating element but purely for the sake of its use-value. Her labour as little replaces for me the fund with which I pay for it, that is, her wages, as, for example, the dinner I eat in the hotel in itself enables me to buy and eat the same dinner again a second time. This distinction however is also to be found between commodities. The commodity which the capitalist buys to replace his constant capital (for example, cotton material, if he is a cotton printer) replaces its value in the printed cotton. But if on the other hand he buys it in order to consume the cotton itself, then the commodity does not replace his outlay. The largest part of society, that is to say the working class, must incidentally perform this kind of labour for itself; but it is only able to perform it when it has laboured productively . It can only cook meat for itself when it has produced a wage with which to pay for the meat; and it can only keep its furniture and dwellings clean, it can only polish its boots, when it has produced the value of furniture, house rent and boots. To this class of productive labourers itself, therefore, the labour which they perform for themselves appears as unproductive labour . This unproductive labour never enables them ||310| to repeat the same unproductive labour a second time unless they have previously laboured productively. Thirdly. On the other hand: an entrepreneur of theatres, concerts, brothels, etc., buys the temporary disposal over the labour-power of the actors, musicians, prostitutes, etc. in fact in a roundabout way that is only of formal economic interest; in its result the process is the same he buys this so-called unproductive labour , whose services perish in the very instant of their performance and do not fix or realise themselves any permanent ( particular is also used) subject or vendible commodity (apart from themselves). The sale of these to the public provides him with wages and profit. And these services which he has thus bought enable him to buy them again; that is to say, they themselves renew the fund from which they are paid for. The same is true for example of the labour of clerks employed by a lawyer in his office except for the fact that these services as a rule also embody themselves in very bulky particular subjects in the form of immense bundles of documents. It is true that these services are paid for to the entrepreneur out of the revenue of the public. But it is no less true that this holds good of all products in so far as they enter into individual consumption. It is true that the country cannot export these services as such; but it can export those who perform the services. Thus France exports dancing masters, cooks, etc., and Germany schoolmasters. With the export of the dancing master, or the schoolmaster, however, his revenue is also exported, while the export of dancing shoes and books brings a return to the country. If therefore on the one hand a part of the so-called unproductive labour embodies itself in material use-values which might just as well be commodities (vendible commodities), so on the other hand a part of the services in the strict sense which assume no objective form which do not receive an existence as things separate from those performing the services, and do not enter into a commodity as a component part of its value may be bought with capital (by the immediate purchaser of the labour), may replace their own wages and yield a profit for him. In short, the production of these services can be in part subsumed under capital, just as a part of the labour which embodies itself in useful things is bought directly by revenue and is not subsumed under capitalist production. Fourthly. The whole world of commodities can be divided into two great parts. First, labour-power; second, commodities as distinct from labour-power itself. As to the purchase of such services as those which train labour-power, maintain or modify it, etc., in a word, give it a specialised form or even only maintain it thus for example the schoolmaster s service, in so far as it is industrially necessary or useful; the doctor s service in so far as he maintains health and so conserves the source of all values, labour-power itself these are services which yield in return a vendible commodity, etc. , namely labour-power itself, into whose costs of production or reproduction these services enter. Adam Smith knew however how little education enters into the costs of production of the mass of working men. And in any case the doctor s services belong to the faux frais* of production. They can be counted as the cost of repairs for labour-power. Let us assume that wages and profit fell simultaneously in total value, from whatever cause (for example, because the nation had grown lazier), and at the same time in use value (because labour had become less productive owing to bad harvests, etc.), in a word, that the part of the product whose value is equal to the revenue declines, because less new labour has been added in the past year and because the labour added has been less productive. If in such conditions capitalist and workman wanted to consume the same amount of value in material things as they did before, they would have to buy less of the services of the doctor, schoolmaster, etc. And if they were compelled to continue the same outlay for both these services, then they would have to restrict their consumption of other things It is therefore clear that the labour of the doctor and the schoolmaster does not directly create the fund out of which they are paid, although their labours enter into the production costs of the fund which creates all values whatsoever namely, the production costs of labour-power. ||311| Adam Smith continues: Is not the [total] value of the commodities at any time in the market greater as a result of the unproductive labour than it would no without this labour? Are there not at every moment of time in the market, alongside wheat and meat, etc., also prostitutes, lawyers, sermons, concerts, theatres, soldiers, politicians, etc.? These lads or wenches do not get the corn and other necessaries or pleasures for nothing. In return they give or pester us with their services, which as such services have a use-value and because of their production costs also an exchange-value. Reckoned as consumable articles, there is at every moment of time, alongside the consumable articles existing in the form of goods, a quantity of consumable articles in the form of services. The total quantity of consumable articles is therefore at every moment of time greater than it would be without the consumable services. Secondly, however, the value too is greater; for it is equal to the value of the commodities which are given for these services, and is equal to the value of the services themselves. Since here, as in every exchange of commodity for commodity, equal value is given for equal value, the same value is therefore present twice over, once on the buyer s side and once on the seller s. <Adam Smith goes on to say in reference to the Physiocrats: In this the Physiocrats were right in relation to workmen and employers taken together, rent forming only a special category of the latter s profit.> ||312| <Adam Smith notes on the same occasion that is, in his criticism of the Physiocrats Book IV, Chapter IX (edit. Garnier, t. III): Here we have a double vicious circle. First: the annual product is augmented by greater productivity of labour. All means to augment this productivity (in so far as this is not due to accidents of nature such as a specially favourable season, etc.) require an increase of capital. But in order to increase the capital, the annual product of labour must be increased. First circle. Secondly: the annual product can be augmented by an increase in the quantity of labour employed. The quantity of labour employed, however, can only be increased if the capital which employs it is first increased. Second circle. Adam Smith helps himself out of both vicious circles with savings , by which he means in fact the transformation of revenue into capital. To think of the whole profit as revenue for the capitalist is already in itself wrong. The law of capitalist production requires on the contrary that a part of the surplus-labour, of the unpaid labour, performed by the workman should be transformed into capital. When the individual capitalist functions as a capitalist that is, as a functionary of capital he himself may think of this as saving; but it also appears to him as a necessary reserve fund. The increase of the quantity of labour does not however depend only on the number of workmen, but also on the length of the working-day. The quantity of labour can therefore be increased without increasing the part of the capital that is converted into wages. Similarly, on this assumption there would be no need to increase the machinery, etc. (although it would wear out more quickly; but this makes no difference). The only thing that would have to be increased is the part of the raw material that resolves itself into seed, etc. And it remains true that, taking a single country (excluding foreign trade), surplus-labour must first be applied to agriculture before it becomes possible in the industries which get their raw materials from agriculture. A part of these raw materials, such as coal, iron, wood, fish, etc. (the last-named for example as manure), in a word, all fertilisers other than animal manures, can be got by merely increasing the labour (the number of labourers remaining the same). There can therefore be no lack of these. On the other hand it has been shown above that the increase of productivity in its origin always presupposes merely the concentration of capital, not the accumulation of capital. Later however each process supplements the other.> <The reason why the Physiocrats preached laissez faire, laissez passer, in short, free competition, is correctly stated in the following passages from Adam Smith: But all fetters and restrictions placed on manufactures and foreign trade make manufactured commodities, etc., dearer. Therefore, etc. (Smith, [ibid., p.308] [Garnier trans], l.c., pp. 554-56). ||313| Smith s second view of productive and unproductive labour or rather the view that is interwoven with his other view therefore amounts to this: that the former is labour which produces commodities, and the latter is labour which does not produce any commodity . He does not deny that the one kind of labour, equally with the other, is a commodity. See above: The labour of the latter has its value, and deserves its reward as well as that of the former (that is, from the economic standpoint; there is no question of moral or other standpoints in the case of either the one or the other kind of labour). The concept commodity however implies that labour embodies, materialises, realises itself in its product. Labour itself, in its immediate being, in its living existence, cannot be directly conceived as a commodity, but only labour-power, of which labour itself is the temporary manifestation. Just as it is only in this way that wage-labour in the true sense can be explained, so it is with unproductive labour , which Adam Smith throughout defines by the costs of production required to produce the unproductive labourer . A commodity must therefore be conceived as something different from labour itself. Then, however, the world of commodities is divided into two great categories: On one side, labour-power. On the other side, commodities themselves. The materialisation, etc., of labour is however not to be taken in such a Scottish sense as Adam Smith conceives it. When we speak of the commodity as a materialisation of labour in the sense of its exchange-value this itself is only an imaginary, that is to say, a purely social mode of existence of the commodity which has nothing to do with its corporeal reality; it is conceived as a definite quantity of social labour or of money. It may be that the concrete labour whose result it is leaves no trace in it. In manufactured commodities this trace remains in the outward form given to the raw material. In agriculture, etc., although the form given to the commodity, for example wheat or oxen and so on, is also the product of human labour, and indeed of labour transmitted and added to from generation to generation, yet this is not evident in the product. In other forms of industrial labour the purpose of the labour is not at all to alter the form of the thing, but only its position. For example, when a commodity is brought from China to England, etc., no trace of the labour involved can be seen in the thing itself (except for those who call to mind that it is not an English product). Therefore the materialisation of labour in the commodity must not be understood in that way. (The mystification here arises from the fact that a social relation appears in the form of a thing). It remains true, however, that the commodity appears as past, objectivised labour, and that therefore, if it does not appear in the form of a thing, it can only appear in the form of labour-power itself; but never directly as living labour itself (except only in a roundabout way which in practice seems the same, but whose significance lies in the determination of different rates of wages). Productive labour would therefore be such labour as produces commodities or directly produces, trains, develops, maintains or reproduces labour-power itself. Adam Smith excludes the latter from his category of productive labour; arbitrarily, but with a certain correct instinct that if he included it, this would open the flood-gates for false pretensions to the title of productive labour. In so far therefore as we leave labour-power itself out of account, productive labour is labour which produces commodities, material products, whose production has cost a definite quantity of labour or labour-time. These material products include all products of art and science, books, paintings, statues, etc., in so far as they take the form of things. In addition, however, the product of labour must be a commodity in the sense of being some vendible commodity , that is to say, a commodity in its first form, which has still to pass through its metamorphosis. (A manufacturer may himself construct a machine if he cannot get one built anywhere else, not to sell it but to make use of it as a use-value. However, he then wears it out as a part of his constant capital and so sells it piecemeal in the form of the product which it has helped to make.) ||314| Certain labours of menial servants may therefore equally well take the form of (potential) commodities and even of the same use-values considered as material objects. But they are not productive labour, because in fact they produce not commodities but immediate use-values . As for labours which are productive for their purchaser or employer himself as for example the actor s labour for the theatrical entrepreneur the fact that their purchaser cannot sell them to the public in the form of commodities but only in the form of the action itself would show that they are unproductive labours. Apart from such cases, productive labour is such as produces commodities, and unproductive labour is such as produces personal services. The former labour is represented in a vendible thing; the latter must be consumed while it is being performed. The former includes (except for that labour which creates labour-power itself) all material and intellectual wealth meat as well as books that exists in the form of things; the latter covers all labours which satisfy any imaginary or real need of the individual or even those which are forced upon the individual against his will. The commodity is the most elementary form of bourgeois wealth. The explanation of productive labour as labour which produces commodities also corresponds, therefore, to a much more elementary point of view than that which defines productive labour as labour which produces capital. Adam Smith s opponents have disregarded his first, pertinent definition, and instead have concentrated on the second, pointing out the unavoidable contradictions and inconsistencies to which it gives rise. And their attacks were made all the easier for them by their insistence on the material content of the labour, and particularly the specific requirement that the labour must fix itself in a more or less permanent product. We shall see in a moment what it was that particularly gave rise to the polemics. But first this further point. Adam Smith says of the Physiocratic system that its great merit is that it represented the wealth of nations as consisting Here we have a deduction of his second definition of productive labour. The definition of surplus-value naturally depended on the form in which value itself was conceived. In the Monetary and Mercantile systems it is therefore presented as money; by the Physiocrats, as the produce of the land, as agricultural product; finally in Adam Smith s writings as commodity in general. In so far as the Physiocrats touch on the substance of value, they resolve it entirely into pure use-value (matter, corporeal object), just as the Mercantilists resolve it into the pure form of value, the form in which the product makes itself manifest as general social labour: money. With Adam Smith, both conditions of the commodity use-value and exchange-value are combined; and so all labour is productive which manifests itself in any use-value, any useful product. That it is labour that manifests itself in the product already implies that the product is equal to a definite quantity of general social labour. As against the Physiocrats, Adam Smith re-establishes the value of the product as the essential basis of bourgeois wealth; but on the other hand he divests value of the purely fantastic form that of gold and silver in which it appeared to the Mercantilists. Every commodity is in itself money. It must be recognised that at the same time Adam Smith also falls back more or less into the Mercantilist conception of permanency in fact, inconsumability. We can recall the passage in Petty (see my first volume, p. 109, where I quote from Petty s Political Arithmetick) where wealth is valued according to the degrees in which it is imperishable, more or less permanent, and finally gold and silver are set above all other things as wealth that is not perishable . Adolphe Blanqui (Histoire de l conomie politique, Bruxelles, 1839, p.152) says [of Adam Smith]: The polemics against Adam Smith s distinction between productive and unproductive labour were for the most part confined to the dii minorum gentium* (among whom moreover Storch was the most important); they are not to be found in the work of any economist ||315| of significance of anyone of whom it can be said that he made some discovery in political economy. They are, however, the hobby-horse of the second-rate fellows and especially of the schoolmasterish compilers and writers of compendia, as well as of dilettanti with facile pens and vulgarisers in this field. What particularly aroused these polemics against Adam Smith was the following circumstance. The great mass of so-called higher grade workers such as state officials, military people, artists, doctors, priests, judges, lawyers, etc. some of whom are not only not productive but in essence destructive, but who know how to appropriate to themselves a very great part of the material wealth partly through the sale of their immaterial commodities and partly by forcibly imposing the latter on other people found it not at all pleasant to be relegated economically to the same class as clowns and menial servants and to appear merely as people partaking in the consumption, parasites on the actual producers (or rather agents of production). This was a peculiar profanation precisely of those functions which had hitherto been surrounded with a halo and had enjoyed superstitious veneration. Political economy in its classical period, like the bourgeoisie itself in its parvenu period, adopted a severely critical attitude to the machinery of the State, etc. At a later stage it realised and as was shown too in practice learnt from experience that the necessity for the inherited social combination of all these classes, which in part were totally unproductive, arose from its own organisation. In so far as those unproductive labourers do not produce entertainment, so that their purchase entirely depends on how the agent of production cares to spend his wages or his profit in so far on the contrary as they are necessary or make themselves necessary because of physical infirmities (like doctors), or spiritual weakness (like parsons), or because of the conflict between private interests and national interests (like statesmen, all lawyers, police and soldiers) they are regarded by Adam Smith, as by the industrial capitalists themselves and the working class, as incidental expenses of production, which are therefore to be cut down to the most indispensable minimum and provided as cheaply as possible. Bourgeois society reproduces in its own form everything against which it had fought in feudal or absolutist form. In the first place therefore it becomes a principal task for the sycophants of this society, and especially of the upper classes, to restore in theoretical terms even the purely parasitic section of these unproductive labourers , or to justify the exaggerated claims of the section which is indispensable. The dependence of the ideological, etc., classes on the capitalists was in fact proclaimed. Secondly, however, a section of the agents of production (of material production itself) were declared by one group of economists or another to be unproductive . For example, the landowner, by those among the economists who represented industrial capital (Ricardo). Others (for example Carey) declared that the merchant in the true sense of the word was an unproductive labourer. Then even a third group came along who declared that the capitalists themselves were unproductive, or who at least sought to reduce their claims to material wealth to wages , that is, to the wages of a productive labourer . Many intellectual workers seemed inclined to share the scepticism in regard to the capitalist. It was therefore time to make a compromise and to recognise the productivity of all classes not directly included among the agents of material production. One good turn deserves another; and, as in the Fable of the Bees, it had to be established that even from the productive , economic standpoint, the bourgeois world with all its unproductive labourers is the best of all worlds. This was all the more necessary because the unproductive labourers on their part were advancing critical observations in regard to the productivity of the classes who in general were fruges consumere nati *; or in regard to those agents of production, like landowners, who do nothing at all, etc. Both the do-nothings and their parasites had to be found a place in this best possible order of things. Thirdly: As the dominion of capital extended, and in fact those spheres of production not directly related to the production of material, wealth became also more and more dependent on it especially when the positive science (natural sciences) were subordinated to it as serving material production ||316| the sycophantic underlings of political economy felt it their duty to glorify and justify every sphere of activity by demonstrating that it was linked with the production of material wealth, that it was a means towards it; and they honoured everyone by making him a productive labourer in the primary sense, namely, a labourer who labours in the service of capital, is useful in one way or another to the enrichment of the capitalist, etc. In this matter even such people as Malthus are to be preferred, who directly defend the necessity and usefulness of unproductive labourers and pure parasites. It is not worth the trouble to examine in detail the inanities of Germain Garnier (Smith s translator), the Earl of Lauderdale, Brougham, Say, Storch, and later Senior, Rossi, and so on, in regard to this question. We shall cite only a few characteristic passages. But first a passage from Ricardo, in which he shows that it is much more advantageous for the productive labourers when the owners of surplus-value (profit, rent) consume it in unproductive labourers (as menial servants, for instance) than in luxury products produced by the productive labourers. <Sismondi, Nouveaux principes, t. I, p. 148, accepts the correct statement of Smith s distinction (as also of course does Ricardo): the real distinction between productive and unproductive classes is: Sismondi likewise following Adam Smith on surplus-value: Ricardo says: D Avenant quotes from an old statistician, Gregory King, a list entitled Scheme of the Income and Expense of the Several Families of England, calculated for the year 1688. In this, the erudite King divides the whole nation into two main classes: Increasing the Wealth of the Kingdom 2,675,520 heads , and Decreasing the Wealth of the Kingdom 2,825,000 heads ; thus the former is the productive class, the latter the unproductive . The productive class consists of Lords, Baronets, Knights, Esquires, Gentlemen, Persons in Office and Places, merchants in oversea trade, Persons in the Law, Clergymen, freeholders, farmers, persons in liberal arts and sciences, shopkeepers and tradesmen, artisans and handicrafts, Naval Officers, Military Officers. As against these, the unproductive class consists of: common seamen, labouring people and out servants (these are agricultural labourers and day wage-labourers in manufacture), cottagers (who in D Avenant s time were still a fifth of the total English population), ||317| common soldiers, paupers, gipsies, thieves, beggars and vagrants generally. D Avenant explains this list of ranks prepared by the learned King as follows: In addition to this, the following passage from D Avenant is rather characteristic of the views of the Mercantilists on surplus-value: <This work printed in the form of an appendix to another work of D Avenant s, which he tries to defend, is not the same as the Considerations on the East-India Trade, 1701, quoted by McCulloch.> Incidentally, it must not be thought that these Mercantilists were as stupid as they were made out to be by the later Vulgar-Freetraders. In Volume II of his Discourses on the Publick Revenues, and on the Trade of England, etc., London, 1698, D Avenant says among other things: Moreover, Petty too had the conception of productive labourers (though he also includes soldiers): In this connection Petty also explains the advantages of the division of labour: Here too Petty strikes quite a Smithian note when he continues: ||VIII-346| Petty, Surplus-Value. In one passage of Petty s there can be seen an anticipation of the nature of surplus-value, although he treats it only in the form of rent. Especially when it is put alongside the following passage, in which he determines the relative value of silver and corn by the relative quantities of each that can be produced in the same labour-time. The passages to which I alluded above are the following: ||VIII-364| <Petty. The following passage, where rent in general is treated as a surplus-value, a net product, should be compared with the one quoted above from Petty: ||VII-318| Mr. John Stuart Mill, in Essays on Some Unsettled Questions of Political Economy, London, 1844, also struggled with the problem of productive and unproductive labour; but in so doing he in fact added nothing to Smith s (second) definition except that labours which produce labour-power itself are also productive. We will now briefly run over the twaddle written against Adam Smith in connection with productive and unproductive labour. ||319| The fifth volume [contains Garnier s] Notes to his translation of Smith s Wealth of Nations (Paris, 1802). On productive labour in the highest sense Garnier shares the view of the Physiocrats; he only makes it somewhat weaker. He opposes Smith s view that productive labour .., is that which realises itself in some particular subject or vendible commodity, which lasts for some time at least after that labour is past ([Garnier] 1.c., t. V, p. 169). |VII-319|| ||VIII-347| (Germain Garnier). He brings forward various arguments against Adam Smith (which are in part repeated by later authors). First. <It is therefore productive because it produces some use-value and is sold, has an exchange-value, and is thus itself a commodity.> In developing this point, however, Garnier cites examples by way of illustration, in which the unproductive labourers do the same thing, produce the same use-value or the same kind of use-value as the productive . For example: (Adam Smith nowhere says that the labour which fixes itself in a more or less permanent object cannot be equally well repairs as the making of new things.) (They can therefore be regarded as machines for maintaining value, or rather use-values. Destutt de Tracy also asserts this view of the saving of labour. See further on. The unproductive labour of one does not become productive by saving the other unproductive labour. One of the two performs it. A part of Adam Smith s unproductive labour but only the part which is absolutely necessary in order to consume things, which so to speak belongs to the costs of consumption (and then, too, only when it saves this time for a productive worker) becomes necessary as a result of the division of labour. But Adam Smith does not deny this division of labour . If everyone had to perform productive and unproductive labour, and through the dividing up of these kinds of labour between two persons both were better performed, according to Adam Smith this would in no way alter the circumstance that one of these labours is productive and the other unproductive.) ||348| Secondly. A Frenchman cannot forget the ponts et chauss es.* Why, he says, call productive In so far as such a lad takes part in the production (or conservation and reproduction) of material things which could be sold were they not in the hands of the State, Smith might call his labour productive . Inspectors of the great social manufacture are purely French creations. Thirdly. Here Garnier falls into moralising . Why should the manufacturer of perfumery, who flatters my sense of smell , be productive and not the musician, who enchants my ear ? (p. 173). Smith would reply: because the former supplies a material product and the latter does not. Morals and the merits of the two lads have nothing to do with the distinction. Fourthly. Is it not a contradiction that the violin maker, the organ builder, the music dealer, the mechanic, etc. , are productive, and the professions for which these labours are only preparations are unproductive? On this reasoning, a man who eats corn is just as productive as the man who produces it. For with what aim is corn produced? In order to eat it. So if the labour of eating is not productive, why should the labour of cultivating corn be productive, since it is only a means for attaining this aim? Besides, the man who eats produces brain, muscles, etc., and are these not just as worthy products as barley or wheat? an indignant friend of humanity might ask Adam Smith. In the first place, Adam Smith does not deny that the unproductive labourer produces a product of some sort. Otherwise he would not be a labourer at all. Secondly, it may seem strange that the doctor who prescribes pills is not a productive labourer, but the apothecary who makes them up is. Similarly the instrument maker who makes the fiddle, but not the musician who plays it. But that would only show that productive labourers produce products which have no purpose except to serve as means of production for unproductive labourers. Which however is no more surprising than that all productive labourers, when all is said and done, produce firstly the means for the payment of unproductive labourers, and secondly, products which are consumed by those who do not perform any labour. Of all these comments, No. II is that of a Frenchman who can t forget his ponts et chauss es; No. III amounts only to morals; No. IV either contains the stupidity that consumption is just as productive as production <which is not true in bourgeois society, where one produces and another consumes> or that some productive labour merely produces the material for unproductive labour, which Adam Smith nowhere denies. Only No. I contains the correct point that Adam Smith, by his second definition, calls the same kinds of labour ||349| productive and unproductive or rather that according to his own definition he would have to call a relatively small part of his unproductive labour productive; a point therefore that does not tell against the distinction, but against the subsumption of certain activities under the distinction or the way it is applied. After making all these comments, the learned Garnier finally comes to the point. In these last words Garnier shows, in spite of himself, the concealed association of ideas that exists between Smith s first distinction (labour which is exchanged against capital, and labour which is exchanged against revenue) and his second (labour which fixes itself in a material, vendible commodity and labour which does not so fix itself). The latter by its nature cannot for the most part be subordinated to the capitalist mode of production; the former can. To say nothing of the fact that on the basis of capitalist production, where the great majority of material commodities material and palpable things is produced by wage-labourers under the domination of capital, [unproductive] labours (or services, whether those of a prostitute or of the Pope) can only be paid for either out of the wages of the productive labourers, or out of the profits of their employers (and the partners in those profits), quite apart from the circumstances that those productive labourers produce the material basis of the subsistence, and consequently, the existence, of the unproductive labourers. It is however characteristic of this shallow French cur that he, who wants to be an expert in political economy and so an explorer of capitalist production, considers inessential the feature which makes this production capitalist the exchange of capital for wage-labour instead of the direct exchange of revenue for wage-labour or the revenue which the labourer directly pays to himself. By so doing Garnier makes capitalist production itself an inessential form instead of a necessary though only historically, that is, transiently necessary form for the development of the social productive powers of labour and the transformation of labour into social labour. (Smith nowhere says that the labour or its product must enter into the circulating capital. It can enter directly into fixed capital, like the mechanic s labour repairing a machine in a factory. But in this case its value enters into the circulation of the product, the commodity. And the repairers, etc., who do this labour as servants, do not exchange ||350| their labour against capital but against revenue.) This last but is quite childish. In the first place, a part of the capital is replaced by capital and not by revenue, whether this part of the capital circulates or does not circulate (as in the case of seed). When a coal-mine supplies coal to an ironworks and gets from the latter iron which enters into the operations of the coal-mine as means of production, the coal is in this way exchanged for capital to the amount of the value of this iron, and reciprocally the iron, to the amount of its own value, is exchanged as capital for coal. Both (considered as use-values) are products of new labour, although this labour was produced with means of labour that were already in existence. But the value of the product of the year s labour is not the product of the labour [newly added] in the year. It also replaces the value of the past labour which was materialised in the means of production. Therefore the part of the total product which is equal to this value is not a part of the product of the year s labour, but the reproduction of past labour. Let us take for example the product of the daily labour of a coal-mine, an ironworks, a timber producer and a machine-building factory. Let the constant capital in all these industries be equal to one-third of all the component parts of value in the product: that is, let the proportion of pre-existing labour to living labour be 1 : 2. Then all these industries produce each a daily product of x, x', x'', x'''. These products are certain quantities of coal, iron, timber and machinery. As such products, they are products of the day s labour (but also of the daily consumed raw materials, fuel, machinery, etc., which have all contributed to the day s production). Let the values of these be equal to z, z', z'', z'''. These values are not the product of the day s labour, since z/3, z'/3, z''/3, z'''/3 are only equal to the value which the constant elements of z, z', z'', z''' had before they entered into the day s labour. Therefore also x/3, x'/3, x''/3, x'''/3, or a third part of the use values produced, represent only the value of the pre-existing labour and continually replace it. <The exchange which here takes place between pre-existing labour and the product of living labour is of quite a different nature from the exchange between labour-power and the conditions of labour existing as capital.> x=z; yet z is the value of the total x, but one-third of z is equal to the value of the raw material, etc., contained in the total x, Thus is a part of the day s product of the labour <but not at all the product of the day s labour, but on the contrary of the previous pre-existing labour combined with it> in which the preexisting labour combined with the day s labour reappears and is replaced. Now it is true that each aliquot part of x, which is simply the quantity of actual products (iron, coal, etc.), represents in its value one-third pre-existing labour and two-thirds labour performed or added the same day. Pre-existing labour and the day s labour enter into the total product in the same proportion as they enter into each separate product of which the total product is made up. But if I divide the total product into two parts, putting one-third on one side and two-thirds on the other, it is the same as if the one-third represents only pre-existing labour and the other two-thirds only the labour of the day. In fact the first one-third represents all past labour which entered into the total product, the full value of the means of production consumed. After deducting this one-third, therefore, the other two-thirds can represent only the product of the day s labour. The two-thirds in fact represent the total amount of the day s labour that was added to the means of production. The last two-thirds are therefore equal to the producer s revenue (profit and wages). He can consume them, that is, spend them on articles which enter into his individual consumption. Suppose that these two-thirds of the coal produced daily were bought by the consumers or purchasers not with money, but with the commodities which they have previously transformed into money in order to buy coal with it. A part of these two-thirds of the coal will enter into the individual consumption of the coal producers themselves, for heating, etc. This part therefore does not enter into circulation, or if it does first enter into circulation it will be withdrawn again from it ||351| by its own producers. Minus this part of the two-thirds which the producers of coal themselves consume, they must exchange all the rest of it (if they want to consume it) for articles which enter into individual consumption. In this exchange it is a matter of complete indifference to them whether the sellers of the consumable articles exchange capital or revenue for the coal; that is to say, whether for example the cloth manufacturer exchanges his cloth for coal in order to heat his private dwelling (in this case the coal itself in turn is an article of consumption for him, and he pays for it with revenue, with a quantity of cloth that represents profit); or whether James, the cloth manufacturer s footman, exchanges the cloth he has received as wages for the coal (in this case the latter is once more an article of consumption and exchanged for the revenue of the cloth manufacturer, who in turn however has exchanged his revenue for the unproductive labour of the footman); or whether the cloth manufacturer exchanges cloth for coal in order to replace the coal required in his factory that has been used up. (In the latter case the cloth that the cloth manufacturer exchanges represents for him constant capital, the value of one of his means of production; and the coal represents for him not only the value but his means of production in kind, But for the coal producer the cloth is an article of consumption, and both cloth and coal represent for him revenue; the coal, revenue in its non-realised form; the cloth, revenue in its realised form.) But as for the last one-third of the coal, the coal producer cannot spend it on articles which enter into his individual consumption; he cannot spend it as revenue. It belongs to the process of production (or reproduction) and must be transformed into iron, timber, machinery into articles which form the component parts of his constant capital and without which the production of coal cannot be renewed or continued. He could, it is true, exchange also this one-third for articles of consumption (or, what is the same thing, for the money of the producers of these articles), but in fact only on the condition that he exchanges these consumption articles in turn for iron, timber, machinery that they enter neither into his own consumption nor into the outlay of his revenue, but into the consumption and revenue outlays of the producers of timber, iron and machinery; all of whom, however, in turn find themselves in the position of not being able to expend one-third of their product on articles for individual consumption. Now let us assume that coal enters into the constant capital of the producers of iron and timber, and of the machine builder. On the other hand iron, timber, and machinery enter into the constant capital of the producer of coal. In so far as these products of theirs enter [into their] mutual [constant capital] to the same amount of value, they replace themselves in kind, and one has to pay the other only the balance for the surplus that he has bought from him in excess of what he has sold to him. In fact, in such a transaction money appears in practice (through the medium of bills of exchange, etc.) only as means of payment, not as coin, means of circulation; and only the balance is paid in money. The producer of coal will need a part of this one-third of his coal for his own reproduction, just as he deducted from the product a part of the two-thirds for his own consumption. The whole quantity of coal, iron, timber and machinery which are reciprocally replaced in this way by the exchange of constant capital for constant capital, of constant capital in one natural form for constant capital in another natural form, has absolutely nothing to do either with the exchange of revenue for constant capital or with the exchange of revenue for revenue. It plays exactly the same role as seed in agriculture or the capital stock of cattle in cattle-rearing. It is a part of the yearly product of labour, but it is not a part of the product of the year s [newly- added] labour (on the contrary it is a part of the product of the year s labour plus the pre-existing labour), which (conditions of production remaining the same) replaces itself annually as means of production, as constant capital, without entering into any circulation other than that between dealers and dealers and without affecting the value of the part of the product which enters into the circulation between dealers and consumers. Let us assume that the whole one-third of the coal is thus exchanged in kind for its own elements of production, iron, timber, machinery. <It might be possible for example to exchange the entire amount direct for machinery; but the machine builder in turn would exchange it as constant capital, not only for his own but for that of the producers of iron and timber.> In fact, each hundredweight of the two-thirds of his product in coal ||352| which he exchanged for articles of consumption, exchanged as revenue, would, from the standpoint of value, consist of two parts, as the total product does. One-third of a hundredweight would be equal to the value of the means of production used up in the hundredweight, and two-thirds of the hundredweight would be equal to the labour newly added to this third by the producers of the coal. But if the total product is for example equal to 30,000 hundredweight he exchanges only 20,000 hundredweight as revenue. On the assumption made, the other 10,000 hundredweight would be replaced by iron, timber, machinery, etc., etc.; in a word, the whole value of the means of production used up in the 30,000 hundredweight would be replaced in kind by means of production of the same sort and of equal value. The buyers of the 20,000 hundredweight thus do not pay a single farthing for the value of the pre-existing labour contained in the 20,000 hundredweight; for the 20,000 represent only two-thirds of the value of the total product in which the newly-added labour is realised. It comes to the same thing, therefore, as if the 20,000 hundredweight represented only labour newly added (during the year, for example) and no pre-existing labour. The buyer therefore pays the whole value of each hundredweight, pre-existing labour plus newly-added labour, and yet he pays only for the newly-added labour; and that is because the quantity he buys is only 20,000 hundredweight, only that quantity of the total product which is equal to the value of all the newly-added labour. Just as little does he pay for the farmer s seed in paying for the wheat which he eats. The producers have mutually replaced this part for each other; therefore they do not need to have it replaced a second time. They have replaced it with the part of their own product which it is true is the year s product of their labour, but is not at all the product of their year s labour, but on the contrary is the part of their annual product that represents the pre-existing labour. Without the new labour the product would not be there; but in the same way it would not be there without the labour materialised in the means of production. If it were merely the product of the new labour, then its value would be less than it now is, and there would be no part of the product to be returned to production. But if the other method of labour [using means of production] were not more productive and did not yield more product in spite of a part of the product having to be returned to production, it would not be used. Although no part of the value of the one-third of the coal enters into the 20,000 hundredweight of coal sold as revenue, any change in the value of the constant capital which the one-third or 10,000 hundredweight represented would nevertheless bring about a change of value in the other two-thirds which are sold as revenue. Let production in iron, timber, machinery and so on, in a word, in the elements of production of which the one-third of the product is composed, become more costly. Let the productivity of mining labour remain the same. The 30,000 hundredweight are produced with the same quantity of iron, timber, coal, machinery and labour as before. But since iron, timber and machinery have got dearer, cost more labour-time than before, more coal than before must be given for them. ||353| As previously, the product would be equal to 30,000 hundredweight. The coal-mining labour has remained as productive as it was before. With the same quantity of living labour and the same amount of timber, iron, machinery, etc., it produces 30,000 hundredweight as before. The living labour, as before, is represented by the same value, say 20,000 (reckoned in money). On the other hand timber, iron, etc., in a word, the constant capital, now cost 16,000 instead of 10,000; that is to say, the labour-time contained in them has increased by six-tenths, or 60 per cent. The value of the total product is now equal to 36,000; it was 30,000 before; it has therefore risen by one-fifth, or 20 per cent. So also every aliquot part of the product costs one-fifth, or 20 per cent, more than before. If a hundredweight cost 1 previously, then now it costs 1 plus one-fifth of 1= 1. 4s. Previously, 1/3 or 3/9 of the total product was equal to constant capital, 2/3 equal to labour added. Now the proportion of the constant capital to the value of the total product is as 16,000 : 36,000 = 16/36 = 4/9. It amounts therefore to one-ninth [of the value of the total product] more than before. The part of the product which is equal to the value of the labour added was formerly 2/3 or 6/9 of the product, now it is 5/9. So we get: The coal miners labour would not have become less productive; but the product of their labour plus the pre-existing labour would have become less productive; that is, 1/9 more of the total product would be required to replace the component part of the value ||354 | formed by the constant capital. 1/9 less of the product would be equal to the value of the labour added. Now as before the producers of iron, timber, etc., would only pay for 10,000 cwt. of coal. Previously these cost them 10,000. They will now cost them 12,000. A part of the costs of the constant capital would therefore be made good, since they would have to pay the increased price for the part of the coal which they get in replacement of iron, etc. But the producer of coal has to buy raw material, etc., from them to the amount of 16,000. There remains therefore a debit balance of 4,000, that is, 3,333 1/3 cwt. of coal. He must therefore, as before, supply 16,666 2/3 + 3,333 1/3 cwt. = 20,000 cwt. of coal = two-thirds of the product to the consumers, who would now have to pay 24,000 for it instead of 20,000. In so doing they would have to replace for him not only labour, but also a part of the constant capital. As regards the consumers, the matter would be very simple. If they wished to consume the same quantity of coal as before, they must pay one-fifth more for it and so must spend one-fifth of their revenue less on other products, if the production costs have remained the same in every branch of production. The difficulty lies only in this: how does the producer of coal pay for the 4,000 of iron, timber, etc., for which their producers do not want coal in exchange? He has sold the 3,333 1/3 cwt., equal to this 4,000, to the consumers of coal, and has received in exchange commodities of all kinds. But these cannot enter into his consumption or that of his labourers, but must pass into the consumption of the producers of iron, timber, etc., for he must replace in these articles the value of his 3,333 1/3 cwt. It will be said: it s quite a simple matter. All consumers of coal have to consume 1/5 less of all other commodities, or each of them has to give 1/5 more of his commodities for coal. The producers of timber, iron, etc., consume exactly this 1/5 more. However, it is not prima facie evident how the lowered productivity in the ironworks, machine building, timber-felling, etc., is to enable their producers to consume a larger revenue than before, since the price of their articles is supposed to be equal to their values, and, consequently, to have risen only in proportion to the diminished productivity of their labour. Now it is assumed that iron, timber, machinery have risen in value by three-fifths, by 60 per cent. There are only two causes which can give rise to this. Either the iron, timber, etc., production has become less productive, because the living labour used in it has become less productive, that is, a greater quantity of labour must be used to produce the same product. In this case the producers must use three-fifths more labour than before. The rate of wages has remained the same, because the lowered productivity of labour has only a passing effect on individual products. Therefore the rate of surplus-value also has remained the same. The producer needs 24 days labour where he needed 15 before; but he pays the labourers, as before, only 10 hours labour on each of the 24 [working-days], and makes them work 2 [hours] for nothing on each of these days, as previously. If the 15 [labourers] have therefore done 150 hours labour for themselves and 30 for him; so the 24 work 240 hours for themselves and 48 for him. (Here we don t worry about the rate of profit.) Wages have only fallen in so far as they are spent in iron, timber and machinery, etc., which is not the case. The 24 labourers now consume 3/5 more than the 15 did before. So the coal producers can set aside correspondingly more for them from the value of the 3,333 1/3 cwt, (i.e., for their master, who pays out the wages). Or the reduced productivity in the production of iron, timber, etc., arises from the fact that parts of their constant capital, of their means of production, have become dearer. Then the same alternative applies, and finally the reduced productivity must result in the use of a greater quantity of living labour; therefore also in increased wages, which the coal producer has partly received from the consumers in the 4,000. In the branches of production where more labour is employed, the amount of the surplus-value will have risen because the number of workers employed is greater. On the other hand, the rate of profit will have fallen in so far as all component parts of their constant capital into which their own product enters [have risen]; whether they themselves use a part of their own product as means of production, or, as in the case of coal, their product enters as a means of production into their own means of production. However, if their circulating capital laid out in wages has increased more than the part of the constant capital that they have to replace, their rate of profit will also have risen, and they ||355| will participate in the consumption of a part of the 4,000. An increase in the value of the constant capital (arising from lowered productivity in the branches of labour which supply it) raises the value of the product into which it enters as constant capital, and reduces the part of the product (in kind) which replaces the newly-added labour, thus making it less productive in so far as this is reckoned in its own product. For the part of the constant capital which is exchanged in kind, the position is the same as it was. The same quantity of iron, timber and coal as before will be exchanged in kind in order to replace the iron, timber and coal that has been used up, and in this transaction the higher prices will balance each other. But the surplus of coal which now forms a part of the constant capital of the coal producer and does not enter into this exchange in kind is, as before, exchanged for revenue (in the case given above, in part not only for wages but also for profit); this revenue, however, instead of going to the former consumers, accrues to the producers in whose spheres of production a greater quantity of labour is used, that is, the number of labourers has increased. If a branch of industry produces products which enter only into individual consumption, and neither into other industries as means of production (by means of production constant capital is always meant here) nor into their own reproduction (as for example in agriculture, cattle-raising, or the coal industry, into which coal itself enters as auxiliary material), then the annual product of this branch<any possible surplus over the annual product making no difference in this connection> must always be paid for out of revenue, wages or profit. Let us take the case of the linen given earlier. Three yards of linen consist of: two-thirds constant capital and one-third labour added. One yard of linen therefore represents labour added. If the surplus-value is 25 per cent, then one-fifth of the 1 yard represents the profit, the other four-fifths represent the reproduction of the wages. The manufacturer himself consumes the one-fifth, or what is the same thing, others consume it and pay him the value, which he consumes in their own or in other commodities. <To simplify matters, here the whole profit is wrongly considered as revenue.> But he expends the four-fifths of a yard again in wages; his labourers consume them as their revenue either directly or in exchange for other consumable products, whose owners consume the linen. This is the total part of the 3 yards of linen the 1 yard which the linen producers can themselves consume as revenue. The other 2 yards represent the manufacturer s constant capital; they must be reconverted into the conditions of production for linen yarn, machinery, etc. From the standpoint of the manufacturer, the exchange of the 2 yards of linen is an exchange of constant capital; but he can only exchange it against the revenue of other people. So he pays for the yarn, say, with 4/5 of the 2 yards or 8/5 yards, and for the machinery with 2/5 of a yard. The spinner and machine builder in turn can each consume 1/3 of what they get, that is, the former, out of 8/5 yards, 8/15 of a yard; the latter 2/15 out of the 2/5 of a [yard]. Added together, 10/15 or 2/3 of a yard. But 20/15 or 4/3 yards must replace for them the raw material, flax, iron, coal, etc., and each of these articles in turn consists of one part which represents revenue (labour newly added), and another part which represents constant capital (raw materials and fixed capital, etc.). The last 4/3 yards, however, can only be consumed as revenue. What therefore ultimately appears as constant capital in yarn and machinery and is used by the spinner and machine builder to replace the flax, iron and coal (except for the part of the iron, coal, etc., which the machine builder replaces with machines) can only represent the part of the flax, iron and coal which forms the revenue of the flax, iron and coal producers, so that there is no constant capital to be replaced in this; that is to say, it must belong to the part of the product into which, as shown above, no part of the constant capital enters. But these producers consume what is their revenue in iron, coal, flax, etc., in linen or in other consumable products, because their own products do not enter in that form, or only to a small extent, into their individual consumption. Thus a part of the iron, flax, etc., can be exchanged for a product which only enters into individual consumption, that is linen, and in exchange for it replace for the spinner all, and for the machine builder part, of his constant capital; while in turn the spinner and machine builder, with the part of their yarn and machinery that represents revenue, consume linen and thereby replace the weaver s constant capital. Thus in fact the whole of the linen is resolved into the profits and wages of the weaver, spinner, machine builder, flax-grower and producers of coal and of iron, while at the same time they replace the whole of the constant capital for the linen manufacturer and the spinner. The account would not balance if the final producers of raw materials had to replace their own constant capital by exchange with the linen, since this is an article for individual consumption, which does not enter into any sphere of production as means of production, ||356| as part of the constant capital. The account balances, because the linen bought by the flax-grower, producers of coal and of iron, machine builder, etc., with their own product, replaces for them only the part of their product which consists in revenue for them, but in constant capital for those who buy their products. That is only possible because they replace the part of their product which does not consist of revenue and which therefore cannot be exchanged for consumable products, in kind or by the exchange of constant capital for constant capital. In the example given above it may seem strange that it is assumed that the productivity of labour in a given branch of industry has remained the same, and yet that it has fallen, if the productivity of the living labour employed in this branch of industry is reckoned in its own product. But this is very simply explained. Suppose the product of a spinner s labour is equal to 5 lbs. of yarn. Assume that he needs for this only 5 lbs. of cotton (that is, there is no waste); and that an lb. of yarn costs 1 shilling (we leave the machinery out of account; that is, we suppose that its value has neither fallen nor risen; for the case we are considering, therefore, its value is equal to nil). [Let] cotton [cost] 8d. an lb. Of the 5s, which the 5 lbs. of yarn costs, 40d. (5x8d.)=3s. 4d. is for the cotton, and 5x4d.=20d.=1s. 8d, is the newly-added labour. Of the total product, therefore, constant capital amounts to 3s. 4d., [that is,] 3 1/3 lbs, of yarn, and labour to 1 2/3 lbs. of yarn, Hence two-thirds of the 5 lbs. of yarn replace constant capital and one-third of the 5 lbs, of yarn, or 1 2/3 lbs., is the part of the product which pays for the labour. Assume that the price of an lb. of cotton now rises by 50 per cent, from 8d. to 12d., or 1s. Then we have for 5 lbs, of yarn, first, 5s. for 5 lbs. of cotton, and 1s. 8d. for labour added, whose quantity, and therefore whose value expressed in money, remains the same. Thus the 5 lbs. of yarn now costs 5s, plus 1s. 8d.=6s, 8d. Of this 6s. 8d., however, raw material is now 5s, and labour 1s. 8d. 6s. 8d.=80 d., of which 60d, is for raw material and 20d. for labour. Labour now only forms 20d, of the value of the 5 lbs., 80d., or 1/4=25 per cent; previously, 33 1/3 per cent. On the other hand the raw material is 60d = 3/4 = 75 per cent; previously it was only 66 2/3 per cent. As the 5 lbs. of yarn now costs 80d., 1 lb. costs 80/5d.=16d. For his 20d. the value of the [newly-added] labour [the spinner] will therefore get 1 1/4 lbs, of the 5 lbs, of yarn, and [the other] 3 3/4 lbs. [go for] raw material. Previously, 1 2/3 lbs. were for labour (profit and wages) and 3 1/3 lbs, for constant capital. Reckoned in its own product, therefore, the labour has become less productive, although its productivity has remained the same and only the raw material has got dearer. But it has remained equally productive, because the same labour has transformed 5 lbs. of cotton into 5 lbs. of yarn in the same time, and the actual product of this labour (considered as use-value) is only the form of yarn which has been given to the cotton. The 5 lbs. of cotton have been given the form of yarn as before, with the same labour. The actual product, however, consists not only of this form of yarn but also of the raw cotton, the material which has been put into this form, and the value of this material now forms a greater part of the total product than it did before, in proportion to the labour which gives it the form. Consequently the same quantity of spinning labour is paid for in less yarn, or the part of the product which replaces it has become smaller. So much for that. So in the first place Garnier is wrong when he says that the whole capital is in the end always replaced by consumer s revenue, since a part of the capital can be replaced by capital and not by revenue. Secondly, it is in itself a silly statement, since revenue itself, in so far as it is not wages (or wages paid by wages, revenue derived from wages), is profit on capital (or revenue derived from profit on capital). Finally, it is silly to say that the part of capital which does not circulate (in the sense that it is not replaced by consumer s revenue) yields no profit to its possessor . In fact conditions of production remaining the same this part yields no profit (or rather, no surplus-value). But without it capital could in no case produce its profit. ||357| All that can be deduced from this difference is that, in order to employ productive people, what is required is not only the revenue of the person who enjoys their labour, but also a capitol which yields profit to intermediaries, while to employ non-productive people the revenue which pays them is most often sufficient (l.c., p. 175). This one sentence is such a bundle of nonsense that it makes it clear that Garnier, the translator of Adam Smith, in fact understood nothing of what Adam Smith wrote, and in particular had no conception whatever of the essence of the Wealth of Nations namely, the view that the capitalist mode of production is the most productive mode (which it absolutely is, in comparison with previous forms). First, it is an extremely silly objection to raise against Smith, who declared that unproductive labour was labour paid directly from revenue, that to employ non-productive people the revenue which pays them is most often sufficient . Now however the antithesis: (How productive then must agricultural labour be for Monsieur Garnier, which in addition to the revenue which enjoys the product of the land, requires a capital which not only yields profit to intermediaries, but in addition a rent to the landowner!) In order to employ these productive people , what is necessary is not first capital that employs them, and secondly revenue that enjoys their labour, but nothing other than capital, which produces the revenue, which enjoys the fruit of their labour. If as a capitalist tailor I lay out 100 in wages, this 100 produces for me say 120. It produces for me a revenue of 20, with which I can then, if I want to, also enjoy tailoring labour in the form of a frockcoat . If on the other hand I buy clothes for 20 in order to wear them, it is obvious that these clothes have not created the 20 with which I buy them. And the case would be the same if I got a jobbing tailor to come to my house and made him sew coats for me for 20. In the first case I received 20 more than I had before, and in the second case, after the transaction, I have 20 less than I had before. Moreover, I would soon realise that the tailor whom I pay directly from revenue does not make the coat as cheaply as if I bought it from the intermediary. Garnier imagines that the profit is paid by the consumer. The consumer pays the value of the commodity; and although it contains a profit for the capitalist, the commodity is cheaper for him, the consumer, than if he had spent his revenue directly on labour causing it to produce on a small scale for his personal requirements. It is obvious here that Garnier has not the slightest idea of what capital is. He continues: This observation is correct, but it only shows that a part of the labourers whom Adam Smith in his second definition calls unproductive are productive according to his first definition. In fact, wage-labour on a mass scale is only another expression for capital on a mass scale. If productive labourers are such as are paid from capital, and unproductive such as are paid from revenue, the proportion of the productive class to the unproductive is obviously that of capital to revenue. The proportional growth of the two classes, however, will not depend only on the existing proportion of the mass of capitals to the mass of revenues. It will depend on the proportion in which the increasing revenue (profit) is transformed into capital or expended as revenue. Although the bourgeoisie was originally very thrifty, with the growing productivity of capital, i.e., of the labourers, ||358| it imitates the retainer system of the feudal lords. According to the latest report (1861 or 1862)* on the factories, the total number of persons (managers included) employed in the factories properly so called of the United Kingdom was only 775,534,* while the number of female servants in England alone amounted to 1 million. What a convenient arrangement it is that makes a factory girl to sweat twelve hours in a factory, so that the factory proprietor, with a part of her unpaid labour, can take into his personal service her sister as maid, her brother as groom and her cousin as soldier or policeman! Garnier s last sentence is trite tautology. He makes the proportion between the productive and the unproductive classes depend, not on the proportion of capital and revenue or rather on the mass of existing commodities which are expended in the form of capital or of revenue but (?) on the customs and habits of the people, on the degree of development of its industry. In fact, capitalist production first appears at a certain stage of development of industry. As a Bonapartist senator, Garnier naturally waxes enthusiastic over lackeys and servitors in general: No class with an equal number of individuals contributes more than domestic servants to the conversion into capital of sums originating from revenue (p. 181). In fact, no class provides a more worthless section of recruits for the petty bourgeoisie. Garnier does not understand how Smith, a man who has observed things with such sagacity , does not value more highly this intermediary, placed close to the rich, in order to gather up the scraps of revenue which the latter so thoughtlessly dissipates (l.c., pp. 82, 183). He himself says in this sentence that he merely gathers up the scraps of revenue . But of what does this revenue consist? Of the unpaid labour of the productive labourer. After all these extremely worthless polemics against Smith, Garnier, relapsing into Physiocracy, declares agricultural labour the only productive labour! And why? Because it creates another new value, a value which did not exist in society, even as an equivalent, at the moment when this labour began to be performed; and it is this value which provides a rent to the owner of the land (l.c., p. 184). So what is productive labour? Labour which produces a surplus-value, a new value over and above the equivalent which it receives as wages. Smith is not to blame for Garnier s failing to understand that the exchange of capital for labour means nothing but the exchange of a commodity of a given value equal to a given quantity of labour for a greater quantity of labour than it itself contains, and thus creates a new value, a value which did not exist in society, even as an equivalent, at the moment when this labour began to be performed . |VIII-358|| ||IX-400| Monsieur Germain Garnier had published in Paris in 1796 Abr g l mmentaire des principes de l conomie politique. Along with the Physiocratic view that agriculture alone is productive another is to be found (which to a great extent explains his polemic against Adam Smith), namely, that consumption (strongly represented by the unproductive labourers ) is the source of production, and that the volume of the latter is to be measured by the volume of the former. The unproductive labourers satisfy artificial needs and consume material products, and are thus in every way useful, He also polemises, therefore, against economy (thrift). On p. xiii of his preface we find: And on p. 240, in the chapter on public debts: From this he concludes that public debts are a good thing, in that they increase these needs. |IX-400|| ||XI-421| Schmalz. In his criticism of Smith s distinction between productive labour and unproductive labour this German afterbirth of the Physiocrats says (German edition [it was published in] 1818): <There is a confusion here: the value and the price of a thing is not determined by the economy of time effected through the division of labour; but I get more use-value for the same value, labour is more productive, because a greater quantity of products is produced in the same time; however as the echo of the Physiocrats he naturally could not discover value in labour-time itself.> The following remark of this same scribbler Schmalz**** is also important for the link with Garnier, for instance his consumption system (and the economic utility of vast expenditure) with the Physiocratic system: ||VIII-358| A very inferior and superficial compilation is Charles Ganilh s Des syst mes d conomie politique, First edition Paris 1809, second 1821. (Quotations from the latter.) His twaddle is directly linked with Garnier, against whom he polemises. <Canard in Principes d conomie politique defines wealth [as] an accumulation of supeflruous labour . Had he said that it is the labour which is superfluous for keeping the labourer alive as a labourer, the definition would be correct.> Monsieur Ganilh s starting-point is the elementary fact that the commodity is the element of bourgeois wealth, and therefore labour, in order to produce wealth, must produce commodities, must sell itself or its product. From this Ganilh jumps straight into the Mercantile system. Ganilh himself declares ||359| that the commercial system which he calls a mere modification of the monetary system He thus falls into the Mercantile system, as Garnier fell into the Physiocratic. His trash, if good for nothing else, is consequently not had as a characterisation of this system and of its views on surplus-value , especially as he puts forward these views in opposition to Smith, Ricardo, etc. Wealth is exchangeable value; all labour which produces an exchangeable value or itself has an exchangeable value consequently produces wealth. The only word in which Ganilh shows himself a more profound Mercantilist, is the word general labour. The labour of individuals, or rather its product, must take the form of general labour. Only so is it exchange-value, money. In fact, Ganilh comes back to the view that wealth is equivalent to money; though no longer only gold and silver, but the commodity itself, in so far as it is money. He says: Commercial system, or the exchange of values of general labour (l.c., p. 98). This is nonsense. The product is value as the form of existence, as the incarnation of general labour, but not as the value of general labour , which would be equivalent to the value of value. But let us assume that the commodity is constituted as value, and has even taken on the form of money, is metamorphosed. It is now exchangeable value. But how great is its value? All commodities are exchangeable value. They are not different from each other in this. But what makes the exchangeable value of a definite commodity? Here Ganilh does not get beyond the crudest superficiality. A is of greater exchange-value when it exchanges for more B, C, D, etc. Ganilh is quite right when he says of Ricardo and most economists that they consider labour without exchange, although their system, like the whole bourgeois system, rests on exchange-value. This however is only due to the fact that to them the form of product as commodity seems self-evident, and consequently they examine only the magnitude of value. In exchange the products of individuals only manifest themselves as products of general labour by taking the form of money. This relativity, however, originates from the fact that they must present themselves as the form of existence of general labour, and can be reduced to it only as relative, merely quantitatively different expressions of social labour. But the exchange itself does not give them their magnitude of value. In exchange they appear as general social labour; and the extent to which they can appear as general social labour depends on the extent to which they can present themselves as social labour, that is, on the extent of the commodities for which they can be exchanged, and therefore on the expansion of the market, of trade; on the range of commodities in which they can be expressed as exchange-value. For example, were there only four different branches of production in existence, each of the four producers would produce a great part of his product for himself. If there are thousands, then he can produce his total product as commodities. It can enter entirely into exchange. But Ganilh imagines, with the Mercantilists, that the magnitude of value is itself the product of exchange, whereas in fact it is only the form of value or the form of commodity which the product receives through exchange. If this means that things, use-values, only become value, receive this form as relative expressions of social labour, it is a tautology. But if it is intended to mean that through exchange they get a greater value than they would have had without it, it is clearly nonsense, for exchange can only increase A s magnitude of value by reducing that of B. So far as it gives A a greater value than it has before the exchange, it gives B a smaller value. A+B, therefore, has the same value after the exchange as it had before it. (First, if these things are products , they are from the start products of labour, not general elemental things provided by nature like air, etc.; if they are the most useful , they are use-values in the highest sense, use-values that everyone needs; if exchange gives them no value, this is only possible if everyone produces them for himself; this however contradicts ||360| the assumption that they are produced for exchange; therefore the whole proposition is nonsense.) For Monsieur Ganilh, exchange is a mystical being. If the most useless products are no use for anything, have no use-value, who will buy them? They must therefore have at least an imaginary utility for the buyer. And if he is not a fool, why should he pay more for them? Their dearness must therefore originate in some circumstance which in any case does not arise from their uselessness . Their scarcity , rarity? But Ganilh calls them the most useless products . As therefore they are products, why are they not produced in greater quantities, in spite of their great exchange-value ? If before it was the buyer who was a fool, giving a lot of money for something that had neither a real nor an imaginary use-value for him, now it is the seller, who does not produce these trifles of great exchange-value instead of utilities of small value. That their exchange-value is great in spite of their small use-value (use-value determined by the natural needs of man), must therefore be due to some circumstance that originates not from Lord Exchange, but from the product itself. Its high exchange-value is therefore not the product of exchange, but only appears in exchange. But exchangeable value is a relation of the thing to other things with which it can be exchanged. <The correct point underlying this statement is: what compels the transformation of the commodity into money is that it has to enter into exchange as an exchangeable value, but only becomes that as the result of exchange.> On the other hand, the exchanged value of A is a definite quantity of products B, C, D, etc. Therefore (according to Monsieur Ganilh) it is no longer a value, but a thing, without exchange. B, C, D, etc., were not values . A has become a value through these non-values stepping into its place (as exchanged value). By the mere change of place after they have come out of exchange and find themselves in the same position as before these things have become values. Lord Exchange fixes and determines something which was there or was not there. If only exchange creates the value of things, then this value, this product of exchange, ceases to exist as soon as exchange itself ceases. Thus what it makes, it equally unmakes. I exchange A for B+C+D, In the act of this exchange A gets value. As soon as the act is past, B+C+D stands on the side where A was, and A on the side where B+C+D was. And in fact each stands on its own, outside Lord Exchange, who only consisted of this change of place. B+C+D is now things, not values. So is A. Or exchange fixes and determines in the literal meaning of the word. A dynamometer determines and fixes the degree of strength of my muscles, but it does not make it. In this case value is not produced by exchange. ||361| From this definition exchange-value is the expression of the labour of the isolated individual as general social labour Ganilh falls once more into the crudest conception: that exchange-value is the proportion in which commodity A exchanges against commodity B, C, D, etc. A has great exchange-value if much B, C, D is given for it; but then little A is given for B, C, D. Wealth consists of exchange-value. Exchange-value consists of the relative proportion in which products exchange for each other. The total quantity of products has therefore no exchange-value, since it is not exchanged for anything. Hence, society, whose wealth consists of exchange-values, has no wealth. Consequently it follows not only, as Ganilh himself concludes, that the national wealth, which is composed of the exchange-values of labour (p.108), can never rise and can never fall in exchange-value ( therefore there is no surplus-value), but that it has no exchange-value whatever, and so is not wealth, since wealth consists only of exchangeable values. Excuse me. The consumers of wheat eat the wheat and not the exchangeable value of the wheat. They are richer in means of subsistence, but not in exchangeable value. They have exchanged a small amount of their products which have a high exchange-value because of their relative paucity as compared with the quantity of wheat for which they are exchanged for the wheat. The farmers have now received the high exchange-value and the consumers a good deal of wheat of small exchange-value, so that now the latter are the poor ones and the farmers the rich. Moreover, the total (the social total of exchange-values) loses its nature of being exchange-value in the same degree as it becomes the total of exchange-values. A, B, C, D, E, F have exchange-value in so far as they are exchanged for each other. When they have been exchanged, they are then all products for their consumers, their purchasers. By exchanging hands they have ceased to be exchange-value. And thereby the wealth of society, which is composed of exchangeable values, has disappeared. The value of A is relative; it is its exchange relation to B, C, etc. A+B has less exchange-value, because its exchange-value now exists only in relation to C, D, E, F. But the total of A, B, C, D, E, F has no exchange-value at all, because it expresses no relation. The total of commodities is not exchanged for other commodities. Therefore the wealth of society, which consists of exchange-values, has no exchange-value and is consequently not wealth. This is the old Mercantile system. Value consists in my getting not an equivalent, but more than the equivalent. At the same time, however, for Ganilh there is no equivalent, for this would imply that the value of A and the value of B are determined not by the proportion of A in B or of B in A, but by a third thing in which A and B are identical. But if there is no equivalent, there can also be no excess over the equivalent. I get less gold for iron than iron for gold. Now I have more iron, for which I get less gold. If therefore I gain on the original transaction because less gold is equal to more iron, I now lose just as much because more iron is equal to less gold. First they are equally productive of the sum, that is, the price, which they have been paid (the value of their wages). But Ganilh at once goes another step further. Immaterial labour, he says, produces the material product for which it is exchanged, so that it seems that material labour produces the product of immaterial labour. ||362| There is no difference between the labour of the workman who makes a chest of drawers for which he gets two bushels of wheat in exchange and the labour of a village fiddler for which he gets two bushels of wheat. In both cases two bushels of wheat are produced: two bushels to pay for the chest of drawers, and two bushels to pay for the pleasure given by the village fiddler. It is true that after the joiner has consumed the two bushels of wheat, a chest of drawers remains, and after the fiddler has consumed the two bushels of wheat, nothing remains; bet how many labours reputed productive are in the same case! it is net by what remains after consumption that one can judge whether a labour is productive or sterile, it is by the exchange or by the production to which it has given rise. But since the joiner s labour, as well as the fiddler s labour, is the cause of the production of two bushels of wheat, both are equally productive of two bushels of wheat, although the one, after it is finished, does not fix and realise itself in any durable object, and the other fixes and realises itself in a durable object (l.c., pp. 122-23). <So according to this the unproductive labours are productive neither because of their cost, that is, their exchange-value, nor because of the special enjoyment that they produce, that is, their use-value, but because they produce productive labour.> <If, according to Adam Smith, that labour is productive which is directly exchanged for capital, then we have to consider, apart from the form, also the material components of the capital which is exchanged for labour. It resolves itself into the necessary means of subsistence; that is for the most part into commodities, material things. What the labourer has to pay from these wages to State and Church is a deduction for services which are forced upon him; what he pays out for education is devilishly little, but when he does, his payments are productive, for education produces labour-power; what he pays out for the services of physicians, lawyers, priests, is his misfortune; there are very few unproductive labours or services left on which the labourer s wages are spent, especially as he himself provides his costs of consumption (cooking, keeping his house clean, generally even repairs).> The following statement of Ganilh s is extremely characteristic: ||363| If the wages of the factory or agricultural labourer are 500 francs, and the surplus-value (profit and rent) created by him is equal to 40 per cent, his net product would be 200 francs, and five such labourers would be required to produce the wages of 1,000 francs for the servant. If instead of the servant Lord Exchange cared to buy a mistress for 10,000 francs annually, the net product of 50 such productive labourers would be required. And because her unproductive labour brings in for the mistress twenty times as much exchange-value, wages, as the wages of the productive labourer, this person adds twenty times as much to the production of wealth , and a country produces the more wealth the higher it pays its servants and mistresses. Monsieur Ganilh forgets that only the productivity of manufacturing and agricultural labour, only the surplus created by the productive workers but not paid to them, provides any fund at all for which the unproductive labourers are paid. But he reckons like this: 1,000 francs wage, and the labour of servant or mistress as equivalent for the wage, make together 2,000 francs. The value of servants and mistresses, that is, their production costs, depend entirely on the net product of the productive labourers. Indeed, their existence as a special breed of people depends on it. Their price and their value have little in common with each other. But even assuming that the value (the costs of production) of a servant is twice as great as that of a productive labourer, it must be observed that the productivity of a labourer (like that of a machine) and his value are entirely different things, which are even in inverse proportion to each other. The value that a machine costs is always a minus in relation to its productivity. On the one hand the fellow makes wealth depend on the excess of production over consumption, on the other hand he says that only consumption gives value. And a servant who consumes 1,000 francs consequently contributes twice as much to the giving of value as a peasant who consumes 500 francs. In the first place he admits that these unproductive labours do not directly participate in the formation of material wealth. Smith does not claim more than this. On the other hand he tries to prove that on the contrary they create material wealth in the same measure as, according to his own admission, they do not. All those who polemise against Adam Smith on the one hand assume a superior attitude to material production, and on the other hand they attempt to justify immaterial production or even no production, like that of lackeys as material production. It makes absolutely no difference whether the owner of the net revenue consumes this revenue in lackeys, mistresses or pasties. But it is ludicrous to imagine that the surplus must be consumed by servants and cannot be consumed by productive labourers themselves without the value of the product going to the devil. With Malthus too we find the same view of the necessity of unproductive consumers which necessity in fact exists when the surplus comes into the hands of idlers. |364|| ||364| Ganilh claims to have put forward a theory in his Th orie de l conomie politique (a book I don t know) which Ricardo later copied from him. This theory is that wealth depends on net product and not on gross product, and thus on the level of profit and rent. (This is certainly not a discovery of Ganilh s, who distinguishes himself, however, by the way he puts it.) Surplus-value presents itself (has its real existence) in a surplus-produce in excess of the quantity of products which only replace its original elements, that is, which enter into its production costs and taking constant and variable capital together are equal to the total capital advanced to production. The aim of capitalist production is the surplus, not the product. The labourer s necessary labour-time, and therefore also its equivalent in the product with which it is paid for, is only necessary as long as it produces surplus-labour. Otherwise it is unproductive for the capitalist. The surplus-value is equal to the rate of surplus-value s/v multiplied by the number of simultaneous days labour or the number of employed labourers, that is, by n. So S= s/v n. This surplus-value can therefore be increased or reduced in two ways. For example, (s/v)/2 n is equal to 2s/v n=2S. Here S ||365| has doubled, because the rate has doubled, since (s/v)/2 is 2s/v, that is, is twice as much as s/v. On the other hand, however s/v 2n would also be equal to 2sn/v, that is, also equal to 2S. V, the variable capital, is equal to the p rice of the single day s labour multiplied by the number of labourers employed. If 800 labourers are employed, each costing 1, then V= 800, that is, 1 800, where n=800. Then if the surplus-value is 160, its rate would be 160/( 1 800) = 160/800 = 16/80 = 1/5 = 20 per cent. But the surplus-value itself is 160/( 1 800) 800, that is, S/ 1 n n. With a given length of labour-time, this surplus-value can only be increased by an increase of productivity, or at a given level of productivity, by a lengthening of the labour-time. But what concerns us here is: 2S=[(s/v)/2] n; and 2S=s/v 2n. The surplus-value (gross amount of surplus-value) remains the same, if the number of labourers is reduced by half is only n instead of 2n, but the surplus-labour performed by them each day is twice as much as it was before. On this assumption, therefore, two things would remain the same: first, the total quantity of products produced; secondly, the total quantity of surplus-produce or net product. But the following would have changed: first, the variable capital, or the part of the circulating capital expended in wages, would have fallen by half. The part of the constant capital which consists of raw materials would also remain unchanged, as the same quantity of raw material as before would be worked up, although this would be done by half the labourers employed before. As against this, the part which consists of fixed capital has increased. If the capital expended in wages was 300 ( 1 per labourer), it would now be 150. If that expended in raw materials was 310, it would now be 310. If the value of the machinery was four times as much as the rest of the capital, it would now be 1,600. Therefore if the machinery is worn out in ten years, the machinery entering annually into the product would be 160. We will assume that the capital previously expended annually on instruments was 40, thus only 1/4, Then the account would stand: In this case the rate of profit has risen, because the total capital has decreased the capital expended in wages has fallen by 150, the total value of the fixed capital has only risen by 120, and so in all 30 less than before is expended. But if the 30 left over is again employed in the same way, 31/62 (or 1/2) in raw material, 16/62 in machinery and 15/62 in wages, the result would be: And taking both together: Total amount of capital expended: 650 as before. Total product 807.5.6. The total value of the product has risen; the total value of the capital expended has remained the same; and not only the value, but the amount of the total product has risen, since an additional 15 in raw materials has been transformed into the product. ||366| [We find in Ganilh:] That is to say, therefore, in the same degree as industry becomes more productive, the production costs of wages are reduced. Fewer labourers are employed in relation to the product, and these therefore also consume a smaller part of the product. If a labourer without machinery needs 10 hours to produce his own means of subsistence, and if with machinery he only needs 6, then (with 12 hours labour) in the first case he works 10 for himself and 2 for the capitalist, and the capitalist gets one-sixth of the total product of the 12 hours. In the first case 10 labourers will produce a product for 10 labourers (equal to 100 hours) and 20 [hours] for the capitalist. Of the value of 120, the capitalist gets one-sixth, or 20. In the second case, 5 labourers will produce a product for 5 Labourers (equal to 30 hours), and for the capitalist 30 hours. Of the 60 hours the capitalist now gets 30, that is, one half 3 times as much as before, The total surplus-value too would have risen, namely from 20 to 30, by 1/3. When I appropriate one-half of 60 days, this is one-third more than when I appropriate one-sixth of 120 days. Moreover, the one-half of the total product that the capitalist gets is also greater in quantity than before. For 6 hours now produce as much product as 10 did before; 1 [hour] as much as ten-sixths of an hour [before], or 1 as much as 1 4/6=1 2/3, So the 30 surplus hours contain as much product as did previously 30 (1+2/3) = 30 + 60/3 = 50. 6 hours produce as much product as 10 did previously, that is, 30 or 5 6 produce as much as 5 10 did before. The capitalist s surplus-value would therefore have risen and also his surplus-product (if he consumes it himself, or as much of it as he consumes in kind). The surplus-value can even rise without the quantity of the total product being increased. For the increase of surplus-value means that the labourer is able to produce his means of subsistence in less time than before, that therefore the value of the commodities he consumes falls, represents less labour-time, and that therefore a certain value, equal to 6 hours for example, represents a greater quantity of the use-values than before. The labourer receives the same quantity of product as before, but this quantity forms a smaller part of the total product, as its value expresses a smaller part of the fruits of the day s labour. Although an increase in productive power in the branches of industry whose product neither directly nor indirectly enters into the formation of the labourer s means of consumption could not have this result since increased or reduced productivity in these branches does not affect the relation between the necessary and the surplus-labour the result for these industries would nevertheless be the same, although it did not originate from a change in their own productivity. The relative value of their products would rise in exactly the same proportion as that of the other commodities had fallen (if their own productivity had remained the same); consequently, a proportionately smaller aliquot part of these products, or a smaller part of the labour-time of the labourer which is materialised in them, would procure for him the same quantity of means of subsistence as before. The surplus-value would therefore rise in these branches of labour just as in the others. But what will then become of the five displaced labourers? It will be said that capital has also been released, namely, that which paid the five dismissed workers, who each received 10 hours (f or which they worked 12), that is, 50 hours in all, which could previously have paid the wages of five labourers and which [now] that wages have fallen to 6 hours can pay for 50/6 = 8 1/2 days labour. Therefore now the capital of 50 [hours ] labour that has been released can employ more labourers than have been dismissed. But a capital equivalent to the whole 50 hours labour has not been released. For even assuming that the raw material has become cheaper in the same proportion as the increase in the quantity of it that is worked up in the same labour-time that is, assuming that the same increase of productivity has taken place in that branch of production the outlay for the new machinery nevertheless remains. Assuming that this costs exactly 50 hours labour, it has certainly in no case employed as many labourers as were put off. For this 50 hours labour was laid out entirely in wages, for 5 labourers. But in the value of the machine, equivalent to 50 hours labour, both profit and wages are contained, both paid and unpaid labour-time. In addition, constant capital enters into the value of the machine. The number of machine-building labourers [who built the machine is] smaller than the number of labourers discharged; nor are they the same individuals ||367| as those discharged. The greater demand for labourers in machine building can at most affect the future distribution of the number of labourers, so that a larger part of the generation entering the labour-market a larger part than before turns to that branch of industry. It does not affect those who have been discharged. Moreover the increase in the annual demand for these is not equal to the new capital expended on machinery. The machine lasts for example for ten years. The constant demand which it creates is therefore equal annually to 1/10 of the wages contained in it. To this 1/10 must be added labour for repairs during the 10 years, and the daily consumption of coal, oil and other auxiliary materials; which in all amounts perhaps to another 2/10. <If the capital released were equal to 60 hours, these would now represent 10 hours surplus-labour and only 50 necessary labour. Thus if previously the 60 hours had been expended in wages and 6 labourers had been employed, now it would be only 5.> <The shifting of labour and capital which increased productivity in a particular branch of industry brings about by means of machinery, etc., is always only prospective. That is to say, the increase, the new number of labourers entering industry, is distributed in a different way; perhaps the children of those who have been thrown out, but not these themselves. They themselves vegetate for a long time in their old trade, which they carry on under the most unfavourable conditions, inasmuch as their necessary labour-time is greater than the socially necessary labour-time; they become paupers, or find employment in branches of industry where a lower grade of labour is employed.> <A pauper, like a capitalist (rentier), lives on the revenue of the country. He does not enter into the production costs of the product, and consequently Monsieur Ganilh would call him a representative of exchangeable value. Ditto, for a criminal who is fed in prison. A large part of the unproductive labourers , holders of State sinecures, etc., are simply respectable paupers.> <Assume that the productivity of industry is so advanced that whereas earlier two-thirds of the population were directly engaged in material production, now it is only one-third. Previously 2/3 produced means of subsistence for 3/3; now 1/3 produce for 3/3. Previously 1/3 was net revenue (as distinct from the revenue of the labourers), now 2/3. Leaving [class] contradictions out of account, the nation would now use 1/3 of its time for direct production, where previously it needed 2/3. Equally distributed, all [that is, the whole population] would have 2/3 more time for unproductive labour and leisure. But in capitalist production everything seems and in fact is contradictory. The assumption does not imply that the population is stagnant. For if the 3/3 grow, so also do the 1/3; thus, measured in quantity, a larger number of people could he employed in productive labour. But relatively, in proportion to the total population, it would always be 50 per cent less than before. Those two-thirds of the population consist partly of the owners of profit and rent, partly of unproductive labourers (who also, owing to competition, are badly paid). The latter help the former to consume the revenue and give them in return an equivalent in services or impose their services on them, like the political unproductive labourers. It can be supposed that with the exception of the horde of flunkeys, the soldiers, sailors, police, lower officials and so on, mistresses, grooms, clowns and jugglers these unproductive labourers will on the whole have a higher level of culture than the unproductive workers had previously, and in particular that ill-paid artists, musicians, lawyers, physicians, scholars, schoolmasters, inventors, etc., will also have increased in number. Within the productive class itself commercial middlemen will have multiplied, but in particular those engaged in machine construction, railway construction, mining and excavation; moreover, in agriculture labourers engaged in stock-raising will have increased in number, and also those employed in producing chemical and mineral materials for fertilisers, etc. Further, the farmers who grow raw materials for industry will have risen in number, in proportion to those producing means of subsistence; and those who provide fodder for cattle, in proportion to those who produce means of subsistence for people. As the constant capital grows, so also does the proportionate quantity of the total labour which is engaged in its reproduction. Nevertheless, the part [of the population] directly producing means of subsistence, although its number declines, ||368| produces more products than before. Its labour is more productive. While for the individual capital the fall in the variable part of the capital as compared with the constant part takes the direct form of a reduction in the part of the capital expended in wages, for the total capital in its reproduction this necessarily takes the form that a relatively greater part of the total labour employed is engaged in the reproduction of means of production than is engaged in the production of products themselves that is, in the reproduction of machinery (including means of communication and transport and buildings), of auxiliary materials (coal, gas, oil, tallow, leather belting, etc.) and of plants which form the raw material for industrial products. Relatively to the manufacturing labourers, agricultural labourers will decline in number. Finally the luxury, labourers will increase in number, since the higher revenue will consume more luxury products.> <The variable capital is resolved into revenue, firstly wages, secondly profit. If therefore capital is conceived as something contrasted with revenue, the constant capital appears to be capital in the strict sense: the part of the total product that belongs to production and enters into the costs of production without being individually consumed by anyone (with the exception of draught cattle). This part may originate entirely from profit and wages. In the last analysis, it can never originate from these alone; it is the product of labour, but of labour which regarded the instrument of production itself as revenue, as the savage did the bow. But once transformed into constant capital, this part of the product is no longer resolvable into wages and profit, although its reproduction yields wages and profit. A part of the product belongs to this part. Each subsequent product is the product of this past labour and of present labour. The latter can only be continued in so far as it returns a part of the total product to production. It must replace the constant capital in kind. If it grows more productive, it replaces the product, but not its value, reducing this value as a result. If it grows less productive, it raises its value. In the first case the aliquot part drawn by past labour from the total product falls; in the second case it rises. In the first case the living labour becomes more productive, in the second, less productive.> <The factors which reduce the costs of the constant capital, also include improved raw materials. For example, it is not possible to make the same quantity of twist in the same time both from good and from had raw cotton, leaving entirely out of account the relative quantity of waste, etc. Hence the importance of the quality of seed, etc.> <As an example combination where a manufacturer himself makes a part of his former constant capital, or where previously the raw material passed as constant capital out of his sphere of production into a second sphere, and he now himself gives it the second form this always only amounts to a concentration of profits, as was shown earlier. An example of the first: the linking together of spinning and weaving. An example of the second: the mine owners of Birmingham, who took over the complete process of making iron, which had formerly been divided between a number of entrepreneurs and owners.> Ganilh continues: ||369| The displacement of the population of a country, a necessary consequence of the progress of industry, is the true cause of the prosperity, the power and the civilisation of modern peoples. The more the lower classes of society decrease in number, the less need it be troubled by the dangers to which the distress, the ignorance, the credulity and the superstition of these unfortunate classes ceaselessly expose it; the more the upper classes multiply, the more subjects the State has at its disposal, the stronger and more powerful it is, the more knowledge, intelligence and civilisation there is in the whole population (l.c., p. 213). <Say makes the total value of the product resolvable into revenue in the following way: in the Constancio translation of Ricardo s [book Principles], Chapter 26, he says in a note: The last sentence would be correct if expressed in this way: The total revenue of a nation is composed of that part of its gross product, that is to say, of the gross value of all the products which are distributed as revenues among the producers, that is to say, less that portion of all the products which in each branch of industry had replaced the means of production. But so expressed, the sentence would negate itself. Say continues: His revenue never consists of his savings, although his savings always consist of his revenues. To prove that a nation can annually consume both its capital and its revenue, Say compares it to an individual who leaves his capital intact and only consumes his revenue each year. If this individual consumed in a single year both his capital of 200,000 francs and the revenue of 20,000, he would have nothing to eat the year after. If the entire capital of a nation, and consequently the entire gross value of its products, consisted of revenues, Say would be right. The individual consumes his 20,000 francs revenue. His 200,000 francs capital, which he does not consume, would be composed of the revenues of other individuals, each of whom consumes his share, and thus, at the end of the year, the whole capital would be consumed. But perhaps it would be reproduced while it is consumed, and thus replaced? But the individual in question reproduces annually his revenue of 20,000 francs, because he has not consumed his capital of 200,000 francs. The others have consumed this capital. Then they have no capital with which to reproduce revenue.> Ganilh further cites Say s notes to Constancio s translation of Ricardo [Principles,] Chapter XXVI, where Ricardo says that if a country has 12 million [inhabitants], it would be more advantageous for it if 5 million productive labourers labour for the 12 million, than if 7 million productive labourers labour for the 12 million. In the first case the net product consists of the surplus-produce on which the 7 million who are not productive live; in the other, of a surplus-produce for 5 million. Say remarks on this: On this, Ganilh observes (pp. 219-20): Here too Ganilh misses the point. The Economists go wrong in regarding the manufacturers as only wage-earning classes. This distinguishes them from Ricardo. They are further wrong in thinking that the wage-earners produce what they consume. The correct view, as Ricardo in contrast to them knew very well, is that it is they who produce the net product, but produce it precisely because their consumption, that is to say their wage, is equal not to the time they labour, but to the labour-time that they have put in to produce this wage; that is, that they receive a share of the product only equal to their necessary consumption, or that they receive only as much of their own product as is equivalent to their own necessary consumption. The Economists assumed that the whole industrial class (masters and workmen) was in this position. They considered that only rent bore the character of an excess of production over wages, and consequently that it was the only wealth. But when Ricardo says that profits and rents form this surplus and are consequently the only wealth, in spite of his difference from the Physiocrats, he agrees with them in thinking that only the net product, the product in which the surplus-value exists, forms the national wealth; although he has a better understanding of the nature of this surplus. For him, too, it is only the part of the revenue which is in excess of wages. What distinguishes him from the Economists is not his explanation of the net product, but his explanation of wages, under which category the Economists wrongly also include profits. Say also remarks in opposition to Ricardo: Ganilh rightly observes, refuting this: In Chapter XXVI [of his Principles] Ricardo observes: This reminds us of the ancient Germans, of whom one part in turn took the field and the other cultivated the field. The smaller the number that was indispensable for cultivating the field, the greater the number who were able to war. It would not have helped them if the number of people had increased by one-third, so that instead of 1,000 they had 1,500, if 1,000 were then required to cultivate the field while previously it was 500. Their disposable forces would have consisted of only 500 men both before and after. If on the other hand the productivity of their labour had increased, so that 250 sufficed to cultivate the field, 750 of the 1,000 could have taken the field, whereas in the opposite case, if the productivity of their labour had fallen, it would be only 500 out of the 1,500. First it should be noted here that Ricardo means by net revenue or net product not the excess of the total product over the part of it that must be returned to production as means of production, raw materials or instruments. On the contrary, he shares the false view that the gross product consists of gross revenue. By net product or net revenue he means the surplus-value, the excess of the total revenue over the part of it that consists of wages, of the revenue of the labourers. This revenue of the labourer, however, is equal to the variable capital, the part of the circulating capital which he is constantly consuming and constantly reproducing as the part of his production which he himself consumes. If Ricardo treats the capitalists as not entirely useless, that is to say, as themselves agents of production, and therefore resolves a part of their profit into wages, he has to deduct a part of their revenue from the net revenue and to declare that all these persons only contribute to wealth in so far as their wages form the smallest possible part of their profit. However that may be, at least a part of their time as agents of production belongs, like a fixture, to production itself. And to this extent they cannot be used for other purposes of society or of the State. The more free time their duties as managers of production leave them, the more is their profit independent of their wage. In contrast to these, the capitalists who live only on their interest, and also the landlords who live on rent, are in person entirely at the disposal [of society and the State], and no part of their income enters into the costs of production except for that part which is used for the reproduction of their own worthy person. Ricardo should therefore have also desired, in the interests of the State, a growth of rent (the pure net revenue) at the cost of profits; but this is not at all his viewpoint. And why not? Because it hinders the accumulation of capitals [or] what is in part the same thing because it increases the number of unproductive labourers at the cost of the productive. Ricardo fully shares Adam Smith s view of the distinction between productive and unproductive labour, that the former exchanges its labour directly for capital, [the latter I directly for revenue. But he no longer shares Smith s tenderness for and illusion about the productive labourer. It is a misfortune to be a productive labourer. A productive labourer is a labourer who produces wealth for another. His existence only has meaning as such an instrument of production for the wealth of others. If therefore the same quantity of wealth for others can be created with a smaller number of productive labourers, then the suppression of these productive labourers is in order. Vos, non vobis.* Ricardo, incidentally, does not think of this suppression as Ganilh does that through mere suppression the revenue increases and that what was formerly consumed as variable capital (that is, in the form of wages) would then be consumed as revenue. With the diminution in the number of productive workers also disappears the amount of product which those who have been discharged themselves consumed and themselves produced their equivalent. Ricardo does not assume, as Ganilh does, that the same quantity of products as before is produced; but the same quantity of net product. If the labourers consumed 200 and their surplus was 100, the total product was 300, and the surplus was one third=100. If the labourers consume 100 and their surplus is 100 as before, the total product is 200 and the surplus is one half=100. The total product would have fallen by one-third by the quantity of products consumed by the 100 dismissed workers, and the net product ||372| [would have] remained the same, because 200/2 = 300/3. For Ricardo, therefore, the amount of the gross product does not matter, provided that that portion of the gross product which constitutes the net product remains the same or grows, but in any case does not diminish. So he says: ||IX - 377 | The passage in Ricardo (Chapter XXVI) runs: <This therefore means nothing but: if the surplus-value produced by a greater quantity of labour would be the same as that produced by a smaller quantity. That however in turn means nothing but that it is the same thing for a country whether it employs a large number of labourers at a lower rate of surplus or a smaller number at a higher rate. n 1/2 is just as much as 2n 1/4, where n represents the number [of labourers] and 1/2 and 1/4 the surplus-labour, The productive labourer as such is a mere instrument of production for the production of surplus, and if the result is the same a larger number of these productive labourers would be a nuisance.> <The meaning of this, as is evident from a later passage, is perfectly banal. For example, a wine-merchant, who makes use of 20,000 and has 12,000 lying in his cellar each year, but sells 8,000 for 10,000, employs few people and makes 10 per cent profit, etc. And then take bankers!> Is not the real interest of the nation similar? Provided its net real income, its rent and profits be the same, it is of no importance whether the nation consists of ten or of twelve millions of inhabitants. Its power of sup-porting fleets and armies, and all species of unproductive labour (this passage shows among other things that Ricardo shared Adam Smith s view of productive and unproductive labour, although he did no longer share Smith s tenderness, based on illusions, for the productive labourer) must be in proportion to its net, and not in proportion to its gross, income. If five millions of men could produce as much food and clothing as was necessary for ten millions, food and clothing for five millions would be the net revenue. Would it be of any advantage to the country, that to produce this same net revenue, seven millions of men should be required, that is to say, that seven millions should be employed to produce food and clothing sufficient for twelve millions? The food and clothing of five millions would be still the net revenue. The employing a greater number of men would enable us neither to add a man to our army and navy, nor to contribute one guinea more in taxes (Ricardo, On the Principles of Political Economy and Taxation, 3rd edition, London, 1821, pp. 415-17). A country is the richer the smaller its productive population is relatively to the total product; just as for the individual capitalist: the fewer labourers he needs to produce the same surplus, so much the better for him. The country is the richer the smaller the productive population in relation to the unproductive, the quantity of products remaining the same. For the relative smallness of the productive population would be only another way of expressing the relative degree of the productivity of labour. On the one hand it is the tendency of capital to reduce to a dwindling minimum the labour-time necessary for the production of commodities, and therefore also the number of the productive population in relation to the amount of the product. On the other hand, however, it* has the opposite tendency to accumulate, to transform profit into capital, to appropriate the greatest possible quantity of the labour of others. It* strives to reduce the norm of necessary labour, but to employ the greatest possible quantity of productive labour at the given norm. The proportion of the products to the population makes no difference in this. Corn and cotton can be changed into wine, diamonds, etc., ||378| or labourers can be employed in productive labour which does not directly add anything to the (consumable) products (such as railway construction, etc.). If as the result of an invention a capitalist can now only use in his business 10,000 instead of the 20,000 he used previously, because 10,000 is sufficient, and if this sum yields 20 per cent for him instead of 10, that is, as much as the 20,000 brought in before, this would be no reason for him to spend 10,000 as revenue instead of as capital as before. (Actually it is only in the case of State loans that we can speak of a direct transformation of capital into revenue.) He would place it elsewhere and in addition would capitalise a part of his profit. Among the economists (including Ricardo in part) we find the same antimony as there is in reality. Machinery displaces labour and increases the net revenue (particularly always what Ricardo here calls net revenue the quantity of products in which revenue is consumed); it reduces the number of labourers and increases the products (which then are partly consumed by unproductive labourers, partly exchanged abroad, etc.). So this would be desirable. But no. In that case it must be shown that machinery does not deprive the labourers of bread. And how is this to be shown? By the fact that after a shock (to which perhaps the section of the population which is directly affected cannot offer any resistance) machinery once again employs more people than were employed before it was introduced and therefore once again increases the number of productive labourers and restores the former disproportion. That is in fact what happens. And so in spite of the growing productivity of labour the labouring population could constantly grow not in proportion to the product, which grows with it and faster than it, but proportionately [to the total population], if, for example, capital simultaneously becomes concentrated, and therefore former component parts of the productive classes fall into the ranks of the proletariat. A small part of the latter rises into the middle class. The unproductive classes, however, see to it that there is not too much food available. The constant retransformation of profit into capital always restores the same cycle on a wider basis. And Ricardo s care for accumulation is even greater than his care for net profit, which he regards with fervent admiration as a means to accumulation. Hence too his contradictory admonitions and consoling remarks to the labourers. They are the people most interested in the accumulation of capital, because it is on this that the demand for them depends. If this demand rises, then the price of labour rises. They must therefore themselves desire the lowering of wages, so that the surplus taken from them, once more filtered through capital, is returned to them for new labour and their wages rise. This rise in wages however is bad, because it restricts accumulation. On the one hand they must not produce children. This brings a fall in the supply of labour, and so its price rises. But this rise diminishes the rate of accumulation, and so diminishes the demand for them and brings down the price of labour. Even quicker than the supply of them falls, capital falls along with it. If they produce children, then they increase their own supply and reduce the price of labour; thus the rate of profit rises, and with it the accumulation of capital. But the labouring population must rise in the same degree as the accumulation of capital; that is to say, the labouring population must be there exactly in the numbers that the capitalist needs which it does anyway. Monsieur Ganilh is not altogether consistent in his admiration for the net product. He quotes from Say: ||379 | On this Ganilh observes: As if the size of the wage depended only on the productivity of the labourer, and not, with a given productivity, on the division of the product between labourer and master. How does that tally with the net product? And for that matter Monsieur Ganilh at once retracts his liberal tirades (l.c., pp. 236-37). He wants Nigger-slavery for the colonies, He is only liberal in so far as he does not want to reintroduce it into Europe, having grasped that the free labourers here are slaves, that they only exist to produce net product for capitalists, landlords and their retainers. Ganilh cites in evidence the following passage from Quesnay: The ass! He does not understand Quesnay. Monsieur Ganilh puts on the keystone in the following paragraph: Then there are still Lauderdale (Brougham s insipit jests are not worth examining after him), (Ferrier?), Tocqueville, Storch, Senior, and Rossi to be considered briefly on productive and unproductive labour. {To be distinguished: 1. The part of the revenue which is trans-formed into new capital; that is, the part of the profit which is itself again capitalised. Here we leave this entirely out of account it belongs to the section on accumulation. 2. The revenue which is exchanged with capital consumed in production, so that by means of this exchange not new capital is formed, but old capital replaced in a word, the old capital is conserved. In this inquiry, therefore, we can put the part of the revenue which is transformed into new capital as equal to nil, and treat the subject as if all revenue covers either revenue or capital consumed. The whole amount of the annual product is therefore divided into two parts: one part is consumed as revenue, the other part replaces in kind the constant capital consumed. Revenue is exchanged for revenue, when for example the producers of linen exchange a portion of that part of their product the linen which represents their profits and wages, their revenue, for corn that represents a portion of the profits and ||380| wages of farmers. Here therefore there is the exchange of linen for corn, those two commodities which both enter into individual consumption exchange of revenue in the form of linen for revenue in the form of corn. There is absolutely no difficulty in this. If consumable products are produced in proportions corresponding to needs, which means also that the proportionate amounts of social labour required for their production are proportionately distributed <which of course is never exactly the case, there being constant deviations, disproportions, which as such are adjusted; but in such a way that the continuous movement towards adjustment itself presupposes continuous disproportion>, then revenue, for example in the form of linen, exists in the exact quantity in which it is required as an article of consumption, therefore in which it is replaced by the articles of consumption of other producers. What the producer of linen consumes in corn, etc., the farmers and others consume in linen. The part of his product which represents revenue, which he exchanges for other commodities (articles of consumption), is thus taken in exchange as an article of consumption by the producers of these other commodities. What he consumes in the product of others, these others consume in his product. It may be noted in passing: that no more necessary labour-time is employed on a product than is required by society that is to say, no more time than on the average is required for the production of this commodity is the result of capitalist production, which even continuously reduces the minimum of necessary labour-time. But in order to do so, it must constantly produce on a rising scale. If 1 yard of linen costs only 1 hour and this is the necessary labour-time that society has to use to satisfy its need for 1 yard of linen, it by no means follows from this that if 12 million yards are produced that is, 12 million hours labour, or what is the same thing, 1 million days labour 1 million labourers being employed as linen weavers, society [needs] to employ such a part of its labour-time necessarily on the weaving of linen. If the necessary labour-time is given, and therefore also that a certain quantity of linen can be produced in one day, the question arises how many such days are to be used in the production of linen? The labour-time used on the total of particular products, in a year for example, is equal to a definite quantity of this use-value for example, 1 yard of linen (say equivalent to 1 day s labour) multiplied by the number of days labour used in all. The total quantity of labour-time used in a particular branch of production may be under or over the correct proportion to the total available social labour, although each aliquot part of the product contains only the labour-time necessary for its production, or although each aliquot part of the labour-time used was necessary to make the corresponding aliquot part of the total product. From this standpoint, the necessary labour-time acquires another meaning. The question is, in what quantities the necessary labour-time itself is distributed among the various spheres of production. Competition constantly regulates this distribution, just as it equally constantly disorganises it. If too large a quantity of social labour-time is used in one branch, the equivalent can be paid only, as if the correct quantity had been used. The total product that is to say, the value of the total product is in this case therefore not equal to the labour-time contained in it, but is equal to the proportionate labour-time which would have been used had the total product been in proportion to production in the other spheres. But in as much as the price of the total product falls below its value, the price of each aliquot part of it falls. If 6,000 yards of linen instead of 4,000 are produced, and if the value of the 6,000 yards is 12,000 shillings, they are sold for 8,000. The price of each yard is 1 1/3 shillings instead of 2 one-third below its value. It therefore amounts to the same thing as if 1/3 too much labour-time had been used to produce one yard. Assuming that the commodity has use-value, the fall of its price below its value therefore shows that, although each part of the product has cost only the socially necessary labour-time <here it is assumed that the conditions of production remain unchanged>, a superfluous more than necessary total quantity of social labour has been employed in this one branch. The sinking of the relative value of the commodity as a result of altered conditions of production is something entirely different; ||381| this piece of linen on the market has cost 2s., equal for example to 1 day s labour. But it can be reproduced every day for 1s. Since the value is determined by the socially necessary labour-time, not by the labour-time used by the individual producer, the day that the producer has used for the production of the one yard is now only equal to half the socially determined day. The fall of the price of his yard from 2s. to 1s. that is, of its price below the value it has cost him shows merely a change in the conditions of production, that is, a change in the necessary labour-time itself. On the other hand, if the production costs of the linen remain the same while those of all other articles rise with the exception of gold, the material of money; or even [if the rise applies to] certain articles such as wheat, copper, etc., in a word, to articles which do not enter into the component parts of the linen then one yard of linen would be equal to 2s. as before. Its price would not fall, but its relative value expressed in wheat, copper, etc., would have fallen. ---------------- Of the part of the revenue in one branch of production (which produces consumable commodities) which is consumed in the revenue of another branch of production, it can be said that the demand is equal to its own supply (in so far as production is kept in the right proportion). It is the same as if each branch itself consumed that part of its revenue. Here there is only a formal metamorphosis of the commodity: C M C . Linen money wheat. Both commodities which are exchanged here represent only a part of the new labour added in the year. But in the first place it is clear that this exchange in which two producers mutually consume a part of their product which represents revenue in each other s commodities only takes place in those branches of production which produce consumable articles, articles which enter directly into individual consumption, in which consequently revenue can be spent as revenue. Secondly, it is just as clear: that only regarding this part of the exchange of products it is true that the producer s supply is equal to the demand for other products which he wishes to consume. Here in fact it is only a question of a simple exchange of commodities. Instead of producing his means of subsistence himself, he produces the means of subsistence for another, who produces his. No relation between revenue and capital enters into this. Revenue in one form of consumable articles is exchanged against revenue in another form of consumable articles, and so in fact consumable articles are exchanged for consumable articles. What determines their process of exchange is not that both are revenue, but that both are consumable articles. Their definite form as revenue does not enter into it at all. It shows itself however in the use-value of the interchangeable commodities, in that both enter into individual consumption; which in turn however means no more than that one part of consumable products is exchanged for another part of consumable products. The form of revenue can only intervene or make itself manifest where the form of capital confronts it. But even in this case what Say and other vulgar economists assert is not true that if A cannot sell his linen or can only sell it under its price that is, the part of his linen which he wishes to consume himself as revenue then this happens because B, C, etc., have produced too little wheat, meat, etc. It may be because they have not produced enough of these. But it may also be because A has produced too much linen. For assuming that B, C, etc., have enough wheat, etc., to buy all A s linen, they nevertheless do not buy it, because only a definite quantity of linen is consumed by them, Or it may also be because A has produced more linen than the part of their revenue which can be spent on clothing materials altogether that is, absolutely, because each person can expend as revenue only a definite quantity of his own product, and A s production of linen presupposes a greater amount of revenue than in total there is. It is ridiculous, however, when it is only a matter of the exchange of revenue against revenue, to suppose that what is wanted is not the use-value of the product but the quantity of this use-value, thus once again forgetting that this exchange concerns only the satisfaction of needs, not, as in exchange-value, the quantity. But everyone will prefer to have a large rather than a small quantity of an article. If this is supposed to solve the difficulty, then ||382| it is absolutely impossible to understand why the producer of linen, instead of exchanging his linen for other articles of consumption and piling these up en masse, does not carry out the simpler process of enjoying a part of his revenue in his superfluous linen. Why does he at all transform his revenue from the form of linen into other forms? Because he has to satisfy other needs than the need for linen. Why does he himself consume only a certain part of the linen? Because only a quantitatively determined part of the linen has use-value for him. The same thing, however, holds for B, C, etc. If B sells wine and C books and D mirrors, each may prefer to consume the surplus of his revenue in his own product wine, books, mirrors rather than in linen. Thus it cannot be said that, necessarily, too little wine, books and mirrors have been produced because A cannot transform his revenue in the form of linen (or cannot transform it at its value) into wine, books and mirrors. It is still more ridiculous, however, when this exchange of revenue against revenue this one section of the exchange of commodities is passed off as the whole of commodity exchange. We have thus disposed of one part of the product. A part of the consumable products changes hands between the producers of these consumable products themselves. Each consumes a part of his revenue (profit and wages) in the other s consumable product instead of in his own consumable product, and in fact he can only do this in so far as there is the reciprocal consumption by the other of someone else s consumable product instead of his own. It is the same as if each had consumed that part of his consumable product which represents his own revenue. For all the rest of the products, however, complicated relations intervene, and it is only here that the commodities exchanged confront each other as revenue and capital, and not only as revenue. First a distinction has to be made. In all branches of production a part of the total product represents revenue, labour added (during the year), profit and wages. <Rent, interest, etc., are parts of profit; the income of the State good-for-nothings is part of profit and wages; the income of other unproductive labourers is the part of profit and wages which they buy with their unproductive labours it therefore does not increase the product existing as profit and wages, but only determines how much of it they consume, and how much is consumed by the labourers and capitalists themselves.> But only in one section of the spheres of production can the part of the product representing revenue enter directly in kind into the revenue, or in its use-value be consumed as revenue. All products which are only means of production cannot be consumed in kind, in their immediate form, as revenue, but only their value. This however must be consumed in the branches of production which produce directly consumable articles. A part of the means of production may be immediate articles of consumption it may be one or the other according to the use made of it, as for example a horse, a cart, etc. A part of the immediate articles of consumption may be means of production, like corn for spirits, wheat for seed, and so on. Almost all articles of consumption can re-enter the production process as excrements of consumption, as for example worn-out and half-rotten rags of linen in the manufacture of paper. But no one produces linen in order that it should become, as rags, the raw material for paper. It only gets this form after the linen weaver s product as such has entered consumption. Only as excrement of this consumption, as residuum and product of the consumption process, can it then go into a new production sphere as means of production. This case, therefore, is not relevant here. The products therefore of which the aliquot part that represents revenue can be consumed by their own producers as value, but not as use-value (so that they must sell the part for example of their machines which represents wages and profit in order to consume it, [as they] cannot directly satisfy any individual need with it as a machine) [these products] can just as little be consumed by the producers of other products; they cannot enter into their individual consumption, and hence cannot form part of the products on which they spend their revenue, since this would be in contradiction to the use-value of these commodities: their use-value by the nature of the case excludes individual consumption. The producers of these unconsumable products, therefore, can only consume their exchange-value; that is to say, they must first transform them into money in order to retransform this money into consumable commodities. But to whom are they to sell ||383| them? To producers of other individually unconsumable products? Then they would merely have one unconsumable product in the place of the other. It is however presupposed that this part of the product forms their revenue; that they sell these commodities in order to consume their value in consumable products. For that reason they can only sell them to the producers of products that can be consumed individually. This part of the exchange of commodities represents exchange of one man s capital for another man s revenue, and of one man s revenue for another man s capital. Only one part of the total product of the producer of consumable products represents revenue; the other part represents constant capital. He can neither himself consume the latter, nor can he exchange it for the consumable products made by others. He can neither consume in kind the use-value of this part of the product, nor can he consume its value by exchanging it for other consumable products. He must on the contrary transform it again into the natural elements of his constant capital. He must consume industrially this part of his product, that is, use it as means of production. But in its use-value his product is only capable of entering individual consumption; he cannot therefore transform it again in kind into his own elements of production. Its use-value excludes industrial consumption. So he can only industrially consume its value, [by selling it] to the producers of those elements of production needed for his product. He can neither consume in kind this part of his product, nor can he consume its value by selling it for other products that can be consumed individually. Just as little as this part of his product can enter into his own revenue, can it be replaced out of the revenue of producers of other individually consumable products; since this would only be possible if he exchanged his product for their product and so consumed the value of his product, which cannot happen. But since this part of his product, as well as the other part which he can consume as revenue, by its use-value can only be consumed as revenue, must enter into individual consumption and cannot replace constant capital, it must enter into the revenue of the producers of unconsumable products it must be exchanged against that part of their products whose value they can consume, or in other words which represents their revenue. If we look at this exchange from the standpoint of each of the people exchanging, for A, the producer of the consumable product, it represents a transformation of capital into capital. He transforms the part of his total product which is equal to the value of the constant capital it contains back again into the natural form in which it can function as constant capital. Both before and after the exchange it represents, in its value, only constant capital. For B, the producer of the product that cannot be consumed, it is the reverse: the exchange represents merely the transformation of revenue from one form into another. He transforms the part of his total product which forms his revenue equal to the part of the total product which represents labour newly added, his own labour (capital and labourer) into the natural form in which only he can consume it as revenue. Both before and after the exchange it represents, in its value, only his revenue. If we look at the relation from both sides there, A exchanges his constant capital for B s revenue, and B exchanges his revenue for A s constant capital. B s revenue replaces A s constant capital, and A s constant capital replaces B s revenue. In the exchange itself <irrespective of the purposes of those carrying it out> only commodities confront each other and a simple exchange of commodities takes place the relation between which is merely that of commodities, the designations of revenue and capital having no significance here. Only the different use-value of these commodities shows that one lot can only serve for industrial consumption, and the other only for individual consumption, can only enter into this consumption. The various practical uses of the various use-values of various commodities, however, concern their consumption and do not affect the process of their exchange as commodities. It is quite a different thing when the capitalist s capital is transformed into wages, and labour is transformed into capital. Here the commodities do not confront each other as simple commodities, but capital as capital. In the exchange we have just been considering sellers and buyers face each other only as sellers and buyers, only as simple commodity owners. It is further clear that the whole of the product destined for individual consumption or the whole product entering into individual consumption, in so far as it enters into it, can only be exchanged for revenue. The fact that it cannot be industrially consumed means precisely that it can only be consumed as revenue, i.e., only individually. <As noted above, we here abstract from the transformation of profit into capital.> If A is a producer of a product that can only be individually consumed, let his revenue be equal to one-third of his total product, his constant capital to two-thirds. The assumption implies that he himself consumes the first one-third, whether he ||384| consumes it all himself in kind or only partly or not at all, or whether he consumes its value in other articles of consumption; the sellers of these articles of consumption then consume their own revenue in A s product. So the part of the consumable product which represents the revenue of the producers of consumable products is consumed by them either directly, or indirectly, through exchanging among themselves the products to be consumed by them; in regard to this part, therefore, where revenue is exchanged for revenue here it is the same as if A represented the producers of all consumable products. He himself consumes one-third of this aggregate amount, the aliquot part which represents his revenue. This part, however, represents exactly the quantity of labour which during the year category A has added to its constant capital, and this quantity is equal to the total sum of wages and profits produced by category A during the year. The other two-thirds of category A s total product are equal value of the constant capital, and must therefore be replaced by the product of the annual labour of category B, which produces products that cannot be [individually] consumed and only enter into industrial consumption as means of production in the production process. But as this two-thirds of A s total product, just the same as the first one-third, must enter into individual consumption, it is taken by the producers of category B, in exchange for the part of their product which represents their revenue. Category A has therefore exchanged the constant part of its total product for constant capital in its original natural form, retransforming it into the newly-produced products of category B; but category B has only paid for it with that part of its product which represents its revenue but which it can only consume in the products of A. It has thus in fact paid with its newly-added labour, which is completely represented by the part of B s product that is exchanged for the last two-thirds of A s product. Thus A s total product is exchanged for revenue, or passes entirely into individual consumption. On the other hand (on the assumption that the transformation of revenue into capital is here left out of account, being taken as equal to nil) the total revenue of society is expended on product A; for the producers of A consume their revenue in A, and so do the producers of category B. And there is no other category besides these two. The total product A is consumed, although it contains two-thirds constant capital, which cannot be consumed by the producers of A but must be retransformed into the natural form of their elements of production. The total product A is equal to the total revenue of society. The total revenue of society, however, represents the total labour-time which it has added during the year to the existing constant capital. Now although the total product A consists of newly-added labour only as to one-third, and as to two-thirds of past labour that has to be replaced, it can be bought in its entirety by newly-added labour, because two-thirds of this total annual labour must be consumed not in their own products but in the products of A. A is replaced by two-thirds more newly-added labour than it itself contains, because these two-thirds are labour newly added in B, and B can only consume it individually in A, just as A can only consume the two-thirds industrially in B. Thus the total product of A can in the first place be entirely consumed as revenue, and at the same time its constant capital can be replaced. Or rather it can only be entirely consumed as revenue because two-thirds of it are replaced by the producers of constant capital, who cannot consume in kind the part of their product representing revenue, but are obliged to consume it in A, that is, through exchanging it for two-thirds of A. We have thus disposed of the final two-thirds of A. It is clear that it makes no difference if a third category C exists, whose products are consumable both industrially and individually; for example, corn, by men or by cattle or as seed or as bread; vehicles, horses, cattle, etc. In so far as these products enter into individual consumption they must be consumed as revenue, direct or indirect, by their own producers, or by the producers (direct or indirect) of the part of the constant capital contained in them. They therefore come under A. In so far as they do not enter into individual consumption, they come under B. The process of this second kind of exchange, where it is not revenue that is exchanged against revenue but capital against revenue in which the whole constant capital must in the end be resolved into revenue, that is, into newly-added labour can be thought of in two ways. Let A s product be for example linen. The two-thirds of the linen which are equal to the constant capital of A (or its value) pay for yarn, machinery and auxiliary materials. But the yarn manufacturer and the manufacturer of machinery ||385| can only consume as much of this product as represents their own revenue. The linen manufacturer pays the whole price of the yarn and machinery with these two-thirds of his product. By so doing he has thus replaced for the spinner and the machinery manufacturer their total product which entered into the linen as constant capital. But this total product is itself equal to the constant capital and revenue one part being equal to the labour added by the spinner and machinery manufacturer, and another part representing the value of their own means of production, that is, for the spinner flax, oil, machinery, coal, etc., and for the machinery manufacturer coal, iron, machinery, etc. A s constant capital, equal to two-thirds, has thus replaced the total product of the spinner and machinery manufacturer, their constant capital plus the labour newly added by them their capital plus their revenue. But they can only consume their revenue in A. After deducting the part of the two-thirds of A which is equal to their revenue, with the rest they pay for their raw materials and machinery. According to our assumption, however, the latter need not replace any constant capital. Only so much of their product can enter into product A and therefore also into the products which are means of production for A as A can pay for. But A can only pay with his two-thirds for as much as B can buy with his revenue, that is to say, as much as the product exchanged by B contains revenue, newly-added labour. If the producers of the final elements of production of A had to sell to the spinner a quantity of their product which represented a part of their own constant capital that is, which represented more than the labour they had added to their constant capital then they could not accept payment in A, because they cannot consume one part of this product. Consequently what takes place is the opposite. Let us trace the stages in reverse. Let us assume that the total linen is equal to 12 days. The product of the flax-grower, of the iron manufacturer, etc., is equal to 4 days; this product is sold to the spinner and the machinery manufacturer, who in turn add 4 days to it; these sell it to the weaver, who again adds 4 days. The linen weaver can thus himself consume one-third of his product; 3 days replace his constant capital for him and pay for the product of the spinner and machinery manufacturer; these can consume 4 of the 8 days, and with the other 4 they pay the flax-grower, etc., and thus replace their constant capital; the last-named have only their labour to replace with the last 4 days in linen. The revenue, although it is assumed to be of the same size equal to 4 days in all three cases, is of different proportions in the products of the three classes of producers who participate in producing product A. For the linen weaver, it is one-third of his product, equal to one-third of 12; for the spinner and for the machinery manufacturer it is equal to one-half of his product, equal to one-half of 8; for the flax-grower it is equal to his product, 4. In relation to the total product it is however exactly the same, equal to one-third of 12, that is, 4. But for the weaver, the labour newly added by spinner, machinery manufacturer and flax-grower takes the form of constant capital. For the spinner and machinery manufacturer, the total product represents the labour newly added by themselves and by the flax-grower, the labour-time of the flax-grower appearing as constant capital. For the flax-grower, this phenomenon of constant capital has ceased to exist. Because of this, the spinner for example can use machinery, or constant capital in general, in the same proportions as the weaver. For example, 1/3 : 2/3. But in the first place the amount (the total amount) of the capital employed in spinning must be smaller than that used in weaving, since its total product enters as constant capital into weaving. Secondly, if the spinner also has the proportion of 1/3 : 2/3, his constant capital would be equal to 16/3 his labour added to 8/3; the former equal to 5 1/3 days labour, the latter to 2 2/3. In this case there would be proportionately more days labour contained in the branch which supplies him with flax, etc. He would then have to pay 5 1/3 for newly-added labour, instead of 4 days. It is self-evident that only that part of category A s constant capital has to be replaced by new labour which enters into the process of giving value to A, that is, is consumed by A during the labour-process. The whole of the raw material and the auxiliary materials enter into it, and the wear and tear of the fixed capital. The other part of the fixed capital does not enter into it, and therefore has not got to be replaced. A large part of the existing constant capital large as regards the relation of the fixed capital to the total capital does not therefore require to be replaced annually by new labour. For that reason the (absolute) amount [of the capital to be annually replaced] may be considerable, but nevertheless it is not large in relation to the total (annual) product. This entire part of the constant capital, in A and B, which enters into the determination of the rate of profit (with a given surplus-value), does not enter as a determining element into the current reproduction of the fixed capital. The larger this part in relation to the total capital the greater the scale on which present, already existing, fixed capital is employed in production the greater the current volume of reproduction will be that is used for the replacement of the worn-out fixed capital, but the smaller relatively will be the proportional amount, in relation to the total capital, Let the reproduction period (the average) for all kinds of fixed capital be ten years. ||386| Let us assume that the different kinds of fixed capital have a turnover of 20, 17, 15, 12, 11, 10, 8, 6, 4, 3, 2, 1, 4/6 and 2/6 years (14 kinds), so that the fixed capital has an average turnover of 10 years. On the average, therefore, the capital would have to be replaced in 10 years. If the total fixed capital amounted to 1/10 of the total capital, then 1/10 of this would mean that only 1/100 of the total capital would have to be replaced annually. If it amounted to 1/3, then 1/30 of the total capital would have to be replaced annually. But let us now compare fixed capitals with different reproduction periods the capital with a 20-year period, for example, in contrast to the capital with a period of 1/3 of a year. Only 1/20 of the fixed capital which is reproduced in 20 years has to be replaced annually. So that if it amounts to 1/2 of the total capital, only 1/40 of the total capital has to be replaced annually, and if it amounts even to 4/5 of the total capital, only 4/100=1/25 of the total capital has to be replaced annually. On the other hand, if the capital which has a reproduction period of 2/6 of a year that is, turns over three times a year amounts to only 1/10 of the capital, then the fixed capital has to be replaced three times a year, so that 3/10 of the capital has to be replaced annually, nearly one-third of the total capital. On the average, the larger the fixed capital in proportion to the total capital, the longer is its relative (not absolute) period of reproduction; and the smaller it is, the shorter its relative period of reproduction. Implements form a much smaller part of handicraft capital than machinery does of machine-production capital. But handicraft implements wear out much more quickly than machinery. Although the absolute magnitude of its reproduction or its wear and tear grows with the absolute size of the fixed capital, as a rule its proportional magnitude falls, in so far as its period of turnover, its duration, as a rule increases in proportion to its size. This proves among other things that the quantity of labour reproducing machinery or fixed capital is not at all proportional to the labour which originally produced these machines (conditions of production remaining the same), since only the annual wear and tear has to be replaced. If the productivity of labour rises as it constantly does in this branch of production the quantity of labour required for the reproduction of this part of the constant capital diminishes still more. However, account has to be taken of the means of consumption daily used by the machine (which however have nothing directly to do with the labour employed in the machine-building industry itself). But machinery, which needs merely coal and a little oil or tallow, lives on an infinitely stricter diet than the labourer not only the labourer whom it replaces, but the labourer who built the machine itself. ---------------- We have now disposed of the product of the entire category A and of a part of category B s product. A is completely consumed: one-third by its own producers, two-thirds by the producers of B, who cannot consume their own revenue in their own product. The two-thirds of A, in which they consume the part of the value of their product which represents revenue, at the same time replace their constant capital in kind for the producers of A, that is, provide them with the commodities which they consume industrially. But with the consumption of A s entire product, and with two-thirds of it replaced by B in the form of constant capital, we have also disposed of the entire part of the product which represents the labour newly added annually. This labour cannot therefore buy any other part of the total product. In fact, the whole of the labour added annually (leaving out of account the capitalisation of profit) is equal to the labour contained in A. For one-third of A which is consumed by its own producers represents the labour newly added by them during the year to the two-thirds of A which represent A s constant capital. They have performed no labour apart from this, which they consume in their own product. And the other two-thirds of A, which are replaced by B s product and consumed by the producers of B, represent all the labour-time which the producers of B have added to their own constant capital. They have added no more in labour, and there is nothing more for them to ||387| consume. In its use-value, product A represents the whole part of the annual total product which enters annually into individual consumption. In its exchange-value, it represents the total quantity of labour newly added by the producers during the year. Thus, however, we have as residuum a third part of the total product whose constituent parts, when exchanged, can represent neither the exchange of revenue against revenue nor of capital against revenue and vice versa. This is the part of product B which represents B s constant capital. This part is not included in B s revenue and therefore cannot be replaced by or exchanged against product A, and therefore also cannot enter as a constituent part into A s constant capital. This part is likewise consumed, industrially consumed, to the extent that it enters not only into B s labour-process but also into the formation of value in B. This part, therefore, like all other parts of the total product, must be replaced in the proportion in which it forms a component part of the total product, and indeed it must be replaced in kind by new products of the same sort. On the other hand, it is not replaced by any new labour. For the total quantity of newly-added labour is equal to the labour-time contained in A, which is completely replaced only by B consuming his revenue in two-thirds of A and supplying to A in exchange all the means of production which are consumed in A and must be replaced. For the first one-third of A, which is consumed by its own producers, consists only as exchange-value of the labour newly added by themselves, and it contains no constant capital. Let us now examine this residuum. It consists of the constant capital which enters into raw materials, and secondly of the constant capital which enters into the formation of the capital, and thirdly of the constant capital which enters into auxiliary materials. First, the raw materials. Their constant capital consists in the first place of fixed capital, machinery, instruments of labour and buildings, and perhaps auxiliary materials, which are means of consumption for the machinery employed. In regard to the directly consumable part of the raw materials such as cattle, corn, grapes, and such like this difficulty does not arise. In this aspect they belong to class A. This part of the constant capital contained in them enters into the two-thirds of the constant part of A, which is exchanged as capital against the unconsumable products of B or in which B consumes his revenue. This holds good too in general for such raw materials that cannot be immediately consumed as far as they enter in kind into the consumable product itself, however many intermediate stages they may pass through in the processes of production. The part of flax that is transformed into yarn and later into linen enters in its entirety into the consumable product. But a part of these vegetative raw materials, such as timber, flax, hemp, leather and so on, partly enters directly into the components of the fixed capital itself, and partly into the auxiliary materials for the fixed capital. For example, in the form of oil, tallow, etc. Secondly, however, seed [belongs to the constant capital expended for the production of raw materials]. Vegetative materials and animals reproduce themselves. Vegetation and generation. By seed we mean actual seed, and in addition fodder which reverts to the land as dung, pedigree cattle, etc. This large part of the annual product or of the constant part of the annual product itself serves directly as material for regeneration, it reproduces itself. Non-vegetative raw materials. Metals, stones, etc. Their value consists of only two parts, since here there is no seed which represents the raw materials of agriculture. Their value consists only of added labour and machinery consumed (including the means of consumption for the machinery). In addition therefore to the part of the product which represents newly-added labour and is hence included in the exchange of B for the two-thirds of A, there is nothing to be replaced but the wear and tear of the fixed capital and its means of consumption (such as coal, oil, etc.). But these raw materials form the principal component part of the constant capital, of the fixed capital (machinery and instruments of labour, buildings, etc.). They therefore replace their constant capital in kind by the exchange [of capital against capital]. ||388| Secondly, the fixed capital (machinery, buildings, instruments of labour, containers of all kinds). Their constant capital consists of: (1) their raw materials, metals, stones, vegetative raw materials such as timber, leather belting, rope, etc. But though these raw materials form the raw material for them, they themselves enter as instruments of labour into the production of these raw materials. Hence they replace themselves in kind. The iron producer has to replace machinery, the machine builder iron. In quarrying there is wear and tear of machinery, but in factory buildings there is wear and tear of building stone, etc. (2) The wear and tear of machine building machinery, which within a certain period has to be replaced by a new product of the same kind. But the product of the same kind can, of course, replace itself. (3) The means of consumption for the machine (auxiliary materials). Machinery consumes coal, but coal consumes machinery, and so on. In the form of containers, tubes, pipes, etc., machinery of all kinds enters into the production of the means of consumption for machinery, as in the case of tallow, soap, gas (for lighting). Therefore also in these cases the products of these spheres enter reciprocally into each other s constant capital, and consequently replace each other in kind. If beasts of burden are included among machines, what has to be replaced in their case is fodder and in certain conditions stabling (buildings). But if fodder enters into the production of cattle, so do cattle into the production of fodder. In the third place, auxiliary materials. Some of these require raw materials, like oil, soap, tallow, gas, etc. On the other hand, in the form of fertilisers, etc., they in turn enter in part into the production of these raw materials. Coal is required for making gas, but gas lighting is used in producing coal, etc. Other auxiliary materials consist only of labour added and fixed capital (machinery, containers, etc.). Coal must replace the wear and tear of the steam-engine used to produce it. But the steam-engine consumes coal. Coal itself enters into the means of production of coal. Thus it replaces itself in kind. Transport by rail enters into the production costs of coal, but coal in turn enters into the production costs of the locomotive. Later on, there is something special to be added about chemical factories, all of which in greater or smaller degree produce auxiliary materials, such as the raw material of containers (for example, glass, porcelain), as well as articles which enter directly into consumption. All colouring materials are auxiliary materials. But they enter into the product not only as to their value, as for example coal consumed enters into cotton; but they reproduce themselves in the form of the product (its colours). Auxiliary materials are either means of consumption for machinery in this case either fuel for the prime mover, or means of reducing the friction of the operating machinery, such as tallow, soap, oil, etc. or they are auxiliary materials for buildings, like cement, etc. Or they are auxiliary materials for carrying on the production process in general, such as lighting, heating, etc. (in this case they are auxiliary materials required by the labourers themselves to enable them to work). Or they are auxiliary materials which enter into the formation of the raw materials as do all types of fertilisers and all chemical products consumed by the raw materials. Or they are auxiliary materials which enter into the finished product colouring matter, polishing materials, and so on. ---------------- The result is therefore: A replaces his own constant capital, [equal to] two-thirds [of the product], by exchange with that part of B s unconsumable product which represents B s revenue that is, the labour added in category B during the year. But A does not replace B s constant capital. B for his part must replace this constant capital in kind by new products of the same sort. But B has no labour-time over to replace them with. For all the new labour-time added by him forms his revenue, and is therefore represented by the part of B s product which enters as constant capital into A. How then is B s constant capital replaced? Partly by his own reproduction (vegetative or animal), as in all agriculture and stock-raising; partly by exchange in kind of parts of one constant capital for parts of another constant capital, because the product of one sphere enters as raw material or means of production into the other sphere, and vice versa; that is, because the products of the various spheres of production, the ||389| various sorts of constant capital, enter reciprocally in kind into each other s sphere as conditions of production. The producers of unconsumable products are the producers of constant capital for the producers of consumable products. But at the same time their products serve them reciprocally as elements or factors of their own constant capital. That is to say, they consume each other s products industrially. The whole product A is consumed. Therefore also the whole of the constant capital it contains. The producers of A consume one-third of A, the producers of the unconsumable products B consume two-thirds of A. A s constant capital is replaced by the products of B which form B s revenue. This is in fact the only part of the constant capital that is replaced by newly-added labour; and it is replaced by it because the quantity of products B that is the newly-added labour in B, is not consumed by B, but on the contrary is industrially consumed by A, while B consumes individually the two-thirds of A. Let A be equal to 3 days labour; his constant capital, on our assumption, is equal to 2 days labour. B replaces the product of two-thirds of A, and so supplies unconsumable products equal to 2 days labour. Now 3 days labour have been consumed, and 2 are left. In other words, the 2 days of past labour in A are replaced by 2 days of newly-added labour in B, but only because the 2 days of newly-added labour in B consume their value in A and not in product B itself. B s constant capital, in so far as it has entered into the total product B, must likewise be replaced in kind by new products of the same sort that is, by products which are required for industrial consumption by B. But it is not replaced by new labour-time, although it is replaced by the products of the labour-time newly applied during the year. Let the whole constant capital in B s total product be two-thirds. Then if the newly-added labour (equal to the total wages and profit) is 1, the past labour which served it as material and means of labour is equal to 2. How then are these 2 replaced? The proportion of constant and variable capital may vary considerably within the various spheres of production of B. But on our assumption the average is as 1/3 : 2/3, or 1 : 2. Each of the producers of B is now Laced by two-thirds of his product, such as coal, iron, flax, machinery, cattle, wheat (i.e., the part of his cattle and wheat that does not enter into consumption), etc.; whose elements of production must be replaced, or which must be reconverted into the natural form of their elements of production. But all these products themselves re-enter industrial consumption. The wheat (as seed) is in turn also its own raw material, and a part of the cattle produced replaces what has been consumed, that is, itself. In these spheres of production of B (agriculture and stock-raising) this part of their product therefore replaces their own constant capital in its natural form. A part of this product, therefore, does not go into circulation (at least need not go into circulation, and can only do so in a formal sense). Others of these products, such as flax, hemp, etc., coal, iron, timber, machinery, in part enter into their own production as means of production, in the same way as seed in agriculture: for example, coal in the production of coal, and machinery in the production of machinery. A part of the product consisting of machinery and coal, and in fact a part of that part of this product which represents its constant capital, thus replaces itself and merely changes its place in the process of production. It changes from a product into its own means of production. Another part of these and of other products reciprocally enter into each other as elements of production machinery into iron and timber, timber and iron into machinery, oil into machinery and machinery into oil, coal into iron, iron (tram-rails, etc.) into coal, and so on. In so far as the two-thirds of these products of B are not self-replacing in this way that is, do not come back in their natural form into their own productions so that a part of B is directly consumed industrially by its own producers, just as a part of A is directly consumed individually by its own producers the products of the producers of B replace each other reciprocally as means of production. The product of a goes into b s industrial consumption and the product of b into a s industrial consumption; or in a roundabout way, a s product into b s industrial consumption, b s product into that of c, and that of c into that of a. What therefore is consumed as constant capital in one of B s spheres of production is newly produced in another; but what is consumed in the latter is produced in the former. What in one sphere passes from the form of machinery and coal into the form of iron, passes in the other from the form of iron and coal into machinery, and so on. ||390| What has to be done is to replace B s constant capital in its natural form. If we consider B s total product, it represents the entire constant capital in all its natural forms. And where the product of one particular sphere of B cannot replace its own constant capital in kind, purchase and sale, a change of hands, puts everything here in its proper place again. Here, therefore, there is replacement of constant capital by constant capital; in so far as this does not occur directly and without exchange, here therefore there is exchange of capital for capital, that is, of products for products on the basis of their use-value; the products enter reciprocally into their respective production processes, so that each of them is industrially consumed by the producers of the other. This part of the capital consists neither of profit nor of wages. It contains no newly-added labour. It is not exchanged against revenue. It is neither directly nor indirectly paid for by consumers. It makes no difference whether this reciprocal replacement of capitals is carried through with the aid of merchants (that is, by merchant s capitals) or not. But since these products are new (machinery, iron, coal, timber, etc., which reciprocally replace each other), since they are the products of the last year s labour thus the wheat which serves as seed is just as much a product of new labour as the wheat which passes into consumption, etc. how can it be said that no newly-added labour is contained in these products? And moreover isn t their form striking evidence to the contrary? Even if not in the case of wheat or cattle, surely in the case of a machine its form bears witness to the labour which has transformed it from iron, etc., into a machine, and so forth. This problem has been solved earlier, It is not necessary to go into it here again. <Adam Smith s statement that the trade between dealers and dealers must be equal to the trade between dealers and consumers (by which he means direct, not industrial, consumers, since he himself includes industrial consumers among dealers) is therefore wrong. It is based on his false assertion that the whole product consists of revenue, and in fact only means that the part of the exchange of commodities which is equal to the exchange between capital and revenue is equal to the total exchange of commodities. As the assertion is wrong, the practical applications Tooke made of it for the circulation of money are also wrong (especially the relation between the quantity of money circulating between dealers and the quantity of money circulating between dealers and consumers). Let us take as the final dealer confronting the consumer the merchant who buys the product of A; this product is bought from him by the revenue of A, equal to one-third of A, and by the revenue of B, equal to two-thirds of A. These replace his merchant s capital for him. The total of their revenues must cover his capital. (The profit which the rascal makes must be accounted for by his retaining a part of A for himself, and selling a smaller part of A for the value of A. Whether the rascal is thought of as a necessary agent of production or as a sybaritic intermediary does not in any way alter the case.) This exchange between dealer in A and consumer of A covers in value the exchange between the dealer in A and all the producers of A, and consequently all dealings between these producers among themselves. The merchant buys the linen. This is the last dealing between dealer and dealers. The linen weaver buys yarn, machinery, coal, etc. This is the last but one dealing between dealer and dealers. The spinner buys flax, machinery, coal, etc. This is the last dealing but two between dealer and dealers. The flax-grower and machine builder buy iron, machines, etc., and so on. But the dealings between the producers of flax, machinery, iron, coal, [which are carried out] to replace their constant capital, and the value of these dealings, do not enter into the dealings which A s product passes through, whether as the exchange of revenue for revenue, or as the exchange of revenue for constant capital. These dealings not those between the producers of B and the producers of A, but those between the producers of B have not to be replaced by the buyer of A to the seller of A, any more than the value of this part of B enters into the value of A. These dealings too require money, and are carried out through merchants. But the part of the circulation of money which exclusively belongs to this sphere is completely separate from that between dealers and consumers.> ||391| Two questions are still to be solved: 1. In our investigation up to now wages have been treated as revenue, without being distinguished from profit. How far in this connection have we to take account of the fact that wages are at the same time part of the circulating capital of the capitalist? 2. Up to now it has been assumed that the total revenue is spent as revenue. The alteration that comes in when a part of the revenue, of the profit, is capitalised, has therefore to be considered. This in fact comes up in the examination of the process of accumulation but not in its formal aspect. That a part of the product which represents surplus-value is reconverted, partly into wages and partly into constant capital, presents no difficulty. Here we have to examine how this affects the exchange of commodities under the headings previously considered under which it can be examined in relation for its holders, that is to say, as exchange of revenue for revenue, exchange of revenue for capital, or finally, exchange of capital for capital.} <This intermezzo has therefore to be completed in this historico-critical section, as occasion warrants.> Ferrier (Fran ois-Louis-Auguste) (Sub-inspector of Customs): Du Gouvernement consid r dans ses rapports avec le commerce, Paris, 1805. (This was the main source for Friedrich List.) This fellow eulogises the Bonapartist system of prohibitions, etc. In fact the Government (therefore also State officials those unproductive labourers) is in his view important, as a manager directly intervening in production. This customs officer is consequently extremely angry with Adam Smith for calling State officials unproductive. <Because in fact he wants the largest possible part to be spent as capital, i.e., in exchange for productive labour, and the smallest possible part as revenue, in exchange for unproductive labour.> In a moment we shall quote for comparison the context of the passage from Adam Smith which Ferrier regards with such abomination. <Book I, Chapter VI, (t. I, d. Garnier, pp. 108-09) Adam Smith says at the end of this chapter which deals with the component parts of the price of commodities: There is confusion of all kinds in this passage, in which Smith is in fact trying to solve the problem of accumulation. First, once again there is the wrong assumption that the exchangeable value of the annual product of labour, and so also the annual produce of labour , resolves itself into wages and profits (including rents). We will not deal again with this nonsense. We only observe: the amount of the annual product or of the funds, the stocks of commodities which are the annual product of labour consists for the most part ||392| of commodities in kind which can only enter as elements into constant capital <raw materials, seed, machinery, etc.>, which can only be consumed industrially. The very use-value of these commodities (and they form the larger part of the commodities entering into constant capital) shows that they are not suitable for individual consumption; that therefore revenue cannot be expended on them, whether it is wages, profit or rent. A part of the raw materials (in so far as it is not required for the reproduction of raw materials themselves, or in so far as it does not enter into the fixed capital as auxiliary material or directly as a component part) will, it is true, later on be given a consumable form, but only through the labour of the current year. As a product of the previous year s labour these raw materials themselves form no part of revenue. It is only the consumable part of the product that can be consumed, can enter into individual consumption and thus form revenue. But even a part of the consumable product cannot be consumed without making reproduction impossible. One part even of the consumable part of commodities therefore must be deducted which must be consumed industrially, that is, it must serve as material of labour, as seed, etc., not as means of subsistence, whether for labourers or for capitalists. This part of the product therefore has first to be deducted from Adam Smith s calculation or rather has to be added to it. If the productivity of labour remains the same, then this part of the product which does not consist of revenue remains the same from year to year; provided that, with the productivity of labour remaining the same, the same quantity of labour-time as before is employed. On the assumption therefore that a greater quantity of labour than before is used each year, we have to see what happens to the constant capital. In short: in order to employ a greater quantity of labour, it is not enough either that a greater quantity of labour should be available, or that a greater quantity should be paid for, that is, more should be spent in wages; but the means of labour raw material and fixed capital must also be there in order to absorb a greater quantity of labour. Hence this point is still to be discussed after the points raised by Adam Smith have been cleared up. So then, once more [we take] his first sentence: Here different things are obviously mixed up. Not only living labour, living labour employed during the current year, enters into the exchangeable value of the total annual product, but also past labour, product of the labour of past years. Not only labour in living form, but labour in materialised form. The exchangeable value of the product is equal to the total labour-time which it contains, a part of which consisted of living labour and a part of materialised labour. Let the proportion of the former to the latter be as 1/3 : 2/3 or 1 : 2. Then the value of the total product is equal to 3, of which 2 are materialised labour-time and 1 living labour-time. The value of the total product can therefore buy more living labour than is contained in it, on the assumption that materialised labour and living labour exchanged for each other as equivalents, that a definite quantity of materialised labour commanded only a quantity of living labour equal to itself. For the product is equal to 3 days labour; but the living labour-time contained in it is only equal to 1 day s labour. 1 day s living labour sufficed to produce the product (in fact, only to give the final form to its elements). But 3 days labour is contained in it. Therefore if it was exchanged entirely against living labour-time, if it was employed only to purchase or command quantities of living labour, it would be able to command, to purchase, 3 days labour. This however is evidently not what Adam Smith has in mind, and would be a quite useless premise for him. What he means is that a large part of the exchangeable value of the product does not resolve itself (or as he wrongly expresses it, because of a confusion of ideas noted earlier) into wages but into profits and rents, or, as we will say to simplify things, into profits. In other words, the part of the value of the product which is equal to the quantity of labour added during the last year thus in fact the part of the product which in the proper meaning of the word is the product of last year s labour pays first the labourers and secondly enters into the capitalist s revenue, his fund for consumption. This whole part of the total product arises from labour, and indeed exclusively from labour; but it consists of paid and unpaid labour. The wages are equal to the total of the paid labour, the profits ||393| to the total of the unpaid labour. If therefore this total product was expended in wages, it could naturally set in motion a greater quantity of labour than that of which it was the product; and in fact the proportion in which the product can set in motion more labour-time than it itself contains depends exactly on the proportion in which the working-day is divided into paid and unpaid labour-time. Let us assume that the proportion is such that the labourer produces or reproduces his wages in 6 hours, that is, in half a day. Then the other 6 hours or the other half day forms the surplus. Thus for example of a product which contained 100 days labour [newly-added labour], equal to 50 (when the day s labour is equal to 10s., making 100 days labour equal to 1,000s., or 50), there would be 25 for wages and 25 for profit (rent). With the 25 equal to 50 days labour l00 labourers would have been paid, who would have worked precisely half their labour-time for nothing or for their masters. If therefore the whole product (of the 100 days labour) were to be expended in wages, then 200 labourers could be set in motion with the 50, each of whom would receive as wages 5s. or half the product of his labour as before. The product of this labour would be equal to 100 (that is, 200 days labour, equal to 2,000s., or 100), with which 400 labourers (5s. the labourer, making 2,000s.) could be set in motion, whose product would be equal to 200, and so on. And this is what Adam Smith means by saying that the annual produce of labour will always be sufficient to purchase or command a much greater quantity of labour than what was employed to produce the product. (If the labourer were paid the whole product of his labour, that is, 50 for 100 days labour, then the 50 too could only set in motion 100 days labour.) And so Smith goes on to say: A part of this product however is consumed by the owners of profit and rent; a part by their parasites. The part of the product that can be expended again in (productive) labour is consequently determined by the part of the product which the capitalists, landlords and their parasites (that is the unproductive labourers) do not themselves consume. But nevertheless there is always a new fund (a new fund of wages) to set in motion, with the previous year s product, a greater quantity of labourers in the current year. And as the value of the annual product is determined by the quantity of labour-time employed, the value of the annual product will grow each year. Of course it would be of no use to have the fund to purchase or command a much greater quantity of labour than in the previous year unless a greater quantity of labour was on the market. It is of no use to me to have more money to buy a commodity, unless more of this commodity is on the market. Let us assume that the 50 set in motion, instead of the 100 as before (who received 25), not 200 but only 150 labourers, while the capitalists themselves consumed 12.l0s. instead of 25. The 150 labourers ([receiving] 37.l0s.) would perform 150 days labour, equal to 1,500s. or 75. But if the quantity of labourers available were, as before, only 100, instead of 25 as before, they would receive 37.l0s, as wages, though their product [would amount to I only 50 as before. Thus the revenue of the capitalist would have fallen from 25 to l2.l0s., because wages had risen by 50 per cent. Adam Smith knows, however, that an increasing quantity of labour will be available. Partly [due to] the annual increase of the population (though this is supposed to be provided for in the old wages), partly unemployed paupers, or half-employed labourers, etc. Then the large numbers of unproductive labourers, part of whom can be transformed into productive labourers by a different way of using the surplus-produce. Finally the same number of labourers can perform a greater quantity of labour. And whether I pay 125 labourers instead of 100, or whether the 100 work 15 hours a day instead of 12, would be quite the same thing. It is incidentally an error of Adam Smith s directly connected with his analysis of the total product into revenue to say that with the increase of the productive capital or with the growth of the part of the annual product which is destined for reproduction the labour employed (the living labour, the part of capital expended in wages) must increase in the same proportion. ||394| Thus first Adam Smith has a fund of consumable means of subsistence, which can purchase or command a greater quantity of labour this year than the foregoing year; he has more labour; and at the same time more means of subsistence for this labour. Now we must see how this additional quantity of labour is to be realised.> Had Adam Smith adhered with full consciousness to the analysis of surplus-value which in substance is to be found in his work which is created only in the exchange of capital against wage-labour it would have followed that productive labour is only that which is exchanged against capital: never labour which is exchanged with revenue as such. In order for revenue to be exchanged against productive labour, it must first be transformed into capital. But taking as his starting-point one aspect of the traditional view that productive labour is labour which directly produces material wealth of any kind and at the same time combining with this his distinction in so far as it is based on the exchange of either capital for labour or of revenue for labour, with Smith the following became possible: The kind of labour for which capital is exchanged is always productive (it always creates material wealth, etc.). The kind of labour which is exchanged for revenue may be productive or it may not; but the spender of revenue as a rule prefers to set in motion directly unproductive labour rather than productive. One can see how Adam Smith, by this compound of his two distinctions, very much weakens and blunts the principal distinction. The following quotation shows that Adam Smith does not take the fixation of labour in a purely external sense; among the various component parts of the fixed capital is enumerated: The strange origin of accumulation and its necessity: (Even in the first case he could not eat the hare before he had killed it, and he could not kill it before he had produced for himself the classical bow or something similar. The only thing that seems to be added in case II is therefore not the necessity of a stock of any sort, but the time to sell the produce of his labour .) (On the other hand, according to what he has stated at the beginning, it appears that no accumulation of capital takes place before the division of labour, just as there is no division of labour before the accumulation of capital.) He continues: Adam Smith treats the objects which are already in the fund for consumption in exactly the same way as productive and unproductive labour. For instance: ||396| In Chapter III of Book II (l.c., t. II, p. 314 sqq.) [we find]: It is the same with commerce and manufactures. Large capitals are now employed in them, formerly very small capitals, but they (Smith falls into the error of identifying the size of the productive capital with the size of that part of it which is destined to provide subsistence for productive labour. But in fact large-scale industry, as he knew it, was as yet only in its beginnings.) Hence Smith s homilies (further on [Garnier], 1, c., t. II, l. II, ch. III, pp. 328-29 sqq.) on the frugal man, who by his annual savings provides something like a public workhouse for an additional number of productive hands, and thus The conclusion of this moral tale is that these (frugality and prodigality) average out among private individuals, that in fact wisdom prevails. [In] Chapter IV of Book II [Smith writes]: In Chapter V of Book II (p. 369 sqq., t. II) of the Different Employments of Capitals , Smith classifies them according as they employ more or less productive labour, and, consequently, raise the exchange-value of the annual product. First agriculture. Then manufacture. Then commerce, and finally retail trade. This is the order of precedence in which they set in motion quantities of productive labour. Here too we get a completely new definition of productive labourers: (On the whole he sees their productivity in the fact that they put into motion productive labour.) He says of the farmer: So in the end the ox too is a productive labourer. Lauderdale (Earl of): An Inquiry into the Nature and Origin of Public Wealth, etc., [Edinburgh and] London, 1804. (The French translation: Recherches sur la nature et l origine de la richesse publique etc. par Lagentie de Lava sse, Paris, 1808.) Lauderdale s apologetic justification of profit will be examined only later on, in Section III. It regards profit as arising from capitals themselves, because they supplant labour. They are paid for doing what otherwise, without them, the hand of man would have to do, or could not do at all. The Earl is a great enemy of Smith s doctrine of accumulation and saving, Also of his distinction between productive and unproductive labourers; but according to him what Smith calls productive powers of labour are only the productive power of capital . He flatly denies the derivation of surplus-value put forward by Smith, on the following grounds: It is clear that on these premises he picks on the most superficial points in his polemic against Smith. Thus he says: (Garnier has the copyright in this argument, as his edition and notes on Smith appeared in 1802, two years before Lauderdale.) Further: The labour of the manufacturer fixes and realises itself in some vendible commodity Neither the labour performed by the menial servant, nor that of which the necessity is supplanted by circulating capital, < by this he means money> do naturally stock, or store themselves up in such a manner as to be transferred from one to another for a defined value. The profit of the one and the other alike arises from saving the labour of the owner or master. The similarity is indeed such that it is natural to suppose the same circumstances which led the one to be deemed unproductive, would naturally create the same impression with relation to the other. > And thereupon he quotes Smith, Book II, Chapter II, > (Lauderdale, l.c., pp. 144-45) [pp. 195-97]. Thus we would have the succession: Ferrier, Garnier, Lauderdale, Ganilh. The latter phrase about the saving of labour is particularly hard ridden by Tocqueville. After Garnier appeared the inane Jean-Baptiste Say s Trait d conomie politique. He reproaches Smith in that he refuses the name of products to the results of these activities [e.g., those of the physician, actor, etc.]. He gives the labour spent on them the name unproductive (3me d., t. I, p. 117). Smith does not at all deny that these activities produce a result , a product of some kind. He even expressly mentions the protection, security, and defence of the commonwealth as the effect of their labour this year (the labour of the servants of the public) ([Wealth of Nations], O.U.P. edition, Vol. I, pp. 369-70] Smith, t. II, d, Garnier, l. II, ch. III, p. 313). Say for his part sticks to Smith s secondary definition, that these services and their product generally perish in the very instant of their performance , in the very instant of their production (Smith, l.c.). Monsieur Say calls these consumed services , or their products, results in a word, their use-value immaterial products or values, which are consumed in the instant of their production . Instead of calling them unproductive , he calls them productive of immaterial products . He gives them another name. But then he declares further: Thus Monsieur Say declares these labours to be unproductive in the most restricted sense used by Smith. But at the same time he wants to appropriate Garnier s step forward . Hence he invents a new name for unproductive labours. This is his kind of originality, his kind of productivity and way of making discoveries, And with his customary logic, he refutes himself again, He says: And why not, if one kind of labour is as productive as the other, and the increase of productive labour is in general advantageous for a nation ? Why is it not as advantageous to increase this kind of labour as any other? Because, Say replies with his characteristic profundity, because it is not at all advantageous to increase productive labour of any kind above the need for this labour. But then surely Garnier is right. For it is equally advantageous that is, equally disadvantageous to increase the one kind of labours as to increase the other kind above a certain quantity. (Not more joiner s labour should be employed to make a table than is necessary for the production of the table. Or to patch up a sick body, not more than is necessary to cure it. So lawyers and physicians should perform only the necessary labour for the production of their immaterial product.) Say s logic is therefore this: It is not so useful for a nation to increase the producers of immaterial products as to increase the producers of material products. Proof: it is absolutely useless to increase the producers of any kind of product, whether material or immaterial, beyond what is necessary. Therefore it is more useful to increase the useless producers of material products than those of immaterial products. It does not follow in both cases that it is useless to increase these producers, but only the producers of a particular kind in their corresponding branch of production. [According to Say], too many material products cannot ||400| be produced, nor can too many immaterial. But a change is diverting. So different kinds must be produced in both departments. And moreover Monsieur Say teaches: Sluggishness in the sale of some products arises from the scarcity of some others (l.c., p. 438). Therefore there can never be too many tables produced, but at most perhaps too few dishes to be put on the tables. If physicians increase too much in number, what is wrong is not that their services are available in superfluity, but perhaps that the services of other producers of immaterial products are in short supply for example, prostitutes (see l. c., p. 123, where the industries of street-porters, prostitutes, etc., are grouped together, and where Say ventures to assert that the apprenticeship for a prostitute amounts to nothing ). In the end, the scales come down on the side of the unproductive labourers . With given conditions of production, it is known exactly how many labourers are needed to make a table, how great the quantity of a particular kind of labour must be in order to make a particular product. With many immaterial products this is not the case. The quantity of labour required to achieve a particular result is as conjectural as the result itself. Twenty priests together perhaps bring about the conversion that one fails to make; six physicians consulting together perhaps discover the remedy that one alone cannot find, In a bench of judges perhaps more justice is produced than by a single judge who has no control but himself. The number of soldiers required to protect a country, of police to establish order in it, of officials to govern it well, etc. all these things are problematical and are very often discussed for example in the English Parliament; although how much spinning labour is needed to spin 1,000 lbs. of twist is known very exactly in England. As for other productive labourers of this kind, the concept of them includes the fact that the utility which they produce depends only on their number, consists in their number itself. For example, lackeys, who should bear witness to their master s wealth and elegance. The greater the number of them, the greater the effect they are supposed to produce . Thus Monsieur Say sticks to his point: unproductive labourers can never be sufficiently increased in numbers. |400|| ||400| Le comte Destutt de Tracy: l mments d id ologie, IVe et Ve parties. Trait de la volont et de ses effets, Paris, 1826 ([First edition] 1815). But in this productive class he distinguishes the labouring class which directly produces all our wealth (p. 88) that is, what Smith calls the productive labourers. As against these, the sterile class consists of the rich, who consume their rent of land or rent on money. They are the idle class. How then does it stand with the labourers whom these idlers directly employ? In so far as they consume commodities, they do not consume actual labour, but the products of the productive labourers, Here therefore we are dealing with labourers for whose labour the idlers directly exchange their revenue, that is, with labourers who draw their wages directly from revenue, not from capital. <Real political economy la Smith treats the capitalist only as personified capital, M C M, agent of production. But who is to consume the products? The labourers? but they don t. The capitalist himself? Then he is acting as a big idle consumer and not as a capitalist. The owners of land and money rents? They do not reproduce their consumption, and thereby are of disservice to wealth, Nevertheless, there are also two correct aspects in this contradictory view, which regards the capitalist only as a real amasser of wealth, not an illusory one like the miser proper: (1) capital (and hence the capitalist, its personification) is treated only as an agent for the development of the productive forces and of production; (2) it expresses the standpoint of emerging capitalist society, to which what matters is exchange-value, not use-value; wealth, not enjoyment. The enjoyment of wealth seems to it a superfluous luxury, until it itself learns to combine exploitation and consumption and to subordinate itself to the enjoyment of wealth.> The industrial capitalists the second sort of capitalists In Destutt it is quite clear as with Adam Smith before him that what on the surface is glorification of the productive labourer is in fact only glorification of the industrial capitalist in contrast to landlords and such moneyed capitalists as live only on their revenue. As for their personal consumption, it is the same as that of the idle capitalists. But it is Destutt is right on this. Rents of land and interest on money are only deductions from industrial profit, portions of the latter given by the industrial capitalist from his gross profit to landlords and moneyed capitalists. Up to here, all right. But how then does it stand with the wage-labourers (the productive labourers, who are employed by the industrial capitalists)? Very well. And whence come the profits of the entrepreneurs which enable them to pay revenue to themselves and to the idle capitalists, etc.? And to whom do they sell everything at a higher price than it costs them? Let us now have a look at these three categories of sales. 1. The industrial capitalists themselves consume one part of their product (or profit). They cannot possibly enrich themselves by swindling themselves and selling their products to themselves at a dearer price than they themselves have paid for them. Nor can any one of them swindle the others in this way. If A sells his product, which the industrial capitalist B consumes, at too dear a price, then B sells his product, which the industrial capitalist A consumes, at too dear a price. It is the same thing as if A and B had sold their products to each other at their real value. Category 1 shows us how the capitalists spend a part of their profit; it does not show us whence they draw the profit. In any case they make no profit by selling to one another everything that they produce at a higher price than it has cost to produce . 2. They can likewise draw no profit from the part of the product which they sell to their labourers above the costs of production, It is presupposed that the whole consumption of the labourers is in fact the consumption of those who buy their labour . Moreover Destutt rubs this in by remarking that the capitalists, by selling their products to the wage-labourers (their own and those of the idle capitalists), only get back their total wages . And in fact not even the total, but after deducting their economies. It is all the same whether they sell the products to them cheap or dear, since they always only get back what they have given them, and, as said above, the wage-labourers only receive with one hand and return with the other . First the capitalist pays money to the labourer as wages. Then he sells him his product too dear , and by so doing draws the money back again. But as the labourer cannot pay back to the capitalist more money than he has received from him, so the capitalist can never sell his products to him dearer than he has paid him for his labour. He can always only get back from him as much money for the sale of his products as the money he has given him for his labour. Not a farthing more. How then can his money increase through this circulation ? ||403| In addition to this, there is another absurdity in Destutt. Capitalist C pays the labourer L a weekly wage of 1, and then draws back the 1 for himself again by selling him commodities for 1. By this means, Tracy thinks, he has drawn back to himself the total of the wages paid. But first he gives the labourer 1. And then he gives him commodities for 1. So what in fact he has given him is 2: 1 in commodities and 1 in money. Of this 2, he takes back 1 in the form of money. Therefore in fact he has not drawn back a farthing of the 1 wage. And if he intended to enrich himself by this kind of drawing back the wages (instead of by the labourer giving him back in labour what he advanced to him in commodities), he would soon come to his senses. Here, therefore, the noble Destutt confuses the circulation of money with the real circulation of commodities. Because the capitalist, instead of giving the labourer directly commodities to the value of 1, gives him 1, with which the labourer then decides as he likes which commodities he wants to buy, and returns to the capitalist in the form of money the draft he had given him on his merchandise after he, the labourer, has appropriated his aliquot share of the merchandise Destutt imagines that the capitalist draws back the wages, because the same piece of money flows back to him, And on the same page Monsieur Destutt remarks that the phenomenon of circulation is little known (p. 239). Totally unknown to himself, at any rate. If Destutt had not explained the drawing back of the total wages in this peculiar way, the nonsense might at least have been conceivable in a way we shall mention now. (But before that, a further illustration of his sapience. If I go into a shop and the shopkeeper gives me 1 and I then use this 1 to buy commodities to the value of 1 in his shop, he then draws back the 1 again. No one will assert that he has enriched himself by this operation. Instead of 1 in money and 1 in commodities he now has only 1 in money left. Even if his commodity was only worth l0s. and he sold it to me for 1, in this case too he is 10s. poorer than he was before the sale, even though he has drawn back the whole of one pound sterling.) If C, the capitalist, gives the labourer 1 wages, and afterwards sells him commodities to the value of 10s. for 1, he would certainly have made a profit of 10s. because he had sold the commodities to the labourer 10s. too dear. But from Monsieur Destutt s point of view even so it could not be understood how any profit from this transaction arises for C. (The profit arises from the fact that he has paid him less wages in fact has given the labourer a smaller aliquot part of the product in exchange for his labour than he gives him nominally.) If he gave the labourer 10s. and sold his commodity for 10s., he would be just as rich as if he gives him 1 and sells him his 10s. commodity for 1. Moreover, Destutt bases his argument on the assumption of necessary wages. In the best case any profit here would only be explained by the labourer having been cheated over his wages. This case 2 therefore shows that Destutt has absolutely forgotten what a productive labourer is, and has not the slightest idea of the source of profit. At most it could be said that the capitalist makes a profit by raising the price of the products above their value, in so far as he sells them not to his own wage-labourers but to the wage-labourers of idle capitalists. But since the consumption of unproductive labourers is in fact only a part of the consumption of idle capitalists, we come now to case 3. 3. The industrial capitalist sells his products too dear , above their value, to the Here again there is the childish conception of the rent, etc., coming back, as there was above of the drawing back of the whole of the wages. For example, C pays 100 rent for land and money to I (the idle capitalist). The 100 are means of payment for C. They are means of purchase for I, who with them draws 100 of commodities from C s warehouse. Thus the 100 return to C as the transformed form of his commodity. But he has 100 less in commodities than before. Instead of giving them direct to I, he has given him 100 in money, with which the latter buys 100 of his commodities. But he buys these 100 worth of commodities with C s money, not with his own funds. And Tracy imagines that in this way the rent which C has paid over to I comes back to C. What imbecility! First absurdity. Secondly, Destutt himself has told us that rent of land and interest on money are only deductions from the industrial capitalist s profit, and therefore only quotas of profit given away to the idler. On the assumption that C drew back this whole quota ||404| to himself by some sort of trick, though not in one or other of the ways described by Tracy in other words, that capitalist C paid no rent at all, neither to the landlord nor to the moneyed capitalist lie would retain his whole profit, but the question is precisely how to explain whence he derived the profit, how he has made it, how it arose. As this cannot be explained by his having or retaining it without giving a quota of it to landlord and moneyed capitalist, just as little can it be explained by the fact that either part or the whole of the quota of profit which he has given away to the idler under one category or another is entirely or partially, in one way or another, dragged back by him from the hand of the idler into his own hand again. Second absurdity! Let us disregard these absurdities. C has to pay I the idler rent to the amount of 100 for the land or the capital that he has rented (lou ) from him. He pays the 100 out of his profit (whence the latter arises we do not yet know). Then he sells his products to I, which are consumed either by I directly or through his retainers (the unproductive wage-labourers), and he sells them to him too dear, for example, 25 per cent above their value. He sells him products worth 80 for 100. In this transaction C undoubtedly makes a profit of 20. He has given I a draft for 100 worth of commodities. When the latter presents the draft, he gives his commodities only to the value of 80, by fixing the nominal price of his goods 25 per cent above their value. Even if I would be satisfied with consuming commodities worth 80 and paying 100 for them, C s profit could never rise above 25 per cent. The prices and the fraud would be repeated every year. But I wants to consume to the value of 100. If he is a landlord, what is he to do? He mortgages property to C for 25, in exchange for which C gives him commodities worth 20 for he sells his commodities at 25 per cent (one-quarter) above their value, If he is a money-lender, he hands over to C 25 of his capital, in exchange for which C gives him commodities worth 20. Let us assume that the capital (or value of the land) was lent at 5 per cent. Then it amounted to 2,000. Now it amounts to only 1,975. His rents are now 98 3/4. And so it would go on, with I constantly consuming commodities to the real value of 100, but his rents constantly falling, because in order to have commodities to the value of 100 he must always consume an ever greater part of his capital itself. Thus bit by bit C would get the whole of I s capital into his own hands, and the rents of it together with the capital that is to say, along with the capital itself he would appropriate that portion of the profit which he makes from borrowed capital. Mr. Destutt evidently has this process in view, for he continues: And Monsieur Destutt is quite right up to a certain point, although not at all in what he wants to explain. In the period of the declining Middle Ages and rising capitalist production the rapid enrichment of the industrial capitalists is in part to be explained by the direct fleecing of the landlords. As the value of money fell, as a result of the discoveries in America, the farmers paid them nominally, but not really, the old rent, while the manufacturers sold them commodities above their value not only on the basis of the higher value of money. Similarly in all countries, as for example the Asiatic, where the principal revenue of the country is in the hands of landlords, princes, etc., in the form of rent, the manufacturers, few in number and therefore not restricted by competition, sell them their commodities at monopoly prices, and in this way appropriate a part of their revenue; they enrich themselves ||405| not only by selling to them unpaid labour, but by selling the commodities at over the quantity of labour contained in them. Only Monsieur Destutt is again wrong if he believes that money-lenders let themselves be fleeced in this way. On the contrary, they share, through the high interest they draw, in those high profits, in that fleecing, directly and indirectly. The following passage shows that this phenomenon was in Monsieur Destutt s mind: What Monsieur Destutt wanted to explain to us was the profits and the high profits of industrial capital. He has explained it in two ways. First, because the money which these capitalists pay out in the form of wages and rents flows back to them again, since these wages and rents buy products from them. In fact, what this explains is only why they do not pay wages and rents twice, first in the form of money, and secondly in the form of commodities to the same amount in money. The second explanation is that they sell their commodities above their price, they sell them too dear, first to themselves, thus cheating themselves; secondly to the labourers, thus again cheating themselves, as Monsieur Destutt tells us that the consumption of the wage-labourers must be regarded as the consumption of those who pay them (p. 235); finally, in the third place, to the gentlemen living on rents, whom they fleece, and this would in fact explain why the industrial capitalists always keep for themselves a larger part of their profit, instead of giving it away to the idlers. It would show why the distribution of the total profit between the industrial and non-industrial capitalists is increasingly to the advantage of the former at the cost of the latter. It would not help one iota to an understanding of whence this total profit comes. Let us assume that the industrial capitalists had got the whole of it for themselves, the question remains where does it come from? Therefore Destutt has not only given no answer, but he has only revealed that he thinks the reflux of the money is a reflux of the commodity itself. This reflux of money means only that the capitalists first pay wages and rents in money, instead of paying them in commodities; that their commodities are bought with this money and hence they have paid in commodities in this roundabout way. This money therefore constantly flows back to them, but only to the extent that commodities to the same money value are definitively taken from them and fall to the share of the consumption of the wage-labourers and drawers of rent. Monsieur Destutt (in a really French way similar exclamations of astonishment about himself are to be found in Proudhon) is altogether astonished at the clarity which this Later, quite incidentally, Monsieur Destutt recalls (from Adam Smith) the real course of things, which however in essence he only repeats as a phrase which he has not understood as otherwise he (this Member of the Institute of France) would have been unable to shed the streams of light referred to above. Destutt writes (p. 246): <Aha! So the rents (and also their own profits) which the industrial capitalists pay to the idle capitalists for the funds borrowed from the latter come from their using these funds to pay wages to labour which produces more than it costs ; that is to say, therefore, whose product has more value than is paid to them in other words, profit comes from what the wage-labourers produce over and above what they cost; a surplus-product which the industrial capitalist appropriates for himself, and of which he gives away only one part to those receiving rent from land and money.> Monsieur Destutt concludes from this: not that we must go back to these productive labourers, but that we must go back to the capitalists who set them in motion. To be sure; inasmuch as they directly exploit labour, and the idle capitalists only do it through their agency. And in this sense it is correct to regard industrial capital as the source of wealth. ||406| The inquiry into the productive labourer , and the result that only one whose buyer is an industrial capitalist is a productive labourer one whose labour produces profit for its immediate buyer led Monsieur Destutt to the conclusion that in fact the industrial capitalists are the sole productive labourers in the higher meaning of the word. That they give a useful direction to current labour in fact means only that they employ useful labour, labour which results in use-values. But that they make useful application of accumulated labour if it is not to mean the same thing again, that they make industrial use of accumulated wealth for the production of use-values means that they make useful application of accumulated labour by buying with it more current labour than is contained in it. In the passage just cited Destutt na vely epitomises the contradictions which make up the essence of capitalist production. Because labour is the source of all wealth, capital is the source of all wealth; the actual propagator of wealth is not he who labours, but he who makes a profit out of another s labour. The productive powers of labour are the productive powers of capital. Hence, according to Destutt, it follows as a matter of course that the industrial capitalists maintain all the others and alone augment the public fortune and create all our means of enjoyment . Our faculties (facult s) are our only original wealth, therefore the faculty of labour is not wealth. Labour produces all other wealth, that means: it produces wealth for all others except for itself, and it itself is not wealth, but only its product is wealth. All properly directed labour is productive; that means: all productive labour, all labour which yields profit to the capitalist, is properly directed. The following remarks of Destutt which refer not to the different classes of consumers, but to the different nature of the articles of consumption are a very good paraphrase of Adam Smith s views in Book II, Chapter III, at the end of which he inquires into what kind of (unproductive) expenditure, that is to say, of individual consumption, consumption of revenue, is more or less advantageous. He opens this inquiry (Garnier, t. II, p. 345) with the words: Destutt summarises Smith s exposition as follows: Most of the writers who contested Smith s view of productive and unproductive labour regard consumption as a necessary spur to production. For this reason they regard the wage-labourers who live on revenue the unproductive labourers whose hire does not produce wealth, but is itself a new consumption of wealth as equally productive even of material wealth as the productive labourers, since they widen the field of material consumption and therewith the field of production. This was therefore for the most part apologetics from the standpoint of bourgeois economy, partly for the rich idlers and the unproductive labourers whose services they consume, partly for strong governments whose expenditure is heavy, for the increase of the State debts, for holders of church and State benefices, holders of sinecures, etc. For these unproductive labourers whose services figure in the expenses of the idle rich all have in common the fact that although they produce immaterial products , they consume material products , that is, products of the productive labourers. Other economists, like Malthus, admit the distinction between productive labourers and unproductive, but prove to the industrial capitalist that the latter are as necessary to him as the former, even for the production of material wealth. To say that production and consumption are identical or that consumption is the purpose of all production or that production is the pre-condition of all consumption, is of no help in this connection. What apart from the tendentious purpose is at the bottom of the whole dispute is rather this: The labourer s consumption on the average is only equal to his costs of production, it is not equal to his output. He therefore produces the whole surplus for others, and so this whole part of his production is production for others. Moreover, the industrial capitalist who drives the labourer to this overproduction (that is, production over and above his own subsistence needs) and makes use of all expedients to increase it to the greatest extent possible to increase this relative overproduction as distinct from the necessary production directly appropriates the surplus-product for himself. But as personified capital he produces for the sake of production, he wants to accumulate wealth for the sake of the accumulation of wealth. In so far as he is a mere functionary of capital, that is, an agent of capitalist production, what matters to him is exchange-value and the increase of exchange-value, not use-value and its increase. What he is concerned with is the increase of abstract wealth, the rising appropriation of the labour of others. He is dominated by the same absolute drive to enrich himself as the miser, except that he does not satisfy it in the illusory form of building up a treasure of gold and silver, but in the creation of capital, which is real production. If the labourer s overproduction is production for others, the production of the normal capitalist, of the industrial capitalist as he ought to be, is production for the sake of production. It is true that the more his wealth grows, the more he falls behind this ideal, and becomes extravagant, even if only to show off his wealth. But he is always enjoying wealth with a guilty conscience, with frugality and thrift at the back of his mind. In spite of all his prodigality he remains, like the miser, essentially avaricious. When Sismondi says that the development of the productive powers of labour makes it possible for the labourer to obtain ever-increasing enjoyments, but that these very enjoyments, if put at his disposal, would make him unfit for labour (as a wagelabourer)*; it is equally true that the industrial capitalist becomes more or less unable to fulfill his function as soon as he personifies the enjoyment of wealth, as soon as he wants the accumulation of pleasures instead of the pleasure of accumulation. He is therefore also a producer of overproduction, production for others. Over against this overproduction on one side must be placed overconsumption on the other, production for the sake of production must be confronted by consumption for the sake of consumption. What the industrial capitalist has to surrender to landlords, the State, creditors of the State, the church, and so forth, who only consume revenue, ||408| is an absolute diminution of his wealth, but it keeps his lust for enrichment going and thus preserves his capitalist soul. If the landlords, moneylenders, etc., were to consume their revenue also in productive instead of unproductive labour, the purpose would not be achieved. They would become themselves industrial capitalists, instead of representing the function of consumption as such. With regard to this point we shall examine later an extremely comical dispute between a Ricardian and a Malthusian. Production and consumption are in their nature [an sich] inseparable. From this it follows that since in the system of capitalist production they are in fact separated, their unity is restored through their opposition that if A must produce for B, B must consume for A. Just as we find with every individual capitalist that he favours prodigality on the part of those who are co-partners with him in his revenue, so the older Mercantile system as a whole depends on the idea that a nation must be frugal as regards itself, but must produce luxuries for foreign nations to enjoy. The idea here is always: on the one side, production for production, therefore on the other side consumption of foreign production. This idea of the Mercantile system is expressed for example by Dr. Paley, Moral Philosophy, Vol. II, Ch.XI: One more fine phrase: Henri Storch, Cours d conomie politique, etc., edited by Jean Baptiste Say, Paris, 1823 (Lectures read to Grand Duke Nicholas, concluded in 1815), Vol. III. After Garnier, Storch is in fact the first writer to polemise against Adam Smith s distinction between productive and unproductive labour on a new basis. (On p age 136 of t. I [he says]: It is evident that man only attains to the production of wealth in so far as he is endowed with internal goods, that is to say, in so far as he has developed his physical, intellectual and moral faculties, which implies the means for their development such as social institutions, etc. Thus the more civilised a people, the more its national wealth can grow. The reverse is also true.) Against Smith: And that is really all there is to it. The distinction between productive labours and unproductive labours is of decisive importance for what Smith was considering: the production of material wealth, and in fact one definite form of that production, the capitalist mode of production. In spiritual production another kind of labour appears as productive. But Smith does not take it into consideration. Finally, the interaction and the inner connection between the two kinds of production also do not fall within the field be is considering; moreover, they can only lead to something more than empty phrases when material production is examined in its own form. In so far as he speaks of workers who are not directly productive, this is only to the extent that they participate directly in the consumption of material wealth but not in its production. With Storch himself the theory of civilisation does not get beyond trivial phrases, although some ingenious observations slip in here and there for example, that the material division of labour is the pre-condition for the division of intellectual labour. How much it was inevitable that Storch could not get beyond trivial phrases, how little he had even formulated for himself the task, let alone its solution, is apparent from one single circumstance. In order to examine the connection between spiritual ||409| production and material production it is above all necessary to grasp the latter itself not as a general category but in definite historical form. Thus for example different kinds of spiritual production correspond to the capitalist mode of production and to the mode of production of the Middle Ages. If material production itself is not conceived in its specific historical form, it is impossible to understand what is specific in the spiritual production corresponding to it and the reciprocal influence of one on the other. Otherwise one cannot get beyond inanities. This because of the talk about civilisation . Further: from the specific form of material production arises in the first place a specific structure of society, in the second place a specific relation of men to nature. Their State and their spiritual outlook is determined by both. Therefore also the kind of their spiritual production. Finally, by spiritual production Storch means also all kinds of professional activities of the ruling class, who carry out social functions as a trade. The existence of these strata, like the function they perform, can only be understood from the specific historical structure of their production relations. Because Storch does not conceive material production itself historically because he conceives it as production of material goods in general, not as a definite historically developed and specific form of this production he deprives himself of the basis on which alone can be understood partly the ideological component parts of the ruling class, partly the free spiritual production of this particular social formation. He cannot get beyond meaningless general phrases. Consequently, the relation is not so simple as he presupposes. For instance, capitalist production is hostile to certain branches of spiritual production, for example, art and poetry. If this is left out of account, it opens the way to the illusion of the French in the eighteenth century which has been so beautifully satirised by Lessing. Because we are further ahead than the ancients in mechanics, etc., why shouldn t we be able to make an epic too? And the Henriade in place of the Iliad! Storch, however, rightly stresses with special reference to Garnier, who was actually the father of this attack on Smith that Smith s opponents had set about it the wrong way. (They assert that the production of spiritual products or the production of services is material production.) The following passages from Storch are to be noted as having been copied from him by later authors: These are nothing but general superficial analogies and relations between spiritual and material wealth. So for example is his observation that undeveloped nations borrow their spiritual capitals from abroad, just as materially undeveloped nations borrow their material capitals (l.c., p. 306); and that the division of immaterial labour depends on the demand for it, in a word, on the market, etc. (p. 246). Here are the passages which have actually been copied: According to Storch, the physician produces health (but also illness), professors and writers produce enlightenment (but also obscurantism), poets, painters, etc., produce good taste (but also had taste), moralists, etc., produce morals, preachers religion, the sovereign s labour security, and so on (pp. 347-50). It can just as well be said that illness produces physicians, stupidity produces professors and writers, lack of taste poets and painters, immorality moralists, superstition preachers and general insecurity produces the sovereign. This way of saying in fact that all these activities, these services, produce a real or imaginary use-value is repeated by later writers in order to prove that they are productive workers in Smith s sense, that is to say, that they directly produce not products suigeneris* but products of material labour and consequently immediate wealth. In Storch there is not yet this nonsense, which for that matter can be reduced to the following: 1. that the various functions in bourgeois society mutually presuppose each other; 2. that the contradictions in material production make necessary a superstructure of ideological strata, whose activity whether good or bad is good, because it is necessary; 3. that all functions are in the service of the capitalist, and work out to his benefit ; 4. that even the most sublime spiritual productions should merely be granted recognition, and apologies for them made to the bourgeoisie, that they are presented as, and falsely proved to be, direct producers of material wealth. Nassau William Senior, Principes fondamentaux de 1 conomie politique, traduit par Jean Arrivabene, Paris, 1836. Nassau Senior mounts his high horse: Was it Moses of Egypt or Moses Mendelssohn? Moses would have been very grateful to Mr. Senior for calling him a productive labourer in the Smithian sense. These people are so dominated by their fixed bourgeois ideas that they would think they were insulting Aristotle or Julius Caesar if they called them unproductive labourers . Aristotle and Caesar would have regarded even the title labourers as an insult. Rubbish! If the child dies, the result is no less durable. And if the child is no better after treatment, the doctor s service has to be paid for just the same. According to Nassau doctors should only be paid in so far as they cure, and lawyers in so far as they win lawsuits, and soldiers in so far as they are victorious. But now he gets really lofty: Belletristic trash! Dutch and English revolted at their own cost. No one paid them for labouring in revolution . But with either productive or unproductive labourers there is always a buyer and seller of labour. Hence what rubbish! These insipid literary flourishes used by these fellows when they polemise against Smith show only that they are representatives of the educated capitalist , while Smith was the interpreter of the frankly brutal bourgeois upstart. The educated bourgeois and his mouthpiece are both so stupid that they measure the effect of every activity by its ||411| effect on the purse. On the other hand, they are so educated that they grant recognition even to functions and activities that have nothing to do with the production of wealth; and indeed they grant them recognition because they too indirectly increase, etc., their wealth, in a word, fulfill a useful function for wealth. Man himself is the basis of his material production, as of any other production that he carries on. All circumstances, therefore, which affect man, the subject of production, more or less modify all his functions and activities, and therefore too his functions and activities as the creator of material wealth, of commodities. In this respect it can in fact be shown that all human relations and functions, however and in whatever form they may appear, influence material production and have a more or less decisive influence on it. First, that is not true. Smith would say that the soldier s protective care is productive of defence, but not of the corn. If order was restored in the country, the ploughman would produce the corn just as before, without being compelled to produce the maintenance, and therefore the life, of the soldiers into the bargain. The soldier belongs to the incidental expenses of production, in the same way as a large part of the unproductive labourers who produce nothing themselves, either spiritual or material, but who are useful and necessary only because of the faulty social relations they owe their existence to social evils. However, Nassau might say: if a machine is invented that makes nineteen out of twenty labourers superfluous, then these nineteen too are incidental expenses of production. But the soldier can drop out although the material conditions of production, the conditions of agriculture as such, remain unchanged. The nineteen labourers can only drop out if the labour of the one remaining labourer becomes twenty times more productive, that is to say, only through a revolution in the actual material conditions of production. Moreover, Buchanan already observes: Smith never denied this, as he wants to reduce the necessary unproductive labourers like State officials, lawyers, priests, etc., to the extent in which their services are indispensable. And this is in any case the proportion in which they make the labour of productive labourers most efficacious. As for the other unproductive labourers , whose labours are only bought voluntarily by anyone in order to enjoy their services, that is, as an article of consumption of his own choice, different cases must be distinguished. If the number of these labourers living on revenue is large in proportion to the productive labourers, it is, either, because the total wealth is small or is of a one-sided character for example the medieval barons with their retainers. Instead of consuming manufactured goods on any considerable scale, they and their retainers consumed their agricultural products. When instead of these products they began to consume manufactured goods, the retainers had to be set to labour. The number of those living on revenue was only large because a large part of the annual product was not reproductively consumed. Along with this, the total population was small. Or, the number of those living on revenue is large, because the productivity of the productive labourers is large, and therefore their surplus-produce upon which the retainers feed. In this case the labour of the productive labourers is not productive because there are so many retainers, but on the contrary there are so many retainers because the labour of the productive labourers is so productive. Taking two countries with equal populations and an equal development of the productive powers of labour, it would always be true to say, with Adam Smith, that the wealth of the two countries must be measured according to the proportion of productive and of unproductive labourers. For that means only that in the country which has a relatively greater number of productive labourers, a relatively greater amount of the annual revenue is reproductively consumed, and consequently a greater mass of values is produced annually. Therefore Mr. Senior has only paraphrased a statement of ||412| Adam s, instead of counterposing it with a novelty. Moreover, he himself here makes the distinction between the producers of services and the producers of values, and so it is the same with him as with most of those who polemise against the Smithian distinction they accept and themselves use this distinction, at the same time as they reject it. It is characteristic that all unproductive economists, who achieve nothing in their own speciality, [come out] against the distinction between productive labour and unproductive labour. However, in relation to the bourgeois, it is on the one hand an expression of their servility that they present all functions as serving the production of wealth for him; then on the other hand, they present the bourgeois world as the best of all possible worlds, in which everything is useful, and the bourgeois himself is so educated that he understands this. In relation to the labourers, [what it expresses is:] it is quite all right that the unproductive ones consume the great mass [of products], since they contribute just as much as the labourers to the production of wealth even though in their own way. Finally however Nassau blurts out, showing that he has not understood one word of the essential distinction made by Smith: This, in fact, is past all understanding. Mr. Nassau s discovery that State and schoolmasters live at the cost of capital and not at the cost of revenue needs no further commentary. Does Mr. Senior mean by it that they live on profit from capital, and in this sense at the expense of capital? If so, he only forgets that revenue from capital is not capital itself, and that this revenue, the result of capitalist production, is not spent in advance for reproduction, of which on the contrary it is the result. Or does he mean that it is so because certain taxes enter into the production costs of particular commodities? That is, enter into the expenses of certain branches of production? Then he should know that this is only a form of levying taxes on revenue. With reference to Storch Nassau Senior, the sophist, also remarks: Finally, the great Nassau himself adopts the Smithian distinction. For in fact he distinguishes between productive consumption and unproductive consumption (p. 206) instead of between productive and unproductive labour. But the object of consumption is either a commodity which is not referred to here or direct labour. Consumption would be productive if it employed labour that either produced labour-power itself (which for example the schoolmaster s or the physician s labour might do) or reproduced the value of the commodities with which it was bought. The consumption of labour which accomplished neither the one nor the other of these would be unproductive. And indeed Smith says: the labour which can only be consumed productively (i.e., industrially) I call productive labour, and that which can be consumed unproductively, whose consumption is by its nature not industrial consumption, I call unproductive labour. Mr. Senior has therefore proved his genius by giving things new names. In general, Nassau copies from Storch. ||413| Pellegrino Rossi, Cours d conomie politique (ann e 1836 to 1837), dit. Bruxelles, 1842. Here is wisdom! What a pleasure it must be for the hatter, that everyone gets moving so that he can produce and sell this hat! Inasmuch as he makes these gaolers, etc., contribute indirectly, not directly, to material production, Rossi in fact makes the same distinction as Adam (lecture XII). In the following lecture XIII, Rossi takes the field particularly against Smith indeed rather [the same as] his predecessors. The erroneous distinction between productive labourers and unproductive labourers, he says, arises for three reasons. The determining factor for the former is the use-value; for the latter, the exchange-value. But in paying attention only to exchange-value, one falls into Smith s error. As all capitalist production rests on the direct purchase of labour in order to appropriate a part of it without purchase in the process of production; which part however is sold in the product since this is the basis of existence of capital, its very essence is not the distinction between labour which produces capital and that which does not produce it the basis for an understanding of the process of capitalist production? Smith does not deny that the servant s labour is productive for him. Every service is productive for its seller. To swear false oaths is productive for the person who does it for cash. Forging documents is productive for anyone paid to do it. A murder is productive for a man who gets paid for doing it. The trade of sycophant, informer, toady, parasite, lickspittle, is productive for people who do not perform these services gratis. Hence they are productive labourers , producers not only of wealth but of capital. The thief, too, who pays himself just as the law-courts and the State do employs his energy, uses it in a particular way, produces a result which satisfies a human need , i.e., the need of the thief and perhaps also that of his wife and children. Consequently [he is a] productive labourer if it is merely a question of producing a result which satisfies a need , or as in the cases mentioned above, if selling his services is enough to make them productive . It is precisely this labour which participates indirectly in production (and it forms only a part of unproductive labour) that we call unproductive labour. Otherwise we would have to say that since the magistrate is absolutely unable to live without the peasant, therefore the peasant is an indirect producer of justice! And so on. Utter nonsense! There is yet another point of view hearing on the division of labour, with which we shall deal later. We buy a clock at a clockmarker s; we are only interested in the result of the labour. The same applies when we buy a coat at the tailor s. But: (The point here is only that these men of the old school make use of a mode of production that has nothing in common with the capitalist mode, and in which all development of labour s productive powers, such as capitalist production brings with it, is impossible. It is characteristic that for Rossi and all the rest of them such a specific distinction is inessential.) In the case of a servant, you buy a force , capable of doing a thousand different things. The results it produces depend on the use that you make of the force (p. 276). All this has nothing to do with the matter. <One further point on this. In lecture XII, p. 273, Rossi says: Adam Smith does not do this. For him, a person who produces a book, a painting, a musical composition or a statue, is a productive labourer in the second sense, although the person who improvises, recites, plays a musical instrument, etc., is not. And Adam Smith treats services, in so far as they directly enter into production, as materialised in the product, both the labour of the manual labourer and that of the manager, clerk, engineer, and even of the scientist in so far as he is an inventor, an indoor or outdoor labourer for the workshop. In dealing with the division of labour, Smith explains how these operations are distributed among different persons; and that the product, the commodity, is the result of their co-operative labour, not of the labour of any individual among them. But the spiritual labourers la Rossi are anxious to justify the large share which they draw out of material production.> After this discourse, Rossi continues: Here we have the quintessence of the whole superwise and would-be profound windbag! When Adam Smith, in his second and more superficial presentation, distinguishes between productive and unproductive labour, according to whether it is or is not directly realised in a vendible commodity for the buyer of the labour, he calls the tailor productive in both cases. But according to his more profound definition the latter is an unproductive labourer. Rossi only shows that he evidently does not understand Adam Smith. That the forms of exchange seem to Rossi to be a matter of complete indifference is just as if a physiologist said that the different forms of life are a matter of complete indifference, that they are all only forms of organic matter. It is precisely these forms that are alone of importance when the question is the specific character of a mode of social production. A coat is a coat. But have it made in the first form of exchange, and you have capitalist production and modern bourgeois society; in the second, and you have a form of handicraft which is compatible even with Asiatic relations or those of the Middle Ages, etc. And these forms are decisive for material wealth itself. A coat is a coat that is Rossi s wisdom. But in the first case the jobbing tailor produces not only a coat, he produces capital; therefore also profit; he produces his master as a capitalist and himself as a wage-labourer. When I have a coat made for me at home by a jobbing tailor, for me to wear, that no more makes me my own entrepreneur (in the sense of an economic category) than it makes the entrepreneur tailor an entrepreneur when ||415| he himself wears and consumes a coat made by his workmen. In one case the purchaser of tailoring labour and the jobbing tailor confront each other as mere buyers and sellers. One pays money and the other supplies the commodity into whose use-value my money is transformed. In this transaction there is no difference at all from my buying the coat in a shop. Buyer and seller confront each other simply as such. In the other case, on the contrary, they confront each other as capital and wage-labour. As for the domestic servant, he has the same determinate form as the jobbing tailor No. II, whom I buy for the sake of the use-value of his labour. Both are simply buyers and sellers. But the way in which the use-value is enjoyed in this case in addition bears a patriarchal form of relation, a relation of master and servant, which modifies the relation in its content, though not in its economic form, and makes it distasteful. For that matter Rossi only repeats in other phrases what Garnier said: This is once more the labour-saving idea of Garnier, Lauderdale and Ganilh. According to this, unproductive labours would only be productive in so far as they save labour and leave more time for a person s own labour, whether he is an industrial capitalist or a productive labourer, who can perform a more valuable labour through this replacement by a less valuable labour. A large part of the unproductive labourers who would be excluded by this are menial servants (in so far as they provide only luxury articles), and all unproductive labourers who produce merely enjoyment and whose labour I can only enjoy in so far as I use just as much time to enjoy it as its seller uses to produce it, to provide it for me. In both cases there can be no talk of saving labour. Finally, even really labour-saving personal services would only be productive in so far as their consumer is a producer. If he is an idle capitalist, they only save him the labour of doing anything at all: like a slut having her hair curled or her nails cut instead of doing it herself, or a foxhunter employing a stable-lad instead of being his own stable-lad, or someone who is just a glutton keeping a cook instead of cooking for himself. Then these labourers would include too those who, according to Storch (l.c.), produce leisure , through which a man gets free time for pleasure, spiritual labour, and so on. The police-man saves me the time of being my own gendarme, the soldier of defending myself, the government official of governing myself, the shoe cleaner of cleaning my shoes myself, the priest the time required for thinking, and so on. What is correct in this matter is the division of labour. Everyone, apart from his productive labour or the exploitation of productive labour, would have a number of functions to fulfill which would not be productive and would in part enter into the costs of consumption. (The real productive labourers have to bear these consumption costs themselves and to perform their unproductive labour themselves.) If these services are pleasant, then sometimes the master performs them for the servant, as the jus primae noctis* shows, or as is shown by the labour of ruling, etc., which the masters have always taken on themselves. This in no way obliterates the distinction between productive and unproductive labour, but this distinction itself appears as a result of the division of labour and thus furthers the general productivity of the labourers by making unproductive labour the exclusive function of one section of labourers and productive labour the exclusive function of another section. But even the labour of a number of menial servants for mere show, to satisfy vanity, is not unproductive . Why? Because it produces something, the satisfaction of vanity, ostentation, the exhibition of wealth (l.c., p.277). Here once again we meet the nonsense that every kind of services produces something the courtesan sensual pleasure, the murderer homicide, etc. Moreover Smith said that every form of this trash has its value. All that is missing ||416| is that these services are rendered gratis. That is not the point in question. But even if they are rendered gratis, they will not increase (material) wealth by a single farthing. Then the belletristic piffle: What bosh! In the sense in which he is here speaking of wealth, as use-value, it is precisely consumption, whether slow or rapid (its length depends on its own nature and on the nature of the object), and only consumption, that makes the product wealth at all. Use-value has only value for use, and its existence for use is only existence as an object for consumption, its existence is in consumption. Drinking champagne, although this may produce a hangover , is as little productive consumption as listening to music, although this may leave behind a memory . If the music is good and if the listener understands music, the consumption of music is more sublime than the consumption of champagne, although the production of the latter is a productive labour and the production of the former is not. If we consider all the twaddle against Smith s distinction between productive and unproductive labour, we find that Garnier, and perhaps also Lauderdale and Ganilh (though the latter said nothing new), exhausted [these polemics]. Those who came later (apart from Storch s unsuccessful effort) [produced] merely pretentious literary arguments, learned prattle. Garnier is the economist of the Directory and the Consulate, Ferrier and Ganilh are the economists of the Empire. On the other hand Lauderdale, the Earl, was far more concerned to make apologies] or consumers by presenting them as the producers of unproductive labour . The glorification of servility and flunkeyism, of tax-gatherers and parasites, runs through the lot of them. Compared with these, the rough cynical character of classical economy stands out as a critique of existing conditions. One of the most fanatic Malthusians is the Reverend Thomas Chalmers, who thinks that the only means for curing all social ills is the religious education of the labouring class (by which he means ramming down their throats the Malthusian population theory with edifying Christian priestly trimmings); at the same time he is a great defender of all abuses, of wasteful expenditure by the State, of fat livings for the clergy and of wild extravagance on the part of the rich. He laments (p. 260 sqq.) the spirit of the time, the hard and hunger-bitten economy ; and he wants heavy taxes, a good deal to eat for the higher and unproductive workers, clergymen and so on (l.c.). Naturally, he blusters about the Smithian distinction. He devoted a whole chapter to it (Chapter XI) which contains nothing new except that parsimony, etc., only harms the productive labourers , but whose tendency is exemplified in the following summing up: This distinction seems to be nugatory [ I; and withal, mischievous in application (l.c., p. 344). And in what does this mischief consist? By the ecclesiastical establishment the cleric means his own church, the Church of England as by law established . Moreover he was one of the fellows who had fostered this Establishment upon Ireland. The parson is at least plain spoken. ||417| Before we finish with Adam Smith, we will cite two further passages, the first, in which he gives vent to his hatred of the unproductive government; the second, in which he aims to explain why the advance of industry, etc., presupposes free labour. Concerning Smith s hatred of the clergy. The first passage runs: And once more the following passage * This is the language of the still revolutionary bourgeoisie, which has not yet subjected to itself the whole of Society, the State, etc. All these illustrious and time-honoured occupations sovereign, judge, officer, priest, etc., with all the old ideological professions to which they give rise, their men of letters, their teachers and priests, are from an economic standpoint put on the same level as the swarm of their own lackeys and jesters maintained by the bourgeoisie and by idle wealth the landed nobility and idle capitalists. They are mere servants of the public, just as the others are their servants. They live on the produce of other people s industry, therefore they must be reduced to the smallest possible number. State, church, etc., are only justified in so far as they are committees to superintend or administer the common interests of the productive bourgeoisie; and their costs since by their nature these costs belong to the overhead costs of production must be reduced to the unavoidable minimum. This view is of historical interest in sharp contrast partly to the standpoint of antiquity, when material productive labour bore the stigma of slavery and was regarded merely as a pedestal for the idle citizen, and partly to the standpoint of the absolute or aristocratic-constitutional monarchy which arose from the disintegration of the Middle Ages as Montesquieu, still captive to these ideas, so na vely expressed them in the following passage (Esprit des lois, l. VII, ch. IV): If the rich do not spend much, the poor will perish of hunger . When on the other hand the bourgeoisie has won the battle, and has partly itself taken over the State, partly made a compromise with its former possessors; and has likewise given recognition to the ideological professions as flesh of its flesh and everywhere transformed them into its functionaries, of like nature to itself; when it itself no longer confronts these as the representative of productive labour, but when the real productive labourers rise against it and moreover tell it that it lives on other people s industry; when it is enlightened enough not to be entirely absorbed in production, but to want also to consume in an enlightened way ; when the spiritual labours themselves are more and more performed in its service and enter into the service of capitalist production then things take a new turn, and the bourgeoisie tries to justify economically , from its own standpoint, what at an earlier stage it had criticised and fought against. Its spokesmen and conscience-salvers in this line are the Garniers, etc. In addition to this, these economists, who them-selves are priests, professors, etc., are eager to prove their productive usefulness, to justify their wages economically . ||418| The second passage, referring to slavery, runs: ---------------- Adam Smith himself says, l.c., t. III, l. IV, ch. I, p. 5: And again, [Garnier], l. c., pp. 24-25: The man of the Monetary system raves about gold and silver because they are money, the independent, tangible form of existence of exchange-value; and a form of its existence that is indestructible, everlasting in so far as they are not allowed to become means of circulation, the merely transient form of the exchange-value of commodities. The accumulation of gold and silver, piling it up, hoarding it, is therefore his way of growing rich. And as I showed in the quotation from Petty, other commodities are themselves valued according to the degree in which they are more or less durable, that is, remain exchange-value. Now in the first place Adam Smith repeats this idea of the relatively greater or less durability of commodities in the section where he speaks of consumption which is more or less advantageous for the formation of wealth, according as it is consumption of less or more durable articles of consumption. Here therefore the Monetary system peeps through; and necessarily so, since even in direct consumption there is the mental reservation that the ||419| article of consumption remains wealth, a commodity, therefore a unity of use-value and exchange-value; and the latter depends on the degree to which the use-value is durable, that is, on how slowly consumption deprives it of the possibility of being a commodity or bearer of exchange-value. Secondly, in his second distinction between productive and unproductive labour he completely returns in a wider form to the distinction made by the Monetary system. Thus Smith makes the same difference between commodities and services as the Monetary system did between gold and silver and the other commodities. With Smith too the distinction is made from the point of view of accumulation no longer however in the form of building a hoard, but in the real form of reproduction. The commodity perishes in consumption, but then it reproduces in turn a commodity of higher value; or, if it is not so used, it is itself value, with which another commodity can be bought. It is the nature of the product of labour that it exists in a more or less durable, and therefore again salable, use-value; in a use-value in which it is a vendible commodity, a bearer of exchange-value, a commodity, or, in essence, money. The services of unproductive labourers do not again become money. I can neither pay debts nor buy commodities nor buy labour which produces surplus-value with the services for which I pay the lawyer, doctor, priest, musician, etc., the statesman or the soldier, etc. They have gone, like perishable articles of consumption. Thus at bottom Smith says the same thing as the Monetary system. For them, only that labour is productive which produces money, gold and silver. For Smith, only that labour is productive which produces money for its buyer; although he discerns the money character in all commodities in spite of its mask, while the Monetary system sees it only in the commodity which is the independent existence of exchange-value. This distinction is founded on the nature of bourgeois production itself, since wealth is not the equivalent of use-value, but only the commodity is wealth, use-value as bearer of exchange-value, as money. What the Monetary system did not understand is how this money is made and is multiplied through the consumption of commodities, and not through their transformation into gold and silver in which they are crystallised as independent exchange-value, in which however they not only lose their use-value, but do not alter the magnitude of their value. * In translating this passage Marx has abridged it somewhat. Ed. *In the manuscript: it does . Ed. * Sterile Ed. +* Unproductive. Ed. * Incidental expenses, that is mere expenses, unproductive expenditure either of living labour or of materialised labour (Marx).- Ed. * Gods of the lesser tribes.-Ed * Born to consume the fruits (Horace). Ed. * In the manuscript: in a variety . Ed. ** In the manuscript: a plenty of silver and gold . Ed. *This passage was translated by Marx into German and slightly shortened Ed. * Other things being equal. Ed. ** In the manuscript: when there . Ed. *** Per day. Ed. * Lit.: bridges and roads in France this designated the administration of roads and communications Ed * Return to an Address of the House of Commons, dated 24 April, 1861 (printed II February, 1862). * Return to an Address of the House of Commons, dated 24 April, 1861 (printed II February, 1862). * Marx quotes Schmalz from the French translation Ed. ** In the manuscript there is a pun upon the name of the author that cannot be translated, Marx calls him Schmalzschmiertopf. (The German noun Schmalz means grease, lard, dripping; Schmiertopf grease can, scribbler.) Ed. * <And so the same fellow says one page later that all labour is productive of wealth, in proportion to its exchange-value determined by supply and demand (it produces wealth, not in proportion to the exchange-value it produces, but in proportion to its own exchange-value; that is to say, not on the basis of what it produces but of what it costs), that its respective value only contributes to the accumulation of capitals by the saving and non-consumption of the products that this value is entitled to take out of total production .> * You work, but not for yourselves (Virgil). Ed. * This refers to the capitalist mode of production. Ed. * This refers to the capitalist mode of production. Ed. * Marx put the passage in his own words and slightly abbreviated it. Ed. * Marx refers to the French translation from which be takes this and the following passages ( see Appendix, p. 450). The page reference in square brackets is to the English edition of 1804. Ed. * Born to consume the fruits (Horace). Ed. * Sismondi says: Because of the progress made by industry and science, each labourer is able to produce each day more, and much more, than he needs to consume. But at the same time as his labour produces wealth, this wealth, if he was called upon to enjoy it, would make him little fitted for labour (Nouveaux principes , t. I, p. 85). * Of their own peculiar kind. Ed. * The right of the first night. Ed. * In the manuscript: distinction . Ed. * See pp. 160, 161 and 264 of the present volume Ed. * in the manuscript: of . Ed. ** In the manuscript: are . Ed

Economic Manuscripts: Theories of Surplus-Value, Chapter 4

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch04.htm

Some quotations from Linguet above have already shown that the nature of capitalist production was clear to him nevertheless, Linguet, can be brought in here after Necker. In his two works Sur la l gislation et le commerce des grains (first published 1775) and De l administration des finances de la France, etc. [published 1784], Necker shows how the development of the productive powers of labour merely results in the worker requiring less time for the reproduction of his own wage, and therefore working more time for his employer unpaid. In dealing with this, he rightly starts from the basis of the average wage, the minimum of wages. What he is mainly concerned with, however, is not the transformation of labour itself into capital and the accumulation of capital through this process, but rather the general development of the antithesis between poverty and wealth, between poverty and luxury, because, to the extent that a smaller quantity of labour suffices to produce the necessary means of subsistence, part of the labour becomes more and more superfluous and can therefore be used in the production of luxury articles, in a different sphere of production. Some of these luxury articles are durable; and so they accumulate from century to century in the possession of those who have surplus-labour at their disposal, making the contrast ever deeper. The important thing is that Necker traces the origin of the wealth of the non-labouring classes ||420| profit and rent entirely to surplus-labour. In his treatment of surplus-value, however, what he has in mind is relative surplus-value, resulting not from the lengthening of the total working-day but from the shortening of the necessary labour-time. The productive power of labour becomes the productive power of the owner of the conditions of labour. And productive power itself is equivalent to the shortening of the labour-time that is necessary to produce a certain result. The chief passages are the following: First: De l administration des finances de la France, etc. ( uvres, t. II, Lausanne et Paris, 1789): (The latter argument is directed against those who held that luxury was the result of the growth in the amount of money.) Secondly: Sur la l gislation et le commerce des grains, etc. ( uvres, t. IV): This contrast between wealth that does not labour and poverty that labours in order to live also gives rise to a contrast of knowledge. Knowledge and labour become separated. The former confronts the latter as capital, or as a luxury article for the rich. Necker ridicules the economic confusion characteristic of the Physiocrats in relation to the land, and of all subsequent economists in relation to the material elements of capital which glorifies the owners of the conditions of production, not because they themselves, but these conditions, are necessary for labour and the production of wealth.

Economic Manuscripts: Theories of Surplus-Value, Chapter 5

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch05.htm

||X-422| Tableau conomique, according to Quesnay 5,000 millions annual gross product (in pounds of Tours) There are dotted lines from a) to b), from a) to c), from c) to d), from a') to b'), and from a'') to b''). Transcriber To make the Tableau clearer, I have shown what Quesnay regards each time as the starting-point of a circulation, as a, a', a'', the following link in the circulation as b, c, d, and as b', b'' respectively. The point to note in this Tableau, and the point which impressed his contemporaries, is the way in which circulation is shown as determined purely by the circulation and reproduction of commodities, in fact by the process of capital. The farmer first pays 2,000 million francs in money to the landlord, the propri taire. With this, the landlord buys from the farmer, 1,000 millions worth of means of subsistence. 1,000 millions therefore flow back to the farmer in money, while one-fifth of the gross product is disposed of, passing definitively out of circulation into consumption. The landlord next buys, with 1,000 millions in money, manufactured commodities, non-agricultural products, to the value of 1,000 millions. With this purchase, a second one-fifth of the (in this case manufactured) products falls out of circulation into consumption. These 1,000 millions in money are now in the hands of the sterile class, who buys with them from the farmer 1,000 millions worth of means of subsistence. Thus the second 1,000 millions which the farmer has paid to the landlord in the form of rent flow back to the farmer. On the other hand, a further one-fifth of the farmer s product has gone to the sterile class, out of circulation into consumption. At the end of this first movement, therefore, we have the 2,000 millions in money back in the hands of the farmer. This money has carried through four different processes of circulation. First, it served as means of payment for rent. In this function it does not circulate any part of the annual product, but is merely a circulating draft on the part of the gross product which is equal to the rent. Second, the landlord buys means of subsistence from the farmer, using half the 2,000 millions, that is, 1,000 millions, thus realising his 1,000 millions in means of subsistence. In fact, the farmer merely gets back, in the 1,000 millions in money, half of the draft he has given the landlord for two-fifths of his product. In this transaction the 1,000 millions, since they serve as means of purchase, circulate commodities to that amount, which fall into final consumption. The 1,000 millions here serve the landlord only as means of purchase; he reconverts the money into use-value (commodities, which however enter into final consumption, and are bought as use-value). If we consider purely the isolated act, the money in this transaction plays merely the role which, as means of purchase, it always plays for the seller, namely, being the changed form of his commodity. The landlord has his 1,000 millions in corn, the farmer has converted into money corn to the price of 1,000 millions, he has realised its price. But if we consider this act in connection with the preceding act of circulation, the money here does not appear as a mere metamorphosis of the farmer s commodity, as a golden equivalent of his commodity. The 1,000 millions are in fact only half the 2,000 millions, in money, which the farmer has paid to the ||423| landlord in the form of rent. It is true that he gets 1,000 millions in money for 1,000 millions in commodities, but in so doing in fact he only buys back the money with which he paid the landlord the rent; that is to say, the landlord buys, with the 1,000 millions which he has received from the farmer, 1,000 millions worth of commodities from the farmer. He pays the farmer with the money which he has received from the farmer without any equivalent. This flowing back of the money to the farmer, taken in con-junction with the first act, does not at first make it appear to him a mere means of circulation. But then it is different in essence from the flowing back of money to its starting-point when the movement is an expression of a process of reproduction. For example: the capitalist or, to leave the characteristics of capitalist reproduction entirely out of account, a producer lays out 100 for raw material, instruments of labour and means of subsistence for the period of his labour. We will assume that he does not add more labour to the means of production than he had expended on the means of subsistence, the wages that he has paid to himself. If the raw material, etc., equals 80, and the labour added is equal to 20 (the means of subsistence consumed also being equal to 20), then the product is equal to 100. If he now sells it, the 100 flows back to him in money, and so on. This flowing back of the money to its starting-point here expresses nothing but continuous reproduction. The simple metamorphosis in this case is M C M, transformation of money into commodity and retransformation of commodity into money this mere change of form of money and commodity here representing at the same time the process of reproduction. Money is transformed into commodities, means of production and means of subsistence; then these commodities enter as elements into the labour-process and emerge from it as a product. Thus a commodity appears again as a result of the process, that is, when the finished product re-enters the process of circulation, and by so doing again confronts money as a commodity; and finally it is reconverted into money, since the finished commodity can only be exchanged again for its production elements after it has first been transformed into money. The constant flowing back of the money to its starting-point expresses here not only the formal conversion of money into commodity and commodity into money as in the simple process of circulation or the mere exchange of goods but at the same time the continuous reproduction of the commodity by the same producer. Exchange-value (money) is converted into commodities which enter into consumption, and are consumed as use-values; they pass however into reproductive or industrial consumption, therefore reproduce the original value and consequently reappear in the same amount of money (in the above example, in which the producer labours only for his own maintenance), M C M here shows that M is not only formally converted into C, but C is actually consumed as a use-value, falling out of circulation into consumption, but into industrial consumption, so that its value is maintained and reproduced in consumption, and M therefore reappears at the end of the process, being maintained in the movement M C M. In contrast with this, in the case given above, no reproduction process takes place when the money flows back from the landlord to the farmer. It is as if the farmer had given the landlord tokens or tickets for products to the value of 1,000 millions. When the landlord cashes these tokens, they flow back to the farmer and he redeems them. If the landlord had had half the rent paid directly in kind, no circulation of money would have taken place. The whole circulation would have been limited to a simple change of hands, the transfer of the product from the farmer s hand to the landlord s. First the farmer gives the landlord the money instead of the commodity, and then the landlord returns the money to the farmer in order to take the commodity itself. The money serves the farmer as means of payment to the landlord; it serves the landlord as means of purchase in relation to the farmer. In the first function it moves away from the farmer, in the second it comes back to him. This type of return flow of the money to the producer must always take place whenever he pays his creditors, instead of a part of his product, its value in money; and everyone who is a co-proprietor of his surplus is in this respect a creditor. For example: all taxes are paid by the producers in money. In this transaction the money is for them means of payment to the State. With this money the State buys commodities from the producers. In the hands of the State it is a means of purchase, and thus returns to the producers in the same measure as they part with their commodities. This type of return flow this peculiar flowing back of money that is not determined by reproduction must take place in all cases where there is exchange of revenue for capital. What makes the money flow back in such cases is not reproduction but consumption. The revenue is paid in money, but it can only be consumed in commodities. The money which is received from the producers as revenue must therefore be paid back to them in order to obtain the same amount of value in commodities, that is, in order to consume the revenue. The money in which revenue is paid rent for example, or interest or taxes, <the ||424 | industrial capitalist pays his revenue to himself in the product, or from the sale of the product that part of it which forms his revenue> has the general form of means of payment. The person who pays the revenue is supposed to have received from his creditor a part of his own product for example, in the case of the farmer, the two-fifths of the product which according to Quesnay constitute the rent. He is only its nominal or de facto owner. The part of the farmer s product, therefore, which constitutes his rent, requires for its circulation between farmer and landlord only an amount of money equal to the value of the product, although this value circulates twice. First the farmer pays the rent in money; then with the same money the landlord buys the product. The first is a simple transfer of money, since the money functions only as means of payment; the assumption is therefore that the commodity for which it is paid is already in the hands of the payer and does not serve him as a means of purchase; that he receives no equivalent for the money, but on the contrary has this equivalent in advance. In the second transaction, on the other hand, the money functions as means of purchase, means of circulation for commodities. It is as if, with the money in which he pays his rent, the farmer had bought the landlord s share in the product. The landlord, with the same money that he has thus received from the farmer (who however in fact has given it away without any equivalent), buys the product back again from the farmer. The same sum of money, therefore, which is handed over by the producers to the owners of revenue in the form of means of payment, serves the owners of revenue as means of purchase for the producers commodities. This twofold change of place of the money from the hands of the producer into the hands of the owner of revenue, and from the latter s hands back into the hands of the producer thus expresses only a single change of place on the part of the commodity, that is, from the hands of the producer into the hands of the owner of revenue, Since the producer is supposed to owe a part of his product to the owner of revenue, the money-rent that he pays him is in fact only a retrospective payment for the value of the commodity which has already passed into his possession. The commodity is in his hands; but it does not belong to him. With the money that he pays in the form of revenue, he therefore redeems it making it his property. Therefore the commodity does not change hands. When the money changes hands, this represents only a change in the title of ownership of the commodity, which remains in the hands of the producer as before. Hence this twofold change of place of the money with only a single change of hands for the commodity. The money circulates twice, in order to make the commodity circulate once. But it too circulates only once as means of circulation (means of purchase), while the other time it circulates as means of payment; in which type of circulation, as I have shown above, no simultaneous change of place between commodity and money takes place. In fact, if the farmer has no money in addition to his product, he can only pay for his product after he has first sold his commodity, and it has therefore already passed through its first metamorphosis before he can pay it out as money to the landlord. Even taking this into account, there are more changes of place on the part of the money than on the part of the commodity. First C M [is carried through]; two-fifths of the commodity is sold and transformed into money. Here there is the simultaneous exchange of commodity and money. Then however this same money, without being exchanged for a commodity, passes from the hands of the farmer into those of the landlord. Here there is a change of place of the money, but no change of place of the commodity. It is the same as if the farmer had a co-partner. He has received the money, but he must share it with his co-partner. Or rather, for the two-fifths it is more as if a servant of the farmer has received the money. This servant must give it to the farmer, he cannot retain it in his own pocket. In this instance the movement of the money from one hand to the other does not express any kind of metamorphosis of the commodity, but is a mere transfer of the money from the hand of its immediate possessor into the hand of its owner. This can therefore be the case when the man who first receives the money is merely an agent for his employer. Then the money is also not a means of payment there is a simple transfer of it from the hand of the receiver, to whom it does not belong, into the hand of the owner. This kind of change of place of money has absolutely nothing to do with the metamorphosis of the commodity, any more than has the change of place arising from the mere conversion of one kind of money into another kind. With a means of payment, however, it is always implied that the payer has received a commodity for which he subsequently pays. In the case of the farmer, etc., he has not received this commodity; it is in his hands before it is in the landlord s hands, and it is a part of his product. But in law he becomes its owner only by handing over to the landlord the money received for it. His legal title to the commodity changes; the commodity itself is in his hands both before and after. But first it was in his hands as something in his possession but the owner of which was the landlord. It is now in his hands as his own property. The change in the legal form while the commodity remains in the same hands has naturally not caused the commodity itself to change hands. ||425| <This also makes it clear how absurd it is to explain the profit of the capitalist from the fact that he advances money to the labourer before he has converted the commodity into money. First: When I buy a commodity for my own consumption I get no profit because I am the buyer and the owner of the commodity is the seller , because my commodity has the form of money and his must first be transformed into money. The capitalist pays for the labour only after he has consumed it, while other commodities are paid for before they are consumed. This arises from the peculiar nature of the commodity which he buys, and which is in fact only delivered after it is consumed. The money here has the form of means of payment. The capitalist has always appropriated to himself the commodity labour before he pays for it. The fact however that he only buys it in order to make a profit out of the resale of its product is no reason for his making this profit. It is a motive. And it would mean nothing but: he makes a profit by buying wage-labour because he wants to make a profit out of selling it again. Secondly: But he does nevertheless advance to the labourer in the form of money the part of the product which is his share as wages, and thus saves the latter himself the trouble and risk and time involved in converting into money the part of the commodity which is due to him as wages. Is the labourer not to pay him for this trouble, this risk, and this time, and on this account to accept less of the product than he would otherwise get? This would upset the whole relationship between wage-labour and capital, and destroy the economic justification of surplus-value. The result of the process is in fact that the fund from which the capitalist pays the wage-labourer is nothing but the latter s own product, and that therefore capitalist and labourer actually share the product in aliquot parts. But this actual result has absolutely nothing to do with the transaction between capital and wage [-labour](on which rests the economic justification of surplus-value, the justification founded on the laws of commodity exchange itself). What the capitalist buys is the temporary right to dispose of labour-power; he only pays for it when this labour-power has taken effect, materialised itself in a product. Here, as in all cases where money functions as means of payment, purchase and sale precede the real handing over of the money by the buyer. But the labour belongs to the capitalist after that transaction, which has been completed before the actual process of production begins. The commodity which emerges as product from this process belongs entirely to him. He has produced it with means of production belonging to him and with labour which he has bought and which therefore belongs to him, even though it has not yet been paid for. It is the same as if he had not consumed anyone else s labour in the production of the commodity. The profit that the capitalist makes, the surplus-value which he realises, springs precisely from the fact that the labourer has sold to him not labour realised in a commodity, but his labour-power itself as a commodity. If he had confronted the capitalist in the first form, as a possessor of commodities, the capitalist would not have been able to make any profit, to realise any surplus-value, since according to the law of value exchange is between equivalents, an equal quantity of labour for an equal quantity of labour. The capitalist s surplus arises precisely from the fact that he buys from the labourer not a commodity but his labour-power itself, and this has less value than the product of this labour-power, or, what is the same thing, realises itself in more materialised labour than is realised in itself. But now, in order to justify profit, its very source is covered up, and the whole transaction from which it springs is repudiated. Because in fact once the process is continuous the capitalist only pays the labourer out of his own product, the labourer is only paid with a part of his own product, and the advance is therefore a mere pretence, we are now told that the labourer has sold his share in the product to the capitalist, be fore it has been converted into money. (Perhaps before it was capable of being converted into money, for although the workman s labour had materialised itself in a product, it may be that only one part of the vendible commodity has as yet been realised, for example, [only] part of a house.) So the capitalist is no longer owner of the product, and thereby the whole process through which he has appropriated another s labour gratis is invalidated. Now therefore owners of commodities confront each other. The capitalist has money, and the labourer sells him not his labour-power but a commodity, namely, the part of the product in which his own labour is realised. He [the labourer] will now say to the capitalist: Of these 5 lbs. of twist, say three-fifths represent constant capital. They belong to you. Two-fifths, that is, 2 lbs., represent my newly-added labour. Therefore you have to pay me the 2 lbs. So pay me the value of 2 lbs. And thereby he would pocket not only the wages but also the profit, in short, a sum of money equal to the quantity of labour newly added by him and materialised in the form of the 2 lbs. But, says the capitalist, have I not advanced the constant capital? Well, says the labourer, you deduct the 3 lbs. for it, and pay me only 2. But, insists the capitalist, you couldn t materialise your labour, you couldn t spin, without my cotton and my spindles. You must pay extra for that. Well, says the labourer, the cotton would have rotted and the spindles rusted if I hadn t used them for spinning. ||426| The 3 lbs. of yarn which you are deducting do represent, it is true, only the value of your cotton and spindles which were used up, and are therefore contained, in the 5 lbs. of yarn. But it is only my labour that has maintained the value of cotton and spindles unchanged, by using these means of production as means of production. I m not charging you anything for this value-maintaining power of my labour, because it didn t cost me any extra labour-time beyond the spinning itself, for which I get the 2 lbs. It s natural faculty of my labour which costs me nothing, though it maintains the value of the constant capital. As I don t charge you anything for it, you can t charge me for not being able to spin without spindles and cotton. For without spinning, your spindles and cotton wouldn t be worth a brass farthing. Driven into a corner, the capitalist says: The 2 lbs. of yarn are in fact worth 2s. They represent that much labour-time of yours. But am I to pay you for them before I have sold them? Perhaps I may not sell them at all. That is risk No. 1. Secondly, perhaps I may sell them at less than their price. That is risk No. 2. And thirdly, in any case it takes time to sell them. Am I to take on both risks on your behalf without recompense and lose my time into the bargain? You can t expect something for nothing. Wait a bit! replies the labourer, what s the relation between us? We face each other as owners of commodities, you as buyer, we as sellers, for you want to buy our share in the product, the 2 lbs., and it in fact contains nothing but our own materialised labour-time. Now you assert that we must sell you our commodity below its value, so that as a result you would be getting more value in commodity than you now have in money. The value of our commodity is equal to 2s. You want to give only 1s. for it, so that since 1s. contains as much labour-time as 1 lb. of yarn you would get from the exchange twice as much value as you give in return. We on the other hand would get, instead of an equivalent, only half an equivalent, an equivalent f or only 1 lb. of yarn instead of 2 lbs. And on what do you base this demand, which is contrary to the law of value and the exchange of commodities in proportion to their value? On what? On the fact that you are buyer and we are seller, that our value is in the form of yarn, of a commodity, and your value is in the form of money that the same value in the form of yarn confronts the same value in the form of money. But, my good friend, that is in fact a mere change of form, which affects the way in which the value is expressed but leaves the amount of value unaltered. Or do you hold the childish view that every commodity must be sold under its price, that is to say, for less than the sum of money which represents its value, because in the form of money it gets an increased value? But no, good friend, it does not get any increased value; the magnitude of its value does not change, it merely takes the shape of exchange-value in its pure form. Besides, my good friend, think of the troubles you are laying up for yourself by taking this line. For what you assert amounts to this that the seller must always sell his commodity to the buyer below its value. Indeed as far as you are concerned, this was the case earlier when we sold you not a commodity we produced but our labour-power itself. It is true that you bought it at its value, but you bought our actual labour below the value in which it is expressed. However that s an unpleasant memory let s say no more about it. We ve got beyond that, thank goodness, since by your own decision we are no longer to sell you our labour-power as a commodity, but the commodity itself which is the product of our labour. Let s look at the troubles you re laying up for yourself. The new law you have set up that the seller pays for the conversion of his commodity into money not with his commodity, through the exchange of his commodity for money, but that he pays for it by selling the commodity below its price this law by which the buyer always fleeces and defrauds the seller must hold good in like measure for every buyer and seller. Let s suppose that we accept your offer but on the condition that you yourself submit to the law just created by you, namely the law that the seller must surrender to the buyer a part of his commodity for nothing, in return for the buyer changing it into money for him. Then you buy our 2 lbs., which are worth 2s., for 1s. and thus make a profit of 1s. or 100 percent. But now you have 5 lbs. of yarn, of a value of 5s., after you have bought the 2 lbs. belonging to us. Now you think you re going to do a good stroke of business. The 5 lbs. cost you only 4s., and you re going to sell them for 5s. Wait a minute! says the man who buys from you, your 5 lbs. of yarn is a commodity, and you are a seller. I have the same value in money and I am a buyer. Consequently, by the law which you recognise I must make 100 per cent profit out of you. You must therefore sell me the 5 lbs. of yarn at 50 per cent below its value, for 2s. 6d. I ll give you then 2s. 6d. and get in exchange a commodity to the value of 5s., and thus make 100 per cent profit out of you, for what s sauce for the goose is sauce for the gander. So you see, my good friend, [continues the worker] where you get with your new law; you would simply have diddled yourself, since although at one moment you are a buyer, the next you re in turn a seller. In this particular case you would lose more as a seller than you gained as a buyer. And don t forget this too before the 2 lbs. of yarn you want now to buy from us ever existed, didn t you make other purchases in advance, but for which the 5 lbs. of yarn would never have been there at all? ||426a | Didn t you buy cotton and spindles in advance, which are now represented by .3 lbs. of yarn? At that time the cotton jobber in Liverpool and the spindle maker in Oldham faced you as sellers, and you faced them as buyer; they represented commodity, you money exactly the same relationship as we have the honour or the misfortune to stand in to each other at this moment. Wouldn t the sharp cotton jobber and your jovial colleague from Oldham have had a good laugh at you, if you had demanded that they hand over to you for nothing a part of the cotton and spindles, or what is the same thing, sell you these commodities below their price (and their value), on the ground that you were transforming commodities for them into money but they were transforming money into commodities for you, that they were sellers, you buyer? They risked nothing, for they got ready money, exchange-value in the pure, independent form. You, on the other hand, what a risk you were taking! First you had to make spindles and cotton into yarn, run all the risks of the production process, and then finally the risk of reselling the yarn, changing it back again into money! The risk whether it would sell at its value, or over or under its value. The risk of not selling it at all, of not transforming it back into money; and as to its quality as yarn, you didn t care a straw for it. You did not eat yarn, nor drink it, nor have any use whatever for it except selling it! And in any case the loss of time, in transforming the yarn again into money, and that includes therefore the transformation of spindles and yarn into money. Old boy, your colleagues will reply, don t make a fool of yourself. Don t talk nonsense. What the devil do we care what you propose turning our cotton and our spindles to? What use you destine them for! Burn them, hang them, if you like, throw them to the dogs, but pay for them! The idea! We are to make you a present of our goods because you have set up as a cotton spinner, and seem not to feel quite at ease in that line of business, and magnify to yourself its risks and perilous chances! Give up cotton spinning, or don t come into the market with such preposterous ideas! The capitalist, with a supercilious smile, replies to this tirade from the labourers: Evidently you people are a bit out of your depth. You re talking about things you don t understand. Do you imagine I ve paid ready money to the Liverpool ruffian and the chap in Oldham? The devil I did. I ve paid them in bills of exchange, and the Liverpool ruffian s cotton was in point of fact spun and sold before his bill fell due. With you it s another affair altogether. You want to get ready money. Very well, say the labourers, and what did the Liverpool ruffian and the Oldham chap do with your bills? What they were doing therewith? says the capitalist. Stupid question! They lodged them with their bankers and got them there discounted. How much did they pay the banker? Let me see! Money is now very cheap. I think they paid something like 3 per cent discount; that is to say, not 3 per cent on the sum, but they paid so much on the sum for the time the bill was running as would have come up to 3 per cent on the whole matter if the bill had run for a whole year. Still better, say the working men. Pay us 2s., the value of our commodity or say 12s. as we have dealt today per day, but we will deal per week. But take away from that sum 3 per cent per annum for fourteen days. But this bill is too small, says the capitalist, to be discounted by any banker. Well, reply the working men, we are 100 men. Thus you have to pay to us 1,200 shillings. Give us a bill for them. This makes 60 and is not too small a sum to be discounted; but besides, as you discount it yourself, the sum must not be too small for you, since it is the identical sum whence you pretend to derive your profit on us. The amount deducted wouldn t he worth mentioning. And since we would thus get the major part of our product in its entirety, we would soon reach the point when we didn t need you to discount it for us. Naturally we will not give you longer credit than the fourteen days the stock jobber gives you. If turning the actual relationship upside-down wages are to be derived from the discount on the part of the value of the total product that belongs to the workmen that is, from the fact that the capitalist pays them this part in advance in money he would have to give them very short-term bills of exchange, such as for example he pays to the cotton jobber, etc. The workman would get the largest share of his product, and the capitalist would soon cease being a capitalist. From being the owner of the product he would become merely the workmen s banker. Moreover, just as the capitalist takes the risk of selling the commodity below its ||427| value, he equally takes the chance of selling it above its value. The workman will he thrown out onto the street if the product is unsalable; and if it falls for long below the market-price, his wages will be brought down below the average and short time will be worked. It is he, therefore, that runs the greatest risk. Thirdly: It never enters anyone s head to suggest that the farmer, because he has to pay rent in money, or the industrial capitalist, because he has to pay interest in money and therefore in order to pay them must first have converted his product into money is on that account entitled to deduct a part of his rent or his interest.> In that part of the capital which circulates between industrial capitalist and labourer (that is, the part of the circulating capital which is equal to the variable capital), there is also a return flow of the money to its starting-point. The capitalist pays the labourer his wages in money; with this money the labourer buys commodities from the capitalist, and so the money flows back to the capitalist. (In practice, to the capitalist s banker. But the bankers in fact represent, in relation to the individual capitalist, the aggregate capital in so far as it takes the form of money.) This return flow of the money does not in itself indicate any reproduction. The capitalist buys labour from the labourer with money; with the same money, the labourer buys commodities from the capitalist. The same money takes the form first of means of purchase for labour, and later on as means of purchase for commodities. That it comes back to the capitalist is due to the fact that at first he is a buyer, and then in turn, in relation to the same parties, he is a seller. He parts with it as a buyer; it returns to him as a seller. The labourer on the contrary is first seller and then buyer, so first he gets the money and then he pays it out, while in relation to him the capitalist first pays it out and then takes it in. For the capitalist, the movement here is M C M. He buys a commodity (labour-power) with money; with the product of this labour-power (a commodity) he buys money; in other words, he sells this product in turn to his former seller, the labourer. For the labourer, on the other hand, the movement of circulation is C M C. He sells his commodity (labour-power), and with the money he gets for it he buys back a part of his own product (a commodity). It could indeed be said that the labourer sells a commodity (labour-power) for money, spends this money on commodities, and then sells his labour-power again, so that for him too the movement is M C M; and since the money is constantly fluctuating between him and the capitalist, it could equally be said, depending on whether one considers it from the standpoint of the one or of the other, that for him as well as for the capitalist the movement is M C M. The capitalist, however, is the buyer. The renewal of the process starts from him, not from the labourer, while the return flow of the money is compulsory, since the labourer must buy means of subsistence. Here, as in all movements where the form of circulation on one side is M C M and on the other C M C, it is made evident that the aim of the process of exchange on one side is exchange-value, money and therefore its increase and on the other side use-value, consumption. This also is the case when the money flows back as in the example first considered, where on the farmer s side the movement is M C M, C M C on the landlord s side; taking into account the fact that the M with which the landlord buys from the farmer is the money form of the rent, and therefore the result of a movement C M, the changed form of the part of the product that at bottom belongs to the landlord in kind. This M C M, in so far as it merely expresses, as between labourer and capitalist, the return to the latter of the money laid out by him in wages, in itself does not indicate any reproduction process, but only that the two parties are in turn buyer and seller in relation to each other. Nor does it represent money as capital, in such a way as in M C M', where the second M' would be a larger sum of money than the first M, so that M represents value (capital) which increases in value. On the contrary, it merely expresses the formal return of the same amount of money (often even less) to its starting-point. (By capitalist here, of course, is meant the class of capitalists.) I was therefore wrong in saying in the first Part that the form M C M must always be M C M'. It may express merely the formal return of the money, as I indicated there already, by showing that the return circuit of the money to the same starting-point arises from the fact that the buyer in turn becomes seller. It is not this return movement of the money that enriches the capitalist. For example, say that he has paid 10s. for wages. The labourer buys goods from him with this 10s. He has given the labourer goods to the value of 10s. for his labour-power. If he had given him means of subsistence in kind to the price of 10s., there would have been no circulation of money, and therefore no return flow of money. This phenomenon of money returning has therefore nothing to do with the enrichment of the capitalist, which only arises from the fact that in the production process itself the capitalist appropriates more labour than he has expended in wages, and that his product is consequently larger than the costs of producing it; while the money that he pays the labourer can in no case be less than the money with which the labourer buys goods from him. This formal return of the money has nothing to do with making a profit, and therefore M here does not signify capital ||428| any more than an increase or replacement of value takes place when money spent in rent, interest or taxes flows back to the payer of rent, interest and taxes. M G M, in so far as it represents the formal return of money to the capitalist, only means that his promissory note issued in money is realised in his own commodity. As an example of the wrong explanation of this money circuit this return of money to its starting-point see Destutt de Tracy above. As a second example, with special reference to the circulation of money between labourer and capitalist, Bray is to be quoted later. Finally, Proudhon, in regard to the money-lending capitalist. This form of return circuit M C M is found wherever the buyer becomes in turn seller, and therefore in the movement of all commercial capital, where all dealers buy from each other in order to sell, and sell in order to buy. It is possible that the buyer M is unable to sell the commodity, rice for example, at a higher price than he bought it at; he may have to sell it below its price. Thus in such a case a simple return of the money takes place, because the purchase turns into a sale without the M having established itself as value that increases value, that is, as capital. It is the same for example in the exchange of constant capital. The machine builder buys iron from the producer of iron and sells him machines. In this case the money flows back. It was paid out as means of purchase for the iron. It then serves the iron producer as means of purchase for machines, and so flows back to the machine builder. The latter has got iron for the money he paid out; he has delivered machines for the money he received. The same money has circulated twice its value. For example, the machine builder buys iron with 1,000; with the same 1,000 the iron producer buys machinery. The value of the iron and the machinery together is 2,000. In this way, however, 3,000 must be in motion: 1,000 money, 1,000 machinery and 1,000 iron. If the capitalists made an exchange in kind, the commodities would change hands without a farthing circulating. It is the same when they have reciprocal accounting and the money serves them as means of payment. If paper money or credit money (bank-notes) circulate, then there is one difference in the transaction. 1,000 still exist in bank-notes, but they have no intrinsic value. In any case here too there are three [times 1,000]: 1,000 iron, 1,000 machinery, 1,000 in bank-notes. But as in the first case these three only exist because the machine builder has had [ l,000] twice machinery 1,000 and money in gold and silver or bank-notes l,000. In both cases the iron producer returns to him only number two (the money); because the only reason why he received it at all was that the machine builder, as buyer, did not immediately become seller; he did not pay for the first commodity, the iron, in commodities, and so he paid for it in money. When he pays for it in commodities, that is, when he sells commodities to the ironmaster, the latter returns the money to him because payment has not to be made twice, once in money, and the second time in commodities. In both cases the gold or the bank-note represents the changed form of a commodity previously bought by the machine builder or some other person, or perhaps of a commodity that has been converted into money even though it has not yet been bought (as in the case of revenue), such as the landlord (his forebears, etc.) represents. Here the flowing back of the money only indicates that the person who has paid out the money for commodities, the person who has thrown the money into circulation, pulls back the money out of circulation by the sale of another commodity that he throws into circulation. The very same 1,000 we are thinking of could in one day pass through forty or fifty hands, from capitalist to capitalist, and [it would] only transfer capital from one to the other. Machinery [goes] to the iron producer, iron to the peasant, grain to the maker of starch or spirits, and so on. In the end it might again come into the hands of the machine builder, and pass from him to the iron producer, and so on, and thus it might circulate a capital of 40,000 or more and might continually flow back to whoever first paid it out. M. Proudhon concludes from this that that part of the profit made on this 40,000 which consists of interest on money, and is therefore paid out by the different capitalists for example, by the machine builder to the man who lent him 1,000, by the iron producer to the man who lent him 1,000 which he spent long ago for coal, etc., or in wages, etc. that these 1,000 yield the total interest that the 40,000 brings in. So that if the interest was 5 per cent, 2,000 in interest. From which he makes the correct calculation that the 1,000 have brought in 200 per cent. And he is a critic of political economy par excellence!* But although M C M, representing the money circulation between capitalist and labourer, in itself does not imply any act of reproduction, nevertheless this is implied by the continuous repetition of this act, the continuity of the return circuit. There cannot be a buyer continually becoming a seller without the reproduction of the commodity which he sells. In fact, this holds good for everyone except those who live on rent or interest or taxes. But in some cases the return movement M C M always takes place if the transaction is to be completed as in the case of the capitalist in relation to the labourer, or landlord or money-lender (with these latter, there is a simple return of the money). In other cases the act is completed when commodities are bought, when the movement C M C has been concluded, as in the case of the labourer. It is this act which he continually renews. His initiative is always as seller, not as buyer. The same holds good for all money circulation ||429| which is merely expenditure of revenue. The capitalist himself, for example, consumes a certain amount each year. He has converted his commodity into money, in order to pay out this money for commodities which he wants for his final consumption. Here there is C M C, and there is no return of the money to him; but the return is to the seller (the shopkeeper for example), whose capital is replaced by the expenditure of revenue. Now we have seen that an exchange takes place, a circulation of revenue against revenue. The butcher buys bread from the baker; the baker meat from the butcher; both consume their revenue. They do not pay for the meat that the butcher himself eats or the bread that the baker himself eats. Each of them consumes this part of his revenue in kind. It is however possible that the meat bought by the baker from the butcher replaces not the latter s capital but his revenue that part of the meat sold by him which not only represents his profit but the part of his profit which he wants to consume himself, as revenue. The bread that the butcher buys from the baker is also an expenditure of his revenue. If the two run accounts with each other, one or the other of them has only to pay the balance. There is no money circulated in respect of the part of their reciprocal purchases and sales which balances out. Let us however assume that the baker has to pay the balance and that this balance represents revenue for the butcher. Then he spends the money from the baker on other articles of consumption. Assuming that this is 10, which he spends with the tailor. If the 10 represents revenue for the tailor, he spends it in a similar way; in turn, he buys bread with it and so on, In this way the money flows back to the baker, no longer however as a replacement of revenue, but as a replacement of capital. A question that can still be raised is: in M C M, as carried through by the capitalist, when it represents self-expanding value, the capitalist draws more money out of circulation than he threw into it. (This was what the miser actually wanted to do but did not succeed in doing. For he does not draw more value in the form of gold and silver out of circulation than he threw into it in the form of commodities. He possesses more value in the form of money, whereas previously he had more value in the form of commodities.) The total production costs of his commodity are 1,000. He sells it for 1,200, because his commodity now contains 20 per cent or one-fifth unpaid labour labour that he has not paid for but nevertheless sold. How then is it possible for all capitalists, the class of industrial capitalists, continually to draw more money out of circulation than they put into it? First it can be said that on the other hand the capitalist continually puts in more than he draws out. His fixed capital had to be paid for. But he sells it only in the measure that he consumes it, only bit by bit. It always enters only to a much smaller extent into the value of the commodity, while it enters in its entirety into the process of producing the commodity. If its circulation is 10 years, only one-tenth of it enters annually into the commodity, and no money circulates in respect of the other nine-tenths, as this nine-tenths does not in any way come into circulation in the form of a commodity. That is the first point. We will consider this problem later, and meanwhile return to Quesnay. But first one other point. The return of bank-notes to a bank which discounts bills or makes advances in notes is quite a different phenomenon from the return of money which we have been considering up to now. In this case the transformation of the commodity into money is anticipated. It receives the form of money before it is sold, perhaps before it is produced. Or perhaps it has already been sold (for bills of exchange). In any case it has not yet been paid for, not yet reconverted into money. This transformation is therefore in any case anticipated. As soon as it is sold (or deemed to be sold) the money flows back to the bank, either in its own notes, which thus come back out of circulation, or in notes of other banks, which are then exchanged for its own (between the bankers) so that then the notes of both are withdrawn from circulation, return to their starting-point or in gold and silver. If this gold and silver is demanded for banknotes which are in some third person s hands, the notes come back. If the notes are not converted, a similar quantity of gold and silver is taken out of circulation, and now lies in the bank s reserves instead of the notes. In all these cases the process is this: the existence of the money (transformation of the commodity into money) was anticipated. As soon as it is actually transformed into money, the transformation into money takes place a second time. This second existence of it as money, however, returns to the starting-point it cancels out, takes the place of its first existence as money, and comes back out of circulation to the bank. It is perhaps the same identical quantity of notes that expressed its first existence which now expresses its second. The bill of exchange for example has been discounted by a yarn manufacturer. He has received the bill of exchange from the weaver. With the 1,000 he pays for coal, raw cotton, etc. The various hands through which these notes pass in payment for their commodities finally spend them on linen, and so the notes come to the weaver, who on the day the bill matures pays the spinner the identical notes, and the spinner in turn takes them back to the bank. It is by no means necessary that the second (posthumous) transformation of the commodity into money after the transformation in anticipation ||430| should be carried through in different money from the first. And so it seems as if the spinner has in fact got nothing, since he borrowed notes, and the end of the process is that he gets them back again and returns them to the issuer. In fact however these identical notes have served as means of circulation and means of payment during this period, and the spinner has used them in part to pay his debts, and in part to buy goods needed for the reproduction of the yarn, and in this way he has realised a surplus (through the exploitation of his workmen) a part of which he can now pay back to the bank. Likewise in money, since more money has flowed back to him than he had expended, advanced, laid out. How? That again brings us to the question we had meanwhile held over. So back to Quesnay. We come now to the third and fourth acts of circulation. L (the landlord) buys manufactured commodities from S (sterile class, manufacturer) (line a c in the Tableau) for 1 milliard. Here 1 milliard in money, and commodities to the same amount, circulate. <Because what takes place is a single act of exchange. If L bought from S in instalments and similarly received his rent from F (the farmer) in instalments, the 1 milliard of manufactured commodities could be bought say with 100 millions, For L buys manufactured commodities from S for 100 millions; S buys means of subsistence from F for 100 millions; F pays 100 millions of rent to L; and when this had occurred ten times, ten times 100 millions of commodities would have passed from S to L, and from F to S, and ten times 100 millions from F to L. The whole circulation would then have been carried out with 100 millions. If F however pays the rent in a single payment, a part of the 1 milliard which is now in the possession of S and of the 1 milliard which is again in F s possession might lie in their money-boxes, and the other part be in circulation.> Commodities to the value of 1 milliard have now passed from S to L; on the other hand, money to the value of 1 milliard has passed from L to S. This is simple circulation. Money and commodities merely change hands in the reverse direction. But in addition to the 1 milliard of means of subsistence which the farmer has sold to L and which have thus gone into consumption, the 1 milliard of manufactured commodities which S has sold to L have also gone into consumption. It must be noted that these existed before the new harvest. (Otherwise L could not buy them with the product of the new harvest.) S for his part now buys means of subsistence to the value of 1 milliard from F [line c d in the Tableau]. Now a second one-fifth of the gross product has fallen out of circulation and into consumption. As between S and F, the 1 milliard functions as means of circulation. But at the same time two things take place in this transaction which do not take place in the process between S and L. In that process S reconverted into money one part of his product manufactured goods to the amount of 1 milliard. But in the exchange with F he transforms the money again into means of subsistence (which for Quesnay are equivalent to wages), and in this way replaces the capital which he had expended in wages and consumed. This retransformation of the 1 milliard into means of subsistence expresses, in the case of L, mere consumption, but in the case of S it expresses industrial consumption, reproduction; for he retransforms a part of his commodity into one of the elements in its production means of subsistence. The one metamorphosis of the commodity, its retransformation from money into commodity, thus in this case expresses at the same time the beginning of its real, not merely formal, metamorphosis the beginning of its reproduction, the beginning of its retransformation into its own production elements; in this transaction there is at the same time metamorphosis of the capital. But for L. revenue is merely converted from the form of money into the form of commodity. This implies only consumption. In the second place, however, since S buys means of subsistence from F for 1 milliard, the second 1 milliard which F paid as money-rent to L returns to F. But it only returns to him because he draws it back out of circulation, buys it back, with an equivalent 1 milliard in commodities. It is the same as if the landlord had bought from him 1 milliard of means of subsistence (in addition to the first milliard); that is to say, as if the landlord had had the second part of his money-rent delivered by the farmer in commodities, and had then exchanged these commodities for commodities from S. S only lifts for L the second part of the 2 milliards in commodities which F has paid to L in money. If payment had been in kind, F would have given L 2 milliards in means of subsistence; L would have consumed 1 milliard of these himself, and exchanged the other 1 milliard in means of subsistence with S, for the latter s manufactured goods. In this case there would only have been: (1) transfer of the 2 milliards in means of subsistence from F to L; (2) a barter transaction between L and S, in which the former exchanges 1 milliard in means of subsistence against 1 milliard in manufactured goods, and vice versa. But instead of this, four acts have taken place: ||431| (1) transfer of 2 milliards in money from F to L; (2) L buys means of subsistence for 1 milliard from F, the money flows back to F, serving as means of circulation; (3) L buys manufactured goods from S for 1 milliard in money; the money functions as means of circulation; changing hands in the reverse direction to the goods; (4) with the 1 milliard in money, S buys means of subsistence from F; the money functions as means of circulation. For S, it at the same time circulates as capital. It flows back to F because now the second 1 milliard in means of subsistence is lifted for which the landlord held a note of assignment from him. The money however does not come back to him directly from the landlord, but only after it has served as means of circulation between L and S, and in between, before it lifts the 1 milliard of victuals, has on its passage lifted 1 milliard in manufactures, and transferred them from the manufacturer to the landlord. The conversion of his commodity into money (in the exchange with the landlord) as well as the following conversion of money into victuals (in the exchange with the farmer) are, on the part of S, the metamorphosis of his capital, first into the form of money, and secondly into the form of the constitutive elements necessary to the reproduction of the capital. The result of the four acts of circulation up to this point is therefore: the landlord has spent his revenue, half on means of subsistence, half on manufactured goods. By these transactions, the 2 milliards he received as rent in the form of money have been spent. Half of it flows back to the farmer from him direct, and half indirect, via S. S however has parted with one part of his finished goods, and has replaced this part with means of subsistence, that is, with an element needed for reproduction. With these processes completed, the circulation is at an end as far as the landlord comes into it. But the following have passed out of circulation into consumption partly unproductive consumption, partly industrial (the landlord has partially replaced the capital of S by spending his revenue): (1) 1 milliard of means of subsistence (product of the new harvest); (2) 1 milliard of manufactured goods (product of the previous year s harvest); (3) 1 milliard of means of subsistence which enter into reproduction, that is, into the production of the goods which S next year will have to exchange against half the landlord s rent. The 2 milliards in money are now again in the hands of the farmer. He then buys goods for 1 milliard from S to replace his annual and original advances, in so far as these consist partly of tools, etc., and partly of manufactured goods which he consumes during the process of production. This is a simple process of circulation. It puts 1 milliard into the hands of S, while the second part of his product existing in the form of a commodity is converted into money. On both sides there is metamorphosis of capital. The farmer s 1 milliard is reconverted into elements of production needed for reproduction. The finished goods of S are reconverted into money; they pass through the formal metamorphosis from commodity into money, without which the capital cannot be reconverted into its production elements, and therefore also cannot be reproduced. This is the fifth circulation process. One milliard of manufactured goods (product of the previous year s harvest) (a' b') fall out of circulation into reproductive consumption. Finally S reconverts the 1 milliard in money, in which form half of his commodities now exist, into the other half of his conditions of production raw materials, etc. (a'' b''), This is simple circulation. For S, it is at the same time the metamorphosis of his capital into the form suitable for its reproduction; for F, it is the reconversion of his product into money. Now the last one-fifth of the gross product falls out of circulation into consumption. That is to say: one-fifth goes into reproduction for the farmer, and does not come into circulation; the landlord consumes one-fifth (that makes two-fifths); S gets two-fifths; in all, four-fifths. Here there is an obvious gap in the explanation. Quesnay seems to reckon like this: F gives L (line a b) 1 milliard (one-fifth) in means of subsistence. With 1 milliard of his raw materials be replaces S s fund (a b ). And 1 milliard in means of subsistence form wages for S, which he adds as value to the commodities and consumes in food while he is doing it (c d), And 1 milliard remains in reproduction (a'), not entering into circulation. Finally, 1 milliard of the product replaces advances (a' b'). Only he overlooks the fact that S buys for the 1 milliard in manufactured goods, neither means of subsistence nor raw materials from the farmer, but pays back to him his own money. In fact he sets out from the presupposition that the farmer possesses 2 milliards in money in addition to his gross product, and that this money is the total fund from which the money in circulation is provided. He also forgets that in addition to the 5 milliards in gross product, a further 2 milliards of gross product exist in manufactured commodities produced before the new harvest. For the 5 milliards represent only the total annual production, ||432| the total crop produced by the farmers, but not the gross product of manufacture, the reproductive elements for which have to be replaced out of this year s harvest. We thus have: (1) 2 milliards in money in the farmer s hands; (2) 5 milliards in gross product of the land; (3) 2 milliards in manufactured goods. That is, 2 milliards in money, and 7 milliards in product (agricultural and industrial), The circulation process, put briefly, is as follows (F=farmer, L=landlord, S = manufacturer, sterile): F pays L 2 milliards in money for rent; L buys from F means of subsistence for 1 milliard. So one-fifth of the farmer s gross product is disposed of. At the same time, 1 milliard in money flows back to him. L moreover buys goods from S for 1 milliard. By this transaction, one-half of S s gross product is disposed of. In return for it, he has 1 milliard in money. With this money he buys 1 milliard of means of subsistence from F. By this transaction he replaces one-half of the reproductive elements of his capital. This disposes of another one-fifth of the farmer s gross product. At the same time the farmer finds himself again in possession of the 2 milliards in money, the price of the 2 milliards in means of subsistence which he has sold to L and S. F now buys goods from S for 1 milliard, which replace for him half of his advances. So the other half of the manufacturer s gross product is disposed of. Finally, the latter, S, buys raw materials from the farmer for the last 1 milliard in money; thereby a third one-fifth of the farmer s gross product is disposed of, and the second half of the reproductive elements of the capital of S is replaced; but also 1 milliard flows back to the farmer. The latter finds himself therefore again in possession of the 2 milliards, which is in order, since Quesnay thinks of him as the capitalist, in relation to whom L is merely a receiver of revenue and S merely a wage-earner. If he paid L and S directly in his product, he would not part with any money. If he pays out in money, they buy his product with it, and the money flows back to him. This is the formal return circuit of money to the industrial capitalist, who as buyer opens the whole business and brings it to an end. Moreover, one-fifth of the advances belongs to reproduction. One-fifth of the means of subsistence, however, which has not entered into circulation at all, remains to be disposed of. S buys from the farmer means of subsistence for 1 milliard and raw materials for 1 milliard; and on the other hand F buys from him only 1 milliard of commodities to replace his advances. So S has to pay a balance of 1 milliard which in the final instance he pays with the 1 milliard he has received from L. Quesnay seems to confuse this payment of 1 milliard to F with the purchase of F s product to the amount of 1 milliard. Reference must be made to the Abb Baudeau s explanations on this point. In fact (on our calculation) the 2 milliards have only served to: (1) pay rent to the amount of 2 milliards in money; (2) circulate 3 milliards of the farmer s gross product (1 milliard means of subsistence to L, 2 milliards means of subsistence and raw materials to S) and to circulate 2 milliards of the gross product of S (1 milliard of it to L, who consumes it, and 1 milliard to F, who consumes it reproductively). In the last purchase (a'' b'') in which S buys raw materials from F, he pays him back in money. ||433| So once more: S has received from L 1 milliard in money. With this 1 milliard in money he buys means of subsistence from F to that amount. With the same 1 milliard in money F buys commodities from S. With the same 1 milliard in money S buys raw products from F. Or, S buys from F raw materials for 1 milliard in money, and means of subsistence for 1 milliard in money. F buys goods from S for 1 milliard [in money]. In this case 1 milliard flows back to S, but only because it was assumed that in addition to the 1 milliard in money he receives from the landlord, and the 1 milliard in goods that he still has to sell, he had over and above this another 1 milliard in money which he himself had thrown into circulation. Instead of 1 milliard circulating the goods between him and the farmer, on this assumption 2 milliards would have been used for it. Then 1 milliard returns to S. For he makes purchases from the farmer for 2 milliards in money. The latter buys 1 milliard from him, for which he pays him back half the money he had received from him. In the first case S buys in two stages. First he pays out 1 milliard; this flows back to him from F; and then he pays it out once more definitively to F, and so nothing comes back. In the second case, on the other hand, S makes a single purchase for 2 milliards, If then F makes a return purchase for 1 milliard, this remains with S. The circulation would have used 2 milliards instead of 1 milliard, because in the first case the 1 mil1iard, by rotating twice, realised 2 milliards in commodities. In the second case 2 milliards, in one rotation, also [realised] 2 milliards in commodities. If the farmer now pays back 1 milliard to S, S has not got more than in the first case. For he has thrown into circulation, in addition to 1 milliard in commodities, also 1 milliard in money from his own fund which existed prior to the circulation process. He has put it out into circulation, and so it flows back to him. In the first case: S [buys] 1 milliard of commodities from F, for 1 milliard in money; F [buys] 1 milliard in goods from S, [for] 1 milliard in money; S [buys] 1 milliard of commodities from F, [for] 1 milliard in money; so that F keeps 1 milliard. In the second case: S [buys] 2 milliards of commodities from F, for 2 milliards in money; F [buys] 1 milliard of goods from S, for 1 milliard in money. The farmer, as before, keeps the 1 milliard. S however gets back the 1 milliard of capital advanced by him to circulation, it is thrown back to him by circulation. S buys commodities from F for 2 milliards; F buys goods from S for 1 milliard. Therefore in any event S has to pay a balance of 1 milliard, but not more than this. Since, by way of paying this balance, he had paid F 2 milliards as a result of the particular form of circulation, F pays him back this 1 milliard, while in the first case he does not return any money to him. In the first case S makes purchases from F for 2 milliards, and F from S for 1 milliard. So in both cases the balance in F s favour is 1 milliard. But this balance is paid to him in such a way that his own money flows back to him, because S first buys 1 milliard from F, then F 1 milliard from S, and finally S 1 milliard from F. In these transactions 1 milliard has circulated 3 milliards. But in the aggregate the value in circulation (if the money is real money) has been 4 milliards, 3 milliards in commodities and 1 milliard in money. The amount of money originally thrown into circulation (to pay F) and circulating was never more than 1 milliard that is, never more than the balance which S had to pay to F. Because F bought from him to the amount of 1 milliard before he buys from F to the amount of 1 milliard for the second time, S can pay his balance with this 1 milliard. In the second case S throws 2 milliards into circulation. It is true that with it he buys 2 milliards in commodities from F. These 2 milliards are here required as means of circulation, and are paid out against an equivalent in commodities. But F buys back goods for 1 milliard from S. One milliard therefore returns to S, as the balance which he has to pay to F is only 1 milliard and not 2 milliards. He has now replaced for F 1 milliard in commodities, and so F must pay him back the 1 milliard, which now he would have paid him in money for nothing. This case is remarkable enough to spend a moment on it. There are various possible cases of the circulation assumed above of 3 milliards in commodities, of which 2 milliards are means of subsistence and 1 milliard manufactures; we must however note: first that on Quesnay s assumption there is 1 milliard in money in the hands of S and 1 milliard of money in the hands of F at the moment when the circulation between the two of them begins; secondly, we will assume by way of illustrating the point that in addition to the 1 milliard which S receives from L, S has in his till another 1 milliard in money. ||434| I. First: The case as Quesnay puts it. S buys 1 milliard in commodities from F, for 1 milliard in money; with the 1 milliard in money thus received from S, F buys 1 milliard in commodities from S; finally S, with the 1 milliard in money he has got back in this way, buys 1 milliard of commodities from F. F is therefore left with the 1 milliard in money which to him represents capital (in fact, along with the other 1 milliard in money which he has got back from L, it forms the revenue with which again next year he pays the rent in money; that is, 2 milliards in money). 1 milliard in money has here circulated three times from S to F, from F to S, from S to F and each time in exchange for 1 milliard in commodities, that is, for 3 milliards in all. If the money itself has value, values to a total of 4 milliards are in circulation. Money here functions only as means of circulation; but for F, in whose hands it finally remains, it is transformed into money and possibly into capital. II. Secondly: The money functions merely as means of payment. In this case S, who buys 2 milliards in commodities from F, and F, who buys 1 milliard in commodities from S, settle accounts with each other. At the close of the transaction S has to pay a balance of 1 milliard in money. As in the former case, 1 milliard in money comes into F s money-box, but without having served as means of circulation. The money is a transfer of capital for him, as it only replaces his capital of 1 milliard in commodities. As before, values amounting to 4 milliards are in circulation. But instead of three movements of 1 milliard in money, there has only been one, and the money has only paid for an amount of values in commodity form that is equal to itself. In the former case, it paid for three times as much. What would be saved as compared with case I would be the two superfluous movements of circulation. III. Thirdly: To start with F comes forward as the buyer with the 1 milliard in money (which he has had from L), and buys commodities from S for 1 milliard. Instead of lying fallow with him as a hoard for payment of the next rent, now the 1 milliard circulates. S has now 2 milliards in money (1 milliard from L and 1 milliard from F). With these 2 milliards in money he buys commodities to the amount of 2 milliards from F. Now values to the amount of 5 milliards have been in circulation (3 milliards in commodities, 2 milliards in money). There has been a circulation of 1 milliard in money and 1 milliard in commodities, and a circulation of 2 milliards in money and 2 milliards in commodities. Of these 2 milliards in money, the milliard originating with the farmer circulates twice, the milliard originating with 5 only once. Now 2 milliards in money return to F, of which however only 1 milliard settles his balance; the other 1 milliard in money, which he himself had thrown into circulation because he took the initiative as buyer, flows back to him through circulation. IV. Fourthly: S buys at once 2 milliards in commodities from F, with 2 milliards in money (1 milliard from L, and 1 milliard which he puts himself into circulation from his till). F buys back from S 1 milliard in commodities, thus returning to him 1 milliard in money; and F holds, as before, 1 milliard in money to settle the balance between him and S. Values to the amount of 5 milliards have circulated. There are two acts of circulation. Of the 2 milliards in money which S returns to F, 1 milliard represents the money which F himself threw into circulation, and only 1 milliard the money which S threw into circulation. Here 2 milliards in money instead of 1 milliard in money come back to F, but in fact he gets only 1 milliard, as he himself had thrown the other 1 milliard into circulation. That is, in case III. In case IV 1 milliard in money returns to S, but it is the 1 milliard which he got from his money-box, not from selling his commodities to L, and himself threw into circulation. In case I and indeed in case II there is never more than 1 milliard in money circulating; but in case I it circulates three times and in case II it only once changes hands; this is merely due to the fact that in case II a high development of credit, and consequently economy in payments, is assumed; while in case I the movement is rapid; however, each time the money functions as means of circulation, and therefore the value at the two poles must each time appear twice, once in money and once in commodity. In case III and IV 2 milliards circulate, instead of 1 milliard as in I and II. This is because on one occasion in both cases (in case III by S as buyer who closes the circulation process, in case IV by S as buyer who opens the circulation process) commodity values to the amount of 2 milliards are at a single stroke thrown into circulation; that is, 2 milliards of commodities enter into circulation in a single act; it is assumed, moreover, that the commodities have to be paid for on the spot and not after the balance has been struck. The most interesting thing about the movement is however the 1 milliard in money which in case III is left in the hands of the farmer, in case IV in the hands of the manufacturer, although in both cases the balance of 1 milliard is paid to the farmer, and he gets not a farthing more in case III, and not a farthing less in case IV. In these transactions, of course, the exchange is always an exchange of equivalents, and when we speak of a balance we mean only the equivalent value which is paid for in money instead of in commodities. In case III F throws 1 milliard in money into circulation, and gets in exchange for it from S the equivalent in commodities, or 1 milliard in commodities. But then S buys commodities from him for 2 milliards in money. The first 1 milliard in money which he threw in thus comes back to him, because 1 milliard in commodities has been taken from him in exchange. This 1 milliard in commodities is paid for with the money which be had paid out. He gets the second 1 milliard in money in payment for the second 1 milliard in commodities. This balance is owed to him in money, because he had only bought in all 1 milliard of commodities, and commodities to the value of 2 milliards had been bought from him. ||435| In case IV S throws 2 milliards in money into circulation at once, for which he takes from F commodities for 2 milliards. With the money which S himself had paid him, F in turn buys from S commodities for 1 milliard and so the 1 milliard in money returns to S. In case IV: S in fact gives F 1 milliard in commodities (the equivalent for 1 milliard in money) and 2 milliards in money, that is, 3 milliards; but S gets from F only 2 milliards in commodities. F has consequently to return to him 1 milliard in money. In case III: F gives S in commodities the equivalent of 2 milliards in money, and 1 milliard in money. That is, 3 milliards in money. But he gets from S only 1 milliard in commodities, the equivalent of 1 milliard in money. S has consequently to return to him 2 milliards in money; he pays back 1 milliard in the money which F himself threw into circulation, and he himself throws 1 milliard into circulation. He keeps the balance of 1 milliard in money, but cannot keep 2 milliards in money. In both cases S receives 2 milliards in commodities, and F 1 milliard in commodities plus 1 milliard in money, that is to say, the balance in money. In case III, in addition to this, another 1 milliard comes to F, but this is only the excess of the money which he has thrown into circulation over what he has drawn from circulation in commodities. Similarly with S in case IV. In both cases S has to pay a balance of 1 milliard in money, because he takes commodities to the value of 2 milliards out of circulation, and puts into it commodities only to the value of l milliard. In both cases F has to receive a balance of 1 milliard in money, because he has thrown 2 milliards in commodities into circulation and only drawn from it 1 milliard in commodities; the second 1 milliard must therefore be paid in money to him. In both cases, it is only this 1 milliard in money that can finally change hands. Since however 2 milliards are actually in circulation, this must flow back to the person who put it into circulation; and this holds good whether F, in addition to receiving a balance of 1 milliard out of circulation, has thrown into it another 1 milliard in money; or whether S, who has to pay only a balance of 1 milliard in money, has in addition advanced another 1 milliard in money. In case III 1 milliard in money comes into circulation in excess of the quantity of money that would under different circumstances be needed for the circulation of this quantity of commodities, because F comes forward as the first buyer, and must therefore throw money into circulation, whatever his ultimate position may be. In case IV, in the same way, 2 milliards in money come into circulation, instead of only 1 milliard as in II, because first S comes forward as buyer at the outset, and secondly buys 2 milliards all at once. In both cases the money that circulates between these buyers and sellers can finally only be equal to the balance which one of them has to pay. For the money which S or F has expended in excess of this amount is paid back to him. Let us assume that F buys commodities from S to the value of 2 milliards. This case, then, would look like this: F gives S 1 milliard in money for commodities. S buys commodities from F to the value of 2 milliards in money, as a result of which the first 1 milliard returns to F and l milliard into the bargain. F in turn buys commodities from S for 1 milliard in money, which brings this money back to S. At the end of the process F would have commodities to the amount of 2 milliards and the 1 milliard that he had originally, before the circulation process began; and S commodities for 2 milliards and 1 milliard in money which he too originally had. The 1 milliard in money of F, and the 1 milliard in money of S, would have played their role only as means of circulation and then would have flowed back as money or in this case also as capital to both the persons who had advanced them. Had they both used money as means of payment, they would have set off 2 milliards in commodities against 2 milliards in commodities; their accounts would have cancelled out and not a farthing would have circulated between them. Thus the money which circulates as means of circulation between two persons who confront each other mutually as buyers and sellers returns to its source; there are three cases in which it can circulate. [First:] The commodity values supplied balance each other. In this case the money returns to the person who advanced it to irculation and in this way used his capital to meet the costs of circulation. For example, if F and S each buys commodities for 2 milliards from the other, and S opens the dance, he buys commodities from F for 2 milliards in money. F returns to him the 2 milliards in money, buying with it 2 milliards in commodities from him. Thus S has both before and after the transaction 2 milliards in commodities and 2 milliards in money. Or when, as in the case cited previously, both advance the means of circulation to an equal amount, each gets back what he had advanced to circulation as above, 1 milliard in money to F and 1 milliard to S. Secondly: The commodity values exchanged between the two parties do not cancel each other out. There is a balance to be paid in money. If, as above in case I, the circulation of the commodities has taken place in such a way that no more money has entered into circulation than is required for the payment of this balance it being always only this sum that passes to and fro between the two parties then it comes finally into the hands of the last seller, in whose favour the balance is. Thirdly: The commodity values exchanged between the two parties are not equal to each other; there is a balance to be paid; but the circulation of the commodities takes place in such a form that more money circulates than is required to settle the balance; in this case the money in excess of this balance returns to the party who has advanced it. In case III to the man who receives the balance, in case IV to the one who has to pay it. In the second category listed above the money only returns when the receiver of the balance is the first buyer, as for example between worker and capitalist. It changes hands, as [in case] II, when the other party comes forward as the first buyer. ||436| <Of course, all this only takes place on the assumption that the definite quantity of commodities is bought and sold between the same persons, so that each of them is alternately buyer and seller in relation to the other one, On the other hand let us assume that the 3 milliards of commodities are equally distributed among the commodity owners. A, A', A'', the sellers, and they are confronted by the buyers B, B', B''. If the three purchases take place simultaneously, that is to say, alongside each other, 3 thousand in money must circulate, so that each A is in possession of 1 thousand in money and each B is in possession of 1 thousand in commodities. If the purchases follow each other, succeeding each other in time, the circulation of the same 1 thousand in money can only effect these if the metamorphoses of the commodities are interwoven, that is to say, when some persons function as buyers and sellers, even if not [in relation] to the same persons as in the case above, but as buyer in relation to one person, and as seller in relation to the other. Thus for example: (1) A sells to B for 1 thousand in money; (2) A buys with this 1 thousand from B'; (3) B' with the 1 thousand in money buys from A'; (4) A' with the 1 thousand in money from B''; (5) B'' with the 1 thousand in money from A''. The money would have changed hands five times between the six persons; but also commodities to the value of 5 thousand would have circulated. If commodities for 3 thousand are to be circulated, it would be like this: (1) A [buys] from B for 1 thousand in money; (2) B from A' for 1 thousand in money; (3) A' from B' for 1 thousand in money. Three changes of place as between four persons. It is M C.> The cases set out above do not contradict the law explained earlier: that with a given rapidity of circulation of money and a given total sum of prices of commodities the quantity of the circulating medium is determined (I, p. 85). In example 1 above, 1 thousand in money circulates three times, and in fact it circulates commodities to the amount of 3 thousand. The amount of money in circulation is consequently 3,000 (sum of prices)/3 (velocity) or 3,000 (sum of prices)/3 cycles = 1,000 money. In case III or IV the total prices of the commodities in circulation are, it is true, equal to 3,000 in money; but the rapidity of circulation is different. 2,000 in money circulates once, that is, 1,000 in money plus 1,000 in money. Of the 2,000, however, 1,000 circulates once more. 2,000 in money circulates two-thirds of the 3,000 in commodities, and half of it, 1,000 in money, circulates another third; one 1,000 in money circulates twice, but another 1 000 in money circulates only once. The twofold circulation of 1,000 in money realises commodities whose prices are equal to 2,000 in money; and the single circulation of 1,000 in money realises commodities whose prices are equal to 1,000 in money both together, equal to 3,000 in commodities. What then is the rapidity of circulation of the money in relation to the commodities which it circulates in this case? The 2,000 in money makes 1 1/2 cycles (this is the same thing as first the total sum circulates once, and then half of it again completes one cycle), that is, 3/2. And in fact: 3,000 (sum of prices)/3/2 cycles = 2,000 in money. What is it then that determines the different rapidity of circulation of the money in this case? Both in III and IV the difference arises from the fact that, in contrast to I where the total amount of prices of the commodities circulating each time is never greater and never smaller than 1/3 of the total prices of the aggregate quantity of commodities which circulate, commodities only to the amount of 1,000 in money circulate at any time in III and IV, however, commodities for 2,000 circulate once, and commodities for 1,000 circulate once, that is, once two-thirds of the existing quantity of commodities, and once one-third. For the same reason, larger varieties of coin must circulate in wholesale trade than in retail trade. As I have already observed (I, [The] Circulation of Money ), the reflux of the money shows in the first place that the buyer has in turn become seller; and in fact it makes no difference whether in so doing he sells to the same person from whom he has bought, or not. If however the buying and selling is between the same persons, then the phenomena appear which have been the occasion of so many errors (Destutt de Tracy). The buyer becoming seller shows that new commodities are to be sold. Continuity in the circulation of commodities tantamount to its constant renewal (I, p. 78) is, therefore, reproduction. The buyer can become in turn seller as in the case of the manufacturer in relation to the labourer without this denoting an act of reproduction. It is only the continuity, the repetition of this reflux, in relation to which it can be said that it denotes reproduction. The reflux of money, when it represents the reconversion of the capital into its money form, necessarily shows the end of one cycle [i.e., turnover] and the beginning again of new reproduction, if the capital as such continues the process. In this case too he [the capitalist], as in all other cases, was the seller, C M, and then became buyer, M C; but it is only in M that his capital again possesses the form in which it can be exchanged for its reproductive elements, and here the C represents these reproductive elements. M C here represents the transformation of the money-capital into productive or industrial capital. Furthermore, as we have seen, the reflux of the money to its starting-point may show that the money balance in a series of purchases and sales is in favour of the buyer with whom the series of these processes opened. F buys from S for 1,000 in money. S buys from F 2,000 in money. Here the 1,000 in money flows back to F. As for the other 1,000, there is merely a change of place of the money between S and F. ||437| Finally, however, a reflux of the money to its starting-point may take place without indicating payment of a balance, both (1) when the reciprocal payments cancel each other out, and consequently there is no balance to be paid in money; and (2) when the transactions do not cancel out, and therefore a balance has to be paid. See the cases analysed above. In all these cases it makes no difference whether for example the same S confronts F; S representing here in relation to F and F to S the total number of those selling to him and buying from him (exactly as in the example where payment of a balance is indicated by the reflux of the money). In all these cases the money flows back to the person who so to speak has advanced it to circulation. It has done its job in circulation, like bank-notes, and comes back to the person who laid it out. Here it is only means of circulation. The final capitalists settle with each other, and so it comes back to the one who paid it out. We have therefore still to deal later on with the question we have held over; the capitalist draws more money out of circulation than he threw into it. Back to Quesnay: Adam Smith cites with some irony the Marquis de Mirabeau s hyperbolical statement: But in fact it was an attempt to portray the whole production process of capital as a process of reproduction, with circulation merely as the form of this reproductive process; and the circulation of money only as a phase in the circulation of capital; at the same time to include in this reproductive process the origin of revenue, the exchange between capital and revenue, the relation between reproductive consumption and final consumption; and to include in the circulation of capital the circulation between consumers and producers (in fact between capital and revenue); and finally to present the circulation between the two great divisions of productive labour raw material production and manufacture as phases of this reproductive process; and all this depicted in a Tableau which in fact consists of no more than five lines which link together six points of departure or return [and this was] in the second third of the eighteenth century, the period when political economy was in its infancy this was an extremely brilliant conception, incontestably the most brilliant for which political economy had up to then been responsible. As regards the circulation of capital its reproductive process, the various forms which it assumes in this process of reproduction, the connection between the circulation of capital and circulation in general (that is, not only the exchange of capital for capital, but of capital for revenue) Adam Smith in fact only took over the inheritance of the Physiocrats and classified and specified more precisely the separate items in the inventory. But his exposition and interpretation of the movement as a whole was hardly as correct as its presentation in outline in the Tableau conomique, in spite of Quesnay s false assumptions. When moreover Adam Smith says of the Physiocrats: Their works have certainly been of some service to their country ([Wealth of Nations, O.U.P. edition, Vol. II, p. 2991, [Garnier], l.c., p. 538), this is an immoderately moderate statement of the significance for example of Turgot, one of the immediate fathers of the French revolution. |437|| * ||437| The passage from Proudhon referred to earlier runs: The amount of mortgage debts, according to the best-informed writers, is 12 milliards; some put it as high as 16 milliards. The amount of debts on note of hand, at least 6. Limited-liability companies, about 2. The public debt, 8 milliards. Total: 28 milliards. All these debts note this point have their source in money lent, or deemed to be lent, at 4, at 5, at 6, at 8, at 12, and up to 15 per cent. I take 6 per cent as the average interest, as far as concerns the first three categories: that would be, then, on 20 milliards, 1,200 millions. Add the interest on the public debt, about 400 millions: in all, 1,600 millions annual interest, for a capital of 1 milliard (p. 152). That is to say; 160 per cent. For the amount of ready money, I will not say existing, but circulating in France, including the cash balance of the Bank, does not exceed 1 milliard, according to the most usual estimate (p. 151). When the exchange has been completed, the money is once more available, and can therefore give rise to a new loan The money-capital, going from exchange to exchange, always returns to its source, and it follows that it can always be reloaned by the same hand and always profits the same person (pp. 153-54). Gratuit du cr dit. Discussion entre M. Fr. Bastiat et M. Proudhon, Paris, 1850. |437||

Economic Manuscripts: Theories of Surplus-Value, Chapter 6

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch06.htm

||438| Linguet, Th orie des lois civiles, etc., Londres, 1767. In accordance with the plan of my work socialist and communist writers are entirely excluded from the historical reviews. These reviews are only intended to show on the one hand in what form the political economists criticised each other, and on the other hand the historically determining forms in which the laws of political economy were first stated and further developed. In dealing with surplus-value I therefore exclude such eighteenth-century writers as Brissot, Godwin and the like, and likewise the nineteenth-century socialists and communists. The few socialist writers whom I shall come to speak of in this survey either themselves adopt the standpoint of bourgeois economy or contest it from its own standpoint. Linguet however is not a socialist. His polemics against the bourgeois-liberal ideals of the Enlighteners, his contemporaries, against the dominion of the bourgeoisie that was then beginning, are given half-seriously, half-ironically a reactionary appearance. He defends Asiatic despotism against the civilised European forms of despotism; thus he defends slavery against wage-labour. Vol. I. The only statement directed against Montesquieu: l esprit des lois, c est la propri t ,* shows the depth of his outlook. The only economists whom Linguet found to deal with were the Physiocrats. The rich have taken possession of all the conditions of production; [hence] the alienation of the conditions of production, which in their simplest form are the natural elements themselves. In order to get hold of some of this wealth appropriated by the rich, it must be purchased with heavy labour, which increases the wealth of these rich persons. (Here in the gifts of nature the Physiocratic view is echoed.) Society itself the fact that man lives in society and not as an independent, self-supporting individual is the root of property, of the laws based on it and of the inevitable slavery. On the one hand, there were peaceful and isolated husband-men and shepherds. On the other hand Stripped of the conditions of production, the labourers are compelled by need to labour to increase the wealth of others in order themselves to live. By these servants, Linguet says, he does not mean lackeys and the like: He calls to the men of the French Enlightenment, in regard to the labourers: * The sprit of the laws is property. Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 7

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch07.htm

||X-445| Herr Rodbertus. Dritter Brief an von Kirchmann von Rodbertus. Widerlegung der Ricardoschen Lehre von der Grundrente und Begr ndung einer neuen Rententheorie, Berlin, 1851. The following remark has to be made beforehand: supposing the necessary wage is equal to 10 hours, then this is most easily explained in the following manner. If 10 hours labour (i.e., a sum of money equal to 10 hours) enabled the agricultural labourer, on an average, to purchase all the necessary means of subsistence, agricultural, industrial products, etc., then this is the average wage for unskilled labour. We are thus concerned here with the value of his daily product which must fall to his share. In the first place this value exists in the form of the commodity which he produces, i.e., [in] a certain quantity of this commodity, in exchange for which, after deducting what he himself consumes of the commodity (if he [does consume any of it]), he can procure for himself the necessary means of subsistence. Not only the use-value which he himself produces, but industry, agriculture, etc., thus come into the estimation of his necessary income. But this is inherent in the concept of commodity. He produces a commodity, not merely a product. We need therefore waste no words about this. Herr Rodbertus first investigates the situation in a country where there is no separation between land ownership and owner-ship of capital. And here he comes to the important conclusion that rent (by which he means the entire surplus-value) is simply equal to the unpaid labour or the quantity of products which it represents. In the first instance it is noteworthy that Rodbertus only takes into account the growth of relative surplus-value, i.e., the growth of surplus-value in so far as it arises out of the growing productivity of labour and not the growth of surplus-value derived from the prolongation of the working-day itself. All absolute surplus-value is of course relative in one respect. Labour must be sufficiently productive for the worker not to require all his time to keep himself alive. But from this point the distinction comes into force. Incidentally, if originally labour is but little productive, the needs are also extremely simple (as with slaves) and the masters themselves do not live much better than the servants. The relative productivity of labour necessary before a profit-monger, a parasite, can come, into being is very small. If we find a high rate of profit though labour is as yet very unproductive, and machinery, division of labour etc., are not used, then this is the case only under the following circumstances; either as in India, partly because the requirements of the worker are extremely small and he is depressed even below his modest needs, but partly also because low productivity of labour is identical with a relatively small fixed capital in proportion to the share of capital which is spent on wages or, and this comes to the same thing, with a relatively high proportion of capital laid out in wages in relation to the total capital; or finally, because labour-time is excessively long, The latter is the case in countries (such as Austria etc.) where the capitalist mode of production is already in existence but which have to compete with far more developed countries. Wages can be low here partly because the requirements of the worker are less developed, partly because agricultural products are cheaper or this amounts to the same thing as far as the capitalist is concerned because they have less value in terms of money. Hence the quantity of the product of, say, 10 hours labour, which must go to the worker as necessary wages, is small. If, however, he works 17 hours instead of 12 then this can make up (for the low productivity of labour]. In any case because in a given country the value of labour is falling relatively to its productivity, it must not be imagined that wages in different countries are inversely proportional to the productivity of labour. In fact exactly the opposite is the case. The more productive one country is relative to another in the world market, the higher will be its wages as compared with the other. In England, not only nominal wages but [also] real wages are higher than on the continent. The worker eats more meat; he satisfies more needs. This, however, only applies to the industrial worker and not the agricultural labourer. But in proportion to the productivity of the English workers their wages are not higher (than the wages paid in other countries]. Quite apart from the variation in rent according to the fertility of the land, the very existence of rent i.e., the modern form of landed property is feasible because the average wage of the agricultural labourer is below that of the industrial worker. Since, to start with, by tradition (as the farmer turns capitalist before capitalists turn farmers) the capitalist passed on part of his gain to the landlord, he compensated himself by forcing wages down below their level. With the labourers desertion of the land, wages had to rise and they did rise. But hardly has this pressure become evident, when machinery etc. is introduced and the land once more boasts a (relative) surplus population. (Vide England.) Surplus-value can be increased, without the extension of labour-time or the development of the productive power of labour, by forcing wages below their traditional level. And indeed this is the case wherever agricultural production is carried on by capitalist methods. Where it cannot be achieved by means of machinery, it is done by turning the land over to sheep grazing. Here then we already have a potential basis of ||446| rent since, in fact, the agricultural labourer s wage does not equal the average wage. This rent would be feasible quite independent of the price of the product, which is equal to its value. Ricardo is also aware of the second type of rent increase, which arises from a greater product sold at the same price, but he does not take it into account, since he measures rent per quarter and not per acre. He would not say that rent has risen (and in this way rent can rise with falling prices) because 20 quarters [at] 2s, is more than 10 [quarters at] 2s, or 10 quarters [at] 3s. Incidentally, however the phenomenon of rent may be explained, the significant difference between agriculture and industry remains, in that in the latter, excess surplus-value is created by cheaper production, in the former, by dearer production. If the average price of 1 lb. of yarn is 2s. and I can produce it for 1s. then, in order to gain an increased market for it, I will necessarily sell [it] for 1s. 6d. [or] at any rate below 2s. And what is more, this is absolutely necessary, for cheaper production presupposes production on a larger scale. So, compared with before, I am now glutting the market, I must sell more than before. Although 1 lb. of yarn costs only 1s. this is only the case if I now produce, say, 10,000 lbs. as against my previous 8,000 lbs. The low cost is only achieved because fixed capital is spread over 10,000 lbs. If I were to sell only 8,000 lbs., the depreciation of the machines alone would raise the price per lb. by one-fifth, i.e., 20 per cent. So I sell at below 2s. in order to be able to sell 10,000 lbs. In doing so, I am still making an excess profit of 6d., i.e., of 50 per cent on the value of my product which is 1s. and already includes the normal profit. In any case, I am hereby forcing down the market-price with the result that the consumer gets the product more cheaply. But in agriculture I sell at 2s. since, if I had sufficient fertile land, the less fertile would not be cultivated. If the area of fertile land were enlarged, or the fertility [of the] poorer soil so improved that I could satisfy demand, then this game would end, Not only does Ricardo not deny this, but he expressly calls attention to it. Thus if we admit that the varying fertility of the land accounts not for rent itself, but only for the differences in rent, there remains the law that while in industry, on an average, excess profit arises from the lowering of the price of the product, in agriculture the relative size of rent is determined not only by the relative raising of the price (raising the price of the product of fertile land above its value) but by selling the cheaper product at he cost of the dearer. This is, however, as I have already demonstrated (Proudhon), merely the law of competition, which does not emanate from the soil but from capitalist production itself. Furthermore, Ricardo would be right in another respect, except that, in the manner of the economists, he turns a historical phenomenon into an eternal law. This historical phenomenon is the relatively faster development of manufacture (in fact the truly bourgeois branch of industry) as against agriculture. The latter has become more productive but not in the same ratio as industry. Whereas in manufacture productivity has increased tenfold, in agriculture it has, perhaps, doubled. Agriculture has therefore become relatively less productive, although absolutely more productive. This only proves the very queer development of bourgeois production and its inherent contradictions. It does not, however, invalidate the proposition that agriculture becomes relatively less productive and hence, compared with the value of the industrial product, the value of the agricultural product rises and with it also rent. That in the course of development of capitalist production, agricultural labour has become relatively less productive than industrial labour only means that the productivity of agriculture has not developed with the same speed and to the same degree. Suppose the relation of industry A to industry B is as 1:1. Originally agriculture [was] more productive because not only natural forces but also a machine created by nature play a part in agriculture; right from the start, the individual worker is working with a machine. Hence, in ancient times and in the Middle Ages agricultural products were relatively much cheaper than industrial products, which is obvious (see Wade) from the ratio of the two within the average wage. At the same time let 1 : 1 indicate the fertility of the two [branches of production]. Now if industry A becomes 10 , [i.e.] its fertility increases tenfold while industry B merely increases threefold, becomes 3 , then whereas the industries were previously as 1:1 they are now as 10:3 or as 1 : 3/10. The fertility of industry B has decreased relatively by 7/10 although absolutely it has increased threefold. For the highest rent [it is] the same relatively to industry as if it had risen because the poorest land had become 7/10 less fertile. Now it does not by any means follow, as Ricardo supposes, that the rate of profit has fallen because wages have risen as a result of the relative increase in the price of agricultural products ||447|. For the average wage is not determined by the relative but by the absolute value of the products which enter into it. It does however follow that the rate of profit (really the rate of surplus-value) has not risen in the same ratio as the productive power of manufacturing industry, and this is due to agriculture (not the land) being relatively less productive. This is absolutely certain. The reduction in the necessary labour-time seems small compared with the progress in industry. This is evident from the fact that the agricultural products of countries like Russia etc. can beat those of England. The lower value of money in the wealthier countries (i.e., the low relative production costs of money in the wealthier countries) does not enter into it at all. For the question is, why it does not affect their industrial products in competition with poorer countries when it does affect their agricultural products. (Incidentally, this does not prove that poor countries produce more cheaply, that their agricultural labour is more productive. Even in the United States, the volume of corn at a given price has increased, as has recently been proved by statistical information, not however because the yield per acre has risen, but because more acres have come under cultivation. It cannot be said that the land is more productive where there is a great land mass and where large areas, superficially cultivated, yield a greater absolute product with the same amount of labour than much smaller areas in the more advanced country.) The fact that less productive land is brought under cultivation does not necessarily prove that agriculture has become less productive. On the contrary, it may prove that it has become more productive; that the inferior land is being cultivated, not [only] because the price of the agricultural product has sufficiently risen to compensate for the capital investment, but also the converse, that the means of production have developed to such an extent that the unproductive land has become productive and capable of yielding not only the normal profit but also rent. Land which is fertile at a [given] stage of development of productive power may be unfertile for a lower developmental stage. In agriculture, the extension of labour-time i.e., the augmentation of absolute surplus-value is only possible to a limited degree. One cannot work by gaslight on the land and so on. True, one can rise early in spring and summer. But this is offset by the shorter winter days when, in any case, only a relatively small amount of work can be accomplished. So in this respect absolute surplus-value is greater in industry so long as the normal working-day is not regulated by force of law. A second reason for a smaller amount of surplus-value being created in agriculture is the long period during which the product remains in the process of production without any labour being expended on it. With the exception of certain branches of agriculture such as stock-raising, sheep farming, etc., where the population is positively ousted from the land, the number of people employed relatively to the constant capital used, is still far greater even in the most advanced large-scale agriculture than in industry, or at least in the dominating branches of industry. Hence in this respect even if, for the above-mentioned reasons, the mass of surplus-value is relatively smaller than it [would be] with the employment of the same number of people in industry this latter condition is partly offset again by the wage falling below its average level the rate of profit can be greater than in industry, But if there are, in agriculture, any causes (we only indicate the above) which raise the rate of profit (not temporarily but on an average as compared with industry) then the mere existence of the landlord would cause this extra profit to consolidate itself and accrue to the landlord rather than enter into the formation of the general rate of profit. In general terms the question to be answered with regard to Rodbertus is as follows: The general form of capital advanced is: In general the two elements of constant capital are the instruments of labour and the subject of labour. The latter is not necessarily a commodity, a product of labour. It may therefore not exist as an element of capital, although it is invariably an element in the labour-process. Soil is the husbandman s raw material, the mine that of the miner, the water that of the fisherman and even the forest is that of the hunter. In the most complete form of capital, however, these three elements of the labour-process also exist as three elements of capital, i.e., they are all commodities, use-values which have an exchange-value and are products of labour. In this case all three elements enter into the process of creating value, although machinery [enters into it] not to the extent to which it enters into the labour-process but only in so far as it is consumed. The following question now arises: Can the absence of one of these elements in a particular branch of industry enhance the rate of profit (not the rate of surplus-value) in that industry? In general terms, the formula itself provides the answer: The rate of profit equals the ratio of surplus-value to the total capital advanced. Throughout this investigation it is assumed that the rate of surplus-value, i.e., the division of the value of the product between the capitalist and the worker, remains constant. ||448| The rate of surplus-value is s/v; the rate of profit is s/c+v. Since s , the rate of surplus-value, is given, v is given and s/v is assumed to be a constant value. Therefore the magnitude of s/c+v can only alter when c + v changes and since v is given, this can only increase or decrease because c decreases or increases. And further, s/c+v will increase or decrease not in the ratio of c : v but according to c s relation to the sum of c + v, If c equals nought, then s/c+v = s/v. The rate of profit [would] in this case equal the rate of surplus-value and this is its highest possible amount, since no sort of calculation can alter the magnitude of s and v. Suppose v = 100 and s = 50, then s/v = 50/100 = 1/2 = 50 per cent. If a constant capital of 100 were added, then the rate of profit [would be] 50/150+100 = 50/200 =1/4 = 25 per cent. The rate of profit would have decreased by half. If 150 c were added to 100 v then the rate of profit would be 50/100+150 = 50/250 = 1/5 = 20 per cent. In the first instance, total capital equals v, i.e., equals variable capital, hence the rate of profit equals the rate of surplus-value. In the second instance, total capital equals 2 v, hence the rate of profit is only half the rate of surplus-value. In the third instance total capital is 2 1/2 100, that is 2 1/2 v, that is 5/2 v; v is now only 2/5 of total capital. Surplus-value equals half of v, i.e., half of 100, hence is only half of 2/5 of total capital, or 2/10 of total capital. 250/10 = 25 and 2/10 of 250 = 50. But 2/10 = 20 per cent. Hence to start with this much has been established. Provided v remains constant and s/v too, then it is of no consequence how c is composed. If c has a certain magnitude, say 100, then it makes no difference whether it consists of 50 units of raw material and 50 of machinery or 10 of raw material and 90 of machinery, or no raw material and 100 machinery or the other way about. For the rate of profit is determined by the relationship s/c+v; the relative value of the various production elements contained in c is of no consequence here. For instance, in the production of coal the raw materials (after deducting coal itself which is used as an auxiliary material) may be reckoned as nought and the entire constant capital can be assumed to consist of machinery (including buildings and tools). On the other hand, with a tailor, machinery can be considered as nought and here the whole of constant capital resolves into raw materials (particularly where tailors running a large business do not as yet use sewing-machines and, on the other hand, even save buildings, as sometimes occurs nowadays in London, by employing their workers as outworkers, This is a new phenomenon, where the second division of labour reappears in the form of the first). If the colliery owner employs 1,000 units of machinery and 1,000 units of labour and the tailor 1,000 of raw materials and 1,000 of labour, then with an equal rate of surplus-value, the rate of profit in both instances is the same. If [we] assume that surplus-value is 20 per cent, then the rate of profit would in both cases be 10 per cent, namely: 200/2000 = 2/20 = 1/10 = 10 per cent. Hence there are only two instances in which the ratio between the component parts of c, i.e., raw materials and machinery, can affect the rate of profit: 1. If a change in this ratio modifies the absolute magnitude of c. 2. If the ratio between the component parts of c modifies the size of v. This would imply organic changes in production itself and not merely the tautologous statement that if a particular part of c accounts for a smaller portion, then the other must make up a larger portion of the total amount. In the real bill of an English farmer, wages amount to 1,690, manure to 686, seeds to 150, fodder for cows to 100. Thus raw material comes to 936, which is more than half the amount spent on wages. (See F. W. Newman, Lectures on Political Economy, London, 1851, p. 166.) And so even manure, plain muck, has become merchandise, not to speak of bone-meal, guano, pottash etc. That the elements of production are estimated in terms of money is not merely due to the formal change in production. New materials are introduced into the soil and its old ones are sold for reasons of production. This is not merely a formal difference between the capitalist and the previous mode of production. The seed trade has risen in importance to the extent to which the importance of seed rotation has become recognised. Hence it would be ridiculous to say that no raw material i.e., raw material as a commodity enters into agriculture whether it be reproduced by agriculture itself or bought as a commodity, acquired from outside. It would be equally absurd to say that the machine employed by the engineer ||449| who constructs machines does not figure as an element of value in his capital. A German peasant who year after year produces his own elements of production, seeds, manure etc., and, with his family, consumes part of his crops needs to spend money (as far as production itself is concerned) only on the purchase of a few tools for cultivating the land, and on wages. Let us assume that the value of all his expenses is 100 [half of this having to be paid out in money]. He consumes half [of the product] in kind (production costs [are also included here]). The other half he sells and he receives, say, 100, His gross income is thus 100 and if he relates this to his capital of 50 then it amounts to 100 per cent [profit]. If one-third of the 50 is deducted for rent and one-third for taxes (33 1/3 in all) then he retains 16 2/3, calculated on 50 this is 33 1/3 per cent. But in fact he has only received 16 2/3 per cent [of the 100 he laid out originally]. The peasant has merely miscalculated and has cheated himself. The capitalist farmer does not make such errors. Mathieu de Dombasle says in his Annales agricoles etc. 4 i me livraison, Paris 1828 that under the m tairie contract (in [the province of] Berry, for example) : Herr Rodbertus seems to think that competition brings about a normal profit, or average profit or general rate of profit by reducing the commodities to their real value; i.e., that it regulates their price relationships in such a manner that the correlative quantities of labour-time contained in the various commodities are expressed in money or whatever else happens to be the measure of value. This is of course not brought about by the price of a commodity at any given moment being equal to its value nor does it have to be equal to its value. [According to Rodbertus, this is what happens:] For example the price of commodity A rises above its value and for a time remains, moreover, at this high level, or even continues to rise. The profit of [the capitalist who produces] A thus rises above the average profit in that he appropriates not only his own unpaid labour-time, but also a part of the unpaid labour-time which other capitalists have produced . This has to be compensated by a fall in profit in one or other sphere of production provided the price of the other commodities in terms of money remains constant. If the commodity is a means of subsistence generally consumed by the worker, then it will depress the rate of profit in all other branches; if it enters as a constituent part into the constant capital, then it will force down the rate of profit in all those spheres of production where it forms an element in constant capital. Finally, the commodity may neither be an element in any constant capital, nor form a necessary item in the workers means of subsistence (for those commodities which the worker can choose to buy or abstain from buying, he consumes as a consumer in general and not as a worker) but it may be one of the consumer goods, an article for individual consumption in general. If, as such, it is consumed by the industrial capitalist himself, then the rise in its price in no way affects the amount of surplus-value or the rate of surplus-value. Now if the capitalist wanted to maintain his previous standard of consumption, then that part of profit (surplus-value) which he uses for individual consumption would rise in relation to that which he sinks into industrial reproduction. The latter would decrease. As a result of the price rise, or the rise in profit above its average rate, in A, the volume of profit in B, C, etc. would diminish within a certain space of time (which is also determined by reproduction). If article A was exclusively consumed by other than industrial capitalists, then they would consume more than before of commodity A as compared with commodities B, C, etc. The demand for commodities B, C, etc. would fall; their price would fall and, in this case, the price rise in A, or the rise in profit in A above the average rate, would have brought about a fall in the profit in B, C, etc. below the average rate by forcing down the money prices of B, C, etc. (in contrast to the previous instances where the money price of B, C, etc. ||450| remained constant). Capitals would migrate from B, C, etc., where the rate of profit has sunk below the [average] level, to A s sphere of production. This would apply particularly to a portion of the new capital which is continually entering the market and which would naturally tend to penetrate into the more profitable sphere A. Consequently, after some time, the price of article A would fall below its value and would continue to do so for a longer or shorter period, until the reverse movement set in again. The opposite process would take place in the spheres B, C, etc., partly as a result of the reduced supplies of articles B, C, etc., because of the exodus of capital, i.e., because of the organic changes taking place in these spheres of production themselves, and partly as a result of the changes which have occurred in A and which in turn are affecting B, C, etc. in the opposite direction. Incidentally, it may well be that in this process assuming the value of money to be constant the money prices of B, C, etc., never regain their original level, although they may rise above the value of commodities B, C, etc. and hence the rate of profit in B, C, etc. may also rise above the general rate of profit. Improvements, inventions, greater economy in the means of production, etc. are introduced not at times when prices rise above their average level, but when they fall below it, i.e., when profit falls below its normal rate. Hence during the period of failing prices of B, C, etc., their real value may fall, in other words the minimum labour-time required for the production of these commodities may decrease. In this case, the commodity can only regain its former money price if the rise in its price over its value equals the margin, i.e., the difference between the price which expresses its new value and the price which expressed its higher former value. Here the price of the commodity would have changed the value of the commodity by affecting supply, and the costs of production. The result of the above-mentioned movement: If we take the average of the increases and decreases in the price of the commodity above or below its value, or the period of equalisation of rises and fails periods which are constantly repeated then the average price is equal to the value of the commodity. The average profit in a particular sphere is therefore also equal to the general rate of profit; for although, in this sphere, profit rose above or fell below its old rate with the rise or fall in prices or with the increase or decrease in costs of production while the price remained constant on an average, over the period, the commodity was sold at its value. Hence the profit yielded is equal to the general rate of profit. This is Adam Smith s conception and, even more so, Ricardo s, since the latter adheres more firmly to the real concept of value. Herr Rodbertus acquires it from them. And yet this conception is wrong. What is the effect of the competition between capitals? The average price of the commodities during a period of equalisation is such that these prices yield the same profits to the producers of commodities in every sphere, for instance, 10 per cent. What else does this mean? That the price of each commodity stands at one-tenth above the price of the production costs, which the capitalist has incurred, i.e., the amount he has spent in order to produce the commodity. In general terms this just means that capitals of equal size yield equal profits, that the price of each commodity is one-tenth higher than the price of the capital advanced, consumed or represented in the commodity. It is however quite incorrect to say that capitals in the various spheres of production produce the same surplus-value in relation to their size, even if we assume that the absolute working-day is equally long in all spheres, i.e., if we assume a set rate of surplus-value. <We leave aside here the possibility of one capitalist enforcing longer working hours than another, and we assume a fixed absolute working-day for all spheres. The variation in absolute working-days is partly offset by the varying intensity of labour etc., and partly these differences only signify arbitrary excess profits, exceptional cases, etc.) Bearing in mind the above assumption, the amount of surplus-value produced by capitals of equal size varies firstly according to the correlation of their organic components, i.e., of variable and constant capital; secondly according to their period of circulation in so far as this is determined by the ratio of fixed capital to circulating capital and also [by] the various periods of reproduction of the different sorts of fixed capital; thirdly according to the duration of the actual period of production as distinct from the duration of labour-time itself, which again may lead to substantial differences between the length of the production period and circulation period. (The first of these correlations, namely, that between constant and variable capital, can itself spring from a great divergency of causes; it may, for example, be purely formal so that the raw material worked up in one sphere is dearer than that worked up in another, or it may result from the varying productivity of labour, etc.) Thus, if the commodities were sold at their values or if the average prices of the commodities were equal to their values, then the rate of profit in the various spheres would have to vary a great deal. In one case it would be 50, in others 40, 30, 20, 10, etc. Taking the total volume of commodities for a year in sphere A, for instance, their value would be equal to the capital advanced in them plus the unremunerated labour they contain. Ditto in spheres B and C. But since A, B and C contain different amounts of unpaid labour, for instance, A more than B and B more than C, the commodities A might perhaps yield 3 S (S = surplus-value) to their producers, B = 2 S and C = S. Since the rate of profit is determined by the ratio of surplus-value to capital advanced, and as on our assumption this is the same in A, B, C, etc., then ||451| if C is the capital advanced, the various rates of profit will be 3S/C, 2S/C, S/C. Competition of capitals can therefore only equalise the rates of profit, for instance in our example, by making the rates of profit, equal to 2S/C, 2S/C, 2SC, in the spheres A, B, C. A would sell his commodity at 1 S less and C at 1 S more than its value. The average price in sphere A would be below, and in sphere C would be above, the value of the commodities A and C. As the example of B shows, it can in fact happen that the average price and the value of a commodity coincide. This occurs when the surplus-value created in sphere B itself equals the average profit; in other words, when the relationship of the various components of the capital in sphere B is the same as that which exists when the total sum of capitals, the capital of the capitalist class, is regarded as one magnitude on which the whole of surplus-value [is] calculated, irrespective of the sphere in which it has been created. In this aggregate capital the periods of turnover, etc. are equalised; one can, for instance, consider that the whole of this capital is turned over during one year. In that case every section of the aggregate capital would in accordance with its magnitude participate in the aggregate surplus-value and draw a corresponding part of it. And since every individual capital is to be regarded as shareholder in this aggregate capital, it would be correct to say first that its rate of profit is the same as that of all the others [because] capitals of the same size yield the same amount of profit; secondly, and this arises automatically from the first point, that the volume of profit depends on the size of the capital, on the number of shares the capitalist owns in that aggregate capital. Competition among capitals thus seeks to treat every capital as a share of the aggregate capital and correspondingly to regulate its participation in surplus-value and hence also in profit. Competition more or less succeeds in this by means of its equalisations (we shall not examine here the reason why it encounters particular obstacles in certain spheres). But in plain language this just means that the capitalists strive (and this striving is competition) to divide among themselves the quantity of unpaid labour or the products of this quantity of labour which they squeeze out of the working class, not according to the surplus-labour produced directly by a particular capital, but corresponding firstly to the relative portion of the aggregate capital which a particular capital represents and secondly according to the amount of surplus-labour produced by the aggregate capital. The capitalists, like hostile brothers, divide among themselves the loot of other people s labour which they have appropriated so that on an average one receives the same amount of unpaid labour as another. Competition achieves this equalisation by regulating average prices. These average prices themselves, however, are either above or below the value of the commodity so that no commodity yields a higher rate of profit than any other. It is therefore wrong to say that competition among capitals brings about a general rate of profit by equalising the prices of commodities to their values. On the contrary it does so by converting the values of the commodities into average prices, in which a part of surplus-value is transferred from one commodity to another, etc. The value of a commodity equals the quantity of paid and unpaid labour contained in it. The average price of a commodity equals the quantity of paid labour it contains (materialised or living) plus a average quota of unpaid labour. The latter does not depend on whether this amount was contained in the commodity itself or on whether more or less of it was embodied in the value of the commodity. It is possible I leave this over for a later inquiry which does not belong to the subject-matter of this book that certain spheres of production function under circumstances which work against a reduction in their values to average prices in the above sense, and do not permit competition to achieve this victory. If this were the case for instance with agricultural rent or rent from mines (there are rents which are altogether only explicable by monopoly conditions, for instance the water rent in Lombardy, and in parts of Asia, also house rent in so far as it represents rent from landed property) then it would follow that while the product of all industrial capitals is raised or lowered to the average price, the product of agriculture [would] equal its value, which would be above the average price. Might there be obstacles here, which cause more of the surplus-value created in this sphere of production to be appropriated as property of the sphere itself, than should be the case according to the laws of competition, more than it should receive according to the quota of capital invested in this branch of industry? Supposing industrial capitals which are producing 10 or 20 or 30 per cent more surplus-value ||452| than industrial capitals of equal size in other spheres of production, not just temporarily, but because of the very nature of their spheres of production as opposed to others; supposing I say, they were able to hang on to this excess surplus-value in the face of competition and to prevent it from being included in the general accounts (distribution) which determine the general rate of profit, then, in this case, one could distinguish between two recipients in the spheres of production of these capitals, the one who would get the general rate of profit, and the other who would get the surplus exclusively inherent in this sphere. Every capitalist could pay, hand over, this excess to the privileged one, in order to invest his capital here, and he would retain for himself the general rate of profit, like every other capitalist, working under the same conditions. If this were the case in agriculture etc., then the splitting of surplus-value into profit and rent would by no means indicate that labour as such is actually more productive ([in the sense of production] of surplus-value) here than in manufacture. Hence [it would not be necessary] to ascribe any magic powers to the soil; this, moreover, is in any case absurd, since value equals labour, therefore surplus-value cannot possibly equal soil (although relative surplus-value may be due to the natural fertility of the soil, but under no circumstances could this result in a higher price for the products of the soil. Rather the opposite). Nor would it be necessary to have recourse to Ricardo s theory, which is disagreeably linked with the Malthusian trash, has repulsive consequences and, though in theory it is not especially opposed to my views on relative surplus-value, it deprives them of much of their practical significance. Ricardo s point is this: Rent (for instance, in agriculture) can be nothing other than an excess above general profit where as he presupposes agriculture is run on capitalist lines, where [there] is [a] farmer. Whether that which the landlord receives is actually equal to this rent in the bourgeois-economic sense is quite irrelevant. It may be purely a deduction from wages (vide Ireland) or it may be partly derived from the reduction of the farmer s profit below the average level of profits. Which of these possible factors happens to be operative is of no consequence whatsoever. Rent, in the bourgeois system, only exists as a special, characteristic form of surplus-value in so far as it is an excess over and above (general) profit. But how is this possible? The commodity wheat, like every other commodity, is [according to Ricardo] sold at its value, i.e., it is exchanged for other commodities in relation to the labour-time embodied in it. (This is the first erroneous assumption which complicates the problem by posing it artificially. Only in exceptional circumstances are commodities exchanged at their value. Their average prices are determined in a different way. See above.> The farmer who grows wheat makes the same profit as all the other capitalists. This proves that, like all the others, he appropriates that portion of labour-time for which he has not paid his workers. Where, on top of this, does the rent come from? It must represent labour-time. Why should surplus-labour in agriculture resolve into profit and rent while in industry it is just profit? And, how is this possible at all, if the profit in agriculture equals the profit in every other sphere of production? <Ricardo s faulty conception of profit and the way in which he confuses it with surplus-value have also a detrimental effect here. They make the whole thing more difficult for him.> Ricardo solves this difficulty by assuming that in principle it is non-existent. <This indeed is in principle the only possibility of overcoming any difficulty. But there are two ways of doing this. Either one shows that the contradiction to the principle is an illusion which arises from the development of the thing itself, or one denies the existence of the difficulty at one point, as Ricardo does, and then takes this as a starting-point from which one can proceed to explain its existence at some other stage.> He assumes a point at which the farmer s capital, like everyone else s, only yields profit. <This capital may be invested in a non-rent paying or individual farm, or in a non-rent paying part of the land of a farm. In fact it can be any capital which is employed in the cultivation of land that does not pay rent.> This, moreover, is the starting-point, and it can also be expressed as follows: Originally the farmer s capital only pays profit, no rent <although this pseudo-historical form is of no consequence and in other laws is common to all bourgeois economists>. It is no different from any other industrial capital. Rent only enters into it because the demand for grain rises and now, in contrast to other branches of industry, it becomes necessary to resort to less fertile ground. The farmer (the supposed original farmer) suffers, like any other industrial capitalist, in so far as he has to pay his workers more because of the rise in [the price of] food. But he gains because of the rise in price of his commodity above its value, firstly, to the extent to which the value of other commodities which enter into his constant capital falls relatively to his commodity and so he buys them more cheaply, and secondly, in so far as he owns the surplus-value in the form of his dearer commodity. Thus this farmer s profit rises above the average rate of profit, which has, however, fallen. Hence another capitalist moves onto the less fertile land, No. II which, with this lower rate of profit, can supply produce at the price of I or perhaps even a little more cheaply. Be that as it may, we now have, once more, ||453| the normal situation on II, that surplus-value merely resolves itself into profit. But we have explained the rent for I by the existence of a twofold price of production: the production price of II [which] is simultaneously the market price of I. A temporary surplus gain has been [achieved], just as with the factory-made commodity which is produced under more favourable conditions. The price of corn, which in addition to profit comprises rent, in fact consists only of materialised labour, and is equal to its value; it is however equal not to the value embodied in itself, but to the value of II. It is impossible to have two market prices [side by side] <While Ricardo introduces farmer No, II because of the fall in the rate of profit, Stirling introduces him because wages [have] fallen not risen following upon the price of corn. This fall in wages allows No. II to cultivate a piece [of land] No. II at the old rate of profit, although the soil is less fertile.> Once the existence of rent has been established in this way, the rest follows easily. The difference between rents according to varying fertility, etc., of course remains correct. This does not necessarily imply that less and less fertile land has to come under cultivation. So here we have Ricardo s theory. The higher price of corn, which yields an excess profit to I, does not yield even as much as the earlier rate of profit for II. It is thus clear that product II contains more value than product I, i.e., it is the product of more labour-time, it embodies a greater quantity of labour. Therefore more labour-time must be supplied to manufacture the same product say, for instance, a quarter of wheat. And the rise in rent will be relative to this decreasing fertility of the land, or the growth in the quantity of labour which must be employed to produce, say, a quarter of wheat. Of course Ricardo would not talk of a rise in rent if there were just an increase in the number of quarters from which rent is paid, but only if the price of the individual quarter rose from say 30s. to 60s. True, he does sometimes forget that the absolute volume of rent can grow with a reduced rate of rent, just as the absolute amount of profit can increase with a decreasing rate of profit. Others seek to by-pass this difficulty (Carey for instance) by directly denying its existence. Rent [they say] is only interest on the capital which, at an earlier stage, was incorporated in the land. Therefore, again only a form of profit. Here then the very existence of rent is denied and so indeed explained away. Others, for instance Buchanan, regard it just as a consequence of monopoly. See also Hopkins. With them it is merely a surcharge above the value. For Mr. Opdyke, a typical Yankee,* landed property or rent becomes the legalised reflection of the capital .[c] With Ricardo the examination is rendered more difficult by the two false assumptions. <Ricardo it is true was not the inventor of the theory of rent. West and Malthus had put it into print before him. The source, however, is Anderson. But what distinguished Ricardo is the way in which he links rent with his theory of value (although West did not entirely miss the real interconnection either). As his later polemic about rent with Ricardo shows, Malthus himself did not understand the theory he had adopted from Anderson.> If we start from the correct principle that the value of commodities is determined by the labour-time necessary for their production (and that value in general is nothing other than materialised social labour-time) then it follows that the average price of commodities is determined by the labour-time required for their production. This conclusion would be the right one if it had been proved that average price equals value. But I show that just because the value of the commodity is determined by labour-time, the average price of the commodities (except in the unique case in which the so-called individual rate of profit in a particular sphere of production, i.e., the profit determined by the surplus-value yielded in this sphere of production itself, [is] equal to the average rate of profit on total capital) can never be equal to their value although this determination of the average price is only derived from the value which is based on labour-time. In the first place, then, it follows that even commodities whose average price (if we disregard the value of constant capital) resolves only into wages and profit, in such a way that these stand at their normal rate, i.e., are average wages and average profit, can be sold above or below their own value, The fact that the commodity yields rent on top of profit ||454| does not prove that the commodity is sold above its intrinsic value, any more than the circumstance of the surplus-value of a commodity only expressing itself in the category of normal profit proves that the commodity is sold at its value. If a commodity can yield an average rate of profit or general rate of profit on capital which is below its own rate of profit determined by its real surplus-value, then it follows that if on top of this average rate of profit commodities in a particular sphere of production yield a second amount of surplus-value which carries a separate name, for instance, rent, then the sum of profit plus rent need not be higher than the surplus-value contained in the commodity. Since profit can be less than the intrinsic surplus-value of the commodity, or the quantity of unpaid labour it embodies, profit plus rent need not be larger than the intrinsic surplus-value of the commodity. Why this occurs in a particular sphere of production as opposed to other spheres has of course still to be explained. But the problem has been simplified. This commodity (the commodity yielding rent] differs from the others in the following way: In a number of these other commodities average price is above their intrinsic value, but only in order to raise their rate of profit to the level of the general rate. In another section of these other commodities the average price stands at a level below their intrinsic value, but only to the extent required to reduce their rate of profit to concur with the general rate. Finally in a third section of these other commodities, average price equals their intrinsic value, but only because if sold at their intrinsic value they yield the general rate of profit. But the commodity which yields rent differs from all these three instances. Whatever the circumstances, it is sold at a price which will yield more than average profit as determined by the general rate of profit on capital. Now the question arises, which, or how many, of these three instances can occur. Supposing the whole of the surplus-value the commodity contains is realised in its price. In that case, it excludes the third instance, namely, those commodities whose entire surplus-value is realised in their average price, because they only yield ordinary profit. We may, therefore, dismiss this one. Similarly, on this presupposition, we can exclude the first instance, where the surplus-value realised in the price of the commodity is above its intrinsic surplus-value. For it is assumed, that the surplus-value contained in it is realised in its price. This instance is thus analogous with case 2 of those commodities whose intrinsic surplus-value is higher than the surplus-value realised in their average price. As with these commodities the profit represents a form of this surplus-value in this case profit on the capital employed which has been reduced to the level of the general rate of profit. The excess intrinsic surplus-value of the commodity over and above this profit is, however, in contrast to commodity 2, also realised in these exceptional commodities, but accrues not to the owner of the capital, but to the owner of the land, the natural agent, the mine, etc. Or [what happens if we assume that] the price is forced up to such a degree that it carries more than the average rate of profit? This is, for instance, the case with actual monopoly prices. This assumption applied to every sphere of production where capital and labour may be freely employed [and] whose production, so far as the volume of capital employed is concerned, is subject to the general laws would not only be a petitio principii, but would directly contradict the foundations of [economic] science and of capitalist production the former being merely the theoretical expression of the latter. For such an assumption presupposes the very phenomenon which is to be explained, namely, that in a particular sphere of production, the price of a commodity must carry more than the general rate of profit, more than the average rate of profit, and to this end must be sold above its value. It presupposes that agricultural products are excluded from the general laws of value of commodities and of capitalist production. It, moreover, presupposes this, because the peculiar presence of rent side by side with profit prima facie makes it appear so. Hence this is absurd. So there is nothing left but to assume that special circumstances exist in this particular sphere of production, which influence the situation and cause the prices of the commodities to realise [the whole] of their intrinsic surplus-value, This in contrast to [case] 2 of the other commodities, where only as much of their intrinsic surplus-value is realised by their prices as is yielded by the general rate of profit, where their average prices fall so far below their surplus-value that they only yield the general rate of profit, or in other words their average profit is no greater than that in all other spheres of production of capital. In this way the problem has already become much simpler. It is no longer a question of explaining how it comes about that the price of a commodity yields rent as well as profit, thus apparently evading the general law of value and by raising its price above its intrinsic surplus-value, carrying more than the general rate of profit for a given capital. The question is why, in the process of equalisation of commodities at average prices, this particular commodity does not have to pass on to other commodities so much of its intrinsic surplus-value that it only yields the average profit, but is able to realise a portion of its own surplus-value which forms an excess over and above average profit; so that it is possible for a farmer, who invests capital in this sphere of production, to sell the commodity at prices which yield him the ordinary profit and at the same time enable him to pay the excess in surplus-value realised over and above this profit to a third person, the landlord. ||455| Put in this way, the very formulation of the problem carries its own solution. It is quite simply the private ownership of land, mines, water, etc. by certain people, which enables them to snatch, intercept and seize the excess surplus-value over and above profit (average profit, the rate of profit determined by the general rate of profit) contained in the commodities of these particular spheres of production, these particular fields of capital investment, and so to prevent it from entering into the general process by which the general rate of profit is formed. Moreover, some of this surplus-value is actually collected in every industrial enterprise, since rent for the land used (by factory buildings, workhouses etc.) figures in every instance, for even where the land is available free, no factories are built, except in the more or less populated areas with good means of communication. Supposing the commodities produced by the poorest cultivated land belonged to category 3, i.e., those commodities whose average price equals their value, in other words, the whole of their inherent surplus-value is realised in their price because only thus do they yield the ordinary profit; in this case the land would pay no rent and land ownership would be purely nominal. If a payment were made for the use of the land, then it would only prove that small capitalists, as is partly the case in England (see Newman), are satisfied with making a profit below the average. The same applies whenever the rate of rent is higher than the difference between the inherent surplus-value of a commodity and the average profit. There is even land whose cultivation at most suffices to pay wages, for, although here the labourer works for himself the whole of his working-day, his labour-time is longer than the socially necessary labour-time. It is so unproductive relative to the generally prevailing productivity in this branch of work that, although the man works for himself for 12 hours, he hardly produces as much as a worker under more favourable conditions of production does in 8 hours. This is the same relationship as that of the hand-loom weaver who competes with the power-loom. Although the product of this hand-loom weaver was equal to 12 hours of labour, it was only equal to 8 or less hours of socially necessary labour and his product therefore only [had] the value of 8 necessary labour hours. If in such an instance the cottager pays a rent then this is purely a deduction from his necessary wage and does not represent surplus-value, let alone an excess over and above average profit. Assume that in a country like the United States, the number of competing farmers is as yet so small and the appropriation of land so much just a matter of form that everyone has the opportunity to invest his capital in land and the cultivation of the soil, without the permission of hitherto-existing owner-cultivators or farmers. In these circumstances it is possible over a considerable period with the exception of that landed property which by its very situation in populated areas carries a monopoly that the surplus-value which the farmer produces on top of average profit is not realised in the price of his product, but that lie may have to share it with his brother capitalists in the same way as this is done with the surplus-value of all commodities which would give an excess profit, i.e., raise the rate of profit above the general rate, if their surplus-value were realised in their price. In this case the general rate of profit would rise, because wheat, etc., like other manufactured commodities, would be sold below its value. This selling below its value would not constitute an exception, but rather would prevent wheat from forming an exception to other commodities in the same category. Secondly, assume that in a given country the land is all of a particular quality, so that if the whole of the surplus-value from the commodity were realised in its price, it would yield the usual profit on capital. In this case no rent would be paid. The absence of rent would in no way affect the general rate of profit, it would neither raise it nor lower it, just as it is not influenced by the fact that other non-agricultural products are to be found in this category. Since the commodities belong to this category just because their inherent surplus-value equals the average profit [they] cannot alter the level of this profit, on the contrary they conform with it and do not influence it at all, although it influences them. Thirdly, assume that all the land consists of a particular type of soil, but this is so poor that the capital employed in it is so unproductive that its product belongs to that kind of commodity whose surplus-value [lies] below average profit. Since wages would rise everywhere as a result of the unproductiveness of agriculture, surplus-value could in this case of course only be higher where absolute labour-time can be prolonged, where the raw material, such as iron, etc., is not the product of agriculture or, further, where it [is] like cotton, silk etc., an imported article and a product of more fertile soil. In this case, the price of the [agricultural] commodity would include a surplus-value higher than that inherent in it, to enable it to yield the usual profit. The general rate of profit would consequently fall, despite the absence of rent. Or assume in case 2, that the soil is very unproductive. Then surplus-value of this agricultural product, by its very equality with average profit would show that the latter is altogether low since in agriculture perhaps 11 of the 12 working hours are required to produce just the wages, and the surplus-value only equals 1 hour or less. ||456| These various examples illustrate the following: In the first case, the absence or lack of rent is bound up with, or concurs with, an increased rate of profit as compared with other countries where the phenomenon of rent has developed. In the second case the lack or absence of rent does not affect the rate of profit at all. In the third case, compared with other countries where rent exists, it is bound up with and indicative of a low, a relatively low, general rate of profit. It follows from this that the development of a particular rent in itself has nothing to do with the productivity of agricultural labour, since the absence or lack of rent can be associated with a rising, falling or constant rate of profit. The question here is not: Why is the excess surplus-value above average profit retained in agriculture etc.? On the contrary, we should rather ask: Why should the opposite take place here? Surplus-value is nothing other than unpaid labour; the average or normal profit is nothing other than the quantity of unpaid labour which each capital of a given magnitude of value is supposed to realise. If we say that average profit is 10 per cent then this means nothing other than that a capital of 100 commands 10 units of unpaid labour; or 100 units of materialised labour command a tenth of their amount in unpaid labour. Thus excess of surplus-value over average profit implies that a commodity ( its price or that part of its price which consists of surplus-value) contains a quantity of unpaid labour [hich is] greater than the quantity of unpaid labour that forms average profit, which therefore in the average price of the commodities forms the excess of their price over the costs of their production. In each individual commodity the costs of production represent the capital advanced, and the excess over these production costs represents the unpaid labour which the advanced capital commands; hence the relationship of this excess in price over the costs of production shows the rate at which a given capital employed in the production process of commodities commands unpaid labour, irrespective of whether the unpaid labour contained in the commodity of the particular sphere of production is equal to this rate or not. Now what forces the individual capitalist, for instance, to sell his commodity at an average price, which yields him only the average profit and makes him realise less unpaid labour than is in fact worked into his own commodity? This average price is thrust upon him; it is by no means the result of his own free will; he would prefer to sell the commodity above its value. It is forced upon him by the competition of other capitals. For every capital of the same size could also be rushed into A, the branch of production in which the relationship of unpaid labour to the invested capital, for instance, 100, is greater than in production spheres B, C, etc. whose products also satisfy a social need just as much as the commodities of production sphere A. When there are spheres of production in which certain natural conditions of production, such as, for example, arable land, coal seams, iron mines, water falls, etc. without which the production process cannot be carried out, without which commodities cannot be produced in this sphere are in the hands of others than the proprietors or owners of the materialised labour, the capitalists, then this second type of proprietor of the conditions of production will say: If I let you have this condition of production for your use, then you will make your average profit; you will appropriate the normal quantity of unpaid labour. But your production yields an excess of surplus-value, of unpaid labour, above the rate of profit. This excess you will not throw into the common account, as is usual with you capitalists, but I am going to appropriate it myself. It belongs to me. This transaction should suit you, because your capital yields you just the same in this sphere of production as in any other and besides, this is a very solid branch of production. Apart from the 10 per cent unpaid labour which constitutes the average profit, your capital will also provide a further 20 per cent of additional unpaid labour here. This you will pay over to me and in order to do so, you add 20 per cent unpaid labour to the price of the commodity, and this you simply do not account for with the other capitalists. Just as your ownership of one condition of production capital, materialised labour enables you to appropriate a certain quantity of unpaid labour from the workers, so my ownership of the other condition of production, the land, etc., enables me to intercept and divert away from you and the entire capitalist class, that part of unpaid labour which is excessive to your average profit. Your law will have it that under normal circumstances, capitals of equal size appropriate equal quantities of unpaid labour and you capitalists can force each other ||457| into this position by competition among yourselves. Well, I happen to be applying this law to you. You are not to appropriate any more of the unpaid labour of your workers than you could with the same capital in any other sphere of production. But the law has nothing to do with the excess of unpaid labour which you have produced over the normal quota. Who is going to prevent me from appropriating this excess ? Why should I act according to your custom and throw it into the common pot of capital to be shared out among the capitalist class, so that everyone should draw out a part of it in accordance with his share in the aggregate capital? I am not a capitalist. The condition of production which I allow you to utilise is not materialised labour but a natural phenomenon. Can you manufacture land or water or mines or coal pits? Certainly not. The means of compulsion which can be applied to you in order to make you release again a part of the surplus-labour you have managed to get hold of does not exist for me. So out with it! The only thing your brother capitalists can do is to compete against you, not against me. If you pay me less excess profit than the difference between the surplus-time you have made and the quota of surplus-labour due to you according to the rule of capital, your brother capitalists will appear on the scene and by their competition will force you to pay me fairly the full amount I have the power to squeeze out of you. The following problems should now be set forth: 1. The transition from feudal landownership to a different form, commercial land rent, regulated by capitalist production, or, on the other hand, the conversion of this feudal landed property into free peasant property. 2. How rent comes into existence in countries such as the United States, where originally land has not been appropriated and where, at any rate in a formal sense, the bourgeois mode of production prevails from the beginning. 3. The Asiatic forms of landownership still in existence. But all this does not belong here. According to this theory then, the private ownership of objects of nature such as the land, water, mines etc., the ownership of these conditions of production, this essential ingredient of production emanating from nature, is not a source from which flows value, since value is only materialised labour. Neither is it the source from which excess surplus-value flows, i.e., an excess of unpaid labour over and above the unpaid labour contained in profit. This ownership is, however, a source of revenue. It is a claim, a means, which in the sphere of production that the property enters as a condition of production enables the owner to appropriate that part of the unpaid labour squeezed out by the capitalist which would otherwise be tossed into the general capital fund as excess over normal profit. This ownership is a means of obstructing the process which takes place in the rest of the capitalist spheres of production, and of holding on to the surplus-value created in this particular sphere, so that it is divided between the capitalist and the landowner in that sphere of production itself. In this way landed property, like capital, constitutes a claim to unpaid labour, gratis labour. And just as with capital, the worker s materialised labour appears as a power over him, so with landed property, the circumstance which enables the landowners to take part of the unpaid labour away from the capitalists, makes landownership appear as a source of value. This then explains the existence of modern ground-rent. With a given capital investment, the variation in the amount of rent is only to be explained by the varying fertility of the land. The variation in the amount of rent, given equal fertility, can only be case, rent rises because its rate increases in proportion to the explained by the varying amount of capital invested, In the first capital employed(also according to the area of the land). In the second case, it rise s because with the same or even with a different rate (if the second dose of capital is not equally productive) the amount of rent increases. For this theory it is immaterial whether the least fertile land yields a rent or not. Further, it is by no means necessary for the fertility of agriculture to decline, although the diversity in productivity, if not artificially overcome (which is possible), is much greater than in similar spheres of industrial production. When we speak of greater or lesser fertility, we are still concerned with the same product. The relationship of the various products, one to another, is another question. Rent as calculated on the land itself is the rental, the amount of rent. It can rise without an increase in the rate of rent. If the value of money remains unchanged, then the relative value of agricultural product s can rise, not because agriculture is becoming less productive, but because, although its productivity is rising, it is rising slower than in industry. On the other hand, a rise in the money price of agricultural products, while the value of money remains the same, is only possible if their value rises, i.e., if agriculture becomes less productive (provided it is not caused by temporary pressure of demand upon supply as with other commodities). In the cotton industry, the price of the raw material fell continuously with the development of the industry itself; the same applies to iron, etc., coal, etc. The growth of rent here was possible, not because its rate rose, but only because more capital was employed. Ricardo is of the following opinion: The powers of nature, such as air, light, electricity, steam, water are gratis; the land is not, because it is limited. So already for this reason alone, agriculture is less productive than other industries. If the land were just as common, unappropriated, available in any quantities, as the other element s and powers of nature, then it would be much more productive. ||458| In the first place, if the land were so easily available, at everyone s free disposal, then a principal element for the formation of capital would be missing. A most important condition of production and apart from man himself and his labour the only original condition of production could not be disposed of, could not be appropriated. It could not thus confront the worker as someone else s property and make him into a wage-labourer. The productivity of labour in Ricardo s sense, i.e., in the capitalist sense, the producing of someone else s unpaid labour would thus become impossible. And this would put an end to capitalist production altogether. So far as the powers of nature indicated by Ricardo are concerned, it is true that these are partly to be had for nothing and do not cost the capitalist anything. Coal costs him something, but steam costs him nothing so long as he gets water gratis. But now, for example, let us take steam. The properties of steam always exist. Its industrial usefulness is a new scientific discovery which the capitalist has appropriated. As a consequence of this scientific discovery, the productivity of labour and with it relative surplus-value rose. In other words, the quantity of unpaid labour which the capitalist appropriated from a day s labour grew with the aid of steam. The difference between the productive power of steam and that of the soil is thus only that the one yields unpaid labour to the capitalist and the other to the landowner, who does not take it away from the worker, but from the capitalist. The capitalist is therefore so enthusiastic about this element belonging to no one. Only this much is correct: Assuming the capitalist mode of production, then the capitalist is not only a necessary functionary, but the dominating functionary in production. The landowner, on the other hand, is quite superfluous in this mode of production. Its only requirement is that land should not be common property, that it should confront the working class as a condition of production, not belonging to it, and the purpose is completely fulfilled if it becomes state-property, i.e., if the state draws the rent. The landowner, such an important functionary in production in the ancient world and in the Middle Ages, is a useless superfetation in the industrial world. The radical bourgeois (with an eye moreover to the suppression of all other taxes) therefore goes forward theoretically to a refutation of the private ownership of the land, which, in the form of state property, he would like to turn into the common property of the bourgeois class, of capital. But in practice he lacks the courage, since an attack on one form of property a form of the private ownership of a condition of labour might cast considerable doubts on the other form. Besides, the bourgeois has himself become an owner of land. Now to Herr Rodbertus. According to Rodbertus, no raw material enters into agricultural calculations, because, so Rodbertus assures us, the German peasant does not reckon that seeds, feeding stuffs, etc. cost him anything. He does not count these as costs of production; in fact he miscalculates. In England, where the farmer has been doing his accounts correctly for more than 150 years, there should accordingly be no ground-rent. The conclusion therefore should not be the one drawn by Rodbertus, that the farmer pays a rent because his rate of profit is higher than in manufacture, but that he pays it because, as a result of a miscalculation, he is satisfied with a lower rate of profit. Dr. Quesnay, himself the son of a tenant farmer and closely acquainted with French farming, would not have received this idea kindly. [In his Tableau Economique], Quesnay includes the raw material which the tenant farmer needs, as one of the items in the annual outlay of 1,000 million, although the farmer reproduces it in kind. Although hardly any fixed capital or machinery is to be found in one section of manufacture, in another section the entire transport industry, the industry which produces change of location, [using] wagons, railways, ships, etc. there is no raw material but only tools of production. Do such branches of industry yield a rent apart from profit? How does this branch of industry differ from, say, the mining industry? In both of them only machinery and auxiliary materials are used, such as coal for steamships and locomotives and mines, fodder for horses, etc. Why should the rate of profit be calculated differently in one sector than in the other? [Supposing] the advances to production which the peasant makes in kind are a fifth of the total capital he advances, to which we would then have to add four-fifths in advances for the purchase of machinery and labour-power, the total expenditure amounting to 150 quarters. If he then makes 10 per cent profit [this would be] equal to 15 quarters, i.e., the gross product would be 165 quarters. If he now deducted a fifth, equal to 30 quarters and calculated the 15 quarters only on 120, then he would have made a profit of 12 1/2 per cent. Alternatively, we could put it in this way: The value of his product, or his product, is equal to 165 quarters ( 330). He reckons his advances to be 120 quarters ( 240), 10 percent on this equals 12 quarters ( 24). But his gross product amounts to 165 quarters; from which thus 132 quarters are to be deducted, which leaves 33 quarters. But from these, 30 quarters are deducted in kind. This leaves an extra profit of 3 quarters ( 6). His total profit is 15 quarters ( 30) instead of 12 quarters ( 24). So he can pay a rent of 3 quarters or 6 and fancy that he has made a profit of 10 per cent like every other capitalist. But this 10 per cent exists only in his imagination. In fact, he has made advances of 150 quarters, not of 120 quarters and on these, 10 per cent amounts to 15 quarters or 30. In fact he received 3 quarters too few, i.e., a quarter of the 12 quarters which he actually received ||459| , or a fifth of the total profit which he should have received, because he did not consider a fifth of his advances to be advances. Therefore, as soon as he learnt to calculate according to capitalist methods, he would cease to pay rent, which would merely amount to the difference between his rate of profit and the normal rate of profit. In other words, the product of unpaid labour embodied in the 165 quarters amounts to 15 quarters, which equals 30, representing 30 labour weeks. Now if these 30 labour weeks or 15 quarters or 30 were calculated on the total advances of 150 quarters, then they would only form 10 per cent; if they were calculated only on 120 quarters, then they would represent a higher percentage, because 10 per cent on 120 quarters would be 12 quarters and 15 quarters are not 10 per cent of 120 quarters but 12 1/2 per cent. In other words: Since the peasant did not include some of his advances in the account as a capitalist would have done, he calculates the accumulated surplus-labour on too small a portion of his advances. Hence it represents a higher rate of profit than in other branches of industry and can therefore yield a rent which is based solely on a miscalculation. The game would be over if the peasant realised that it is by no means necessary first to convert his advances into real money, i.e., to sell them, in order to assess them in money, and hence to regard them as commodities. Without this mathematical error (which may be committed by a large number of German peasants but never by a capitalist farmer) Rodbertus s rent would be an impossibility. It only becomes possible where raw material enters into costs of production, but not where it does not. It only becomes feasible where the raw material enters [into production] without entering into the accounts, But it is not possible where it does not enter [into production], although Herr Rodbertus wants to derive his explanation of the existence of rent not from a miscalculation, but from the absence of a real item of expenditure. Take the mining industry or the fisheries. Raw material does not figure in these, except as auxiliary material, which we can omit, since the use of machinery always implies (with very few exceptions) the consumption of auxiliary material, the food of the machine. Assuming that the general rate of profit is 10 per cent and 100 are laid out in machinery and wages; why should the profit on 100 amount to more than 10, because the 100 have not been expended on raw material, machinery and wages, but have been expended on raw material and wages only? If there is to be any sort of difference, this could only arise because in the various instances, the ratio of the values of constant capital and variable capital is in fact different. This varying ratio would result in varying surplus-value, even if the rate of surplus-value is taken to be constant. And if varying surplus-values are related to capitals of equal size, they must of course yield unequal profits. But on the other hand the general rate of profit means nothing other than the equalisation of these inequalities, abstraction from the organic components of capital and redistribution of surplus-value, so that capitals of equal size yield equal profits. That the amount of surplus-value depends on the size of the capital employed does not hold good according to the general laws of surplus-value for capitals in different spheres of production, but for different capitals in the same sphere of production, in which it is assumed that the organic component parts of capital are in the same proportion. If one says for example: The volume of profit in spinning corresponds to the size of the capitals employed (which is also not quite correct, unless one adds that productivity is assumed to be constant), this in fact merely means that, given the rate of exploitation of the spinners, the total amount of exploitation depends on the number of exploited spinners. If, on the other hand, one says that the volume of profit in different branches of production corresponds to the size of the capitals employed, then this means that the rate of profit is the same for each capital of a given size, i.e., the volume of profit can only change with the size of this capital. In other words, the rate of profit is independent of the organic relationship of the components of a capital in a particular sphere of production; it is altogether independent of the amount of surplus-value which is realised in these particular spheres of production. Mining production ought to be considered right from the start as belonging to industry and not to agriculture. Why? Because no product of the mine is used, in kind, as an element of production; no product of the mine enters in kind, straight from the mine, into the constant capital of the mining industry (the same applies to fishing and hunting, where the outlay consists to a still higher degree of the instruments of labour and wages or labour itself ||460|). In other words, because every production element in the mine even if its raw material originates in the mine not only alters its form, but becomes a commodity, i.e., it must be bought, before it can re-enter mining as an element of production. Coal forms the only exception to this, But it only appears as a means of production at a stage of development when the exploiter of the mine has graduated as a capitalist, who uses double entry book-keeping, in which he not only owes himself his advances, i.e., is a debtor against his own funds, but his own funds are debtors against themselves, Thus just here, where in fact no raw material figures in expenditure, capitalist accounting must prevail from the outset, making the illusion of the peasant impossible . Now let us take manufacture itself, and in particular that section where all the elements of the labour-process are also elements in the process of the creation of value; i.e., where all the production elements enter into the production of the new commodity as items of expenditure, as use-values that have a value, as commodities. There is a considerable difference between the manufacturer who produces the first intermediate product and the second and all those that follow in the process towards the finished product. The raw material of the latter type of manufacturers enters the production process not only as a commodity, but is already a commodity of the second degree; it has already taken on a different form from the first commodity, which was a raw product in its natural form, it has already passed through a second phase of the production process. For example, the spinner: His raw material is cotton, a raw product which is already a commodity. The raw material of the weaver however is the yarn produced by the spinner; that of the printer or dyer is the woven fabric, the product of the weaver; and all these products, which reappear as raw materials in further phases of the process are at the same time commodities. |460|| ||461| We seem to have returned here to the question with which we have already been concerned on two other occasions, once when discussing John Stuart Mill, and again during the general analysis of the relationship between constant capital and revenue. The continual recurrence of this question shows that there is still a hitch somewhere. Really this belongs into Chapter III on profit. But it fits in better here. For example: On the basis of this assumption, 1 lb. cotton = 6d., yarn = 1s., 1 yard [calico] = 2s. Given a rate of profit of 10 per cent, then A = cotton [the product of the] peasant (I); B = yarn [the product of the] spinner (II), C = woven fabric [the product of the] weaver (III). Under this assumption it does not matter whether A s 90 10/11 itself includes a profit or not. It will not do so if it constitutes self-replacing constant capital. It is equally irrelevant for B, whether the 100 [the value of product A] includes profit or not, and ditto with C in relation to B. The relationship of C (the cotton-grower) or I, of S (spinner) or II and of W (weaver) or III is as follows: Continuing to analyse this rubbish, we obtain the following: I does not have to repay any profit, because it is assumed that his constant capital of 9010/11 does not include any profit, but represents purely constant capital. The entire product of I figures as constant capital in II s outlay. That part of constant capital which equals 100 yields a profit of 9 1/11 to I. The entire product [of] II which amounts to 200, enters into III s outlay, and thus yields a profit of 18 2/11. However, this does not in any way alter the fact that I s profit is not one iota larger than II s or III s, because the capital which he has to replace is smaller to the same degree and the profit corresponds to the volume of the capital, irrespective of the composition of the capital. Now let us assume that III produces everything himself. Then the position seems to change, because his outlay now appears as follows: 90 10/11 in the production of cotton; 181 9/11 in the production of yarn and 363 7/11 in the production of the woven fabric. He buys all three branches of production and must therefore continually employ a definite amount of constant capital in all three. If we now total this up we get: 90 10/11 + 181 9/11 + 363 7/11 = 636 4/11. 10 per cent of this is exactly 63 7/11, as above, only that one individual pockets the lot, whereas previously the 63 7/11 were shared among I, II and III. ||462| How did the wrong impression arise a little while ago? But first, one other comment. If from the 400, we deduct the profit of the weaver, which is included in it and which amounts to 36 4/11, then we are left with 400 364/11 = 3637/11, his outlay. This outlay includes 200 paid out for yarn, Of these 200, 18 2/11 are the profit of the spinner. If we now deduct these 18 2/11 from the outlay of 363 7/11, we are left with 345 5/11. But the 200 which are returnable to the spinner, also contain 9 1/11 profit for the cotton-grower. If we deduct these from the 345 5/11, we are left with 336 4/11. And if we deduct these 336 4/11 from the 400 the total value of the woven fabric then it becomes evident that it contains a profit of 63 7/11. But a profit of 63 7/11 on 336 4/11 is equal to 18 34/37 per cent. Previously we calculated these 63 7/11 on 636 4/11, and obtained a profit of 10 per cent. The excess of the total value of 700 over 636 4/11 was in fact 63 7/11. According to the present calculation, therefore, 18 34/37 per cent would be made on 100 of this same capital, whereas according to the previous calculation only 10 per cent. How does this tally? Supposing I, II and III are one and the same person, but that this individual does not employ three capitals simultaneously, one in cotton-growing, one in spinning and one in weaving. Rather, as soon as he ceases to grow cotton, he begins to spin it and as soon as he has spun, he finishes with this and begins to weave. Then his accounting would look like this: He invests 90 10/11 in cotton-growing. From this he obtains 4,000 lbs. of cotton, In order to spin these he needs to lay out a further 81 9/11 in machinery, auxiliary materials and wages. With this he makes the 4,000 lbs. of yarn. Finally he weaves these into 4,000 yards which involves him in a further outlay of 163 7/11. If he now adds up his expenditure, the capital which he has advanced amounts to 90 10/11 + 81 9/11 + 163 7/11, i.e., 336 4/11. 10 per cent on this would be 33 7/11, because 336 4/11 : 33 7/11 is as 100 : 10. But 336 4/11 + 33 7/11 = 370. He would thus sell the 4,000 yards at 370 instead of at 400, i.e., at 30 less, i.e., at a price which is 7 1/2 per cent lower than before. If the value indeed were 400, he could thus sell at the usual profit of 10 per cent and in addition pay a rent of 30, because his rate of profit would not be 33 7/11 but 63 7/11 on his advances of 336 4/11, i.e., 18 34/37 per cent, as we saw earlier on. And this in fact appears to be the manner in which Herr Rodbertus makes out his calculation of rent. What does the fallacy consist of? First of all it is evident that if spinning and weaving are combined, they should [according to Rodbertus] yield a rent, just as if spinning is combined with cultivation or if agriculture is carried on independently. Evidently two different problems are involved here. Firstly we are calculating the 63 7/11 only on one capital of 336 4/11, whereas we should be calculating it on three capitals of a total value of 636 4/11. Secondly in the last capital, that of III, we are reckoning his outlay to be 336 4/11, instead of 363 7/11. Let us go into these points separately. Firstly: If III, II and I are united in one person, and if he spins up the entire product of his cotton harvest, then he does not use any part of this harvest at all to replace his agricultural capital. He does not employ part of his capital in ||463| cotton-growing in expenditure on cotton-growing, seeds, wages, machinery and another part in spinning, but he first puts a part of his capital into cotton-growing, then this part plus a second into spinning, and then the whole of these two first parts, now existing in the form of yarn, plus a third part, into weaving. Now when the fabric of 4,000 yards has been woven, how is he to replace its elements? While he was weaving he wasn t spinning, and he had no material from which to spin; while he was spinning he did not grow any cotton. Therefore his elements of production cannot be replaced. To help ourselves along, let us say: Well, the fellow sells the 4,000 yards and then buys yarn and the elements of cotton out of the 400. Where does this get us? To a position where we are in fact assuming that three capitals are simultaneously employed and engaged and laid out in production. But yarn cannot be bought unless it is available and in order to buy cotton it must be available as well. And so that they are available to replace the woven yarn and the spun cotton, simultaneously with the capital employed in weaving, capitals must be invested which are turned into cotton and yarn at the same time as the yarn is turned into woven fabric. Thus, whether III combines all three branches of production or whether three producers share them, three capitals must be available simultaneously. If he wants to produce on the same scale, he cannot carry on spinning and cotton-growing with the same capital which he used for weaving. Every one of these capitals is engaged and their reciprocal replacement does not affect the problem under discussion. The replacement capitals are the constant capital which must be invested and operating in each of the three branches simultaneously. If the 400 contain a profit of 6 37/11, then this is only because besides his own profit of 36 4/11, we allow III to gather in the profit which he has to pay to II and I and which, according to the assumption, is realised in his commodity. But the profit was not made on his 363 7/11. The peasant made it on his additional 90 10/11 and the spinner on his 181 9/11. When he pockets the whole amount himself, he likewise has not made it on the 363 7/11 that he invested in weaving, but on this capital and on his two other capitals invested in spinning and cotton-growing. Secondly: If we reckon III s outlay to be 3364/11 instead of 3637/11, then this arises from the following: We take his outlay on cotton-growing to be only 90 10/11 instead of 100, But he needs the whole product and this equals 100 and not 90 10/11. It contains the profit of 9 1/11. Or else he would be employing a capital of 90 10/11 which would bring him no profit. His cotton-growing would yield him no profit but would just replace his expenditure of 90 10/11. In the same way, spinning would not bring him any profit, but the whole of the product would only replace his outlay. In this case, his expenditure would indeed be reduced to 90 10/11 + 81 9/11 + 163 7/11 = 336 4/11. This would be the capital he has advanced. 10 per cent on this would be 33 7/11. And the value of the product would be 370. The value would not be one farthing higher because, according to the supposition, portions I and II have not brought in any profit. Accordingly III would have done much better to leave I and II well alone and to keep to the old method of production. For instead of the 63 7/11 which were previously at the disposal of I, II and III, III now has only 33 7/11 for himself whereas previously, when his fellows were alongside of him, he had 36 4/11. He would indeed be a very bad hand at business. He would only have saved an outlay of 9 1/11 in II because he had made no profit in I, and he would have saved an outlay of 182/11 in III, by not making a profit in II. The 9010/11 in cotton-growing and the 81 9/11 + 90 10/11 in spinning would both have only replaced themselves. Only the third capital of 90 10/11 + 81 9/11 + 163 7/11 invested in weaving, would have yielded a profit of 10 per cent. This would mean that 100 would yield 10 per cent profit in weaving, but not one farthing in spinning and cotton-growing. This would be very pleasant for III, so long as I and II are persons other than himself, but by no means so, if, in order to save these petty profits and pocket them himself, he has united these three branches of business in one and the same person, namely, his worthy self. The saving of advances for profit (or that component part of the ||464| constant capital of one capitalist which is profit for the others) arose therefore from the fact that [the products of] I and II contained no profits and that I and II performed no surplus-labour but regarded themselves merely as wage-labourers who only had to replace their costs of production, i.e., the outlay in constant capital and wages. Thus, in these circumstances provided I and II were not prepared to work for III, since if they did, profit would go to his account less labour would have been done in any case, and it would not matter to III whether the work for which he has to pay is only laid out in wages, or in wages and profit. This is all the same to him, in so far as he buys and pays for the product, the commodity. Whether constant capital is wholly or partially replaced in kind, in other words, whether it is replaced by the producers of the commodity for which it serves as constant capital, is of no consequence. First of all, all constant capital must in the end be replaced in kind: machinery by machinery, raw material by raw material, auxiliary material by auxiliary material. In agriculture, constant capital may also enter as a commodity, i.e., be mediated directly by purchase and sale. In so far as organic substances enter into reproduction, the constant capital must of course be replaced by products of the same sphere of production. But it need not be replaced by the individual producers within this sphere of production. The more agriculture develops, the more all its elements enter into it as commodities, not just formally, but in actual fact. In other words, they come from outside, for instance, seeds, fertilisers, cattle, animal substances, etc., are the products of other producers. In industry, for example, the continual movement to and fro of iron into the machine shop and machines into the iron mines, is just as constant as is the movement of wheat from the granary to the land and from the land to the granary of the farmer. The products in agriculture are replaced directly. Iron cannot replace machines, But iron, to the value of the machine, replaces the machine for one [producer], and [the machine replaces] the iron for the other, in so far as the value of his machine is replaced by iron. It is difficult to see what difference it is supposed to make to the rate of profit if the peasant, who lays out the 90 10/11 on a product of 100, were to compute that, for instance, he spends 20 on seeds etc., 20 on machinery etc., and 50 10/11 on wages. What he wants is a profit of 10 per cent on the total sum. The 20 of the product which he sets against seeds do not include any profit. Nevertheless, this is just as much 20 as the 20 in machinery, in which there may be a profit of 10 per cent, although this may be only formal. In actual fact the 20 in machinery, like the 20 in seeds, may not contain a single farthing of profit. This is the case if these 20 are merely a replacement for components of the machine builder s constant capital, which he draws from agriculture, for instance. Just as it would be wrong to say that all machinery goes into agriculture as its constant capital, so it is incorrect to say that all raw material goes into manufacture. A very large part of it remains fixed in agriculture and only represents a reproduction of constant capital. Another part of it goes directly into revenue in the form of food and some of it, like fruit, fish, cattle etc., does not undergo a manufacturing process at all. It would therefore be incorrect to burden industry with the entire bill for all the raw materials manufactured by agriculture. Of course in those branches of manufacture where the raw material features as an advance, alongside wages and machinery, the capital advanced must be greater than in those branches of agriculture which supply the raw material used. It could also be assumed that if these branches of manufacture had their own rate of profit (different from the general rate) it would be smaller here than in agriculture because less labour is employed. For, with a given rate of surplus-value, more constant capital and less variable capital necessarily bring in a lower rate of profit. This, however, applies equally to certain branches of manufacture as against others and to certain branches of agriculture (in the economic sense) as against others. It is in fact least likely to occur in agriculture proper, because, although it supplies raw material to industry, it differentiates between raw materials, machinery and wages in its own expenditure account, but industry by no means pays agriculture for the raw material, i.e., for that part of constant capital which it replaces from within itself and not by exchange with industrial products. ||465| Now to a brief resum of Herr Rodbertus. First he describes the situation as he imagines it, where the owner of the land is at the same time the capitalist and slave-owner. Then there comes a separation. That part of the product of labour which has been taken from the workers the one natural rent is now split up into rent of land and capital gain ([Rodbertus, Sociale Briefe an von Kirchmann. Dritter Brief, Berlin, 1851,] pp. 81 82). (Mr. Hopkins see notebook explains this in even more simple and blunt terms.) Then Herr Rodbertus divides the raw product and manufactured product (p.89) between the landowner and the capitalist petitio principii. One capitalist produces raw products and the other manufactured products. The landowner produces nothing, neither is he the owner of raw products . That [i.e., that the landowner is the owner of raw products ] is the conception of a German landed proprietor such as Herr Rodbertus is. In England, capitalist production began simultaneously in manufacture and in agriculture. How a rate of capital gain (rate of profit) comes about, is explained by Herr Rodbertus purely from the fact that money now provides a measure of gain, making it possible to express the relationship of gain to capital (p. 94) and thus supplying a standard gauge for the equalisation of capital gains (p. 94). He has not even a remote idea that this uniformity of profit is in contradiction to the equality of rent and unpaid labour in each branch of production, and that therefore the values of commodities and the average prices must differ. This rate of profit also becomes the norm in agriculture because the return on property cannot be calculated upon anything other than capital (p. 95) and by far the larger part of the national capital is employed (p. 95) in manufacture. Not a word about the fact that with the advent of capitalist production, agriculture itself is revolutionised, not only in a formal sense but really, and the landowner is reduced to a mere receptacle, ceasing to fulfil any function in production. According to Rodbertus The entire bit is incorrect. Rodbertus now asks himself whether apart from the industrial profit, the profit on capital, there remains a rent for the raw product, and if so for what reasons (p. 96). He even assumes True, as Rodbertus says, Ricardo also assumes this. But it is wrong, at least prima facie, since commodities do not exchange according to their values, but at average prices, which differ from their values, and this, moreover, is a consequence of the apparently contradictory law, the determination of the value of commodities by labour-time . If the raw product carried a rent apart from and distinct from average profit, this would only be possible if the raw product were not sold at the average price and why this happens would then have to be explained. But let us see how Rodbertus operates. To begin with we must examine this first assumption. In fact this just means that the surplus-values contained in the commodities are in the same proportion as their values, or, in other words, the unpaid labour contained in the commodities is proportionate to the total quantities of labour they contain. If the quantity of labour contained in the commodities A and B is as 3 : 1, then the unpaid labour or surplus-values contained in them is as 3 : 1. Nothing could be further from the truth. Given the necessary labour-time, for instance 10 hours, one commodity may be the product of 30 workers while the other is the product of 10. If the 30 workers only work 12 hours, then the surplus-value created by them [amounts to] 60 hours, which is 5 days (5 12), and if the 10 [others] work 16 hours a day, then the surplus-value created by them is also 60 hours. According to this, the value of product A would be 30 12 = 120 3 = 360 [working hours] which is 30 working days <12 hours are 1 working day>. And the value of commodity B would be equal to 160 working hours which is 13 1/3 working days. The values of commodities A and B [are as] 360 : 160, as 36 : 16, as 9 : 4, as 3 : 1 1/3. The surplus-values contained in the commodities, however, are as 60 : 60 = 1 : 1. They are equal, although the values are as 3 : 1 1/3. ||466| [Firstly] therefore, the surplus-values of the commodities are not proportionate to their values, if the absolute surplus-values, the extension of labour-time beyond the necessary labour, i.e., the rates of surplus-value, are different. Secondly, assuming the rates of surplus-value to be the same, and leaving aside other factors connected with circulation and the reproductive process, then the surplus-values are not dependent on the relative quantities of labour contained in the two commodities, but on the proportion of the part of capital laid out in wages to the part which is laid out in constant capital, raw material and machinery. And this proportion can be entirely different with commodities of equal values, whether they be agricultural products or products of manufacture , which in any case has nothing to do with this business, at least not on the face of it. Rodbertus s first assumption, that, if the values of commodities are determined by labour-time, it follows that the quantities of unpaid labour contained in various commodities or their surplus-values are directly related to their values is therefore fundamentally wrong. It is therefore also incorrect to say that Wrong again. The volume of surplus-value (and in this case surplus-value is the rent, since rent is here regarded as the general term, as opposed to profit and ground-rent) depends only on the immediate labour involved and not on the depreciation of fixed capital. Just as it does not depend on the value of the raw material or indeed on any part of the constant capital. The wear and tear does, of course, determine the rate at which fixed capital must be reproduced. (At the same time, its production depends on the formation of new capital, on the accumulation of capital.) But the surplus-labour which is performed in the production of fixed capital does not affect the sphere of production into which this fixed capital enters as such, any more than does the surplus-labour which goes into the production of, say, the raw materials. It is rather equally valid for all of them, agriculture, production of machines and manufacture, that their surplus-value is determined only by the amount of labour employed, if the rate of surplus-value is given, and, by the rate of surplus-value, if the amount of labour employed is given. Herr Rodbertus seeks to drag in wear and tear in order to chuck out raw materials . The labour-time which is required for spinning and weaving is as much, or rather as little, dependent on the labour-time i.e., the value of the machine, as it is on the labour-time which the raw material costs. Both machine and raw material enter into the labour process; neither of them enters into the process of creating surplus-value. This is the conception of the German peasant. In agriculture (excluding mining, fishing, hunting but by no means stock-raising) seeds, feeding stuffs, cattle, mineral fertilisers etc. form the material for manufacturing and this material ||467| is the product of labour. This outlay grows proportionately to the development of industrialised agriculture. All production once we are no longer dealing with mere taking and appropriating is reproduction and hence requires the product of a previous production as material . Everything which is the result of production is at the same time a prerequisite of production. And the more large-scale agriculture develops the more it buys products of a previous production and sells its own. In agriculture these expenses feature as commodities in a formal sense converted into commodities by being reckoned in money as soon as the farmer becomes at all dependent on the sale of his product; as soon as the prices of various agricultural products (like hay for example) have established themselves, for division of the spheres of production takes place in agriculture as well. Queer things must be happening in the mind of a peasant if lie reckons the quarter of wheat which he sells as income, but does not reckon the quarter which he puts into the soil as expenditure. Incidentally, Herr Rodbertus ought to try somewhere to begin the production , for instance of flax or silk, without products of a previous production . This is absolute nonsense. And therefore also the rest of Rodbertus s conclusions: First wrong proposition: If industrial products and agricultural products exchange according to their values (i.e., in relation to the labour-time required for their production), then they yield to their owners equal amounts of surplus-value or quantities of unpaid labour. Surplus-values are not proportional to values. Second wrong proposition: Since Rodbertus presupposes a rate of profit (which he calls rate of capital gain) the supposition that commodities exchange in the proportion of t h e i r v a l u e s is incorrect. One proposition excludes the other. For a (general) rate of profit to exist, the values of the commodities must have been transformed into average prices or must be in the process of transformation. The particular rates of profit which are formed in every sphere of production on the basis of the ratio of surplus-value to capital advanced, are equalised in this general rate. Why then not in agriculture? That is the question. But Rodbertus does not even formulate this question correctly, because firstly he presupposes that there is a general rate of profit and secondly he assumes that the particular rates of profit (hence also their differences) are not equalised and thus that commodities exchange at their values. Third wrong proposition: The value of the raw material does not enter into agriculture. Rather here, the advances of seeds etc. are component parts of constant capital and are calculated as such by the farmer. To the same degree that agriculture becomes a mere branch of industry i.e., that capitalist production is established on the land ||468| to the degree to which agriculture produces for the market, produces commodities, articles for sale and not for its own consumption to the same degree it calculates its outlay and regards each item of expenditure as a commodity, whether it buys it from itself (i.e., from production) or from a third person. The elements of production naturally become commodities to the same extent as the products do, because, after all, these elements are those very same products. Since wheat, hay, cattle, seeds of all kinds etc. are thus sold as commodities and, since this sale is the essential thing, not their use as a means of subsistence they also enter into production as commodities and the farmer would have to be a real blockhead not to be able to use money as the unit of account. This is, however, only the formal aspect of the calculation. But simultaneously [the position] develops [in such a way] that the farmer buys his outlay, seeds, cattle, fertilisers, mineral substances etc. while he sells his receipts, so that for the individual farmer these advances are also advances in the formal sense in that they are bought commodities. (They have always been commodities for him, component parts of his capital. And when he has returned them, in kind, to production, he has regarded them as sold to himself in his capacity as producer.) Moreover, this takes place to the same extent as agriculture develops and the final product is produced increasingly by industrial methods and according to the capitalist mode of production. It is therefore wrong to say that there is a part of capital which enters into industry but not into agriculture. Suppose then, according to Rodbertus s (false) proposition, that the portions of rent (i.e., shares of surplus-value) yielded by the agricultural product and the industrial product are given, and that they are proportionate to the values of the agricultural product and the industrial product. Supposing, in other words, industrial products and agricultural products of equal values yield equal surplus-values to their owners, i.e., contain equal quantities of unpaid labour, then no disparity arises owing to a part of capital entering into industry (for raw material) which does not enter into agriculture, so that, for instance, the same surplus-value would be calculated in industry on a capital augmented by this amount and hence result in a smaller rate of profit. For the same item of capital goes into agriculture. There only remains the question of whether it does so in the same proportion. But this brings us to mere quantitative differences whereas Herr Rodbertus wants a qualitative difference. These same quantitative differences occur between different industrial spheres of production. They compensate one another in the general rate of profit. Why not as between industry and agriculture (if there are such differences)? Since Herr Rodbertus allows agriculture to participate in the general rate of profit, why not in the process of its formation? But of course that would mean the end of his argument. Fourth wrong proposition: It is wrong and arbitrary of Rodbertus to include wear and tear of machinery etc., that is an element of Constant capital, in variable capital, that is, in the part of capital which creates surplus-value and in particular determines the rate of surplus-value, and at the same time, not to include raw material. He makes this accounting error in order to arrive at the result he wanted from the outset. Fifth wrong proposition: If Herr Rodbertus wants to differentiate between agriculture and industry, then that element of capital which consists of fixed capital such as machinery and tools belongs entirely to industry. This element of capital, in so far as it becomes part of any capital, can only enter into constant capital; and can never increase surplus-value by a single farthing. On the other hand, as a product of industry, it is the result of a particular sphere of production. Its price, or the value which it forms within the whole of social capital, at the same time represents a certain quantity of surplus-value (just as is the case with raw material). Now it does enter into the agricultural product, but it stems from industry. If Herr Rodbertus reckons raw material to be an element of capital in industry which comes from outside, then he must charge machines, tools, vessels, buildings etc. as an element of capital in agriculture, which comes from outside. He [must] therefore say that industry comprises only wages and raw materials (because fixed capital, in so far as it is not raw materials, is a product of industry, its own product) whereas agriculture comprises only wages ||469| and machinery etc., i.e., fixed capital, because raw material, in so far as it is not embodied in tools etc., is the product of agriculture. It would then be necessary to examine how the absence of this item affects the account in industry. Sixthly: It is quite true that mining, fishing, hunting, forestry (in so far as the trees have not been planted by man) etc., in short, the extractive industries concerned with the extraction of raw material that is not reproduced in kind use no raw materials, except auxiliary materials. This does not apply to agriculture. But it is equally [true] that the same does hold good for a very large part of industry, namely the transport industry, in which outlay consists only of machinery, auxiliary materials and wages. Finally, there are certainly other branches of industry, such as tailoring etc., which, relatively speaking, only absorb raw materials and wages, but no machinery, fixed capital etc. In all these instances, the size of the profit, i.e., the ratio of surplus-value to capital advanced, would not depend on whether the advanced capital after deduction of variable capital, or the part of capital spent on wages consists of machinery or raw material or both, but it would depend on the magnitude of the capital advanced relative to the part of the capital spent on wages. Different rates of profit (apart from the modifications brought about by circulation) would thus exist in the different spheres of production, the result of their equalisation being the general rate of profit. Rodbertus surmises that there is a difference between surplus-value and its special forms, in particular profit. But he misses the point because, right from the beginning, he is concerned with the explanation of a particular phenomenon (ground rent) and not [with] the establishment of a general law. Reproduction occurs in all branches of production; but only in agriculture does this industrial reproduction coincide with natural reproduction. It does not do so in extractive industry. That is why, in the latter, the product does not in its natural form become an element in its own reproduction (except in the form of auxiliary material). What distinguishes agriculture, stock-raising, etc. from other industries is, firstly, not the fact that a product becomes a means of production, since that happens to all industrial products which have not the definite form of individual means of subsistence. And even as such they become means of production of the producer who reproduces himself or maintains his labour-power by consuming them. Secondly, the difference is not the fact that agricultural products enter into production as commodities, i.e., as component parts of capital; they go into production just as they come out of it. They emerge from it as commodities and they re-enter it as commodities. The commodity is both the prerequisite and the result of capitalist production. Hence thirdly, there only [remains] the fact that they enter as their own means of production into the production process whose product they are. This is also the case with machinery. Machine builds machine. Coal helps to raise coal from the shaft. Coal transports coal etc. In agriculture this appears as a natural process, guided by man, although he also causes it to some extent. In the other industries it appears to be a direct effect of industry. But Herr Rodbertus is on the wrong track altogether if he thinks that he must not allow agricultural products to enter into reproduction as commodities because of the peculiar way in which they enter it as use-values (technologically). He is evidently thinking of the time when agriculture was not as yet a trade, when only the excess of its production over what was consumed by the producer became a commodity and when even those products, in so far as they entered into production, were not regarded as commodities. This is a fundamental misunderstanding of the application of the capitalist mode of production to industry. For the capitalist mode of production, every product which has value and is therefore in itself a commodity also figures as a commodity in the accounts. Supposing, for example, that in the mining industry, the constant capital, which consists purely of machinery, amounts to 500 and that the capital laid out in wages also amounts to 500. Then, if the surplus-value is 40 per cent, i.e., 200, the profit [would be] 20 per cent. Thus: If the same variable capital were laid out in those branches of manufacture (or of agriculture) in which raw materials play a part, and furthermore, if the utilisation of this variable capital (i.e, the employment of this particular number of workers) required machinery etc., to the value of 500, then indeed a third element, the value of the raw materials, would have to be added, say again, 500. Hence in this case: The 200 would now have to be reckoned on 1,500 and would only be 13 1/3 per cent. This example would still apply, if in the first case the transport industry had been quoted as an illustration. On the other hand, the rate of profit would remain the same in the second case if machinery cost 100 and raw materials 400. ||470| What, therefore, Herr Rodbertus imagines is that in industry 100 are laid out in machinery, 100 in wages and x in raw materials, whereas in agriculture 100 are laid out in wages and 100 in machinery. The scheme would be like this: It must therefore be, at any rate, less than 1/4, Hence the rent in I. Firstly then, this difference between agriculture and manufacture is imaginary, non-existent: it has no bearing on that form of rent which determines all others. Secondly, Herr Rodbertus could find this difference between the rates of profit in any two individual branches of industry. The difference is dependent on the proportion of constant capital to variable capital and the proportion in turn may or may not be determined by the addition of raw materials. In those branches of industry which use raw materials as well as machinery, the value of the raw materials, i.e., the relative share which they form of the total capital, is of course very important, as I have shown earlier. This has nothing to do with ground-rent. Thus, continuing with the above example; but taking raw materials as 100, to have something tangible, we get: Here the rate of profit in agriculture and industry would be the same, therefore nothing would be left over for rent, because the agricultural product is sold at 16 2/3 below its value. Even if the example were as correct as it is false for agriculture, then the circumstance that the value of the raw product falls below the cost of labour would in any case only correspond to the law of average prices. Rather it needs to be explained why as an exception this is to a certain extent not the case in agriculture and why here the total surplus-value (or at least to a larger extent than in the other branches of industry, a surplus above the average rate of profit) remains in the price of the product of this particular branch of production and does not participate in. the formation of the general rate of profit. It becomes evident here that Rodbertus does not understand what the (general) rate of profit and the average price are. In order to make this law quite clear, and this is far more important than Rodbertus, we shall take five examples. We assume the rate of surplus-value to be the same throughout. It is not at all necessary to compare commodities of equal value; they are to be compared only at their value. To simplify matters, the commodities compared here are taken as produced by capitals of equal size. ||471| We have here, in the categories I, II, III, IV and V (five different spheres of production), commodities whose respective values are 1,100, 1,200, 1,300, 1,150 and 1,250. These are the money prices at which these commodities would exchange if they were exchanged according to their values. In all of them the capital advanced is of the same size, namely 1,000. If these commodities were exchanged at their values, then the rate of profit in I would be only 10 per cent; in II, twice as great, 20 per cent; in III, 30 per cent; in IV, 15 per cent; in V, 25 per cent. If we add up these particular rates of profit they come to 10 per cent+20 per cent+30 per cent+15 per cent+25 per cent, which is 100 per cent. If we consider the entire capital advanced in all five spheres of production, then one portion of this (I) yields 10 per cent, another (II) 20 per cent etc. The average yielded by the total capital equals the average yielded by the five portions, and this is: 100 (the total sum of the rates of profit)/5 (the number of different rates of profit) i.e., 20 per cent. In fact we find that the 5,000 capital advanced in the five spheres yield a profit of 100+200+300+150+250=1,000; 1,000 on 5,000 is 1/5 which is 20 per cent. Similarly: if we work out the value of the total product, it comes to 6,000 and the excess on the 5,000 capital advanced is 1,000, which is 20 per cent in relation to the capital advanced, that is 1/6 or 16 2/3 per cent of the total product. (This again is another calculation.) However, so that in fact each of the capitals advanced, i.e., I, II, III etc. or what comes to the same thing, that capitals of equal size should receive a part of the surplus-value yielded by the aggregate capital only in proportion to their magnitude, i.e., only in proportion to the share they represent in the aggregate capital advanced, each of them should get only 20 per cent profit and each must get this amount. ||472| But to make this possible, the products of the various spheres must in some cases be sold above their value and in other cases more or less below their value. In other words, the total surplus-value must be distributed among them not in the proportion in which it is made in the particular sphere of production, but in proportion to the magnitude of the capitals advanced. All must sell their product at 1,200, so that the excess of the value of the product over the capital advanced is 1/5 of the latter, i.e., 20 per cent. According to this apportionment: This shows that only in one instance (II) the average price equals the value of the commodity, because by coincidence, the surplus-value equals the normal average profit of 200. In all other instances a greater or a lesser amount of surplus-value is taken away from one [sphere] and given to another, etc. What Herr Rodbertus had to explain was, why this [is] not the case in agriculture, hence [why] its commodities should be sold at their value and not their average price. Competition brings about the equalisation of profits, i.e., the reduction of the values of the commodities to average prices. The individual capitalist, according to Mr. Malthus, expects an equal profit from every part of his capital which, in other words, means only that he regards each part of his capital (apart from its organic function) as an independent source of profit, that is how it seems to him. Similarly, in relation to the class of capitalists, every capitalist regards his capital as a source of profit equal in volume to that which is being made by every other capital of equal size. This means that each capital in a particular sphere of production is only regarded as part of the aggregate capital which has been advanced to production as a whole and demands its share in the total surplus-value, in the total amount of unpaid labour or labour products in proportion to its size, its stock in accordance to the proportion of the aggregate capital it constitutes. This illusion confirms for the capitalist to whom everything in competition appears in reverse and not only for him, but for some of his most devoted pharisees and scribes, that capital is a source of income independent of labour, since in fact the profit on capital in each particular sphere of production is by no means solely determined by the quantity of unpaid labour which it itself produces and throws into the pot of aggregate profits, from which the individual capitalists draw their quota in proportion to their shares in the total capital. Hence Rodbertus s nonsense. Incidentally, in some branches of agriculture such as stock-raising the variable capital, i.e., that which is laid out in wages, is extraordinarily small compared with the constant part of capital. Wrong. Rent is always paid to the landlord; that s all. However, if, as so often occurs in practice, it is partially or wholly a deduction from normal profit or a deduction from normal wages (true surplus-value, i.e., profit plus rent, is never a deduction f r o m wages, but is that part of the product of the worker which remains after deduction of the wage from this product) then from an economic point of view, it is not rent of land. In practice this is proved as soon as ||473| competition restores the normal Wage and the normal profit. Average prices, to which competition constantly tends to reduce the values of commodities, are thus achieved by constant additions to the value of the product of one sphere of production and deductions from the value of the product of another sphere except in the case of II in the above table in order to arrive at the general rate of profit. With the commodities of the particular sphere of production where the ratio of variable capital to the total sum of capital advanced (assuming the rate of surplus-labour to be given) corresponds to the average ratio of social capital value equals average price; neither an addition to nor a deduction from value is therefore made. If, however, owing to special circumstances which we will not go into here, in certain spheres of production a deduction is not made from the value of the commodities (although it stands above the average price, not just temporarily but on an average) then this retention of the entire surplus-value in a particular sphere of production although the value of the commodity is above the average price and therefore yields a rate of profit higher than the average is to be regarded as a privilege of that sphere of production. What we are concerned with here and have to explain as a peculiar feature, as an exception, is not that the average price of commodities is reduced below their value this [would be] a general phenomenon and a necessary prerequisite for equalisation but why, in contrast to other commodities, certain commodities are sold at their value, above the average price. The average price of a commodity equals its cost of production (the capital advanced in it, be it in wages, raw material, machinery or whatever else) plus average profit. Hence if, as in the above example, average profit is 20 per cent which is 1/5, then the average price of each commodity is C (the capital advance) +P/C (the average rate of profit). If C+P/C equals the value of this commodity, i.e., if S, the surplus-value created in this sphere of production, equals P, then the value of the commodity equals its average price. If C+P/C is smaller than the value of the commodity, i.e., if the surplus-value S, created in this sphere, is larger than P, then the value of the commodity is reduced to its average price and part of its surplus-value is added on to the value of other commodities. Finally, if C+P/C is greater than the value of the commodity, i.e., S is smaller than P, then the value of the commodity is raised to its average price and surplus-value created in other spheres of production is added to it. Finally, should there be commodities which are sold at their value, although their value is greater than C+P/C, or whose value is at any rate not reduced to such an extent as to bring it down to the level of the normal average price C+P/C, then certain conditions must be operative, which put these commodities into an exceptional position. In this case the profit realised in these spheres of production stands above the general rate of profit. If the capitalist receives the general rate of profit here, the landlord can get the excess profit in the form of rent. What I call rate of profit and rate of interest or rate of rent, Rodbertus calls Level of Profit on Capital and Interest (p. 113). This is bad. The rate of rent is, in the first place, to be calculated on the capital, i.e., as the excess of the price of a commodity over its costs of production and over that part of the price which forms the profit. Because it helps him to understand certain phenomena Herr Rodbertus makes the caculation with an acre or a morgen, the apparent form of the thing, ||474| in which the intrinsic connection is lost. The rent yielded by an acre is the rental, the absolute amount of rent. It may rise if the rate of rent remains the same or is even lowered. The word level is nonsense here. For to what does it express a relationship? That 10 per cent yields more than 20 is obvious; but the unit of measurement here is 100. Altogether the level of the value of land is the same general phrase as the high or low level of commodity prices in general. Herr Rodbertus now wants to investigate: First of all he examines: What determines the level of rent in general , i.e., what regulates the rate of surplus-value? This is good (I mean that in this consideration of surplus-value the constant part of capital is disregarded ). The following is a somewhat peculiar notion: The last bit is good. But it is incorrect to say that when the variable capital that is laid out in wages decreases, the constant capital must diminish. In other words, it is not true that the rate of profit <the quite inappropriate reference to area of land etc. is omitted here) must rise because the rate of surplus-value rises. For instance, wages fall because labour becomes more productive and in all cases this expresses itself in more raw material being worked up by the same worker in the same period of time; this part of constant capital therefore grows, ditto machinery and its value. Hence the rate of profit can fall with the reduction in wages. The rate of profit is dependent on the amount of surplus-value, which is determined not only by the rate of surplus-value, but also (by] the number of workers employed. Rodbertus correctly defines the necessary wage as equal to ||475| Herr Rodbertus then puts forward in a most intricately confused, complicated and clumsy fashion, the propositions set up by Ricardo on the inverse relationship of profit and wages and the determination of this relationship by the productivity of labour. The confusion arises partly because, instead of taking labour-time as his measure, he foolishly takes quantities of product and makes non-sensical differentiations between level of the value of the product and magnitude of the value of the product . By level of the value of the product this stripling means nothing other than the relation of the product to the labour-time. If the same amount of labour-time yields many products then the value of the product, i.e., the value of separate portions of the product is low, if the reverse, then the reverse. If one working-day yielded 100 lbs. yarn and later 200 lbs. then in the second case the value of the yarn would be half what it was in the first. In the first case its value is 1/100 of a working-day; in the second, the value of the lb. of yarn is 1/200 of a working-day. Since the worker receives the same amount of product, whether its value be high or low, i.e., whether it contains more or less labour, wages and profit move inversely, and wages take more or less of the total product, according to the productivity of labour. He expresses this in the following intricate sentences: But this is only correct if the product, for whose production the worker is employed, belongs to that species which according to tradition or necessity figures in his consumption as a means of subsistence. If this is not the case, then the productivity of this labour has no effect on the relative height of wages and of profit, or on the amount of surplus-value in general. The same share in the value of the total product falls to the worker as wages, irrespective of the number of products or the quantity of the product in which this share is expressed. The division of the value of the product in this case is not altered by any change in the productivity of labour. First ([in thesis] I) we had the Ricardian (law] that wages and profit are related inversely. Now the second Ricardian [law] differently evolved or, rather, made involved that profit and rent have an inverse relation. It is obvious, that when a given surplus-value is divided between capitalist and landowner, then the larger the share of one, the smaller will be that of the other and vice versa. But Herr Rodbertus adds something of his own which requires closer examination. In the first place, Herr Rodbertus regards it as a new discovery that surplus-value in general ( the value of the product of labour which is in fact available for sharing out as rent >, the entire surplus-value filched by the capitalist, consists of the value of the raw product+the value of the manufactured product (p. 120). Herr Rodbertus first reiterates his discovery of the absence of the value of the material in ||476| agriculture. This time in the following flood of words: We repeat: quod non! Assume that a ground-rent exists which Herr Rodbertus has not proved and cannot prove by his method that is to say, a certain portion of the surplus-value of the raw product falls to the landlord. Further assume that: the level of rent in general (the rate of surplus-value) in a particular value of the product is also given (p. 121). This amounts to the following: For instance, in a commodity of 100, say half, 50, is unpaid labour; this then forms the fund from which all categories of surplus-value, rent, profit etc. are paid. Then it is quite evident that one shareholder in the 50 will draw the more, the less is drawn by the other and vice versa, or that profit and rent are inversely proportional. Now the question is, what determines the apportionment between the two? In any case it remains true that the revenue of the manufacturer (be he agriculturist or industrialist) equals the surplus-value which he draws from the sale of his manufactured product (which he has pilfered from the workers in his sphere of production), and that rent of land (where it does not, as with the waterfall which is sold to the industrialist, stem directly from the manufactured product, which is also the case with rent for houses etc., since houses can hardly be termed raw product) only arises from the excess profit (that part of surplus-value which does not enter into the general rate of profit) which is contained in the raw products and which the farmer pays over to the landlord. It is quite true that when the value of the raw product rises [or falls], the rate of profit in those branches of industry which use raw material will rise or fall inversely to the value of the raw product. As I showed in a previous example, if the value of cotton doubles, then with a given wage and a given rate of surplus-value, the rate of profit will fall. The same applies however to agriculture. If the harvest is poor and production is to be continued on the same scale (we assume here that the commodities are sold at their value) then a greater part of the total product or of its value would have to be returned to the soil and after deducting wages, if these remain stationary, the farmer s surplus-value would consist of a smaller quantity of product, hence also a smaller quantity of value would be available for sharing out between him and the landlord. Although the individual product would have a higher value than before, not only the amount of product, but also the remaining portion of value would be smaller. It would be a different matter if, as a result of demand, the product rose above its value, and to such an extent that a smaller quantity of product had a higher price than a larger quantity of product did before. But this would be contrary to our stipulation that the products are sold at their value. Let us assume the opposite. Supposing he cotton harvest is twice as rich and that that part of it which is returned direct to the soil, for instance as fertiliser and seed, costs less than before. In this case the portion of value which is left for the cotton-grower after deduction of wages is greater than before. The rate of profit would rise here just as in the cotton industry. True, in one yard of calico, the proportion of value formed by the raw product would now be smaller than before and [that] formed by the manufacturing process would be larger. Assume that calico costs 2s. a yard when the value of the cotton it contains is 1s. Now if cotton goes down from 1s. to 6d., (which, on the assumption that its value equals its price, is only possible because its cultivation has become more productive) then the value of a yard of calico is 18d. It has decreased by a quarter which is 25 per cent. But where the cotton-grower previously sold 100 lbs. at is., he is now supposed to sell 200 at 6d. Previously the value [was] 100s.; now too it is 100s. Although previously cotton formed a greater proportion of the value of the product and the rate of surplus-value in cotton growing itself decreased simultaneously the cotton-grower obtained only 50 yds. of calico for his 100s. cotton at 1s. per lb.; now that the lb. [is sold] at 6d., he receives 66 2/3 yds, for his 100s. On the assumption that the commodities are sold at their value, it is wrong to say that the revenue of the producers who take part in the production of the product is necessarily dependent on the portion of value ||477| represented by their products in the total value of the product. Let the value of the total product of all manufactured commodities, including machinery, be 300 in one branch, 900 in another and 1,800 in a third. If it is true to say that the proportion in which the value of the whole product is divided between the value of the raw product and the value of the manufactured product determines the proportion in which the surplus-value the rent, as Rodbertus says is divided into profit and ground-rent, then this must also be true of different products in different spheres of production where raw material and manufactured products participate in varying proportions. Suppose out of a value of 900, manufactured product accounts for 300 and raw material for 600, and that 1 equals 1 working-day. Furthermore, the rate of surplus-value is given as, say, 2 hours on 10, with a normal working-day of 12 hours, then the 300 [manufactured product] embodies 300 working-days, and the 600 [raw product] twice as much, i.e., 2 300. The amount of surplus-value in the one is 600 hours, in the other 1,200. This only means that, given the rate of surplus-value, its volume depends on the number of workers or the number of workers employed simultaneously. Furthermore, since it has been assumed (not proved) that of the surplus-value which enters into the value of the agricultural product a portion falls to the landlord as rent, it would follow that in fact the amount of ground-rent grows in the same proportion as the value of the agricultural product compared with the manufactured product . In the above example the ratio of the agricultural product to the manufactured product is as 2:1, i.e., 600:300. Suppose [in another case] it is as 300:600. Since the rent depends on the surplus-value contained in the agricultural product, it is clear that if this [amounts to] 1,200 hours in the first case as against 600 in the second, and if the rent constitutes a certain part of this surplus-value, it must be greater in the first case than in the second. Or the larger the portion of value which the agricultural product forms in the value of the total product, the larger will be its share in the surplus-value of the whole product, for every portion of the value of the product contains a certain portion of surplus-value and the larger the share in the surplus-value of the whole product which falls to the agricultural product, the larger will be the rent, since rent represents a definite proportion of the surplus-value of the agricultural product. Let the rent be one-tenth of the agricultural surplus-value, then it is 120 [hours] if the value of the agricultural product is 600 out of the 900 and only 60 [hours] if it is 300. According to this, the volume of rent would in fact alter with the amount of the value of the agricultural product, hence also with the relative value of the agricultural product in relation to the manufactured product. But the level of the rent and of the profit their rates would have absolutely nothing to do with it whatsoever. In the first case the value of the product is 900 of which 300 is manufactured product and 600 agricultural product. Of this, 600 hours surplus-value accrue to the manufactured product and 1,200 to the agricultural product. Altogether 1,800 hours. Of these, 120 go to rent and 1,680 to profit. In the second case the value of the product is 900, of which 600 is manufactured product and 300 agricultural product. Thus 1,200 [hours] surplus-value for manufacture and 600 for agriculture. Altogether 1,800. Of this 60 go to rent and 1,200 to profit for manufacture and 540 for agriculture. Altogether 1,740. In the second case, the manufactured product is twice as great as the agricultural product (in terms of value). In the first case the position is reversed. In the second case the rent is 60, in the first it is 120. It has simply grown in the same proportion as the value of the agricultural product. As the volume of the latter increased so the volume of the rent increased. If we consider the total surplus-value, 1,800, then in the first case the rent is 1/15 and in the second it is 1/30. If here with the increased portion of value that falls to agricultural product the volume of rent also rises and with this, its volume, increases its proportional share in the total surplus-value i.e., the rate at which surplus-value accrues to rent also rises compared to that at which it accrues to profit then this is only so, because Rodbertus assumes that rent participates in the surplus-value of the agricultural product in a d e f i n i t e p r o p o r t i o n. Indeed this must be so, if this fact is given or presupposed. But the fact itself by no means follows from the rubbish which Rodbertus pours forth about the value of the material and which I have already cited above at the beginning of page 476. But the level of the rent does not rise in proportion to the [surplus-value in the] product in which it participates, because now, as before, this [proportion is] one-tenth; its volume grows because the product grows, and because it grows in volume, without a rise in its level , its level rises in comparison with the quantity of profit or the share of profit in the ||4781 value of the total product. Because it is presupposed that a greater part of the value of the total product yields rent, i.e., a greater part of surplus-value is turned into rent, that part of surplus-value which is converted into rent is of course greater. This has absolutely nothing to do with the value of the material , But that a is ridiculous. It amounts to measuring the level of rent by a standard of measurement that obviates the difficulties of the problem itself. Since we do not know as yet what rent is, had we put the above example differently and had left the same rate of profit for the agricultural product as for the manufactured product, only adding on one-tenth for rent, which is really necessary since the same rate of profit is assumed, then the whole business would look different and become clearer. In case II the rent is twice that in I because the agricultural product, the share of the value of the product on which it sponges, has grown in proportion to the industrial product. The volume of profit remains the same in both cases, i.e., 1,800. In the first case (the rent] is 1/31 of the total surplus-value, in the second case it is 1/16 If Rodbertus wants to charge the value of the material exclusively to industry, then above all, it should have been his duty to burden agriculture alone with that part of constant capital which consists of machinery, etc. This part of capital enters into agriculture as a product supplied to it by industry as a manufactured product , which forms the means of production for the raw product . Since we are dealing here with an account between two firms, so far as industry is concerned, that part of the value of the machinery which consists of raw material is already debited to it under the heading of raw material or value of the material . We cannot therefore book this twice over. The other portion of value of the machinery used in manufacture, consists of added manufacturing labour (past and present) and this resolves into wages and profit (paid and unpaid labour). That part of capital which has been advanced here (apart from that contained in the raw material of the machines) therefore consists only of wages. Hence it increases not only the amount of capital advanced, but also the profit, the volume of surplus-value to be calculated upon this capital. (The error usually made in such calculations is that, for instance, the wear and tear of the machinery or of the tools used is embodied in the machine itself, in its value and although, in the last analysis, this wear and tear can be reduced to labour either labour contained in the raw material or that which transformed the raw material into machine, etc. this past labour never again enters into profit or wages, but only acts as a produced condition of production (in so far as the necessary labour-time for reproduction does not alter) which, whatever its use-value in the labour-process, only figures as value of constant capital, in the process of creating surplus-value. This is of great importance and has already been explained in the course of my examination of the exchange of constant capital and revenue. But apart from this, it needs to be further developed in the section on the accumulation of capital.) So far as agriculture is concerned that is, purely the production of raw products or so-called primary production in balancing the accounts between the firms primary production and manufacture that part of the value of constant capital which represents machinery, tools, etc., can on no account be regarded in any other way than as an item which enters into agricultural capital without increasing its surplus-value. If, as a result of the employment of machinery etc., agricultural labour becomes more productive, the higher the price of this machinery etc., the smaller will be the increase in productivity. It is the use-value of the machinery and not its value which increases the productivity of agricultural labour or of any other sort of labour. Otherwise one might also say that the productivity of industrial labour is, in the first place, due to the presence of raw material and its properties. But again it is the use-value of the raw material, not its value, which constitutes a condition of production for industry. Its value, on the contrary, is a drawback. Thus what Herr Rodbertus says about the value of the material in respect to the industrial capital, is literally, ||479| mutatis mutandis valid for machinery etc. In other words: That portion of the value of wheat and cotton representing the value of the wear and tear of the plough or gin, is not the result of the work of ploughing or of separating the cotton fibre from its seed, but the result of the labour which manufactured the plough and the gin. This component part of value goes into the agricultural product without being produced in agriculture. It only passes through agriculture, which uses it merely to replace ploughs and gins by buying new ones from the maker of machines. The machines, tools, buildings and other manufactured products required in agriculture consist of two component parts : 1. the raw materials of these manufactured products [2. the labour added to the raw materials.] Although these raw materials are the product of agriculture, they are a part of its product which never enters into wages or into profit. Even if there were no capitalist, the farmer still could not chalk up this part of his product as wages for himself. He would in fact have to hand it over gratis to the machine manufacturer so that the latter would make him a machine from it and besides he would have to pay for the labour which is added to this raw material (equal to wages plus profit). This happens in reality. The machine maker buys the raw material but in purchasing the machine, agricultural producer must buy back the raw material. It is just as if he had not sold it at all, but had lent it to the machine maker to give it the form of the machine. Thus that portion of the value of the machinery employed in agriculture which resolves into raw material, although it is the product of agricultural labour and forms part of its value, belongs to production and not to the producer, it therefore figures in his expenses, like seed. The other part, however, represents the manufacturing labour embodied in the machinery and is a product of manufacture which enters into agriculture as a means of production, just as raw material enters as a means of production into industry. Thus, if it is true that the firm primary production supplies the firm manufacturing industry with the value of the material which enters as an item into the capital of the industrialist, then it is no less true that the firm manufacturing industry supplies the firm primary production with the value of the machinery which enters wholly (including that part which consists of raw material) into the farmer s capital without this component part of value yielding him any surplus-value. This circumstance is a reason why the rate of profit appears to be smaller in high agriculture , as the English call it, than in primitive agriculture, although the rate of surplus-value is greater. At the same time this supplies Herr Rodbertus with striking proof of how irrelevant it is to the nature of a capital advance, whether that portion of the product which is laid out in constant capital is replaced in kind and therefore only accounted for as a commodity as money value or whether it has really been alienated and has gone through the process of purchase and sale. Supposing the producer of raw materials handed over gratis to the machine builder the iron, copper, wood etc., embodied in his machine, so that the machine builder in selling him the machine would charge him for the added labour and the wear and tear of his own machine, then this machine would cost the agriculturist just as much as it costs him now and the same component part of value would figure as constant capital, as an advance, in his production. Just as it amounts to the same thing whether a farmer sells the whole of his harvest and buys seed from elsewhere with that portion of its value which rep-resents seed (raw material) perhaps to effect a desirable change in the type of seed and to prevent degeneration by inbreeding or whether he deducts this component part of value directly from his product and returns it to the soil. But in order to arrive at his results, Herr Rodbertus misinterprets that part of constant capital which consists of machinery. A second aspect that has to be examined in connection with [case] II of Herr Rodbertus is this: He speaks of the manufactured and agricultural products which make up the revenue, which is something quite different from those manufactured and agricultural products which make up the total annual product. Now supposing it were correct to say of the latter that after deducting the whole of that part of the agricultural capital which consists of machinery etc. ||480| and that part of the agricultural product which is returned direct to agricultural production, the proportion in which the surplus-value is distributed between farmer and manufacturer and therefore also the proportion in which the surplus-value accruing to the farmer is distributed between himself and the landlord must be determined by the share of manufacture and of agriculture in the total value of the products; then it is still highly questionable whether this is correct if we are speaking of those products which form the common fund of revenue. Revenue (we exclude here that part which is reconverted into new capital) consists of products which go into individual consumption and the question is, how much do the capitalists, farmers and landlords draw out of this pot. Is this quota determined by the share of manufacture and raw production in the value of the product that constitutes revenue? Or by the quotas in which the value of the total revenue is divisible into agricultural labour and manufacturing labour? The mass of products which make up revenue, as I have demonstrated earlier, does not contain any products that enter into production as instruments of labour (machinery), auxiliary material, semi-finished goods and the raw material of semi-finished goods, which form a part of the annual product of labour. Not only the constant capital of primary production is excluded but also the constant capital of the machine makers and the entire constant capital of the farmer and the capitalist which does not enter into the process of the creation of value though it enters into the labour-process. Furthermore, it excludes not only constant capital, but also the part of the unconsumable products that represents the revenue of their producers and enters into the capital of the producers of products consumable as revenue, for the replacement of their used up constant capital. The mass of products on which the revenue is spent and which in fact represents that part of wealth which constitutes revenue, in terms of both use-value and exchange-value this mass of products can, as I have demonstrated earlier, be regarded as consisting only of newly-added (during the year) labour. Hence it can be resolved only into revenue, i.e., wages and profit (which again splits up into profit, rent, taxes, etc.), since not a single particle of it contains any of the value of the raw material which goes into production or of the wear and tear of the machinery which goes into production, in a word, it contains none of the value of the means of production. Leaving aside the derivative forms of revenue because they merely show that the owner of the revenue relinquishes his proportional share of the said products to another, be it for services etc. or debt etc. let us consider this revenue and assume that wages form a third of it, profit a third and rent a third and that the value of the product is 90. Then each will be able to draw the equivalent of 30 worth of products from the whole amount. Since the amount of products which forms the revenue consists only of newly-added (i.e., added during the year) labour, it seems very simple that if the product contains two-thirds agricultural labour and one-third manufacturing labour, then manufacturers and agriculturists will share the value in this proportion. One-third of the value would fall to the manufacturers and two-thirds to the agriculturists and the proportional amount of the surplus-value realised in manufacture and agriculture (the same rate of surplus-value is assumed in both) would correspond to these shares of manufacture and agriculture in the value of the total product. But rent again [would] grow in proportion to the farmer s volume of profit since it sits on it like a parasite. And yet this is wrong. Because a part of the value which consists of agricultural labour forms the revenue of the manufacturers of that fixed capital etc., which replaces the fixed capital worn out in agriculture. Thus the ratio between agricultural labour and manufacturing labour in the component parts of value of those products which constitute the revenue, in no way indicates the ratio in which the value of this mass of products or this mass of products itself is distributed between the manufacturers and the farmers, neither does it indicate the ratio in which manufacture and agriculture participate in total production. Rodbertus goes on to say: If the productivity of two different spheres of production is to be compared, this can only be done relatively. In other words, one starts at any arbitrary point, for instance, when the values of hemp and linen, i.e., the correlative quantities of labour-time embodied in them, are as 1:3. If this ratio alters, then it is correct to say that the productivity of these different types of labour has altered. But it is wrong to say that because the labour-time required for the production of an ounce of gold ||481| equals three and that for a ton of iron also equals three, gold production is less productive than iron production. The relative value of two commodities shows that the one costs more labour-time than the other; but one cannot say that because of this one branch is more productive than the other. This would only be correct if the labour-time were used for the production of the same use-values in both instances. It would be entirely wrong to say that manufacture is three times as productive as agriculture if the value of the raw product is to that of the manufactured product as 3:1. Only if the ratio changes say to 4:1 or 3:2 or 2:1, i.e., when it rises or falls, could one say that the relative productivity in the two branches has altered. In other words: The rate of profit depends solely on the rate of surplus-value and this is determined solely by the productivity of labour. On the other hand, given the productivity of labour, the rate of ground-rent also depends on the amount of labour (the number of workers) employed. This assertion contains almost as many falsehoods as words. Firstly the rate of profit is by no means solely determined by the rate of surplus-value. But more about this shortly. First of all, it is wrong to say that the rate of surplus-value depends solely on the productivity of labour. Given the productivity of labour, the rate of surplus-value alters according to the length of the surplus labour-time. Hence the rate of surplus-value depends not only on the productivity of labour but also on the quantity of labour employed because the quantity of unpaid labour can grow (while productivity remains constant) without the quantity of paid labour, i.e., that part of capital laid out in wages, growing. Surplus-value absolute or relative (and Rodbertus only knows the latter from Ricardo) cannot exist unless labour is at least sufficiently productive to leave over some sur-plus labour-time apart from that required for the worker s own reproduction. But assuming this to be the case, with a given minimum productivity, then the rate of surplus-value alters according to the length of surplus labour-time. Firstly, therefore, it is wrong to say that because the rate of surplus-value is solely determined by the productivity of the labour exploited by capital, the rate of profit or the level of capital gain is so determined. Secondly: The rate of surplus-value which, if the productivity of labour is given, alters with the length of the working-day and, with a given normal working-day, alters with the productivity of labour is assumed to be given. Surplus-value itself will then vary according to the number of workers from whose every working-day a certain quantity of surplus-value is extorted, or according to the volume of variable capital expended on wages. The rate of profit, on the other hand, depends on the ratio of this surplus-value [to] the variable capital plus the constant capital. If the rate of surplus-value is given, the amount of surplus-value does indeed depend on the amount of variable capital, but the level of profit, the rate of profit, depends on the ratio of this surplus-value to the total capital advanced. In this case the rate of profit will thus be determined by the price of the raw material (if such exists in this branch of industry) and the value of machinery of a particular efficiency. Hence what Rodbertus says is fundamentally wrong: This is only valid if it [signifies] the tautology that: given the rate of profit <very different from the rate of surplus-value and surplus-value itself.>, the amount of capital employed is immaterial, precisely because the rate of profit is assumed to be constant. But as a rule the rate of profit can increase although the productivity of labour remains constant, or it can fall even though the productivity of labour rises and rises moreover in every department. And now again the silly remark <pp. 125 26> about ground-rent, the assertion that the mere increase of rent raises its rate, because in every country it is calculated on the basis of an unalterable number of acres (p. 126). If the volume of profit grows (given the rate of profit), then the amount of capital from which it is drawn, grows. On the other hand, if rent increases, then [according to Rodbertus] only one factor changes, namely rent itself, while its standard of measurement, the number of acres , remains unalterably fixed. ||482| Hence rent can rise for a reason which enters into the economic development of society everywhere, namely the increase in labour used for production, in other words, the increasing population. This does not necessarily have to he followed by a rise in the raw product value since the drawing of rent from a greater quantity of primary product must already have this effect (p. 127). On p.128, Rodbertus makes the strange discovery that even if the value of the raw product fell below its normal level, causing rent to disappear completely, it would be impossible And why? This, Herr Rodbertus, depends entirely upon the nature of your calculation. Let the constant capital advanced be 100, the wages advanced 50 and let the product of labour over and above this 50 be 150. We would then have the following calculation: The only requirement to produce this situation is that the worker should work for his master three quarters of his working-day, it is therefore assumed that one quarter of his labour-time suffices for his own reproduction. Of course, if Herr Rodbertus takes the total value of the product, which equals 300, and does not consider the excess it contains over the costs of production, but says that this product is to be divided between the capitalist and the worker, then in fact the capitalist s portion can only amount to a part of this product, even if it came to 999/1,000. But the calculation is incorrect, or at least useless in almost every respect. If a person lays out 150 and makes 300 he is not in the habit of saying that he has made a profit of 50 per cent on the basis of reckoning the 150 on 300 instead of 150. Assume, in the above example, that the worker has worked 12 hours, 3 for himself and 9 for the capitalist. Now let him work 15 hours, i.e., 3 for himself and 12 for the capitalist. Then, according to the former production ratio, an outlay of 25 on constant capital would have to be added (less in fact, because the outlay on machinery would not grow to the same degree as the quantity of labour). Thus: Then Rodbertus comes up again with the growth of rent to infinity , firstly because he interprets its mere increase in volume as a rise, and therefore speaks of its rise when the same rate of rent is paid on a larger amount of product. Secondly because he calculates on an acre as his standard of measurement. Two things which have nothing in common. The following points can be dealt with quite briefly, since they have nothing to do with my purpose. The value of land is the capitalised ground-rent . Hence this, its expression in terms of money, depends on the level of the prevailing rate of interest. Capitalised at 4 per cent, it would have to be multiplied by 25 (since 4 per cent is 1/25 of 100); at 5 per cent by 20 (since 5 per cent is 1/20 of 100). This would amount to a difference in land value of 20 per cent (p. 131). Even with a fall in the value of money, ground-rent and hence the value of land would rise nominally, since unlike the increase in interest or profit (expressed in money) the monetary expression of capital does not rise evenly. The rent, however, which has risen in terms of money has to be related to the unchanged number of acres of the piece of land (p. 132). Herr Rodbertus sums up his wisdom as applied to Europe in this way: Here Herr Rodbertus, just like Ricardo, explains the rise of rent and the fall of the rate of profit one by the other; the fall of one is equal to the rise of the other and the rise of the latter is explained by the relative unproductiveness ||483| of agriculture. Indeed, Ricardo says somewhere quite expressly that it is not a matter of absolute but of relative unproductiveness. But even if he had said the opposite, it would not comply with the principle he establishes since Anderson, the original author of the Ricardian concept, expressly declares that every piece of land is capable of absolute improvement. If surplus-value (profit and rent) in general has risen then it is not merely possible that the rate of the total rent has fallen in proportion to constant capital, but it will have fallen because productivity has risen. Although the number of workers employed has grown, as has the rate at which they are exploited, the amount of capital expended on wages as a whole has fallen relatively, although it has risen absolutely; because the capital which as an advance a product of the past is set in motion by these workers and as a prerequisite of production forms an ever growing share of the total capital. Hence the rate of profit and rent taken together has fallen, although not only its volume (its absolute amount) has grown, but also the rate at which labour is being exploited has risen. This Herr Rodbertus cannot see, because for him constant capital is an invention of industry of which agriculture is ignorant. But so far as the relative magnitude of profit and rent is concerned, it does not by any means follow that, because agriculture is relatively less productive than industry, the rate of profit has fallen absolutely. If, for instance, its relationship to rent was as 2:3 and is now as 1:3, then whereas previously it formed two-thirds of rent, it now forms only one-third, or previously [profit] formed two-fifths of the total surplus-value and now only a quarter, [or] previously 8/20 and now only 5/20; it would have fallen by 3/20 or [by] 15 per cent. Assume that the value of 1 lb. of cotton was 2s. It falls to 1s. 100 workers who previously span 100 lbs. in one day, now spin 300. Previously, the outlay for 300 lbs. amounted to 600s.; now it is only 300s. Further, assume that in both cases machinery equals 1/10, or 60s. Finally, previously 300 lbs. cost 300s. as an outlay for 300 workers, now only l00s. for 100 [workers]. Since the productivity of the workers has increased , and we must suppose that they are paid here in their own product, assume that whereas previously the surplus-value was 20 per cent of wages, it is now 40. Thus the cost of the 300 lbs. is: In the first case: The costs of production 960, profit 60, rate of profit 6 1/4 [per cent]. In the second case: [The costs of production] 460, profit 40, rate of profit 8 16/23 [per cent]. Suppose the rent is a third of 1 lb., then in the first case it equals 200s., i.e., 10; in the second it is 100s. or 5. The rent has fallen here because the raw product has become cheaper by 50 per cent. But the whole of the product has become cheaper by more than 50 per cent. The industrial labour added in I [is to the value of the raw material] as 300 : 600 = 6 : 10 = 1 : 1 2/3; in II, as 140 : 300 = 1 : 2 1/7. Industrial labour has become relatively more productive than agricultural labour; yet in the first case the rate of profit is lower and the rent higher than in the second. In both cases rent amounts to one-third of raw materials. Assume that the amount of raw materials in II doubles so that 600 lbs. are spun and the ratio would be: II. 600 lbs. [cotton] = 600s. raw material, 120s. machinery, 200s. wages, 80s. surplus-value. Altogether 920s. production costs, 80s. profit, rate of profit 8 16/23 per cent. The rate of profit [has] risen compared with I. Rent would be just the same as in I. The 600 lbs. would cost only 1,000, whereas before they cost 2,040. ||484| It does not by any means follow from the relative dearness of the agricultural product that it yields a [higher] rent. However, if one assumes as Rodbertus can be said to assume, since his so-called proof is absurd that rent clings as a percentage on to every particle of value of the agricultural product, then indeed it follows that rent rises with the increasing dearness of agricultural produce. Let us strip Herr Rodbertus of all nonsense (not to speak of such defective conceptions as I have detailed more fully above, for instance that the rate of surplus-value ( level of rent ) can only rise when labour becomes more productive, i.e., the overlooking of absolute surplus-value, etc.); namely the absurd conception that the value of the material does not form part of the expenditure in (capitalist) agriculture in the strict sense. The second piece of nonsense: that he does not regard the machinery etc., the second part of the constant capital of agriculture and manufacture, as a component part of value , which just as the value of the material does not arise from the labour of the sphere of production into which it enters as machinery, and upon which the profit made in each sphere of production is also calculated, even though the value of the machinery does not add a farthing to the profit, as little as the value of the material although both are means of production and as such enter into the labour process. The third piece of nonsense: that he does not charge to agriculture the entire value of the machinery etc. which enters into it as an item of expenditure and that he does not regard that element of it which does not consist of raw material as a debit of agriculture to industry, which does not therefore belong to the expenditure of industry as a whole and in payment for which, a part of the raw material of agriculture must be supplied gratis to industry. The fourth piece of nonsense : his belief that in addition to machinery and its auxiliary materials the value of the material enters into all branches of industry, whereas this is not the case in the entire transport industry any more than it is in the extractive industry. The fifth piece of nonsense: that he does not see that although, besides variable capital, raw material does enter into many branches of manufacture (and this the more they supply finished produce for consumption) the other component part of constant capital disappears almost completely or is very small, incomparably smaller than in large-scale industry or agriculture. The sixth piece of nonsense: that he confuses the average prices of commodities with their values. Stripped of all this, which has allowed him to derive his explanation of rent from the farmer s wrong calculation and his own wrong calculation, so that rent would have to disappear to the extent to which the farmer accurately calculates the outlay he makes, then only the following assertion remains as the real kernel: When the raw products are sold at their values, their value stands above the average prices of the other commodities or above their own average price, this means their value is greater than the costs of production plus average profit, thus leaving an excess profit which constitutes rent. Furthermore, assuming the same rate of surplus-value, this means that the ratio of variable capital to constant capital is greater in primary production than it is, on an average, in those spheres of production which belong to industry (which does not prevent it from being higher in some branches of industry than it is in agriculture). Or, putting it into even more general terms: agriculture belongs to that class of industries, whose variable capital is greater proportionately to constant capital than in industry, on an average. Hence its surplus-value, calculated on its costs of production, must be higher than the average in the industrial spheres. Which means again, that its particular rate of profit stands above the average rate of profit or the general rate of profit. Which means again: when the rate of surplus-value is the same and the surplus-value itself is given, then the particular rate of profit in each sphere of production depends on the proportion of variable capital to constant capital in that particular sphere. This would therefore only be an application of the law developed by me in a general form to a particular branch of industry. ||485| Consequently: 1. One has to prove that agriculture belongs to those particular spheres of production whose commodity values are above their average prices, whose profit, so long as they appropriate it themselves and do not hand it over for the equalisation of the general rate of profit, thus stands above the average profit, yielding them, therefore, in addition to this, an excess profit. This point 1 appears certain to apply to agriculture on an average, because manual labour is still relatively dominant in it and it is characteristic of the bourgeois mode of production to develop manufacture more rapidly than agriculture. This is, however, a historical difference which can disappear. At the same time this implies that, on the whole, the means of production supplied by industry to agriculture fall in value, while the raw material which agriculture supplies to industry generally rises in value, the constant capital in a large part of manufacture has consequently a proportionately greater value than that in agriculture. In the main, this will probably not apply to the extractive industry. 2. It is wrong to say, as Rodbertus does: If according to the general law the agricultural product is sold on an average at its value then it must yield an excess profit, alias rent; as though this selling of the commodity at its value, above its average price, were the general law of capitalist production. On the contrary, it must be shown why in primary production by way of exception and in contrast to the class of industrial products whose value similarly stands a b o v e their average price the values are not reduced to the average prices and therefore yield an excess profit, alias rent. This is to be explained simply by property in land. The equalisation takes place only between capitals, because only the action of capitals on one another has the force to assert the inherent laws of capital. In this respect, those who derive rent from monopoly are right. Just as it is the monopoly of capital alone that enables the capitalist to squeeze surplus-labour out of the worker, so the monopoly of land ownership enables the landed proprietor to squeeze that part of surplus-labour from the capitalist, which would form a constant excess profit. But those who derive rent from monopoly are mistaken when they imagine that monopoly enables the landed proprietor to force the price of the commodity above its value. On the contrary, it makes it possible to maintain the value of the commodity above its average price; to sell the commodity not above, but at its value. Modified in this way, the proposition is correct. It explains the existence of rent, whereas Ricardo only explains the existence of differential rents and actually does not credit the ownership of land with any economic effect. Furthermore, it does away with the superstructure, which with Ricardo himself was anyhow only arbitrary and not necessary for his presentation, namely, that the agricultural industry becomes gradually less productive; it admits on the contrary that it becomes more productive. On the bourgeois basis however agriculture is relatively less productive, or slower to develop the productive power of labour, than industry, Ricardo is right when he derives his excess surplus-value not from greater productivity but from smaller productivity. So far as the difference in rents is concerned, provided equal capital is invested in land areas of equal size, it is due to the difference in natural fertility, in the first place, specifically with regard to those products which supply bread, the chief nutriment; provided the lad is of equal size and fertility, differences in rent arise from unequal capital investment. The first, natural, difference causes not only the difference in the size but also in the level or rate of rent, relatively to the capital which has been laid out. The second, industrial difference, only effects a greater rent in proportion to the volume of capital which has been laid out. Successive capital investments on the same land may also have different results. The existence of different excess profits or different rents on land of varying fertility does not distinguish agriculture from industry. What does distinguish it is that those excess profits in agriculture become permanent fixtures, because here they rest on a natural basis (which, it is true, can be to some extent levelled out). In industry, on the other hand given the same average profit these excess profits can only turn up fleetingly and they only appear because of a change-over to more productive machines and combinations of labour. In industry it is always the most recently added, most productive capital that yields an excess profit by reducing average prices. In agriculture excess profit may be the result, and very often must be the result, not of the absolute increase in fertility of the best fields, but the relative increase in their fertility, because less productive land is being cultivated. In industry the higher relative productiveness, the excess profit (which disappears), must always be due to the absolute increase in productiveness, or productivity, of the newly invested capital compared with the old. No capital can yield an excess profit in industry (we are not concerned here with a momentary rise in demand), because less productive capitals are newly entering into the branch of industry. ||486| It can, however, also happen in agriculture (and Ricardo admits this) that more fertile land land which is either naturally more fertile or which becomes more fertile under newly developed advances in technique than the old land under the old [conditions] comes into use at a later stage and even throws a part of the old land out of cultivation (as in the mining industry and with colonial products), or forces it to turn to another type of agriculture which supplies a different product. The fact that the differences in rents (excess profits) become more or less fixed distinguishes agriculture from industry. But the fact that the market-price is determined by the average conditions of production, thus raising the price of the product which is below this average, above its price and even above its value, this fact by no means arises from the land, but from competition, from capitalist production. Hence this is not a law of nature, but a social law. This theory neither demands the payment of rent for the worst land, nor the non-payment of rent. Similarly, it is possible that a lease rent is paid where no rent is yielded, where only the ordinary profit is made, or where not even this is made. Here the landowner draws a rent although economically none is available. Rent (excess profit) is paid only for the better (more fertile) land. Here rent as such does not exist. In such cases excess profit just as the excess profit in industry rarely becomes fixed in the form of rent (as in the West of the United States of North America). |486|| ||486| This is the case where, on the one hand, relatively great areas of disposable land have not become private property and, on the other, the natural fertility is so great that the values of the agricultural products are equal to (sometimes below) their average prices, despite the scant development of capitalist production and therefore the high proportion of variable capital to constant capital. If their values were higher, competition would reduce them to this level. It is however absurd to say, as for example Rodbertus does, that the state [appropriates the ground-rent because it] levies, for instance, a dollar or so per acre, a low, almost nominal price. One could just as well say that the state imposes a trade tax on the pursuit of every branch of industry. In this case Ricardo s law exists. Rent exists only for relatively fertile land although mostly not in a fixed but in a fluid state, like the excess profit in industry. The land that pays no rent does so, not because of its low fertility, but because of its high fertility. The better kinds of land pay rent, because they possess more than average fertility, as a result of their relatively higher fertility. But in countries where landed property exists, the same situation, namely that the last cultivated land pays no rent, may also occur for the reverse reasons. Supposing, for instance, that the value of the grain crops was so low (and that its low value was in no way connected with the payment of rent), that owing to the relatively low fertility of the last cultivated land the value of its crop were only equal to the average price, this means that, if the same amount of labour were expended here as on the land which carried a rent, the number of quarters would be so small (on the capital laid out), that with the average value of bread products, only the average price of wheat would be obtained. ||487| Supposing for example, that the last land which carries rent (and the land which carries the smallest rent represents pure rent; the others already differential rent) produces [with] a capital investment of 100, [a product] equal to 120 or 360 quarters of wheat at 1/3. In this case 3 quarters equal 1. Let 1 equal one week s labour. 100 are 100 weeks labour and 120 are 120 weeks labour. 1 quarter is 1/3 of a week which is 2 days and of these 2 days or 24 hours (if the normal working-day is 12 hours) 1/5, or 4 4/5 hours, are unpaid labour which is equal to the surplus-value embodied in the quarter. 1 quarter equals 1/3 which is 6 2/3s. or 6 6/9s. If the quarter is sold at its value and the average profit is 10 per cent then the average price of the 360 quarters would be 110 and the average price per quarter 6 1/9s. The value would be 10 above the average price. And since the average profit is 10 per cent the rent would be equal to half the surplus-value, i.e., 10 or 5/9s. per quarter. Better types of land, which would yield more quarters for the same outlay of 120 labour weeks (of which, however, only 100 are paid labour, be it materialised or living), would, at the price of 6 6/9s. per quarter, yield a higher rent. But the worst cultivated land would yield a rent of 10 on a capital of 100 or of 5/9s. per quarter of wheat. Assume that a new piece of land is cultivated, which only yields 330 quarters with 120 labour weeks. If the value of 3 quarters is 1, then that of 330 quarters is 110. But 1 quarter would now be equal to 2 days and 2 2/11 hours, while before it was equal to only two days. Previously, 1 quarter was equal to 6 6/9s. or 1 quarter was equal to 6s. 8d.; now, since 1 equals 6 days, it is equal to 7s. 3d. 1 1/11 farthing. To be sold at its value the quarter would now have to be sold at 7d. 1 1/11 farthing more, at this price it would also yield the rent of 5/9s. per quarter. The value of the wheat produced on the better land is here below the value of that produced on the worst land. If this worst land sells at the price per quarter of the next best or rent yielding land then it sells below its value but at its average price, i.e., the price at which it yields the normal profit of 10 per cent. It can therefore be cultivated and yield the normal average profit to the capitalist. There are two situations in which the worst land would here yield a rent apart from profit. Firstly if the value of the quarter of wheat were above 6 6/9s. (its price could be above 6 6/9s., i.e., above its value, as a result of demand; but this does not concern us here. The 6 6/9s., the price per quarter, which yielded a rent of 10 on the worst land cultivated previously, was equal to the value of the wheat grown on this land, which yields a non-differential rent), that is [if] the worst land previously cultivated and all others, while yielding the same rent, were proportionately less fertile, so that their value were higher above their average price and the average price of the other commodities. That the new worst land does not yield a rent is thus not due to its low fertility but to the relatively high fertility of the other land. As against the new type of land with the new capital investment, the worst, [previously] cultivated, rent-yielding lad represents rent in general, the non-differential rent. And that its rent is not higher is due to the [high] fertility of the rent-yielding land. Assume that there are three other classes of land besides the last rent-yielding land. Class II (that above I, the last rent-yielding land) carries a rent of one-fifth more because this land is one-fifth more fertile than class I; class III again one-fifth more because it is one-fifth more fertile than class II, and the same again in class IV because it is a fifth more fertile than class III. Since the rent in class I equals 10, it is 10 + 1/5 = 12 in class II, 12 + 1/5 = 14 2/5 in class III and 14 2/5 + 1/5 = 17 7/25 in class IV. If IV s fertility were less, the rent of III-I inclusive ||488 | would be greater and that of IV also greater absolutely (but would the proportion be the same?). This can be taken in two ways. If I were more fertile then the rent of II, III, JV would be proportionately smaller. On the other hand, I is to II, II is to III and III is to IV as the newly added, non-rent-yielding type of land is to I. The new type of land does not carry a rent because the value of the wheat from I is not above the average price [of that] from the new land. It would be above it if I were less fertile. Then the new land would likewise yield a rent. But the same applies to I, If II were more fertile then I would yield no rent or a smaller rent. And it is the same with II and III and with III and IV, Finally we have the reverse: The absolute fertility of IV determines the rent of III. If IV were yet more fertile, III, II, I would yield a smaller rent or no rent at all. Thus the rent yielded by I, the undifferentiated rent, is determined by the fertility of IV, just as the circumstance that the new land yields no rent is determined by the fertility of I. Accordingly, Storch s law is valid here, namely, that the rent of the most fertile land determines the rent of the last land to yield any rent at all, and therefore also the difference between the land which yields the undifferentiated rent and that which yields no rent at all. Hence the phenomenon that here the fifth class, the newly cultivated land I (as opposed to I) yields no rent, is not to be ascribed to its own lack of fertility, but to its relative lack of fertility compared with I, therefore, to the relative fertility of I as compared with I . [Secondly ] The value [of the product] of the rent-yielding types of land I, II, III, IV, that is 6s. 8d. per quarter (to make it more realistic, one could say bushel instead of quarter), equals the average price of I and is below its own value. Now many intermediary stages are in fact possible. Supposing on a capital investment of 100, I yielded any quantity of quarters between its real return of 330 bushels and the return of I which is 360 bushels, say 333, 340, 350 up to 360 x bushels. Then the value of the quarter at 6s. 8d. would be above the average price of I (per bushel) and the last cultivated land would yield a rent. That it yields the average profit at all, it owes to the relatively low fertility of I, and therefore of I-IV. That it yields no rent, is due to the relatively high fertility of I and to its own relatively low fertility. The last cultivated land I could yield a rent if the value of the bushel were above 6s. 8d., that is, if I, II, III, IV were less fertile, for then the value of the wheat would be greater. It could however also yield a rent if the value were given at 6s. 8d., i.e., if the fertility of I, II, III and IV were the same. This would be the case if it were more fertile itself, yielded more than 330 bushels and if the value of 6s. 8d. per bushel were thus above its average price; in other words, its average price would then be below 6s. 8d., and therefore below the value of the wheat grown on I, II, III, IV. If the value is above the average price, then there is an excess profit above the average profit, hence the possibility of a rent. This shows: When comparing different spheres of production for instance industry and agriculture the fact that value is above average price indicates lower productivity in the sphere of production that yields the excess profit, the excess of value over the average price. In the same sphere, on the other hand, [it indicates] greater productivity of one capital in comparison with other capitals in the same sphere of production. In the above example, I yields a rent, only because in agriculture the proportion of variable capital to constant capital is greater than in industry, i.e., more new labour has to be added to the materialised labour and because of the existence of landed property this excess of value over average price is not levelled out by competition between capitals. But that I yields a rent at all is due to the fact that the value of 6s. 8d. per bushel is not below its average price, and that its fertility is not so low that its own value rises above 6s. 8d. per bushel. Its price moreover is not determined by its own value but by the value of the wheat grown on II, III, IV or, to be precise, by that grown on II. Whether the market-price is merely equal to its own average price or stands above it, and whether its value is above its average price, depends on its own productivity. Hence Rodbertus s view that in agriculture every capital which yields the average profit must yield rent is wrong. This false conclusion follows from his ||489| false basis. He reasons like this: The capital in agriculture, for instance, yields 10. But because, in contrast to industry, raw materials do not enter into it, the 10 are reckoned on a smaller sum. They represent therefore more than 10 per cent. But the point is this: It is not the absence of raw materials (on the contrary, they do enter into agriculture proper; it wouldn t matter a straw if they didn t enter into it, provided machinery etc. increased proportionally) which raises the value of the agricultural products above the average price (their own and that of other commodities). Rather is this due to the higher proportion of variable to constant capital compared with that existing, not in particular spheres of industrial production, but on an average in industry as a whole. The magnitude of this general difference determines the amount and the existence of rent on No. I, the absolute, non-differential rent and hence the smallest rent. The price of wheat from I , the newly cultivated land which does not yield a rent, is, however, not determined by the value of its own product, but by the value of I, and consequently by the average market-price of the wheat supplied by I, II, III and IV. The privilege of agriculture (resulting from landed property), that it sells its product not at the average price but at its value if this value is above the average price, is by no means valid for products grown on different types of land as against one another, for products of different values produced within the same sphere of production. As against industrial products, they can only claim to be sold at their value. As against the other products of the same sphere, they are determined by the market-price, and it depends on the fertility of I whether the value which equals the average market-price here is sufficiently high or low, i.e., whether the fertility of I is sufficiently high or low, for I , if it is sold at this value, to participate little, much or not at all in the general difference between the value and the average price of wheat. But, since Herr Rodbertus makes no distinction at all between values and average prices, and since he considers it to be a general law for all commodities, and not a privilege of agricultural products, that they are sold at their values he must of course believe that the product of the least fertile land has also to be sold at its individual value. But it loses this privilege in competition with products of the same type. Now it is possible for the average price of I to be above 6s. 8d. per bushel, the value of I. It can be assumed (although this is not quite correct), that for land I to be cultivated at all, demand must increase. The price of wheat from I must therefore rise above its value, above 6s. 8d., and indeed persistently so. In this case land I will be cultivated, If it can make the average profit at 6s. 8d. although its value is above 6s. 8d. and if it can satisfy demand, then the price will be reduced to 6s. 8d., since demand now again corresponds to supply, and so I must sell at 6s. 8d. again, ditto II, III, IV; hence also I . If, on the other hand, the average price in I amounted to 7s. 8d. so that it could make the usual profit at this price only (which would be far below its individual value) and if the demand could not be otherwise satisfied, then the value of the bushel would have to consolidate itself at 7s. 8d. and the demand price of I would rise above its value. That of II, III, IV, which is already above their individual value, would rise even higher. If, on the other hand, there were prospects of grain imports which would by no means permit of such a stabilisation, then I could nevertheless be cultivated if small farmers were prepared to be satisfied with less than the average profit. This is constantly happening in both agriculture and industry. Rent could be paid in this case just as when I yields the average profit, but it would merely be a deduction from the farmer s profit. If this could not be done either, then the landlord could lease the land to cottagers whose main concern, like that of the hand-loom weaver, is to get their wages out of it and to pay the surplus, large or small, to the landlord in the form of rent. As in the case of the hand-loom weaver, this surplus could even be a mere deduction, not from the product of labour, but from the wages of labour. In all these instances rent could be paid. In one case it would be a deduction from the capitalist s profit. In the other case, the landlord would appropriate the surplus-labour of the worker which would otherwise be appropriated by the capitalist. And in the final case he would live off the worker s wage as the capitalists are also often wont to do. But large-scale capitalist production is only possible where the last cultivated land yields at least the average profit, that is where the value of I enables I, to realise at least the average price. One can see how the differentiation between value and average price surprisingly solves the question and shows that Ricardo and his opponents are right. ||XI-490| If I, the land which yields absolute rent, were the only cultivated land, then it would sell the bushel of wheat at its value, at 6s. 8d. or 6 6/9s. and not reduce it to the average price of 6 1/9s. or 6s. 1 1/3d. If all land were of the same type and if the cultivated area increased tenfold, because demand grew, then since I yields a rent of 10 per 100, the rent would grow to 100, although only a single type of land existed. But its rate or level would not grow, neither compared with the capital advanced nor compared with the area of land cultivated. Ten times as many acres would be cultivated and ten times as much capital advanced. This would therefore merely be an augmentation of the rental, of the volume of rent, not of its level. The rate of profit would not fall; for the value and price of the agricultural products would remain the same. A capital which is ten times as large can naturally hand over a rent which is ten times larger than a capital which is one-tenth its size. On the other hand, if ten times as much capital were employed on the same area of land with the same result, then the rate of rent compared with the capital laid out would have remained the same; it would have risen in proportion to the area of land, but would not have altered the rate of profit in any way. Now supposing the cultivation of I became more productive, not because the land had altered but because more constant capital and less variable capital is being laid out, that is more capital is being spent on machinery, horses, mineral fertilisers etc. and less on wages; then the value of wheat would approach its average price and the average price of the industrial products, because the excess in the ratio of variable to constant capital would have decreased. In this case rent would fall and the rate of profit would remain unaltered. If the mode of production changed in such a way that the ratio of variable to constant capital became the same as the average ratio in industry, then the excess of value over the average price of wheat would disappear and with it rent, excess profit. Category I would no longer pay a rent, and landed property would have become nominal (in so far as the altered mode of production is not in fact accompanied by additional capital being embodied in the land, so that, on the termination of the lease, the owner might draw interest on a capital which he himself had not advanced; this is indeed a principal means by which landowners enrich themselves, and the dispute about tenantry-right in Ireland revolves around this very point). Now if, besides I, there also existed II, III, IV, in all of which this mode of production were applied, then they would still yield rents because of their greater natural fertility and the rent would be in proportion to the degree of their fertility. Category I would in this case have ceased to yield a rent and the rents of II, III, IV would have fallen accordingly, because the general ratio of productivity in agriculture had become equal to that prevailing in industry. The rent of II, III, IV would correspond with the Ricardian law; it would merely be equivalent to, and would exist only as an excess profit of more fertile compared to less fertile land, like similar excess profits in industry, except in the latter they lack the natural basis for consolidation. The Ricardian law would prevail just the same, even if landed property were non-existent. With the abolition of landed property and the retention of capitalist production, this excess profit arising from the difference in fertility would remain. If the state appropriated the land and capitalist production continued, then rent from II, III, IV would be paid to the state, but rent as such would remain. If landed property became people s property then the whole basis of capitalist production would go, the foundation on which rests the confrontation of the worker by the conditions of labour as an independent force. A question which is to be later examined in connection with rent: How is it possible for rent to rise in value and in amount, with more intensive cultivation, although the rate of rent falls in relation to the capital advanced? This is obviously only possible because the amount of capital advanced rises. If rent is 1/5 and it becomes 1/10, then 20 1/5 = 4 and 50 1/10 = 5. That s all. But if conditions of production in intensive cultivation became the same as those prevailing on an average in industry, instead of only approximating to them, then rent for the least fertile land would disappear and for the most fertile it would be reduced merely to the difference in the land. Absolute rent would no longer exist. Now let us assume that, following upon a rise in demand, new land, II, were cultivated in addition to I. Category I pays the absolute rent, II would pay a differential rent, but the price of wheat (value for I, excess value for II) remains the same. The rate of profit, too, [is supposed] not to be affected, And so on till we come to IV. Thus the level, the rate of rent is also rising if we take the total capital laid out in I, II, III, IV. But the average rate of profit from II, III, IV would remain the same as that from I, which equals that in industry, the general rate of profit. Thus if ||491| we go on to more fertile land, the amount and rate of rent can grow, although the rate of profit remains unchanged and the price of wheat constant. The rise in level and amount of rent would be due to the growing productivity of the capital in II, III, IV, not to the diminishing productivity in I. But the growing productivity would not cause a rise in profits and a fall both in the price of the commodity and in wages, as happens necessarily in industry. Supposing, however, the reverse process took place: from IV to III, II, I, Then the price would rise to 6s. 8d. at which it would still yield a rent of 10 on 100 on I. For the rent of wheat on IV [amounts to] 17 7/25 on 100, of which, however, 7 7/25 are the excess of its price over the value of I. Category I gave 360 bushels at 100 (with a rent of 10 and the value of the bushel at 6s. 8d.) . II 432 bushels. III 518 2/5 bushels and IV 622 2/25 bushels. But the price per bushel of 6s. 8d yielded IV an excess rent of 7 7/25 per 100. IV sells 3 bushels for 1 or 622 2/25 bushels at 207 9/25. But its value is only 120, as in I; whatever is above this amount is excess of its price over its value. IV would sell the bushel at its value or rather, [he would sell it at its value] if he sold it, at 3s. 10 8/27d. and at this price he would have a rent of 10 on 100. The movement from IV to III, III to II and II to I, causes the price per bushel (and with it the rent) to rise until it eventually reaches 6s. 8d. with I, where this price now yields the same rent that it previously yielded with IV. The rate of profit would fall with the rise in price, partly owing to the rise in value of the means of subsistence and raw materials. The transition from IV to III could happen like this: Due to demand, the price of IV rises above its value, hence it yields not only rent but excess rent. Consequently III is cultivated which, with the normal average profit, is not supposed to yield a rent at this price, If the rate of profit has not fallen as a result of the rise in price of IV, but wages, have, then III will yield the average profit. But due to the [additional] supply from III, wages should rise to their normal level again; (then] the rate of profit in III falls etc. Thus the rate of profit falls with this downward movement on the assumptions which we have made, namely, that III cannot yield a rent at the price of IV and that III can only be cultivated at the old rate of profit because wages have momentarily fallen below their [normal] level. Under these conditions [it is again possible for] the Ricardian law [to apply]. But not necessarily, even according to his interpretation. It is merely possible in certain circumstances. In reality the movements are contradictory. This has disposed of the essence of the theory of rent. With Herr Rodbertus, rent arises from eternal nature, at least of capitalist production, because of his value of the material . In our view rent arises from an historical difference in the organic component parts of capital which may be partially ironed out and indeed disappear completely, with the development of agriculture. True, the difference in so far as it is merely due to variation in actual fertility of the land remains even if the absolute rent disappeared. But quite apart from the possible ironing out of natural variations differential rent is linked with the regulation of the market-price and therefore disappears along with the price and with capitalist production. There would remain only the fact that land of varying fertility is cultivated by social labour and, despite the difference in the amount of labour employed, labour can become more productive on all types of land. But the amount of labour used on the worse land would by no means result in more labour being paid for [the product] of the better land as now with the bourgeois. Rather would the labour saved on IV be used for the improvement of III and that saved from III for the improvement of II and finally that saved on II would be used to improve I. Thus the whole of the capital eaten up by the landowners would serve to equalise the labour used for the cultivation of the soil and to reduce the amount of labour in agriculture as a whole. ||492| {Adam Smith, as we saw above, first correctly interprets value and the relation existing between profit, wages, etc. as component parts of this value, and then he proceeds the other way round, regards the prices of wages, profit and rent as antecedent factors and seeks to determine them independently, in order then to compose the price of the commodity out of them. The meaning of this change of approach is that first he grasps the problem in its inner relationships, and then in the reverse form, as it appears in competition. These two concepts of his run counter to one another in his work, naively, without his being aware of the contradiction. Ricardo, on the other hand, consciously abstracts from the form of competition, from the appearance of competition, in order to comprehend the laws as such. On the one hand he must be reproached for not going far enough, for not carrying his abstraction to completion, for instance, when he analyses the value of the commodity, he at once allows himself to be influenced by consideration of all kinds of concrete conditions. On the other hand one must reproach him for regarding the phenomenal form as immediate and direct proof or exposition of the general laws, and for failing to interpret it. In regard to the first, his abstraction is too incomplete; in regard to the second, it is formal abstraction which in itself is wrong.} Now to return briefly to the remainder of Rodbertus. First of all it should be noted that Ricardo [at whom this passage is aimed] nowhere seeks to explain the great rise in land value . This is no problem at all for him. He says further, and Ricardo even noted this explicitly (see later in connection with Ricardo), that given the rate of rent rent can increase with a constant value of corn or agricultural produce. This increase again presents no problem for him. The rise in the rental while the rate of rent remains the same, is no problem for him either. His problem lies in the rise in the rate of rent, i.e., rent in proportion to the agricultural capital advanced, and hence the rise in value not of the amount of agricultural produce, but the rise in the value, for example, of the quarter of wheat, i.e., of the same quantity of agricultural produce; in consequence of this the excess of its value over the average price increases and thereby also the excess of rent over the rate of profit. Herr Rodbertus here begs the Ricardian problem (to say nothing of his erroneous value of the material ). The rate of rent can indeed rise relatively to the capital advanced, in other words, the relative value of the agricultural product can rise in proportion to the industrial product, even though agriculture is constantly becoming more productive. And this can happen for two reasons. Firstly take the above example, the transition from I to II, III, IV, i.e., to ever more fertile land (but where the additional supply is not so great as to throw I out of cultivation or to reduce the difference between value and average price to such an extent that IV, III, II pay relatively lower rents and I no rent at all). If I s rent amounts to 10, II s to 20, III s to 30 and IV s to 40 and if 100 are invested in all four types of land, then I s rent would be 1/10 or 10 per cent on the capital advanced, II s would be 2/10 or 20 per cent, III s would be 3/10 or 30 per cent and IV s rent would be 4/10 or 40 per cent. Altogether 100 on 400 capital advanced, which gives an average rate of rent of 100/4=25 per cent. Taking the entire capital invested in agriculture, the rent amounts now to 25 per cent. Had only the cultivation of land I (the unfertile land) been extended, then the rent would be 40 on 400, 10 per cent just as before, and it would not have risen by 15 per cent. But in the first case (if 330 bushels resulted from an outlay of 100 on I) only 1,320 bushels would have been produced at the price of 6s. 8d. per bushel. In the second case [i.e., when all four classes of land are cultivated], 1,500 bushels have been produced at the same price. The same capital has been advanced in both cases. But the rise in the level of the rent here is only apparent. For if we calculate the capital outlay in relation to the product, then 100 [would have been] needed in I to produce 330 and 400 to produce 1,320 bushels. But now only 100+90+80+70, i.e., 340 are needed to produce 1,320 bushels. 90 in II produce as much as 100 in I, 80 in III as much as 90 in II and 70 in IV as much as 80 in III. The rate of rent [has] risen in II, III, IV, compared with I. If we take society as a whole, it means that a capital of 340 [was] employed to raise the same product, instead of a capital of 400, that is 85 per cent [of the previous] capital. ||493| The 1,320 bushels [would] only be distributed, in a different way from those in the first case. The farmer must hand over as much on 90 as previously on 100, as much on 80 as previously on 90 and as much on 70 as previously on 80. But the capital outlay of 90, 80, 70, gives him just the same amount of product as he previously obtained on 100. He hands over more, not because he must employ more capital in order to supply the same product, but because he employs less capital; not because his capital has become less productive, but because it has become more productive and he is still selling at the price of I, as though he still required the same capital as before in order to produce the same quantity of product. [Secondly.] Apart from this rise in the rate of rent which corresponds to the uneven rise in excess profit in individual branches of industry, though here it does not become fixed there is only one other possibility of the rate of rent rising although the value of the product remains the same, that is, labour does not become less productive. It occurs either when productivity in agriculture remains the same as before but productivity in industry rises and this rise expresses itself in a fall in the rate of profit, in other words when the ratio of variable to constant capital diminishes. Or, alternatively, when productivity is rising in agriculture as well though not at the same rate as in industry but at a lower rate. If productivity in agriculture rises as 1:2 and in industry as 1:4, then it is relatively the same as if it had remained at one in agriculture and had doubled in industry, In this case the ratio of variable capital to constant capital would be decreasing in industry twice as fast as in agriculture. In both cases the rate of profit in industry would fall, and because it fell the rate of rent would rise. In the other instances the rate of profit does not fall absolutely (rather it remains constant) but it falls relatively to rent. It does so not because it itself is decreasing but because rent, the rate of rent in relation to the capital advanced, is rising. Ricardo does not differentiate between these cases. Except in these cases (that is where the rate of profit, although constant, falls relatively because of the differential rents of the capital employed on the more fertile types of land or where the general ratio of constant to variable capital alters as a result of the increased productivity of industry and hence increases the excess of value of agricultural products above their average price) the rate of rent can only rise if the rate of profit falls without industry becoming more productive. This is, however, only possible if wages rise or if raw material rises in value as a result of the lower productivity of agriculture. In this case both the fall in the rate of profit and the rise in the level of rent are brought about by the same cause the decrease in the productivity of agriculture and of the capital employed in agriculture. This is how Ricardo sees it. With the value of money remaining the same, this must then show itself in a rise in the prices of the raw products. If, as above, the rise is relative, then no change in the price of money can raise the money prices of agricultural products absolutely as compared with industrial products. If money fell by 50 per cent then l quarter which was previously worth 3 would now be worth 6, but 1 lb. yarn which was previously worth 1s. would now be worth 2s. The absolute rise in the money prices of agricultural products compared with industrial products can therefore never be explained by changes in [the value of] money. On the whole it can be assumed that under the cruder, pre-capitalist mode of production, agriculture is more productive than industry, because nature assists here as a machine and an organism, whereas in industry the powers of nature are still almost entirely replaced by human action (as in the craft type of industry etc.). In the period of the stormy growth of capitalist production, productivity in industry develops rapidly as compared with agriculture, although its development presupposes that a significant change as between constant and variable capital has already taken place in agriculture, that is, a large number of people have been driven off the land. Later, productivity advances in both, although at a uneven pace. But when industry reaches a certain level the disproportion must diminish, in other words, productivity in agriculture must increase relatively more rapidly than in industry. This requires: 1. The replacement of the easy-going farmer by the businessman, the fanning capitalist; transformation of the husbandman into a pure wage-labourer; large-scale agriculture, i.e., with concentrated capitals. 2. In particular however: Mechanics, the really scientific basis of large-scale industry, had reached a certain degree of perfection during the eighteenth century. The development of chemistry, geology and physiology, the sciences that directly form the specific basis of agriculture rather than of industry, ||494| does not take place till the nineteenth century and especially the later decades. It is nonsense to talk of the greater or lesser productivity of two different branches of industry when merely comparing the values of their commodities. If, [in] 1800, the pound of cotton was 2s. and of yarn 4s., and if, in 1830, the value of cotton was 2s. or 18d. and that of yarn 3s. or 1s. 8d. then one might compare the proportion in which the productivity in both branches had grown but only because the rate of 1800 is taken as the starting-point. On the other hand, because the pound of cotton is 2s, and that of yarn is 3, and hence the labour which produces the cotton is as great again as the [newly-added labour] of spinning, it would be absurd to say that the one is twice as productive as the other. Just as absurd as it would be to say that because canvas can be made more cheaply than the artist s painting on the canvas, the labour of the latter is less productive than that of the former. Only the following is correct, even if it comprises the capitalist meaning of productive productive of surplus-value along with the relative amounts of the product: If, on an average, according to the conditions of production, 500 is needed in the form of raw material and machinery etc.<at given values> in order to employ 100 workers [whose wages] amount to 100 in the cotton industry, and, on the other hand, 150 is needed for raw materials and machinery in order to employ 100 workers [whose wages] amount to 100, in the cultivation of wheat, then the variable capital in I would form 1/6 of the total capital of 600, and 1/5 of the constant capital; in II, the variable capital would constitute 2/5 of the total capital of 250 and 2/3 of constant capital. Thus every 100 which is laid out in I can only contain 16 2/3 variable capital and must contain 83 1/3 constant capital; whereas in II it comprises 40 of variable capital and 60 of constant, In I, variable capital forms 1/6 or 16 2/3 per cent and in II, 40 per cent. Clearly the histories of prices are at present quite wretched. And they can be nothing but wretched until theory shows what needs to be examined. If the rate of surplus-value were given at, say, 20 per cent then the surplus-value in I would amount to 3 1/3 (hence profit 31/3 per cent). In II, however, 8 (hence profit 8 per cent). Labour in I would not be so productive as in II because it would be more productive (in other words, not so productive of surplus-value, because it is more productive of produce). Incidentally, it is cleary only possible to have a ratio of 1 :1/6, for example, in the cotton industry, if a constant capital (this depends on the machines etc.) amounting to say 10,000 has been laid out, hence wages amounting to 2,000, making a total capital of 12,000. If only 6,000 were laid out, of which wages would be 1,000, then the machinery would be less productive etc. At 100 it could not be done at all. On the other had it is possible that if 23,000 is laid out, the resulting increase in the efficiency of the machinery and other economies etc. are so great that the 19,166 2/3 is not entirely allocated to constant capital, but that more raw material and the same amount of labour require less machinery etc. ([in terms of] value) which is assumed to cost 1,000 less than before. Then the ratio of variable to constant capital grows again, but only because the absolute [amount of] capital has grown. This is a check against the fall in the rate of profit. Two capitals of 12,000 would produce the same quantity of commodities as the one of 23,000, but firstly the commodities would be dearer since they required an outlay of 1,000 more, and secondly the rate of profit would be smaller because within the capital of 23,000, the variable capital is more than 1/6 of the total capital, i.e., more than in the sum of the two capitals of 12,000. |494|| ||494| (On the one hand, with the advance of industry, machinery becomes more effective and cheaper; hence, if only the same quantify of machinery were employed as in the past, this part of constant capital in agriculture would diminish; but the quantity of machinery grows faster than the reduction in its price, since this element is as yet little developed in agriculture. On the other hand, with the greater productivity of agriculture, the price of raw material see cotton falls, so that raw material does not increase as a component part of the process of creating value to the same degree as it increases as a component part of the labour-process.) |494|| * * * ||494| Already Petty tells us that the Landlord of his time feared improvements in agriculture because they would cause the price of agricultural products and (the level of) rent to fall; ditto the extension of the land and the cultivation of previously unused land which is equivalent to an extension of the land. (In Holland this extension of the land is to be understood in an even more direct way.) He says: ( the Rent of all England Wales, and the Low-Lands of Scotland, be about Nine Millions per Annum ) (Ibid., p. 231.) Petty fights this view and D Avenant goes ||495| even further and shows how the level of rent may decrease while the amount of rent or the rental increases, He says: It is also evident here, that the Englishman always regards the levef of rent as rent related to capital and never to the total land in the kingdom (or to the acre in general, like Herr Rodbertus). [a] Instead of of the towns has therefore become in the manuscript: In Dutch towns is . Ed. [b] Instead of and the in the manuscript: on . Ed * ||486| <As Opdyke calls landed property the legalised reflection of the capital , so capital is the legalised reflection of other people s labour .> |486|| [c] Instead of reflection of the capital in the manuscript: reflection of the value of capital . Ed. [d] In the manuscript: woods . Ed. [e] In the manuscript: manufacturing instead of manuring . Ed. [f] In the manuscript: and instead of or . Ed. [g] In the manuscript: income from rent instead of Rental . Ed. [h] In the manuscript: rent instead of Rental . Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 8

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch08.htm

Anderson was a practical farmer. His first work, in which the nature of rent is discussed in passing, appeared in 1777, at a time when, for a large section of the public, Sir James Steuart was still the leading economist, and while everyone s attention was focused on the Wealth of Nations, which had appeared a year earlier. As against this, the work of the Scottish farmer, which had been occasioned by an immediate practical controversy and which did not ex professo deal with rent but only incidentally elucidated its nature, could not attract any attention. In this work, Anderson only dealt with rent accidentally, not ex professo. This theory of his appears again, in the same incidental fashion, in one or two of his collected essays which he himself published in three volumes under the title of: Essays Relating to Agriculture and Rural Affairs, 3 vols., Edinburgh, 1775-1796. Similarly in his Recreations in Agriculture, Natural History, Arts, etc., London (to be looked up in the British Museum) which were published in the years 1799 to 1802, all these writings are directly intended for farmers and agriculturists. [It would have been] different if Anderson had had an inkling of the importance of his find and had put it before the public separately, as an Inquiry into the Nature of Rent , or if he had had the least bit of talent in trading his own ideas, as his fellow countryman, McCulloch, did so successfully with other people s. The reproductions of his theory which appeared in 1815 were published forthwith as independent theoretical inquiries into the nature of rent, as the very titles of the respective works of West and Malthus show: Malthus: An Inquiry into the Nature and Progress of Rent. West: Essay on the Application of Capital to Land. Furthermore, Malthus used the Andersonian theory of rent to give his population law, for the first time, both an economic and a real (natural-historical) basis, while the nonsense about geometrical and arithmetical progression borrowed from earlier writers, was a purely imaginary hypothesis. Mr. Malthus at once improved the matter, Ricardo even made this doctrine of rent, as he himself says in his preface, one of the most important links in the whole system of political economy and quite apart from the practical aspect gave it an entirely new theoretical importance. Ricardo evidently did not know Anderson since, in the preface to his Principles of Political Economy, he treats West and Malthus as the originators. Judging by the original manner in which he presents the law, West was possibly as little acquainted with Anderson as Tooke was with Steuart. With Mr. Malthus it is different. A close comparison of his writings shows that he knows and uses Anderson. He was in fact plagiarist by ||496| profession. One need only compare the first edition of his work on population with the work of the Reverend Townsend which I have quoted previously, to he convinced that he does not work him over as an independent producer, but copies him and paraphrases him like a slavish plagiarist, although he does not mention him anywhere by name and conceals his existence. The manner in which Malthus used Anderson is characteristic. Anderson had defended premiums on exports of corn and duties on corn imports, not out of any interest for the landlords, but because he believed that this type of legislation would reduce the average price of corn and ensure an even development of the productive forces in agriculture. Malthus accepted this practical application of Anderson s because being a staunch member of the Established Church of England he was a professional sycophant of the landed aristocracy, whose rents, sinecures, squandering, heartlessness etc. he justified economically. Malthus defends the interests of the industrial bourgeoisie only in so far as these are identical with the interests of landed property, of the aristocracy, i.e., against the mass of the people, the proletariat. But where these interests diverge and are antagonistic to each other, he sides with the aristocracy against the bourgeoisie. Hence his defence of the unproductive worker , over-consumption etc. Anderson, on the other hand, explained the difference between land which pays rent and that which does not, or between lands which pay varying rents, by the relatively low fertility of the land which hears no rent or a smaller rent compared with that which bears a rent or a greater rent. But he stated expressly that these degrees of relative productivity of different types of land, i.e., also the relatively low productivity of the worse types of land compared with the better, had absolutely nothing to do with the absolute productivity of agriculture. On the contrary, he stressed not only that the absolute productivity 0f all types of land could he constantly improved and must be improved with the progress in population, but he went further and asserted that the differences in productivity of various types of land can be progressively reduced. He said that the present degree of development of agriculture in England gives no indication at all of its possibilities. That is why he said that in one country the prices of corn may be high and rent Low, while in another country the price of corn may be low and rent may he high, and this is in accordance with his principle, since the level and the existence of rents is in both countries determined by the difference between the fertile and the unfertile land, in neither of them by the absolute fertility; in each only by the degree of difference in fertility of the existing types of land, and not by the average fertility of these types of land, From this he concluded that the absolute fertility of agriculture has nothing to do with rent. Hence later, as we shall see below, he declared himself a decided adversary of the Malthusian theory of population and it never dawned on him that his own theory of rent was to serve as the basis of this monstrosity. Anderson reasoned that the rise in corn prices in England between 1750 and 1801 as compared with the years 1700 to 1750 was by no means due to the cultivation of progressively less fertile types of land, but to the influence of legislation on agriculture during these two periods. What then did Malthus do? Instead of his (also plagiarised) chimera of the geometrical and arithmetical progression, which he retained as a phrase , he made Anderson s theory the confirmation of his population theory. He retained Anderson s practical application of the theory in so far as it was in the interests of the landlords this fact alone proves that he understood as little of the connection of this theory with the system of bourgeois economy as Anderson himself. Without going into the counter-evidence which the discoverer of the theory put forward, he turned it against the proletariat. The theoretical and practical advance which could have been made from this theory was: theoretical for the determination of the value of the commodity etc. and gaining an insight into the nature of landownership; practical against the necessity of private ownership of the land, on the basis of bourgeois production and, more immediately, against all state regulations such as corn laws, which enhanced this ownership of land. These advances from Anderson s theory, Malthus left to Ricardo. The one practical conclusion which he drew from it was a defence of the protective tariffs which the landlords demanded in 1815 a sycophantic service for the aristocracy and a new justification for the poverty of the producers of wealth, a new apology for the exploiters of labour. In this respect it was a sycophantic service for the industrial capitalists. Utter baseness is a distinctive trait of Malthus a baseness which can only he indulged in by a parson ||497| who sees human suffering as the punishment for sin and who, in any ease, needs a vale of tears on earth , but who, at the same time, in view of the living he draws and aided by the dogma of predestination, finds it altogether advantageous to sweeten their sojourn in the vale of tears for the ruling classes. The baseness of this mind is also evident in his scientific work. Firstly in his shameless and mechanical plagiarism. Secondly in the cautious, not radical, conclusions which he draws from scientific premises. Ricardo, rightly for his time, regards the capitalist mode of production as the most advantageous for production in general, as the most advantageous for the creation of wealth. He wants production for the sake of production and this with good reason. To assert, as sentimental opponents of Ricardo s did, that production as such is not the object, is to forget that production for its own sake means nothing but the development of human productive forces, in other words the development of the richness of human nature as an end in itself. To oppose the welfare of the individual to this end, as Sismondi does, is to assert that the development of the species must be arrested in order to safeguard the welfare of the individual, so that, for instance, no war may be waged in which at all events some individuals perish. Sismondi is only right as against the economists who conceal or deny this contradiction.) Apart from the barrenness of such edifying reflections, they reveal a failure to understand the fact that, although at first the development of the capacities of the human species takes place at the cost of the majority of human individuals and even classes, in the end it breaks through this contradiction and coincides with the development of the individual; the higher development of individuality is thus only achieved by a historical process during which individuals are sacrificed for the interests of the species in the human kingdom, as in the animal and plant kingdoms, always assert themselves at the cost of the interests of individuals, because these interests of the species coincide only with the interests of certain individuals, and it is this coincidence which constitutes the strength of these privileged individuals. Thus Ricardo s ruthlessness was not only scientifically honest but also a scientific necessity from his point of view. But because of this it is also quite immaterial to him whether the advance of the productive forces slays landed property or workers. If this progress devalues the capital of the industrial bourgeoisie it is equally welcome to him. If the development of the productive power of labour halves the value of the existing fixed capital, what does it matter, says Ricardo. The productivity of human labour has doubled, Thus here is scientific honesty. Ricardo s conception is, on the whole, in the interests of the industrial bourgeoisie, only because, and in so far as their interests coincide with that of production or the productive development of human labour. Where the bourgeoisie comes into conflict with this, he is just as ruthless towards it as he is at other times towards the proletariat and the aristocracy. But Malthus! This wretch only draws such conclusions from the given scientific premises (which he invariably steals), as will be agreeable (useful) to the aristocracy against the bourgeoisie and to both against the proletariat. Hence he does not want production for the sake of production, but only in so far as it maintains or extends the status quo, and serves the interests of the ruling classes. Already his first work, one of the most remarkable literary examples of the success of plagiarism at the cost of the original work, had the practical purpose to provide economic proof, in the interests of the existing English government and the landed aristocracy that the tendency of the French Revolution and its adherents in England to perfect matters was utopian. In other words, it was a panegyric pamphlet for the existing conditions, against historical development and, furthermore, a justification of the war against revolutionary France. His writings of 1815, on protective tariffs and rent, were partly means to confirm the earlier apology of the poverty of the producers, in particular, however, to defend reactionary landed property against enlightened literal and progressive capital and especially to justify an intended retrogressive step in English legislation in the interests of the aristocracy against the industrial bourgeoisie. Finally, ||498| his Principles of Political Economy directed against Ricardo had essentially the purpose of reducing the absolute demands of industrial capital and the laws under which its productivity develops, to the desirable limits favourable to the existing interests of the landed aristocracy, the Established Church (to which Mal-thus belonged), government pensioners and consumers of taxes. But when a man seeks to accommodate science to a viewpoint which is derived not from science itself (however erroneous it may be) but from outside, from alien, external interests, then 1 call him base . It is not a base action when Ricardo puts the proletariat on the same level as machinery or beasts of burden or commodities because (from his point of view) their being purely machinery or beasts of burden is conducive to production or because they really are mere commodities in bourgeois production. This is stoic, objective, scientific. In so far as it does not involve sinning against his science, Ricardo is always a philanthropist, just as he was in practice too. The parson Malthus on the other hand, reduces the worker to a beast of burden for the sake of production and even condemns bin to death from starvation and to celibacy. But when these same demands of production curtail the landlord s rent or threaten to encroach on the tithes of the Established Church, or on the interests of the consumers of taxes ; and also when that part of the industrial bourgeoisie whose interests stand in the way of progress is being sacrificed to that part which represents the advance of production and therefore whenever it is a question of the interests of the aristocracy against the bourgeoisie or of the conservative and stagnant bourgeoisie against the progressive in all these instances parson Malthus does not sacrifice the particular interests to production but seeks, as far as he can, to sacrifice the demands of production to the particular interests of existing ruling classes or sections of classes. And to this end he falsifies his scientific conclusions. This is his scientific baseness, his sin against science, quite apart from his shameless and mechanical plagiarism. The scientific conclusions of Malthus are considerate towards the ruling classes in general and towards the reactionary elements of the ruling classes in particular; in other words he falsifies science for these interests, But his conclusions are ruthless as far as they concern the subjugated classes. He is not only ruthless; he affects ruthlessness; he takes a cynical pleasure in it and exaggerates his conclusions in so far as they are directed against the poor wretches, even beyond the point which would be scientifically justified from his point of view.* The hatred of the English working classes for Malthus the mountebank-parson as Cobbett rudely called him (Cobbett, though England s greatest political writer of this century, lacked the Leipzig professorial scholarship and was a pronounced enemy of the learned language ) was thus fully justified and the people s instinct was correct here, in that they felt he was no man of science, but a bought advocate of their opponents, a shameless sycophant of the ruling classes. The inventor of an idea may exaggerate it in all honesty; when the plagiarist exaggerates it, he always makes a business of such an exaggeration. Because the first edition of Malthus s work On Population contains not a single new scientific word, it is to be regarded purely as an obtrusive Capuchin s sermon, an Abraham a Santa Clara version of the discoveries of Townsend, Steuart, Wallace, Herbert etc. Since in fact it only wants to impress by its popular form, popular hate rightly turns against it. As compared to the wretched bourgeois economists who preach harmony, Malthus s only merit lies in his pointed emphasis on the disharmonies, which, though none of them were discovered by him were all emphasised, amplified and publicised by him with complacent sacerdotal cynicism. ||499| Charles Darwin, in the introduction to his On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life (5th thousand), London, 1860, says the following: In his splendid work, Darwin did not realise that by discovering the geometrical progression in the animal and plant kingdom, he overthrew Malthus s theory. Malthus s theory is based on the fact that he set Wallace s geometrical progression of man against the chimerical arithmetical progression of animals and plants. In Darwin s work, for instance on the extinction of species, we also find quite apart from his fundamental principle) the detailed refutation, based on natural history, of the Malthusian theory. But in so far as Malthus s theory rests upon Anderson s theory of rent, it was refuted by Anderson himself. |499|| ||499| Anderson s first publication, in which he develops the theory of rent as a by-product, was a practical polemic, not on rent but on protection. It appeared in 1777 and its very title, An Enquiry into the Nature of the Corn Laws, with a View to the New Corn Bill Proposed for Scotland, Edinburgh, 1777, shows firstly, that it pursues a practical purpose, secondly, that it is related to an imminent act of legislation, in which the interests of the manufacturers and the landlords are diametrically opposed. The law of 1773 (in England; to be looked up in McCulloch s Catalogue), was due (so it appears) to be introduced into Scotland in 1777 (see in the Museum). Thus Anderson s publication was a polemic on behalf of the interests of the agriculturists (protection) (inclusive of the landlords) against the interests of the manufacturers. And he published it avowedly as such a partisan piece of writing. The theory of rent comes in here only incidentally. In his later writings which are to a greater or lesser degree continuously concerned with this battle of interests he merely repeats the theory of rent once or twice in passing. He never pretends to a scientific interest in it and it does not even become an independent subject in his presentation. Accordingly one may judge the correctness of the following remarks of Wilhelm Thukydides Roscher who was evidently not acquainted with Anderson s writings: This sentence contains as many falsehoods as words. Firstly, unlike West, Malthus and Ricardo, Anderson did not put forward his opinion as a doctrine . Secondly, it remained not almost , but entirely unnoticed. Thirdly, it first came in incidentally in a work whose s o l e purpose it was to deal with the contradiction between manufacturers and landlords a contradiction which was considerably developed in 1777 and the work only touched upon this practical battle of interests and left untouched the general ||500| theory of political economy. Fourthly, in 1815 one of the reproducers of this theory, Malthus, expounded it just as much in support of the corn laws as Anderson had done. The same doctrine was used in support of landed property by its discoverer and [by] Malthus, but was turned against landed property by Ricardo. Thus, at most, one might say that some of those who put it forward were defending the interests of landed property while others who put it forward fought those same interests, but one could not say that this theory was attacked by the defenders of landed property in 1815 (for Malthus defended it before Ricardo), or that it was defended by the attackers of landed property for Ricardo did not have to defend this theory against Malthus, since he himself regarded Malthus as one of its discoverers and as his own forerunner. He only had to combat the practical conclusions that were drawn by Malthus). Fifthly, the contradiction between monied and landed interest , touched upon by Wilhelm Thukydides Roscher had up to that moment, absolutely nothing to do either with Anderson s theory of rent or with its reproduction, defence and attack. As Wilhelm Thukydides could have gathered from John Stuart Mill (Essays on Some Unsettled Questions of Political Economy, London, 1844, pp. 109-10), by monied class the Englishman understands l. the money-lenders; and 2. these money-lenders are people who either live altogether on interest or are money-lenders by profession, such as bankers, bill-brokers etc. Mill also observes that all these people who form the monied class are opposed to, or at any rate are distinct from, the producing class (by which Mill understands industrial capitalists besides the working men). Hence Wilhelm Thukydides should see that the interests of the producing class , including the manufacturers, the industrial capitalists, and the interests of the monied class are two very different matters and that these classes are different classes. Furthermore, Wilhelm Thukydides should see that a battle between the industrial capitalists and the landlords was thus by no means a battle between the monied interest and the landed interest . If Wilhelm Thukydides knew the history of the corn laws of 1815 and the struggle over these, then he would already have known from Cobbett that the borough-mongers (landed interest) and the loan-mongers (monied interest) combined against the industrial interest. But Cobbett is crude . Furthermore, Wilhelm Thukydides should know from the history of 1815 to 1847 that in the battle over the corn laws, the majority of the monied interest and some even of the commercial interest (Liverpool for instance) were to be found amongst the allies of the landed interest against the manufacturing interest. |500|| ||502| (At most Herr Roscher might have been surprised that the same doctrine served in favour of landed interest in 1777 and against it in 1815 and that it caused a stir only then. |502|| ||500| If I were to elucidate in equal detail all similar gross falsifications of history which Wilhelm Thukydides commits in his literary historical notes, then I would have to write as fat a volume as his Grundlagen, and indeed, such a work would not be worth the paper it was written upon . But the harmful effects which such learned ignorance as that of a Wilhelm Thukydides can have on researchers in other fields of knowledge, can be seen in the example of Herr Adolf Bastian. In his work Der Mensch in der Geschichte, 1860, Vol. I, p. 374, Note, he quotes the above sentence of Wilhelm Thukydides as documentary proof for a psychological assertion. Incidentally, one cannot say of Bastian that materiam superabat opus [c]. Rather, in this case, the opus does not master its own raw material. Besides, I have found out through the few sciences which I know , that Herr Bastion who knows all sciences, very often relies on such authorities as Wilhelm Thukydides, which is in any case unavoidable in a pantologist . ||501| I hope I shall not be accused of unkindness towards Wilhelm Thukydides. Note the unkindness with which this pedant himself treats science! Anyhow, I have the same right to speak of his total untruths as he has to speak in his self-satisfied and condescending manner of Ricardo s half-truths . Furthermore, Wilhelm Thukydides is by no means honest in his research and cataloguing. Anyone who is not respectable does not exist for him historically either. For instance, Rodbertus does not exist for him as a theoretician of rent because he is a communist . Besides, Wilhelm Thukydides is also inaccurate when it comes to respectable writers . For instance, Bailey exists for McCulloch, who even regards his work as epoch-making. For Wilhelm Thukydides he does not exist. If the science |502| of political economy is to he furthered and popularised in Germany, people like Rodbertus should found a journal which would be open to all scholars (not pedants, prigs and vulgarisers) and whose main purpose it would be to demonstrate the ignorance of the specialists in the science itself as well as in its history. |502|| ||501| Anderson was in no way concerned with any inquiry into the relationship of his theory of rent to the system of political economy. This is not in the least surprising, since his first book appeared one year after Adam Smith s Wealth of Nations, i.e., at a moment when the system of political economy was only first being consolidated, for Steuart s system too had only appeared a few years before, But so far as the material is concerned, which Anderson examined, within the confines of the specific subject he was considering, this was decidedly more extensive than Ricardo s. Just as in his theory of money, the reproduction of Hume s theory, Ricardo specifically only took into account the events from 1797 to 1809, so in the theory of rent, the reproduction of Anderson s theory, he considered only the economic phenomena relating to the rise in corn prices between 1800 and 1815. The following paragraphs are very important because they clearly reflect Ricardo s character: With free import of corn, land is abandoned (l.c., p. 46). In other words landed property is sacrificed to the development of production. In connection with the free import of corn (he writes) however: Ricardo terms as our capital that capital which belongs neither to us nor to him but which has been permanently invested in the land by the capitalists. But we signifies a cross-section of the nation. The increase in our wealth is the increase in social wealth, which is an end as such, irrespective of who are the participants in this wealth! Here the proletariat is sacrificed to wealth. In so far as it is irrelevant to the existence of wealth, its existence is a matter of indifference to wealth. Here mass mass of human beings is worth nothing. These three instances exemplify ||502| Ricardo s scientific impartiality. {The element in which the capital employed in agriculture is invested, is the soil (nature) etc. Hence rent is here equal to the excess of the value of the product of labour created in this element, over its average price. If, on the other hand, an element of nature (or material) which is privately owned by an individual, is employed in another sphere of production whose (physical) basis it does not form, then the rent, if it only comes into being through the employment of this element, cannot consist in the excess of the value of this product over the average price, but only in the excess of the general average price of this product over its own overage price. For instance, a waterfall may replace the steam-engine for a manufacturer and save him consumption of coal. While in possession of this waterfall, he would, for instance, constantly be selling yarn above its overage price and making an excess profit. If the waterfall belongs to a landowner, this excess profit accrues to him as rent. In his hook on rent, Mr. Hopkins observes that in Lancashire the waterfalls not only yield rent but, according to the degree of the natural motive power, they yield differential rent. Here rent is purely the excess of the average market-price of the product over its individual average price.} |502|| ||502| {In competition there are two distinct movements towards equalisation. Capitals within the same sphere of production equalise the prices of the commodities produced within this sphere to the same market-price, irrespective of the relationship of the value of these commodities to this price. The average market-price should equal the value of the commodity, [were] it not for the equalisation between different spheres of production. As between these different spheres, competition equalises the va1ues to the average prices, in so far as the reciprocal interaction of the capitals is not hampered, disrupted by a third element landownership, etc.} Rodbertus is altogether mistaken when he thinks that because one commodity is dearer than another, thus realising more labour-time, it must therefore given the same rate of surplus-value or the equal exploitation of the workers in the different spheres also contain more unpaid labour-time, surplus labour-time. If the same labour yields 1 quarter on unfertile land and 3 on fertile (in a good or a had year alike); if the same labour yields 1 oz of gold in land very rich in gold whereas in less rich or exhausted land it yields only 1/3 oz; if the same labour-time which produces 1 lb. of wool spins 3 lb. of wool, then, to begin with, the values of the 1 quarter and the 3 quarters, of the 1 oz of gold and the 1/3 oz, of the 1 lb. of wool and the 3 lbs. of woollen yarn (minus the value of the wool it contains) are of equal magnitude. They contain equal quantities of labour-time, therefore, according to the assumption, equal quantities of surplus labour-time. True, the quantity of surplus-labour embodied in the 1 quarter [grown on unfertile land] is greater, but then it is only 1 quarter whereas in the other case it is 3 quarters, or 1 lb. of wool whereas in the other case it is 3 lbs. of woollen yarn (minus the value of the material). The volume [of surplus-labour] is therefore the same, and the proportional quantity of surplus-value, comparing the individual commodities one with another, [is] also equal. According to the assumption, the amount of labour contained in the 1 quarter or the 1 lb. of wool, is the same as that contained in the 3 quarters or the 3 lbs. of yarn. The capital laid out in wages is therefore greater to exactly the same degree as the surplus-value. The 1 lb. of wool contains three times as much labour as the 1 lb. of yarn. Though the surplus-value is three times as great, the capital laid out in wages on which it is based is also three times as great. The proportion thus remains the some. Rodbertus calculates quite wrongly here, or wrongly compares the capital laid out in wages with the ||503| greater or lesser quantity of commodities which these wages represent. But this calculation is completely wrong, if, as he presupposes, wages or the rote of surplus-value are given, The same quantity of labour, say, 12 hours, may result in x or 3x commodities. In one case, 1x commodities contain as much labour and surplus-labour as 3x in the other; but in no case would more than 1 working-day be spent and in no case would the rate of surplus-value be more than, say, 1/5. In the first instance 1/5 of the one x would be x to as in the second 1/5 of the 3x would be to 3x. And if we were to call each of the three x: x', x'', x''' then there would be 4/5 paid and 1/5 unpaid labour in each x', x'' x'''. It is quite right, on the other hand, that if just as much commodity were to be produced under the unproductive conditions as under more productive, the commodity would contain more labour and so also more surplus-labour. But then, proportionately, a greater capital would also have to be laid out. In order to produce 3x, three times as much capital would have to he laid out (in wages) as is required to produce 1x. Now it is true that manufacture cannot work up more raw material than agriculture supplies. Thus, for instance, it cannot spin more pounds of wool than have been produced. If the productivity in wool spinning is trebled, then, provided the conditions of the production of wool remained the same, three times as much time as previously would have to he spent, three times as much capital would have to be expended on labour in wool production, whereas only the same amount of the spinners labour-time would be required to spin up this trebled quantity of wool. But the rate [of surplus-value] would remain the same. The same spinning labour would have the same value as before and contain the same surplus-value. The wool-producing labour would have a trebled surplus-value but the labour embodied in it, or the capital advanced in wages, would accordingly have trebled as well. The three times greater surplus-value would thus be calculated on a three times greater capital. But this is no reason for saying that the rate of surplus-value is 1ower in spinning than in wool production. One would only say that the capital laid out in wages is three times as great in one as in the other (since it is assumed here that the changes in the spinning and in the production of wool are not due to any change in their constant capital). It is necessary to make a distinction here. The same labour plus constant capital gives a smaller output in an unfavourable than a favourable season, in unproductive than in productive soil, in a poorer than in a richer mine. In the former case the product is thus dearer, contains more labour and more surplus-labour in the same number of products. But in the latter case, the number of these products is the greater. Furthermore, the ratio between paid and unpaid labour in each individual product in the two categories is not affected by this, for though the individual product contains less unpaid labour, according to the assumption, it also contains less paid labour in the same proportion. For it has been assumed here that there is no change in the proportions of the organic component parts of capital of variable and constant capital. It is assumed that the same amount of variable and constant capital supplies varying, greater or smaller, quantities of product under varying conditions. Herr Rodbertus appears to confuse this all the time, and as a matter of course to conclude from the mere increase in the price of the product that it contains a greater surplus-value. As to the rate, this is wrong even according to the assumption. As to the total, however, it is only right if more capital is advanced in one case than in the other, that means if as much is produced now of the dearer product as previously of the cheaper or if the increased quantity of the cheaper product (as above with spinning) presupposes a correspondingly increased quantity of the dearer product. ||504| That rent, hence also the value of land, can rise, although the rate of rent remains the same or even decreases, that therefore the productivity of agriculture also increases this Ricardo sometimes forgets, though he knows it. Anyhow, Anderson knows it and Petty and D Avenant already knew it. That is not the question. Ricardo abstracts from the question of absolute rent which he denies on theoretical grounds because he starts out from the false assumption that if the value of commodities is determined by labour-time, the average prices of commodities must equal their values (which is why he comes to the wrong practical conclusion. that competition from more fertile types of land must throw the less fertile out of cultivation, even if they bore rent previously). If values of commodities and average prices of commodities were identical then absolute rent i.e., rent on the worst cultivated land or on that originally cultivated would be equally impossible. What is the average price of the commodity? The total capital (constant plus variable) laid out in its production plus the labour-time contained in the average profit, say 10 per cent. Supposing, that a capital produced a higher value than the average price, just because it was operating in a particular element, an element of nature, say land, then the value of this commodity would be above its value and this excess value would contradict the conception of value being equal to a certain quantity of labour-time. An element of nature, something heterogeneous from social labour-time would he creating value. But this cannot be. Hence capital invested in land pure and simple cannot bear a rent. The worst land is land pure and simple. If the better land bears a rent, then this only shows that the difference between the individually necessary labour and that which is socially necessary becomes permanently established in agriculture because it has a natural basis, whereas in industry it is constantly disappearing. Absolute rent cannot be permitted to exist, but only differential rent. To admit the existence of absolute rent would be to admit that the same quantity of labour (materialised, laid out in constant capital and bought with wages) creates varying values according to the element in which [the labour is expended] or according to the material which it works up. But if one admits this diversity in value although in each sphere of production the same amount of labour-time materialises itself in the product, then one admits that value is not determined by labour-time but by something heterogeneous. These different magnitudes of value would invalidate the concept of value, they would invalidate the proposition that the substance of value is social labour-time, hence its differences can only be quantitative and these quantitative differences can only be equal to the differences in the amounts of social labour-time applied. The maintenance of value the determination not only of the amount of value by the varying amount of labour-time, but also of the substance of value by social labour thus requires the denial of absolute rent. The denial of absolute rent can, however, be expressed in two ways. Firstly. The worst land cannot bear a rent. The rent from the better types of land can be explained as arising from the market-price which is the same for products which have been produced on more favourable types of land as for those which have been produced on less favourable. But the worst land is land pure and simple. It is not differentiated in itself. It differs from industrial capital investment only in that it is a special sphere of capital investment. If it bore a rent then this would arise from the fact that the same quantity of labour would produce different values, if applied in different spheres of production; this means that the quantity of labour in itself does not determine the value, and products which contain the same amount of labour are not equal [in terms of value]. ||505| [Secondly.] Or one might say that the land which was cultivated originally must not bear rent. For what is the originally cultivated land? The land which is originally cultivated is neither better nor worse land; it is land pure and simple. Undifferentiated land. Originally, capital investment in agriculture can only differ from investment in industry because of the spheres in which these capitals are invested. But since equal quantities of labour are represented in equal values, there is absolutely no reason why the capital invested in land should yield a rent in addition to profit, unless the same quantity of labour applied in this sphere produced a higher value, so that the excess of this value over the value yielded in manufacture would produce an excess profit, equal to rent. But this would amount to saying that the land as such creates value, thus invalidating the concept of value itself. The land which is cultivated originally therefore cannot originally bear a rent, if the whole theory of value is not to he discarded. Furthermore, this ties up very easily (although not necessarily, as Anderson shows) with the idea that originally people of course chose not the worst but rather the best land for cultivation, With the advance of civilisation and population, the land which originally hears no rent, does so at a later stage, because people are forced to descend to worse types of land and thus in this descent to Avernus, to ever worse land, rent must arise on the originally cultivated, most fertile land. And then, step by step, on the land which follows it, while the worst land which always represents simply land the particular sphere of capital investment never bears a rent. All this has a more or less logical coherence. If, on the other hand, one knows that average prices and values are not identical, that the average price of a commodity may be either equal to its value or bigger or smal1er, then the question, the problem itself, disappears and with it also the hypotheses for its solution. The only remaining question is why, in agriculture, the value of the commodity, or at any rate its price, is above its average price though not above its value. But this question no longer bears any relation to the fundamentals of the theory, the determination of value as such. Ricardo knows of course that the relative values of commodities are modified according to the varying proportion of fixed capital and capital laid out in wages, which enter into their production. <But these are not opposites; fixed capital and circulating capital are opposites, and circulating capital comprises not only wages but also raw materials and auxiliary materials. For example, the same ratio may exist between capital laid out in wages and fixed capital in the mining and fishing industries, as between that laid out in wages and in raw materials in tailoring.> But Ricardo also knows that these relative values are equalised by competition. In fact he only makes the differentiation, so that the same average profit should result from these different capital investments. In other words these relative values of which he speaks are only the average prices. It does not even occur to him that value and average price are different. He only gets as far as their identity. Since however this identity does not exist when the ratio of the organic component parts of capital varies, he accepts it as an unexplained fact brought about by competition. Hence too, he does not come up against the question: Why do the values of agricultural products not equalise in average prices? ||506| On the contrary he assumes that they do so and poses the problem from that point of view. It is quite incomprehensible why fellows la Wilhelm Thukydides should be so ardently for Ricardo s theory of rent. From their point of view, Ricardo s half truths , as Thukydides condescendingly calls then, lose their whole value. For Ricardo the problem only exists because value is determined by labour-time. With those fellows this is not the case. According to Roscher, nature as such has value. See Later. In other words, he has absolutely no idea what value is. What prevents him therefore from allowing the value of land to enter into production costs from the outset and to form the rent; what prevents him from presupposing the value of land, i.e., rent as an explanation for rent? With these fellows, the phrase production costs is meaningless. We see this with Say. The value of the commodity is determined by the costs of production, capital, land, labour. But these are determined by demand and supply. In other words, no determination is taking place. Since the land performs productive services , why should not the price of these services be determined by demand and supply, just as the services performed by labour or capital? And since the land services are in the possession of certain sellers, why should their article not have a market-price, in other words why should not rent exist as an element of price? One can see how lime reason Wilhelm Thukydides had for getting so well-meaningly vexed over the Ricardian theory. But apart from absolute rent, the following question remains for Ricardo: The population grows and with it the demand for agricultural products. Therewith their price rises, as happens in similar cases in industry. But in industry, this rise in price ceases as soon as demand has become effective and brought about an increased supply of commodities. The product now falls to the old, or rather below the old, level of value. But in agriculture this additional product is thrown on to the market neither at the same price nor at a 1ower price. It costs more and effects a constant rise in market-prices and along with that, a raising of rent. How is this to be explained if not by the fact that ever less fertile types of land are being used, that ever more labour is required in order to produce the same product, that agriculture becomes progressively more sterile? Why, apart from the influence of the depreciation [of money], did agricultural products rise in England from 1797 to 1815 with the rapid development of the population? That they fell again later proves nothing. That supplies from foreign markets were cut off proves nothing. On the contrary. This in fact created the right conditions for demonstrating the effect of the law of rent as such. For it was the very cutting off of foreign supplies which forced the country to have recourse to ever less fertile land. This cannot be explained by an absolute increase in rent, because not only did the rental rise but also the rate of rent. The quarter of wheat, etc. rose in price. It cannot be explained by depreciation because although this might well explain why, with greater productivity in industry, industrial products fell, hence why the relative price of agricultural products rose, it would not explain why in addition to this relative rise, the prices of agricultural products were continuously rising absolutely. Similarly, it cannot be explained as a consequence of the fall in the rate of profit. This would never explain a change in prices, but only a change in the distribution of value or of price between landlord, manufacturer and worker. So far as depreciation is concerned, assume that 1 now equals 2. A quarter of wheat which was previously equal to 2 is now equal to 4. If the industrial product fell to 1/10, and previously its value was 20s., then it would be now 2s. But these 2s. are now equal to 4s. True, depreciation could have something to do with this, the poor harvests as well. ||507| But quite apart from all this it can he assumed that, considering the state of agriculture at that time, unfertile land (for wheat) was being cultivated. The sane land was later fertile, in that the rate of differential rents decreased, as is proved by the best barometer, namely, wheat prices. The highest prices [occur in the years] 1800 and 1801 and 1811 and 1812; the first were years of poor growth, the second, [years] of the peak of depreciation. Similarly 1817 and 1818 were years of depreciation. But if these years are omitted, probably (to be checked up later) what was left would give the average price. In comparing wheat prices etc. in different periods, it is at the same time important to compare the amounts produced at so much per quarter, because this shows to what extent the additional production of corn influences the price. I Average Wheat Prices If we fake the period 1650 to 1699 then (yearly) average price for these 50 years is 44s. 21/5d. During the period (9 years) from 1641 to 1649, the biggest yearly average price is 75s. 1d. for 1649, year of the revolution, then 71s. 1d. for 1649, 65s. 5d. for 1847 and the lowest price, 42s. 8d. for 1646. II Average price (yearly) for the 50 years [from] 1700 to 1749: 35s. 920/50 d. ||508| III Yearly average for the 50 years [from] 1760 to 1799: 45s. 313/50 d. IV Yearly average for the 50 years [from] 1800 to 1849: 69s. 6 9/50 d. Yearly average for the 60 years [from] 1800 to 1859: 66s. 914/15d. Hence yearly average * * * West says himself: Hopkins grasps correctly the difference between absolute and differential rent: ||508a| Hopkins makes the following distinction between productive and unproductive labour or, as he says, between primary and secondary: Diamonds and song are both congealed labour and can like all commodities be converted into money and as money into capital. But in this transformation of money into capital we must distinguish two things. All commodities can be converted into money and as money into capital, because in the form of money their use-value and their particular natural form become extinct. They are materialised labour in that social form in which it is exchangeable for any real labour, therefore convertible into any form of real labour. On the other hand, whether the commodities which are the product of labour can as such become elements of productive capital once again, depends on whether the nature of their use-values permits them to re-enter the process of production be it as objective conditions of labour (tools and material) or as subjective conditions (means of subsistence of the worker), (in other words [as] elements of constant or of variable capital). In Ireland, according to a moderate estimate and the census of 1821, the whole net produce which goes to the landlords, the government and the tythe-owners, amounts to 20 3/4 million, the whole wages, however, only to 14,114.000.[g] The same was the case in France under Louis XIV [XV and XVI]. According to Young, rent, tythes and taxes amounted to 140,905,304. Cultivation moreover was very poor. The population of France, at this time, is stated to have been 26,363,074. Now if there had been six millions of labouring families (which is too high a figure), each family would have had to furnish annually, either directly or indirectly, an average of upwards of 23 of net wealth to the landlords. The church and the government.[i] According to Young, and taking into account various other factors, the laboring family produced annually 42 l0s.; 23 of which were paid away to others, and 19 l0s. remained to subsist itself (l.c., pp. 102-04). The Dependence of Population on Capital. This conception of the accumulation of capital is correct. But the means can grow, i.e., the quantity of surplus produce or surplus-labour can grow, without a proportionate growth in the quantity of labour. It is somewhat extraordinary[j] that that [there is] a strong inclination to represent net wealth as beneficial to the labouring class, because it gives employment though it is evidently ||509| not on account of being net, that if has that power, but because it is wealth, that which has been brought into existence by labour: while, at the time,[k] an additional quantity of labour is represented as injurious to the labouring classes, though that labour produces three times as much as it consumes (l.c., p. 120). If by the use of superior machines,[l] the whole primary produce could he raised from 200 to 250 or 300, while net wealth and profit took only 140, it is clear that there would remain as a fund for the wages of the primary producers 110 or 160 instead of 60 (l.c., p. 128). This is a very important circumstance in relation to rent, especially when the population suddenly grows significantly, as it did from 1780 to 1815, consequent upon the advance in industry, and hence a large portion of hitherto uncultivated land is suddenly brought into cultivation. The newly cultivated land may be as fertile as or even more fertile than old land was, before centuries of cultivation had accumulated in it. But what is demanded of the new land if [this product] is not to be sold at a dearer price is that its fertility must he equal firstly to the natural fertility of the cultivated ||510| land and secondly to the artificial fertility which has been engendered by cultivation, hut which has now become its natural fertility. The newly cultivated land would thus have to be much more fertile than the old had been before its cultivation. But it will be said: The fertility of the cultivated land originates in the first place from its natural fertility. Thus it depends on the natural condition of the newly cultivated land whether or not it possesses this fertility arising from and owing to nature. In either ease it costs nothing. The other part of the fertility of cultivated land is an artificial product, owing to cultivation, the investment of capital. But this part of productivity involves costs of production which are repaid as interest on the fixed capital which has been sunk into the land. This part of rent is merely interest on the fixed capital tied up in the land. Hence it enters into the costs of production of the product of the previously cultivated land. Hence only the same capital needs to be thrown into the newly cultivated land for it to obtain this second part of fertility; and as with the first, the interest on the capital which has been employed to bring forth this fertility will enter into the price of the product. Why then should it not he possible to cultivate new land unless it is more fertile without the price of the product rising? If the natural fertility is the same, then the difference is brought about only by the capital invested and, in both cases alike, the interest on this capital enters into costs of production to the same extent. However, this reasoning is wrong. A portion of the costs of bringing the land into cultivation etc, is no longer liable to be paid for, because, as Ricardo has already observed, the fertility thus created has partly coalesced with the natural quality of the soil (this applies to the costs of clearing, draining, levelling, the chemical change of the soil resulting from continued chemical processes etc.). Thus if [the product of] the newly cultivated land is to sell at the same price as [that of] the last cultivated land the land must he sufficiently fertile for this price to cover that part of the costs of bringing it into cultivation which enters into its own costs of production but which has ceased to enter into the costs of the previously cultivated land, because it has coalesced with the natural fertility of the land. A stream, favourably situated, furnishes an instance of a rent being paid for an appropriated gift of nature, of as exclusive a kind as any that can be named. This is well understood in manufacturing districts, where considerable rents are paid for small streams of water, particularly if the fall is considerable. The power obtained from such streams being equal to that afforded by large steam-engines, it is as advantageous to use them, though subject to the payment of a heavy rent, as it is to expend large sums in the erection and working of steam-engines. Of streams, too, there are some larger, some smaller. Contiguity to the seat of manufacture is also an advantage which commands a higher rent. In the counties of York and Lancaster there is probably a much greater difference between the rents paid for the smallest and the largest streams of water, than there is between the rents paid for 50 of the least and 50 of the most fertile acres that are in common cultivation (l.c., pp. 37-38). If we compare the average prices given earlier and deduct firstly what is due to depreciation (1809-13) and secondly what is due to particularly bad seasons such as 1800 and 1801, then [we shall find] that a very important element is the amount of new land cultivated at a given moment or during a given period. A rise in price on the cultivated land here indicates a growth in population and hence an excess in price (as compared with costs): on the other hand, the same increase in demand brings about the cultivation of fresh land. If proportionately the amount [of newly cultivated land] has greatly increased, then the rising price, and the higher price, in the early period merely shows that a large part of the costs of bringing land into cultivation enters into the additional quantity of food produced. If the price had not risen, this production [of additional food] would not have taken place. Its effect, a fall in price, can only come into evidence later, because the price of the recently created food comprises an element of the cost of production or price, that has long become extinct in the older applications of capital to land, or in the older portions of cultivated soil. The difference would be even greater if consequent upon the increased productivity of labour, the cost of appropriating soil to cultivation, had not greatly fallen, as compared to the costs of cultivation in former, bygone periods. ||511| The transformation of new land, whether more or equally or less fertile than old land, into such a state (and this state is given by the general rate of adaptation to culture prevailing on the existing land under cultivation) as to make it suitable for the application of capital and labour under the game conditions under which capital and labour is employed on the average quantity of cultivated soil this adaptation must he paid for by the costs of converting waste land into cultivated land. This difference of cost must he borne by the newly cultivated land. If it does not enter into the price of its produce, there are only two eases possible, under which such a result can be realised. Either the produce of the newly cultivated land is not sold at its real value. Its price stands below its value, as is in fact the case with most of the land bearing no rent, because its price is not constituted by its own value, but by the value of the produce derived from more fertile soils. Or the newly cultivated land must be so fertile, that, if it was sold at its immanent, own value, according to the quantity of labour realised in it, it would be sold at a less price than the price of produce grown on the formerly cultivated soil. If the difference between the inherent value [of its product] and the market-price settled by the value of the cultivated soil is such, that it amounted for instance to 5 per cent and if on the other hand the interest, entering into its costs of production on the part of the capital employed to bring it up to the level of productive ability common to the old soils, amounted also to 5 per cent, then the newly cultivated land would grow produce, which at the old market-price would he able to pay the usual wages, profits and rents. If the interest of the capital employed amounted to 4 per cent only while its degree of fertility exceeded 4 per cent, as compared to the older soils, the market-price, after the deduction of the 4 per cent interest for the capital employed to bring the new land into a cultivable state would leave a surplus, or it might be sold at a lower price than the market-price settled by the value of the least fruitful soil. Rents consequently would generally be lowered, together with the market-price of the produce. Absolute rent is the excess of value over the average price of raw produce. Differential rent is the excess of the market-price of the produce grown on favoured soils over the value of their own produce. If, therefore, the price of raw produce rises or remains constant in periods in which a relatively large part of the additional food, required by the increase of population, is produced on soil which from uncultivated state has been converted into a state of cultivation, this constancy or rise of prices does not prove that the fertility of the land has decreased, but only that it has not increased to such a degree as to counteract the fresh element of production formed by the interest of capital applied with a view to bringing the uncultivated land to a level of the common conditions of production, under which the old soils in a given state of development are cultivated. If the relative quantity of the newly cultivated soil is different in different periods, then even a constant or rising price does not prove that the new soil is unfertile or yields less produce, but only that an element of cost, which has become extinct in the old cultivated soils enters into the value of the products of the newly cultivated land. This new element of cost moreover remains, although under the new conditions of production, the costs of bringing new soil into cultivation have fallen considerably, compared with the costs of bringing the old soil from its original, natural state of fertility to its present state. It is therefore necessary to establish the relative proportion of enclosures during the different ||512| periods. The above list (pp. 507-08) moreover shows: That of the decennial periods examined, the period 1641-1649 reaches a higher level than any other decennial period up to 1860, with the exception of the decennial periods 1800-1809 and 1810-1819. So far as the fifty-year periods are concerned, that of 1650-1699 is at a higher level than that of 1700-1749 and that of 1750-1799 higher than that of 1700-1749 and lower than that of 1800-1849 (or 1859). Prices constantly fall in the period from 1810 to 1859, whereas in the period from 1750 to 1799, despite the lower average price over the 50 years, an upward movement (takes place); the upward movement is just as consistent as the downward movement between 1810 and 1859. In fact, compared with the period of 1641-1649, there is, on the whole, a continuous fall in decennial average prices, until this fall reaches its peak (lowest point) in the last two decennial periods of the first half of the 18th century. From the middle of the eighteenth century onwards, an upward movement takes place. It commences from a price (36s. 4 5/10d. 1750-1759), which is lower than the 50 years average price of the second half of the seventeenth century and approximately corresponds (to or is) a little higher than the average price of the 50 year period 1700-1749 (35s. 9 29/50d.), the first half of the eighteenth century. This upward movement continues at an increasing pace in the two decennial periods 1800-1809 and 1810-1819. In the latter it reaches its acme. From that point on, the consistent downward movement begins again. If we take the average of the period of rise from 1750 to 1819, then its average price (a little over 57s. per quarter) [is] equal to the starting-point of the period of fail from 1820 (namely a little over 58s, for the decennial period 1820-1829); just as the starting-point for the second half of the 18th century [equals] the average price of its first half. Any mathematical example will show how individual circumstances, a poor harvest, depreciation of money, etc. can affect the average figure. For instance, 30+20+5+5+5=65. Average is 13, although the last three numbers here [are] always only equal to 5. As against this, 12+11+10+9+8[=50], average is 10, although, if one struck off the exceptional 30 and 20 in the first series, the average of any three years in [the] second [series] would he greater. If one deducts the differential costs for the capital successively employed in bringing new land into cultivation, which for a certain period enters as an item into cost, then perhaps the prices of 1820-1859 [would be] lower than any of the earlier ones. And this to some extent may well be the notion in the heads of those fellows who explain rent as interest for fixed capital sunk into the soil. Anderson says in: A Calm Investigation of the Circumstances that have led to the Present Scarcity of Grain in Britain, London, 1801: Thus, unlike West, Malthus, Ricardo, he did not one-sidedly consider the phenomenon of a rising scale of corn prices (from 1750 to 1813), but rather the double phenomenon, a whole century, of which the first half shows a constantly falling and the second half a constantly rising scale of corn prices. He says very definitely: He is a decided enemy of the theory of population and says explicitly that the land is capable of increasing and perennial improvement. The soil can be continuously improved by chemical influences and cultivation (l.c., p. 38) ||513| under a judicious system of management, that productiveness[s] may be made to augment, from year to year, for a succession of time to which no limits can be assigned, fill at last it may be made to attain a degree of productiveness, of which we cannot, perhaps, at this time conceive an idea l.c., pp. 35-36). The theory of population represents the most pernicious prejudice (l.c., p. 54). Anderson seeks to prove historically that the productivity of agriculture rises with a growing and falls with a declining population (I.e., pp. 55, 56, 60, 61 et seq.). With a correct conception of rent, the first point to arise was of course that it does not originate from the land but from the product of agriculture, that is, from labour, from the price of the product of labour, for instance of wheat; in other words, from the value of the agricultural product, from the labour applied to the land, not from the land, and Anderson quite correctly emphasises this. <Rent has thus nothing to do with the absolute productivity of agriculture.> <namely the excess of price over the expenses or the price of the capital advanced> The last field pays no rent, (This is cited from McCulloch, The Literature of Political Economy, London, 1845. Does McCulloch quote here from An Enquiry into the Nature of the Corn Lows or from Recreations in Agriculture, Natural History, Arts etc., London, 1799-1802? This to be looked up at the Museum.) What Anderson calls value of the whole produce is evidently nothing other than his conception of the market-price at which the product is sold, whether it grows on better or on worse land. With the more fertile types of land, this price (value) leaves a greater or lesser excess over the expenses. This does not apply to the last product. Here the average price i.e., that formed by the costs of production plus the average profit coincides with the market-price of the product. Hence it does not yield an excess profit, which alone can constitute rent. With Anderson, rent equals the excess of the market-price of the product over its average price. (The theory of value as yet does not worry Anderson at all.) Thus if, as a result of the particularly low fertility of the land, the average price of the product of this land coincides with the market-price of the product, then there is no excess and therefore no fund for the formation of rent. Anderson does not say the last cultivated land cannot bear a rent. He only says that if it happens that the expenses (the costs of production plus the average profit) are so great that the difference between the market-price of the product and its average price disappears, then rent also disappears and that this must be the case if one descends ever further down the scale. Anderson says expressly that a definite market-price equal for equal quantities of produce that have been produced under more favourable or less favourable conditions of production, is the prerequisite for this formation of rent. He says that a surplus profit or excess of profit from the better types of soil over that from the worse, necessarily follows if an equal quantity of corn, the produce of each field, can be sold at the same price , i.e., if a general market-price is presupposed. ||514| Anderson by no means assumes, as might have appeared from the preceding passage, that different degrees of fertility are merely the product of nature. On the contrary the On the one hand, the progress in the productivity of labour in general makes it easier to bring land into cultivation; on the other hand, cultivation increases the diversity of soils, in that the original fertility of land A which is cultivated and land B which is not, may have been the same if we deduct from A s fertility that part which, though it is now inherent in it, had previously been added artificially. Thus cultivation itself increases the diversity of natural fertility between cultivated and waste lands. Anderson says expressly that that land for whose produce average price and market-price coincide, can pay no rent: Then he immediately goes on to say: Supposing therefore the produce of the best cultivated land is 20 bushels per acre. Of this, according to the assumption, 12 bushels pay the expenses (advances plus average profit). Then it can pay 8 bushels as rent. Assume that the bushel is 5s., then 8 bushels or 1 quarter are 40s, or 2 and 20 bushels are 5 (2 1/2 quarters). Of these 5, 12 bushels or 60s, which is 3, is expenses. Then it pays a rent of 2 or 8 bushels. If the rate of profit is 10 per cent then of the 3 expenses, the outlay is 54 6/11s. and the profit is 5 5/11s. (546/11 : 55/11 = 100 : 10). Now supposing, the farmer had to carry out various improvements on waste land, which is just as fertile as that yielding 20 bushels had been originally, in order to bring it into such a state of cultivation that would correspond to the general state of agriculture. Apart from the outlay of 54 6/11s. or, if we reckon the profit in with the expenses, apart from 60s., this may involve a further outlay of 36 4/11; then 10 per cent on this would be 3 7/11, and if the farmer always sold 20 bushels at 5s, he could pay a rent only after 10 years, only after the reproduction of his capital. From then on the artificially created fertility of the land would he reckoned as original and would fall to the landlord. Although the newly cultivated land is as fertile as the best cultivated land was originally, the market-price and the average price for its product do nevertheless coincide now, because it contains an item of costs which is extinct in the best land, whose artificially created fertility and whose natural fertility coincide to a certain extent. But with the newly cultivated land, that part of fertility which is created artificially, by the application of capital, is still entirely distinct from the natural fertility of the land. The newly cultivated land can therefore pay no rent although its original fertility may be the same as that of the best cultivated land. After ten years, however, it could pay not only rent, but as much rent as the best type which was cultivated earlier. Thus Anderson comprehends both phenomena: 1. That the differential rent of the landlords is partly the result of the fertility which the farmer has given the land artificially. 2. That after a certain lapse of time, this artificial fertility appears as the original productivity of the soil itself, in that the soil itself has been transformed and the process by which this transformation has been accomplished, has disappeared and is no longer visible. ||515| If to-day I build a cotton mill for 100,000, I get a more efficient mill than my predecessor who set one up ten years ago. I do not pay for the difference between productivity in machine-building, building in general etc. of to-day and of ten years ago; on the contrary. It enables me to pay less for a mill of the same efficiency or only the same for a mill d higher efficiency. In agriculture it is different. The difference between the original fertilities of the soils is magnified by that part of the so-called natural fertility of the soil which, in fact, has been once produced by men, but has now become incorporated in the soil and is no longer to be distinguished from its original fertility. Owing to the development of the productive power of labour in general, it costs less to raise uncultivated soil of the same original fertility to the improved level of fertility, than it cost to bring the original fertility of the cultivated soil to the apparently original fertility it now has, but some expenditure is still required to bring that equalisation about. The average price of the new product is consequently higher than that of the old, the difference between market-price and average price is thus smaller and may disappear completely. But supposing, in the above case, the newly cultivated soil is so fertile, that after the additional expense of 40s. (including profit) it yields 28 bushels instead of 20. In this case the farmer could pay a rent of 8bushels or 2. And why? Because the newly cultivated soil yields 8 bushels more than the old, so that despite the higher average price, with the same market-price, it yields just as much in excess of the price. If it had involved no extra expense, its fertility would be double that of the old land. With this expense it is the same as that of the old land. Adam Smith sets forth this problem in two ways. [The first concept:] Division of the product of labour where this is regarded as given and he is in fact concerned with the distribution of use-value. This is also Herr Rodbertus s conception. It is also to he found with Ricardo who is all the more to be reproached on this account because he does not merely confine himself to general phrases but seriously tries to determine the value by labour-time. This conception is more or less, mutatis mutandis, applicable to all modes of production where the workers and the owners of the objective conditions of labour form different classes. Smith s second conception, on the other hand, is characteristic of the capitalist mode of production, Hence it alone is a theoretically fruitful formula. For Smith here conceives of profit and rent as springing from the surplus labour which the worker adds to the subject of labour, apart from that portion of labour by which he only reproduces his own wage. This is the only correct standpoint where production rests solely on exchange-value. This concept comprises the process of development, whereas the first concept presupposes that labour-time is constant. With Ricardo the one-sidedness arises also from the fact that in general he wants to show that the various economic categories or relationships do not contradict the theory of value, instead of on the contrary, developing them together with their apparent contradictions out of this basis or presenting the development of this basis itself. First of all, by breaking down the whole value of the product into wages, ground-rent and capital gain [p. 162] and thus forgetting about constant capital which also forms a part of value, Adam Smith has in fact led astray all the later economists, including Ricardo and including Herr Rodbertus. As my exposition has shown, the lack of this differentiation made any scientific presentation quite impossible. In this respect the Physiocrats were further advanced. Their avances primitives et annuelles [u] are defined as a part of the value of the annual product or as a part of the annual product itself, which is not resolved into wages, profit or rent, either for the nation or for the individual. According to the Physiocrats, the raw material of the agriculturists replaces the advances of the sterile class (the transformation of this raw material into machines of course devolves on the sterile class), while, on the other hand, the agriculturists replace a part of their own advances (seeds, cattle for breeding and draught animals, fertiliser etc.) from their product and get a part, machinery etc. replaced by the sterile class in exchange for raw material. Secondly Herr Rodbertus errs in that he identifies division of value with division of product. The wealth which constitutes income has nothing directly to do with this division of the value of the product. That the portions of value which accrue, for instance, to the producers of yarn, and which are represented in certain quantities of gold, exist as agricultural and manufactured products of all kinds is equally well known to the economists as to Rodbertus. This is taken for granted because commodities are produced and not products for the immediate consumption of the producers themselves. Since the value which becomes available for distribution, i.e., the part of value which forms revenue, is created within each individual sphere of production, independently of the others although, on account of the division of labour, it presupposes the others Rodbertus takes a step backward and creates confusion, by not examining this creation of value on its own, but confusing it right from the start by asking what share of the available total product of the nation these component parts secure for their owners. With Rodbertus, division of the value of the product immediately becomes division of use-values. Because he foists this confusion upon the other economists, there arises the need for his corrective, i.e., the consideration of manufactured and raw products en bloc a mode of procedure which is irrelevant to the creation of value, and hence wrong if it is to explain the latter. The only participants in the value of the manufactured product. In 50 far as it comprises revenue and in so far as the manufacturer does not pay a rent, he it for land on which the buildings stand or for waterfalls, etc., are the capitalist and the wage-labourer. The value of the agricultural produce is generally divided between three. This Herr Rodbertus also admits. The manner in which he explains this phenomenon does not in any way alter this fact. It is entirely in accord with the standpoint of capitalist production that the other economists, especially Ricardo, start from a division into two, between capitalist and wage-labourer, and only bring in the landowner who draws rent at a later stage, as a special excrescence. Capitalist production is based on the antithesis of two factors ||517| , materialised labour and living labour. Capitalist and wage-labourer are the sole functionaries and factors of production whose relationship and confrontation arise from the nature of the capitalist mode of production. The circumstances under which the capitalist has in turn to share a part of the surplus-labour or surplus-value which he has captured, with a third, non-working person, are only of secondary importance. It is also a fact of production, that, after the part of the value which is equal to constant capital is deducted, the entire surplus-value passes straight from the hands of the worker to those of the capitalist, with the exception of that part of the value of the product which is paid out as wages. The capitalist confronts the worker as the direct owner of the entire surplus-value, in whatever manner he may later he sharing it with the money-lending capitalist, landowner etc. As James Mill observes, production could therefore continue undisturbed if the landed proprietor disappeared and the state took his place. He the private landowner is not a necessary agent for capitalist production, although it does require that the land should belong to someone, so long as it is not the worker, but for instance, the state. Far from being an error on the part of Ricardo etc., this reduction of the classes participating directly in production, hence also in the value produced and then in the products in which this value is embodied, to capitalists and wage-labourers, and the exclusion of the landowners (who only enter post festum, as a result of conditions of ownership of natural forces that have not grown out of the capitalist node of production but have been passed on to it) is rooted in the nature of the capitalist mode of production as distinct from the feudal, ancient etc. This reduction is an adequate theoretical expression of the capitalist mode of production, and reveals its differentia specifica. Herr Rodbertus is still too much of an old Prussian landed proprietor , to understand this. Furthermore, it can only he grasped and become self-evident when the capitalist has seized agriculture, and everywhere, as is generally the case in England, has taken charge of agriculture just as he has of industry, and has excluded the landowner from any direct participation in the production process. What Rodbertus regards as a deviation , is, therefore, the right path, which however he does not understand because he is still engrossed in views that originated from the pre-capitalist mode of production. Not the product, Herr Rodbertus, but the value of the product, and this is quite correct. Your finished product and its division have absolutely nothing to do with this division of value. This you fail to understand again, Herr Rodbertus. From the standpoint of capitalist production, capital property does in fact appear as the original because capitalist production is based on this sort of property and it is a factor of and fulfils a function in capitalist production; this does not hold good of landed property. The latter appears as derivative, because modern landed property is in fact feudal property, but transformed by the action of capital upon it; in its form as modern landed property it is therefore derived from, and the result of capitalist production. That Ricardo considers the position as it is and appears in modern society to be also the historically original situation (whereas you, instead of keeping to the modern form, cannot rid yourself of your memories of landownership) is a delusion from which the bourgeois economists suffer in respect of all bourgeois economic laws. They appear to them as natural laws and hence also as historically primary . ||518| But Herr Rodbertus could already see from the very first sentence of his preface, that Ricardo, where it is not a question of the value of the product, but of the product itself, permits the whole of the finished product to he shared out. He continues forthwith: He is concerned here with the distribution of the whole produce , not the manufactured product or the raw product. If this whole produce is taken as given, these shares in the whole produce are solely determined within each sphere of production by the share which each shareholder has in the value of his own product. This value is convertible into and can he expressed in a certain proportional part of the whole produce . Ricardo only errs here, following Adam Smith, in that he forgets that the whole produce is not divided into rent, profit and wages, but that part of it will be allotted in the shape of capital to one or some of these three classes. Indeed, Herr Rodbertus! The law of the equalisation of capital gains does not invalidate the law that the value of the products is governed by labour costs . But it does invalidate Ricardo s assumption that the average price of the products equals their value . But there again, it is not the raw product whose value is reduced to the average price, but the other way about. Due to landed property, the raw product is distinguished by the privilege that its value is not reduced to the average price. If, indeed, its value did decrease, which would be possible despite your value of the material , to the level of the average price of the commodities, then rent would disappear. The types of land which possibly pay no rent to-day, pay none, because the market-price of raw products is for them equal to their own average price, and because the competition of more fertile types of land deprives them of the privilege of selling their product at its value . Well, here you have it, Herr Rodbertus. Ricardo s whole conception is only appropriate to the presupposition that the capitalist mode of production is the predominant one. How he expresses this presupposition, whether he commits a historical hysteron proteron is irrelevant to the theory. The presupposition must he made, and it is therefore impossible to introduce, as yon are doing, the peasant, who does not understand capitalist book-keeping and hence does not reckon seeds etc., as part of the capital advanced! The absurdity is introduced not by Ricardo but by Rodbertus, who assumes that capitalists and workers exist before cultivation of the land (l.c., p. 176). What utter nonsense! Only when a capitalist has squeezed himself as farmer between the husbandman and the landed proprietor he it that the old tenant has swindled his way into becoming a capitalist farmer, or that an industrialist has invested his capital in agriculture rather than in manufacture only then he-gins, by no means the cultivation of the land , but capitalist land cultivation which is very different, both in form and content from the previous forms of cultivation. To comprehend Ricardo s conception Rodbertus would have to be an Englishman instead of a Pomeranian landowner and would have to understand the history of the enclosure of commons and waste land. Rodbertus cites America. There the state sells the land By no means. This price does not constitute a ground-rent, any more than, say, a general trade tax constitutes a trade rent or in fact any tax constitutes a rent . This is wrong. The quantity of unpaid surplus-labour rises, for instance, if 3, 4 5 hours surplus labour-time are worked instead of 2 hours. The volume of capital advanced does not grow [to the same extent] as the volume of this unpaid surplus-labour, firstly, because this further excess of surplus-labour is not paid for and so does not occasion a capital outlay; secondly, because the capital outlay for fixed capital does not grow in the same proportion as its utilisation in this instance. No more spindles etc. are required. True, they are used tip more quickly but not in the same proportion in which their use increases. Thus, given the same productivity, profit grows here, because not only the surplus-value grows, but also the rate of surplus-value. In agriculture this is impracticable because of the natural conditions. On the other hand, productivity is easily altered with the increased outlay of capital. Although an absolutely large amount of capital is laid out, it is relatively not so big, due to economies in the conditions of production, quite apart from the division of labour and machinery. Thus the rate of profit could grow even if the surplus-value (not only its rate) remained the same. ||520| Rodbertus is positively wrong, and typically the Pomeranian landowner when he says: Worthy Pomeranian! Why do you always transfer your Prussian situation to England in a disparaging manner? The English-man does not reckon that, if, as was the case (this to be looked up), three to four million acres were enclosed between 1800 and 1830, the rent on these four million acres was calculated before 1830 as well and also in 1800. Rather they were waste land or commons which bore no rent and did not belong to anybody. It has nothing to do with Ricardo if Rodbertus, like Carey (but in a different way), seeks to prove to Ricardo that for physical and other reasons, the most fertile hand is usually not the first to he cultivated. The most fertile land is always the most fertile under the existing conditions of production. A very large number of the objections which Rodbertus raises against Ricardo arise from the naive manner in which he identifies the Pomeranian conditions of production with the English . Ricardo presupposes capitalist production to which, where it is in fact carried out, as in England corresponds the separation of the farming capitalist from the landlord. Rodbertus introduces circumstances which are in themselves alien to the capitalist node of production, which has merely been built upon them. For instance, what Herr Rodbertus says about the position of economic centres in economic complexes applies perfectly to Pomerania but not to England, where the capitalist node of production has become increasingly pre-eminent since the last third of the 16th century, where it has assimilated all the conditions and in different periods has progressively sent historical preconditions, villages, buildings and people, to the devil, in order to secure the most productive investment for capital. What Rodbertus says about capital investment is equally wrong. Again the notion of the Pomeranian landowner who gets money on tick in order to improve his property and who for theoretical and practical reasons, only wants to pay the money-lender the customary interest . But in England things are different. It is the farmer, the farming-capitalist, who lays out capital in order to improve the land. From this capital, just as from that which he hays out directly in production, he does not demand the customary interest but the customary profit. He does not tend the landowner any capital on which the latter is to pay the customary interest. He may borrow capital himself, or else lie uses his own surplus capital so that it yields him the customary industrial profit, at least double the customary interest. Incidentally, Ricardo knows what Anderson already knew and, into the bargain, expressly says that ||521| the productivity of the land thus engendered by capital, later coincides with its natural productivity, hence swells the rent. Rodbertus knows nothing of all this and therefore babbles away at random. I have already given a correct explanation of modern landed property: Similarly I have already correctly observed: I also pointed out correctly that land as capital could be increased like all other capitals: The difference between manufacture and agriculture which I pointed out at that time still remains correct: Rodbertus says: Anderson already said cultivation improves the land. [Rodbertus continues.] But this is partly because more arable land is turned over to cattle and sheep grazing, partly because with the higher stage of production large-scale agriculture labour becomes more productive. But also, and this is a circumstance which Herr Rodbertus overlooks entirely, because a greater part of the non-agricultural population assist in agriculture, supplying constant capital which grows with the advance in cultivation such as mineral fertilisers, seeds from other countries, machinery of every sort. According in Herr Rodbertus (l.c., p. 78): ||522| Capital in itself, or from an economic point of view, is a product which continues to be used for production But in respect of a particular gain which it is to yield, or from the point of view of to-day s entrepreneurs, it must appear as an outlay in order to be capital (l.c., p. 77). This concept of outlay however does not, as Rodbertus thinks, require that it is bought as a commodity. If instead of being sold as a commodity, a part of the product re-enters production, it does so as a commodity. It has previously been estimated as money , this is easily done, since simultaneously all these outlays , in agriculture too, are available on the market as commodities : cattle, feeding-stuffs, fertilisers, corn for sowing, seeds of all kinds. But it seems that in Pomerania this is not reckoned as outlay . This is quite irrelevant. The realisation of this value can only be its realisation in use-value. But we are not concerned with that. Furthermore, the necessary wage already implies how much value in the shape of agricultural and industrial products is contained in the means of subsistence the worker requires. Done with. * ||499| For instance, when Ricardo s theory (see above) convinces him that a rise in wages above their minimum does not raise the value of the commodities, he says so in a straightforward manner. Malthus wants to bold down wages so flint the bourgeois may profit. |499|| [a] In the manuscript: encouragement of foreign importation , instead of encouraging the importation of corn from abroad Ed. [b] In the manuscript: to place instead of for the purpose of feeding. Ed. [c] The work surpasses the material. Ed. [d] In the manuscript: the Ed. [e] but not the general average of rent is a summary by Marx of the contents of the subsequent passages Ed. [f] In the manuscript: could Ed [g] In this paragraph Marx reproduces in his own words the contents of a longer passage from Hopkins s book On Rent of Land, p. 94. Ed. [h] In the manuscript: landlords . Ed [i] This passage has been condensed by Marx. Ed. [j] a It is somewhat extraordinary is in the manuscript condensed to: strange . Ed. [k] In the manuscript: simultaneously instead of at the same time . Ed. [l] In the manuscript: machinery . Ed. [m] In the manuscript: landlord . Ed. [n] Instead of in others 10 per cent , in the manuscript: in others not 10 Ed. [o] In the manuscript: when Ed. [p] Instead of added to the very important circumstance, of good roads being already formed in the neighbourhood , in the manuscript: in addition good roads in the neighbourhood, etc Ed. [q] In the manuscript: expendet Ed. [r] In the manuscript: the 18th century instead of this century . Ed. [s] In the manuscript: the productivity of the soil instead of that productiveness . Ed. [t] Von Kirchmann. Ed. [u] Original and annual advances. Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 9

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch09.htm

With Anderson s thesis (partly also contained in Adam Smith s work): It is not the rent of the land that determines the price of its produce, but it is the price of that produce which determines the rent of the land the doctrine of the Physiocrats was overthrown. The price of the agricultural produce, and neither this produce itself nor the land, had thus become the source of rent. This finished the notion that rent was the offspring of the exceptional productivity of agriculture which again was supposed to be the offspring of the special fertility of the soil. For, if the same quantity of labour was exerted in a particularly productive element and hence was itself exceptionally productive, then the result could only be that this labour manifested itself in a relatively large quantity of products and that the price of the individual product was therefore relatively low; but it could never have the opposite result, namely, that the price of its product was higher than that of other products containing the same quantity of labour and that this price, as distinct from that of other commodities, thus yielded a rent, in addition to profit and wages. (In his treatment of rent Adam Smith to some extent returns to the physiocratic view, having previously refuted or at least rejected it by his original conception of rent as part of surplus-labour.) Buchanan sums up this discarding of the physiocratic view in the following words: After the rejection of this notion of the Physiocrats which, however, was fully justified in its deeper sense, because they regarded rent as the only surplus, and capitalists and labourers together merely as the paid employees of the landlord only the following viewpoints were possible. ||523| [Firstly:] The view that rent arises from the monopoly price of agricultural products, the monopoly price being due to the landowners possessing the monopoly of the land. According to this concept, the price of the agricultural product is constantly above its value. There is a surcharge of price and the law of the value of commodities is breached by the monopoly of landed property. Rent arises out of the monopoly price of agricultural products, because supply is constantly below the level of demand or demand is constantly above the level of supply. But why does supply not rise to the level of demand? Why does not an additional supply equalise this relationship and thus, according to this theory, abolish all rent? In order to explain this, Malthus on the one hand takes refuge in the fiction that agricultural products provide themselves with direct consumers (about which more later, in connection with his row with Ricardo); on the other hand, in the Andersonian theory, that agriculture becomes less productive because the additional supply costs more labour. Hence, in so far as this view is not based on mere fiction, it coincides with the Ricardian theory. Here too, price stands a b o v e value, surcharge. [Secondly:] The Ricardian Theory: Absolute rent does not exist, only a differential rent. Here too, the price of the agricultural products that bear rent is above their individual value, and in so far as rent exists at all, it does so through the excess of the price of agricultural products over their value. Only here this excess of price over value does not contradict the general theory of value (although the fact remains) because within each sphere of production the value of the commodities belonging to it is not determined by the individual value of the commodity but by its value as modified by the general conditions of production of that sphere. Here, too, the price of the rent-bearing products is a monopoly price, a monopoly however as it occurs in all spheres of industry and only becomes permanent in this one, hence assuming the form of rent as distinct from excess profit. Here too, it is an excess of demand over supply or, what amounts to the same thing, that the additional demand cannot be satisfied by an additional supply at prices corresponding to those of the original supply, before its prices were forced up by the excess of demand over supply. Here too, rent comes into being (differential rent) because of excess of price over value, [brought about by] the rise of prices on the better land above the value of the product, and this leads to the additional supply. [Thirdly:] Rent is merely interest on the capital sunk in the land. This view has the following in common with the Ricardian, namely, that it denies the existence of absolute rent. It must admit the existence of differential rent, when pieces of land in which equal amounts of capital have been invested, yield rents of varying size. Hence in fact, it amounts to the Ricardian view, that certain land yields no rent and that where actual rent is yielded, this is differential rent. But it is absolutely incapable of explaining the rent of land in which no capital has been invested, of waterfalls, mines etc. It was, in fact, nothing but an attempt from a capitalist point of view, to save rent despite Ricardo under the name of interest. Finally [fourthly]: Ricardo assumes that on the land which does not bear a rent, the price of the product equals its value because it equals the average price, i.e., capital outlay plus average profit. He thus wrongly assumes that the value of the commodity equals the average price of the commodity. If this wrong assumption is dropped, then absolute rent becomes possible because the value of agricultural products, like that of a whole large category of other commodities, stands above their average price, but owing to landed property, the value of the agricultural products, unlike that of these other commodities, is not levelled out at the average price. Hence this view assumes, like the monopoly theory, that property in land, as such, has something to do with rent; it assumes differential rent along with Ricardo, and finally it assumes that absolute rent by no means infringes the law of value. Ricardo starts out from the determination of the relative va1ues(or exchangeable values) of commodities by the quantity of labour . (We can examine later the various senses in which Ricardo uses the term value. This is the basis of Bailey s criticism and, at the same time, of Ricardo s shortcomings.) The character of this labour is not further examined, If two commodities are equivalents or bear a definite proportion to each other or, which is the same thing, if their magnitude differs according to the ||524| quantity of labour which they contain then it is obvious that regarded as exchange-values, their substance must be the same. Their substance is labour. That is why they are values . Their magnitude varies, according to whether they contain more or less of this substance. But Ricardo does not examine the form the peculiar characteristic of labour that creates exchange-value or manifests itself in exchange-values the nature of this labour. Hence lie does not grasp the connection of this labour with money or that it must assume the form of money. Hence he completely fails to grasp the connection between the determination of the exchange-value of the commodity by labour-time and the fact that the development of commodities necessarily leads to the formation of money. Hence his erroneous theory of money. Right from the start he is only concerned with the magnitude of value, i.e., the fact that the magnitudes of the va1ues of the commodities are proportionate to the quantities of labour which are required for their production. Ricardo proceeds from here and he expressly names Adam Smith as his starting-point (Chapter I, Section I). Ricardo s method is as follows: He begins with the determination of the magnitude of the value of the commodity by labour-time and then examines whether the other economic relations and categories contradict this determination of value or to what extent they modify it. The historical justification of this method of procedure, its scientific necessity in the history of economics, are evident at first sight, but so is, at the same time, its scientific inadequacy. This inadequacy not only shows itself in the method of presentation (in a formal sense) but leads to erroneous results because it omits some essential links and directly seeks to prove the congruity of the economic categories with one another. Historically, this method of investigation was justified and necessary. Political economy had achieved a certain comprehensiveness with Adam Smith; to a certain extent he had covered the whole of its territory, so that Say was able to summarise it all in one textbook, superficially but quite systematically. The only investigations that were made in the period between Smith and Ricardo were ones of detail, on productive and unproductive labour, finance, theory of population, landed property and taxes. Smith himself moves with great na vet in a perpetual contradiction. On the one hand he traces the intrinsic connection existing between economic categories or the obscure structure of the bourgeois economic system. On the other, he simultaneously sets forth the connection as it appears in the phenomena of competition and thus as it presents itself to the unscientific observer just as to him who is actually involved and interested in the process of bourgeois production. One of these conceptions fathoms the inner connection, the physiology, so to speak, of the bourgeois system, whereas the other takes the external phenomena of life, as they seem and appear and merely describes, catalogues, recounts and arranges them under formal definitions. With Smith both these methods of approach not only merrily run alongside one another, but also intermingle and constantly contradict one another. With him this is justifiable (with the exception of a few special investigations, [such as] that into money) since his task was indeed a twofold one. On the one hand he attempted to penetrate the inner physiology of bourgeois society but on the other, he partly tried to describe its externally apparent forms of life for the first time, to show its relations as they appear outwardly and partly he had even to find a nomenclature and corresponding mental concepts for these phenomena, i.e., to reproduce them for the first time in the language and [in the] thought process. The one task interests him as much as the other and since both proceed independently of one another, this results in completely contradictory ways of presentation: the one expresses the intrinsic connections more or less correctly, the other, with the same justification and without any connection to the first method of approach expresses the apparent connections without any internal relation. Adam Smith s successors, in so far as they do not represent the reaction against him of older and obsolete methods of approach, can pursue their particular investigations and observations undisturbedly and can always regard Adam Smith as their base, whether they follow the esoteric or the exoteric part of his work or whether, as is almost always the case, they jumble up the two. But at last Ricardo steps in and calls to science: Halt! The basis, the starting-point for the physiology of the bourgeois system for the understanding of its internal organic coherence and life process is the determination of value by labour-time. Ricardo starts with this and forces science to get out of the rut, to render an account of the extent to which the other categories the relations of production and commerce evolved and described by it, correspond to or contradict this basis, this starting-point; to elucidate how far a science which in fact only reflects and reproduces the manifest forms of the process, and therefore also how far these manifestations themselves, correspond to the basis on which the inner coherence, the actual physiology of bourgeois society rests or the basis which forms its starting-point; and in general, to examine how matters stand with the contradiction between the apparent and the actual movement of the system. This then is Ricardo s ||525| great historical significance for science. This is why the inane Say, Ricardo having cut the ground from right under his feet, gave vent to his anger in the phrase that under the pretext of expanding it (science) it had been pushed into a vacuum . Closely bound up with this scientific merit is the fact that Ricardo exposes and describes the economic contradiction between the classes as shown by the intrinsic relations and that consequently political economy perceives, discovers the root of the historical struggle and development. Carey (the passage to be looked up later) therefore denounces him as the father of communism. Thus it follows on the one hand that the Ricardian method of investigation is scientifically justified and has great historical value, on the other hand the scientific deficiencies of his procedure are clearly visible and will become more evident in what follows later. Hence also the very peculiar and necessarily faulty architectonics of his work. The whole work consists of 32 chapters (in the third edition). Of this, 14 chapters deal with taxes, thus dealing only with the application of the theoretical principles. The twentieth chapter, Value and Riches, Their Distinctive Properties is nothing but an examination of the difference between use-value and exchange-value, i.e., a supplement to the first chapter, On Value . The twenty-fourth chapter Doctrine of Adam Smith Concerning the Rent of Land , like the twenty-eighth chapter On the Comparative Value of Gold, Corn and Labour and the thirty-second chapter Mr. Malthus s Opinions on Rent are mere supplements to, and in part a vindication of, Ricardo s rent theory, thus forming mere appendices to chapters II and III which deal with rent. The thirtieth chapter On the Influence of Demand and Supply on Prices is simply an appendix to the fourth chapter On Natural and Market-Price. The nineteenth chapter, On Sudden Changes in the Channels of Trade , forms a second appendix to this chapter. The thirty-first chapter, On Machinery , is purely an appendix to the fifth and sixth chapters On Wages and On Profits . The seventh chapter, On Foreign Trade , and the twenty-fifth, On Colonial Trade like the chapters on taxes are mere applications of previously established principles. The twenty-first chapter Effects of Accumulation on Profits and Interest is an appendix to the chapters on rent, profits and wages. The twenty-sixth chapter On Gross and Net Revenue is an appendix to the chapters on wages, profits and rent. Finally, the twenty-seventh chapter On Currency and Banks stands quite apart from the rest of the work and merely consists of further explanations and in part modifications of views put forward in his earlier writings on money. The Ricardian theory is therefore contained exclusively in the first six chapters of the work. It is in respect of this part of the work that I use the term faulty architectonics. The other part (with the exception of the section on money) consists of applications, elucidations and addenda which, by their very nature, are jumbled together and make no claim to being systematically arranged. But the faulty architectonics of the theoretical part (the first six chapters) is not accidental, rather it is the result of Ricardo s method of investigation itself and of the definite task which he set himself in his work. It expresses the scientific deficiencies of this method of investigation itself. Chapter I is On Value . It is subdivided into seven sections. The first section actually examines whether wages contradict the determination of the values of commodities by the labour-time they contain. In the third section Ricardo demonstrates that the entry of what I call constant capital into the value of the commodity does not contradict the determination of value and that the values of commodities are equally unaffected by the rise or fall in wages. The fourth section examines to what extent the determination of exchangeable values by labour-time is altered by the application of machinery and other fixed and durable capital, in so far as it enters into the total capital in varying proportions in different spheres of production. The fifth section examines how far a rise or fall in wages modifies the determination of values by labour-time, if capitals of unequal durability and varying periods of turnover are employed in different spheres of production. Thus one can see that in this first chapter not only are commodities assumed to exist and when considering value as such, nothing further is required but also wages, capital, profit, the general rate of profit and even, as we shall see, the various forms of capital as they arise from the process of circulation, and also the difference between natural and market-price . This latter, moreover, plays a decisive role in the following chapters, Ch. II and Ch. III: On Rent and On the Rent of Mines . In accordance with his method of investigation, the second chapter, On Rent ||526| the third On the Rent of Mines is only a supplement to this again opens with the question: Does landed property, and rent, contradict the determination of the value of commodities by labour-time? This is how he opens the second chapter On Rent : In order to carry out this investigation, he introduces not only, en passant, the relationship of market-price and real price ( monetary expression of value) but postulates the whole of capitalist production and his entire conception of the relationship between wages and profit. The fourth chapter On Natural and Market-Price and the fifth On Wages and the sixth On Profits are thus not only taken for granted, but fully developed in the first two chapters On Value and On Rent and in Chapter III as an appendix to II. The later three chapters, in so far as they bring any new theoretical points, fill in gaps here and there, and provide closer definitions, which for the most part should by rights have found their place in [chapters] I or II. Thus the entire Ricardian contribution is contained in the first two chapters of his work. In these chapters, the developed relations of bourgeois production, and therefore also the developed categories of political economy, are confronted with their principle the determination of value and examined in order to determine the degree to which they directly correspond to this principle and the position regarding the apparent discrepancies which they introduce into the value relations of commodities. They contain the whole of his critique of hitherto existing political economy, the determined break with the contradiction that pervades Adam Smith s work with its esoteric and exoteric method of approach, and, at the same time, because of this critique, they produce some quite new and startling results. Hence the great theoretical satisfaction afforded by these first two chapters; for they provide with concise brevity a critique of the old, diffuse and meandering political economy, present the whole bourgeois system of economy as subject to one fundamental law, and extract the quintessence out of the divergency and diversity of the various phenomena. But this theoretical satisfaction afforded by these first two chapters because of their originality, unity of fundamental approach, simplicity, concentration, depth, novelty and comprehensiveness, is of necessity lost as the work proceeds. Here too, we are at times captivated by the originality of certain arguments. But as a whole, it gives rise to weariness and boredom. As the work proceeds, there is no further development. Where it does not consist of monotonous formal application of the same principles to various extraneous matters, or of polemical vindication of these principles, there is only repetition or amplification; at most one can occasionally find a striking chain of reasoning in the final sections. In the critique of Ricardo, we have to separate what he himself failed to separate. [Firstly] his theory of surplus-value, which of course exists in his work, although he does not define surplus-value as distinct from its particular forms, profit, rent, interest. Secondly, his theory of profit. We shall begin with the latter, although it does not belong into this section, but into the historical appendix to Section III. Before we go on, just a few comments on how Ricardo confuses the definitions of value . Bailey s polemic against him is based on this; it is however also important for us. First of all Ricardo speaks of value in exchange (l.c., p. 1) and, like Adam Smith, defines it as the power of purchasing other goods (l.c., p. 1). This is exchange-value as it appears at first. Then, however, he proceeds to the real determination of value: Which variation? Ricardo later also calls this relative value comparative value (p. 448 et seq.). We want to know in which commodity the variation has taken place. This means the variation of the value which was called relative value above. For instance, 1 pound of sugar equals 2 pounds of coffee. Later 1 pound of sugar equals 4 pounds of coffee. The variation which we want to know about is: whether the necessary labour-time has altered for sugar or for coffee, whether sugar costs twice as much labour-time as before or whether coffee costs half as much labour-time as before and which of these variations in the labour-time required for their respective production has called forth this variation in their exchange relation. This relative or comparative value of sugar and coffee the ratio in which they exchange is thus different from relative value in the first sense. In the first sense, the relative value of sugar is determined by the quantity of sugar which can be produced by a certain amount of labour-time ||527|. In the second case, the relative value of sugar [and coffee] expresses the ratio in which they are exchanged for one another and changes in this ratio can be the result of a change in the relative value in the first sense, in coffee or in sugar. The proportion in which they exchange for one another can remain the same, although their relative values in the first sense have altered, 1 lb. sugar can equal 2 lbs. coffee, as before, even though the labour-time for the production of sugar and of coffee has risen to double or has fallen to a half. Variations in their comparative value, that is, if the exchange-value of sugar is expressed in coffee, and vice versa, will only appear when the variations in their relative value in the first sense, i.e., the values determined by the quantity of labour, have altered to a different extent, when therefore comparative changes have occurred. Absolute changes, when they do not alter the original ratio, but are of equal magnitude and move in the same direction, will not call forth any variation in the comparative values nor in the money prices of these commodities, since, if the value of money should change, it would do so equally for both [commodities]. Hence, whether the values of two commodities are expressed in their own reciprocal use-values or in their money price representing both commodities in the form of the use-value of a third commodity these relative or comparative values or prices are the same, and the changes in them must be distinguished from changes in their relative values in the first sense of the term, i.e., in so far as they only express the change in the labour-time required for their own production, and thus realised in themselves. The latter relative value thus appears as absolute value compared with relative values in the second sense, i.e., in the sense of actually representing the exchange-value of one commodity in terms of the use-value of the other or in money. That is why the term absolute value occurs in Ricardo s work, to denote relative value in the first sense. If, in the above example, 1 lb. sugar costs the same amount of labour-time as before, then its relative value in the first sense has not altered. If, however, the labour cost of coffee has halved, then the value of sugar expressed in terms of coffee has altered, because the relative value of coffee, in the first sense, has altered. The relative values of sugar and coffee thus appear to be different from their absolute values and this difference becomes evident because the comparative value of sugar, for instance, has not altered in comparison with commodities whose absolute values have remained unchanged. At times Ricardo also calls this absolute value real value or simply value (for instance on p. 16). See the whole of Bailey s polemic against Ricardo in: A Critical Dissertation on the Nature, Measures and Causes of Value; chiefly in reference to the Writings of Mr. Ricardo and his Followers. By the Author of Essays on the Formation and Publication of Opinions, London, 1825. (See also his A Letter to a Political Economist; occasioned by an article in the Westminster Review etc., London, 1826.) [Bailey s polemic] partially revolves around these different instances of definitions of value, which are not explained by Ricardo but only occur de facto and are confused with one another, and Bailey sees in this only contradictions . Secondly, [Bailey s polemic is directed] against absolute value or real value as distinct from comparative value (or relative value in the second sense). In the first of the above-mentioned works, Bailey says: They regard value as something intrinsic and absolute (l.c., p. 8). The latter reproach arises from Ricardo s inadequate presentation, because he does not even examine the form of value the particular form which labour assumes as the substance of value. He only examines the magnitudes of value, the quantities of this abstract, general and, in this form social, labour which engender differences in the magnitudes of value of commodities. Otherwise Bailey would have recognised that the relativity of the concept of value is by no means negated by the fact that all commodities, in so far as they are exchange-values, are only relative expressions of social labour-time and their relativity consists by no means solely of the ratio in which they exchange for one another, but of the ratio of all of them to this social labour which is their substance. On the contrary, as we shall see, Ricardo is rather to be reproached for very often losing sight of this real or absolute value and only retaining relative and comparative values . ||528| Thus: In Section III of the First Chapter Ricardo explains that the statement: the value of the commodity is determined by labour-time includes not only the labour directly employed on the commodity in the final labour process but also the labour-time contained in the raw material and the instruments of labour that are required for the production of the commodity. Thus it applies not only to the labour-time contained in the newly-added labour which has been bought, paid for by wages, but also to the labour-time contained in that part of the commodity which I call constant capital. Even the very heading of this Section III of Chapter I shows the deficiency of his exposition. It runs like that: Raw material has been omitted here, yet the labour bestowed on raw material is surely just as different from labour applied immediately to commodities as the labour bestowed on implements, tools and buildings . But Ricardo is already thinking of the next section. In Section III he assumes that equal component parts of value comprised in the instruments of labour employed enter into the production of the various commodities. In the next section he examines the modifications arising from the varying proportions in which fixed capital enters [into the commodities]. Hence Ricardo does not arrive at the concept of constant capital, one part of which consists of fixed capital and the other of circulating capital raw material and auxiliary material just as circulating capital not only includes variable capital but also raw material etc., and all means of subsistence which enter into consumption in general, not only into the consumption of the workers. The proportion in which constant capital enters into a commodity does not affect the values of the commodities, the relative quantities of labour contained in the commodities, but it does directly affect the different quantities of surplus-value or surplus-labour contained in commodities embodying equal amounts of labour-time. Hence this varying proportion gives rise to average prices that differ from values. With regard to sections IV and V of Chapter I we have to note, first of all, that Ricardo does not examine a highly important matter which directly affects the production of surplus-value, namely, that in different spheres of production the same volume of capital contains different proportions of constant and variable capital. Instead, Ricardo concerns himself exclusively with the different forms of capital and the varying proportions in which the same capital assumes these various forms, in other words, [with] different forms arising out of the process of the circulation of capital, that is, fixed and circulating capital, capital which is fixed to a greater or lesser degree (i.e., fixed capital of varying durability) and unequal velocity of circulation or rates of turnover of capital. And the manner in which Ricardo carries out this investigation is the following: He presupposes a general rate of profit or an average profit of equal magnitude for different capital investments of equal magnitude, or for different spheres of production in which capitals of equal size are employed or, which is the same thing, profit in proportion to the size of the capital employed in the various spheres of production. Instead of postulating this general rate of profit, Ricardo should rather have examined in how far its existence is in fact consistent with the determination of value by labour-time, and he would have found that instead of being consistent with it, prima facie, it contradicts it, and that its existence would therefore have to be explained through a number of intermediary stages, a procedure which is very different from merely including it under the law of value. He would then have gained an altogether different insight into the nature of profit and would not have identified it directly with surplus-value. Having made this presupposition Ricardo then asks himself how will the rise or fall of wages affect the relative values , when fixed and circulating capital are employed in different proportions? Or rather, he imagines that this is how he handles the question. In fact he deals with it quite differently, namely, as follows: He asks himself what effect the rise or fall of wages will have on the respective profits on capitals with different periods of turnover and containing different proportions of the various forms of capital. And here of course he finds that depending on the amount of fixed capital etc., a rise or fall of wages must have a very different effect on capitals, according to whether they contain a greater or lesser proportion of variable capital, i.e., capital which is laid out directly in wages. Thus in order to equalise again the profits in the different spheres of production, ||529| in other words, to re-establish the general rate of profit, the prices of the commodities as distinct from their values must be regulated in a different way. Therefore, he further concludes, these differences affect the relative values when wages rise or fall. He should have said on the contrary: Although these differences have nothing to do with the values as such, they do, through their varying effects on profits in the different spheres, give rise to average prices or, as we shall call them cost-prices which are different from the values themselves and are not directly determined by the values of the commodities but by the capital advanced for their production plus the average profit. Hence he should have said: These average cost-prices are different from the values of the commodities. Instead, he concludes that they are identical and with this erroneous premise he goes on to the consideration of rent. Ricardo is also mistaken when he thinks that it is only [through] the three cases he examines that he discovers the variations in the relative values that occur independently of the labour-time contained in the commodities, that is in fact the difference between the cost-prices and the values of the commodities. He has already assumed this difference, in postulating a general rate of profit, thus presupposing that despite the varying ratios of the organic component parts of capitals, these yield a profit proportional to their size, whereas the surplus-value they yield is determined absolutely by the quantity of unpaid labour-time they absorb, and with a given wage this is entirely dependent on the volume of that part of capital which is laid out in wages, and not on the absolute size of the capital. What he does in fact examine is this: supposing that cost-prices differ from the values of commodities and the assumption of a general rate of profit presupposes this difference how in turn are these cost-prices (which are now, for a change, called relative values ) themselves reciprocally modified, proportionately modified by the rise or fall of wages, taking also into account the varying proportions of the organic component parts of capital? If Ricardo had gone into this more deeply, he would have found that owing to the diversity in the organic composition of capital which first manifests itself in the immediate production process as the difference between variable and constant capital and is later enlarged by differences arising from the circulation process the mere existence of a general rate of profit necessitates cost-prices that differ from values. He would have found that, even if wages are assumed to remain constant, the difference exists and therefore is quite independent of the rise or fall in wages, thus he would have arrived at a new definition. He would also have seen how incomparably more important and decisive the understanding of this difference is for the whole theory, than his observations on the variation in cost-prices of commodities brought about by the rise or fall of wages. The result with which he contents himself and that he is content accords with the whole manner in which he carries out his investigation is as follows: Once the variations in the cost-prices (or, as he says, relative values ) of the commodities in so far as they are due to changes, rises or falls, in wages when capital of different organic composition is invested in different spheres are admitted and taken into consideration the law remains valid; that the relative values of the commodities are determined by labour-time does not contradict the law; for all other changes changes that are not merely transitory in the cost-prices of the commodities can only be explained by a change in the necessary labour-time required for their respective production. On the other hand, it must be regarded as a great merit that Ricardo associates the differences in fixed and circulating capital with the varying periods of turnover of capital and that he deduces all these differences from the varying periods of circulation, i.e., in fact from the circulation or reproduction period of capital. First of all, let us consider these differences themselves, as he presents them in Section IV (Chapter I) and then examine his views on how they act or bring about variations in the relative values . So far as the different portions of labour to produce them are concerned, this can imply and here it seems to be Ricardo s sole point that the less durable ones require more labour (recurring, directly applied labour), partly for their repair and partly for their reproduction; or it can also mean that machinery etc. of the same degree of durability may be more or less expensive, the product of more or less labour. This latter aspect, important for the proportion of variable to constant capital, is not relevant to Ricardo s consideration and therefore he does not take it up anywhere as a separate point. It is at once evident why he is not interested in that part of constant capital which exists as raw material. The latter is itself part of circulating capital. A rise in wages does not cause increased expenditure on that part of capital which consists of machinery and does not need to be replaced but remains available; the rise, however, causes an increased outlay for that part which consists of raw material, since this has to be constantly replenished, hence also constantly reproduced. Thus the difference between fixed and circulating capital is here reduced to the difference in the time of reproduction (which coincides with the period of circulation). On what does this difference in the circulation periods of different circulating capitals depend? [On the fact] that in one case, the same capital remains for a longer time in the actual sphere of production, though the labour-process does not continue. This applies, for instance, to wine which lies in the cellar to attain maturity, or to certain chemical processes in tanning, dyeing etc. 4. Again two manufacturers may employ the same amount of fixed, and the same amount of circulating capital; but the durability of their fixed capitals (therefore also their period of reproduction) may he very unequal. One may have steam-engines of the value of 10,000 the other, ships of the same value (l.c., pp. 27-28). 5. It is hardly necessary to say, that commodities which have the same quantity of labour bestowed on[a] their production, will differ in exchangeable value, if they cannot be brought to market in the same time (l.c., p. 34). [Thus we have:] 1. A difference in the proportion of fixed to circulating capital. 2. A difference in the period of turnover of circulating capital as a result of a break in the labour-process while the production process continues. 3. A difference in the durability of fixed capital. 4. A difference in the relative period during which a commodity is altogether subjected to the labour-process (without any break in the labour-process or without any difference between production period and labour period) before it can enter the actual circulation process. The last case is described by Ricardo as follows: ||531| But how is a change in the relative values of these commodities brought about by this difference whether in the degree of durability of fixed capital, or in the period of turnover of circulating capital, or in the proportions in which the two sorts of capital may be combined or, finally, in the time required by different commodities upon which the same quantity of labour is bestowed [to come on to the market]. Ricardo says in the first place, that And how is this proved? Namely when capitals of equal size are employed in different industries, and one capital consists chiefly of fixed capital and contains only a small amount of capital employed in the support of labour (l.c., p. 27), whereas in the other capital the proportions are exactly the reverse. To begin with, it is nonsense to say that the commodities are affected. He means their values. But how far are the values affected by these circumstances? Not at all. In both cases it is the profit which is affected. The man who, for instance, lays out only 1/5 of his capital in variable capital provided wages and the rate of surplus-labour are constant can only produce [a surplus-value of] 4 on 100, if the rate of surplus-value is 20 per cent. On the other hand, another man, who lays out 4/5 in variable capital would produce a surplus-value of 16 [on 100]. For in the first example the capital laid out in wages is 100/5 = 20 and 1/5 of 20 or 20 per cent is 4. And in the second example, the capital laid out in wages equals 4/5 100 = 80. And 1/5 of 80 or 20 per cent = 16. In the first example the profit would be 4, in the second 16. The average profit for both would be (16+4)/2 or 20/2 = 10 per cent. This is actually the case to which Ricardo refers. Thus if they both sold at cost-prices and this Ricardo assumes then they would each sell their commodity at 110. Supposing wages rose, for example, by 20 per cent. Where previously a worker cost 1, he now costs 1 4s, or 24s. As before, the first [man] still has to lay out 80 in constant capital (since Ricardo leaves raw materials out of account here, we can do the same) and for the 20 workers whom he employs, he has to lay out 80s. that is 4 in addition to the 20. His capital therefore now amounts to 104 and, since the workers are producing a smaller surplus-value instead of a larger one, he is only left with 6 profit out of his 110. 6 on 104 is 5 10/13 per cent. The other man, however, who employs 80 workers, would have to pay out an additional 320s., i.e., 16. Thus he would have to lay out 116. If he were to sell at 110, he would consequently make a loss of 6 instead of a gain. This, however, is only the case because the average profit has already modified the relation between the labour he has laid out and the surplus-value which he himself produces. Instead therefore of investigating the important problem: what changes have to take place in order that the one who lays out 80 of his capital of 100 in wages does not make four times as much profit as the other who only lays out 20 of his 100 in wages, Ricardo examines the subsidiary question of how it is that after this great difference has been levelled out, i.e., with a given rate of profit, any alteration of the rate of profit, due to rising wages for instance, would affect the man who employs many workers with his 100 far more than the man who employs few workers with his 100, and hence provided the rate of profit is the same the commodity prices of the one must rise and of the other must fall, if the rate of profit or the cost-prices is to remain the same. Ricardo s first illustration has absolutely nothing to do with a rise in the value of labour although he originally stated that the whole of the variation in the relative values were to arise from this cause. This is the example: <in other words they will have laid out the same capital in wages, but they will by no means have employed the same quantity of labour> <That is, average prices or cost-prices different from the values of the commodities come into being as a result of the average profit the general rate of profit presupposed by Ricardo.> <Not on account of that, but on account of both those ragamuffins having the fixed idea that both of them must draw the same spoils from the support they have given to labour ; or that, whatever the respective values of their commodities, those commodities must be sold at average prices, giving each of them the same rate of profit.>[b] This exceedingly clumsy illustration of an exceedingly simple matter is so complicated in order to avoid saying simply: Since capitals of equal size, whatever the ratio of their organic components or their period of circulation, yield profits of equal size which would be impossible if the commodities were sold at their values etc. there exist cost-prices which differ from the values of commodities. And this is indeed implied in the concept of a general rate of profit. Let us examine this complicated example and reduce it to its genuine dimensions, which are hardly complicated . And for this purpose let us begin from the end and note at the outset, in order to reach a clearer understanding, that Ricardo presupposes that the farmer and the cotton manufacturer spend nothing on raw material, that, furthermore, the farmer does not lay out any capital for instruments of labour and, finally, that no part of the fixed capital laid out by the cotton-manufacturer enters into his product as wear and tear. Though all these assumptions are absurd, they do not in themselves affect the illustration. Having made these assumptions, and starting Ricardo s example from the end, it runs as follows: The farmer lays out 5,000 in wages; the cotton fellow lays out 5,000 in wages and 5,500 in machinery. The first therefore spends 5,000 and the second 10,500; the second ||533| thus spends as much again as the first. If therefore both are to make a profit of 10 per cent, the farmer must sell his commodity at 5,500 and the cotton fellow his at 6,050 (since it has been assumed that no part of the 5,500 expended in machinery forms part of the value of the product as wear and tear). One absolutely cannot conceive what Ricardo intended to elucidate in this example, apart from the fact that the cost-prices of commodities in so far as they are determined by the value of the outlay embodied in the commodities plus the same annual rate of profit differ from the values of the commodities and that this difference arises because the commodities are sold at prices that will yield the same rate of profit on the capital advanced; in short, that this difference between cost-prices and values is identical with a general rate of profit. Even the difference between fixed capital and circulating capital which he introduces here is, in this example, sheer humbug. Since if, for instance, the additional 5,500 which the cotton spinner employs, consisted of raw materials, while the farmer did not require any seeds etc., the result would be exactly the same. Neither does the example show, as Ricardo asserts, that For according to his assumption, the cotton-manufacturer employs a fixed capital of 5,500 and the farmer nil; the one employs fixed capital, the other does not. By no means do they, therefore, employ it in different quantities , any more than one could say that, if one person eats meat and the other eats no meat, they consume meat in different quantities . On the other hand it is correct (though very wrong to introduce the term surreptitiously with an or ) that they employ accumulated labour , i.e., materialised labour, in different quantities , namely, one to the amount of 10,500 and the other only 5,000. However, the fact that they employ different quantities of accumulated labour only means that they lay out different quantities of capital in their respective trades, that the amount of profit is proportionate to this difference in the size of the capitals they employ, because the same rate of profit is assumed, and that, finally, this difference in the amount of profit, proportionate to the size of the capitals, is expressed, represented, in the respective cost-prices of the commodities. But whence the clumsiness in Ricardo s illustration? This means that they do not employ the same quantity of labour immediate and accumulated labour taken together but they do employ the same quantity of variable capital, capital laid out in wages, the same quantity of living labour. And since money exchanges for accumulated labour, i.e., existing commodities, in the form of machines etc., only according to the law of commodities, since surplus-value comes into being only as the result of the appropriation without payment of a part of the living labour employed it is clear (since, according to the assumption, no part of the machinery enters into the commodity as wear and tear) that both can only make the same profit if profit and surplus-value are identical. The cotton-manufacturer would have to sell his commodity for 5,500, like the farmer, although he lays out more than twice as much capital. And even if the whole of his machinery passed into the commodity, he could only sell his commodity for 11,000; he would make a profit of less than 5 per cent, while the farmer makes 10. But with these unequal profits, the farmer and the manufacturer would have sold the commodities at their values, provided that the 10 per cent made by the farmer represented actual unpaid labour embodied in his commodity. If therefore, they sell their commodities at an equal profit, then this must be due to one of two things: either the manufacturer arbitrarily adds 5 per cent on to his commodities and then the commodities of the manufacturer and the farmer, taken together, are sold above their value; or the actual surplus-value which the farmer makes is, for instance, 15 per cent and both add the average of 10 per cent on to their commodity. In this case, although the cost price of the respective commodity is either above or below its value, both commodities taken together are sold at their value and the equalisation of the profits is itself determined by the total surplus values they contain. Here, in Ricardo s above proposition, when correctly modified, lies the truth, [namely] that capitals of equal size, containing [different] proportions of variable to constant capital, must result in commodities of unequal values and thus yield different profit; the levelling out of these profits must therefore result in cost-prices which differ from the values of the commodities. But the idea foreshadowed in this passage is never clearly stated by Ricardo, It only explains the meanderings and obvious fallaciousness of the illustration, which up to this point had nothing to do with the different quantities of fixed capital employed . Let us now go further back in the analysis. In the first year, the manufacturer builds a machine with a hundred men; the farmer, meanwhile, produces corn, also with a hundred men. In the second year the manufacturer uses the machine to manufacture cotton, for which he again employs a hundred men. The farmer, on the other hand, again employs a hundred men for the cultivation of corn. Suppose, says Ricardo, the value of corn is 500 per annum. Let us assume that the unpaid labour contained therein equals 25 per cent [of the labour paid for], i.e., [of] 400 = 100. Then at the end of the first year, the machine would also be worth 500, of which 400 would be paid labour and 100 the value of the unpaid labour. Let us ||534| assume that by the end of the second year, the whole of the machine has been used up, has passed into the value of the cotton. In fact Ricardo assumes this, in that, at the end of the second year, he compares not only the value of the cotton goods, but the value of the cotton goods and the machine with the value of the corn [l.c., p. 29]. Well then. At the end of the second year, the value of the cottons must be equal to 1,000, namely, 500 the value of the machine, and 500 the value of the newly-added labour. The value of the corn, on the other hand, is 500, namely, 400 the value of the wages and 100 unpaid labour. So far, there is nothing in this case which contradicts the law of value. The cotton-manufacturer makes a profit of 25 per cent just as the corn-manufacturer does. But the commodities of the former equal 1,000 and those of the latter equal 500, because the former commodity embodies the labour of 200 men and the latter the labour of only 100 in each year. Furthermore, the 100 profit (surplus-value) , which the cotton-manufacturer has made on the machine in the first year by absorbing 1/5 of the labour of the workers who constructed it, without paying for it are only realised for him in the second year, since it is only then that he realises in the value of the cotton, simultaneously the value of the machine. But now we come to the point. The cotton-manufacturer sells for more than 1,000, i.e., at a higher value than his commodity has, while the farmer sells his corn at 500, thus, according to our assumption, at its value. If, therefore, there were only these two people to exchange with one another, the manufacturer obtaining corn from the farmer and the farmer cotton from the manufacturer, then it would amount to the same as if the farmer sold his commodity below its value, making less than 25 per cent [profit] and the manufacturer sold his cotton above its value. Let us do without the two capitalists (the cloth-man and the cotton-man) whom Ricardo introduces here quite superfluously, and let us modify his example by only referring to the cotton-manufacturer. Ricardo s double calculation is of no value at all to the illustration at this point. Thus: (This latter bourgeois extenuating phrase is here quite meaningless from a theoretical standpoint. Moral considerations have nothing to do with the matter.) If the manufacturer sold the commodity at its value, then he would sell it at 1,000, twice the price of corn, because it embodies twice as much labour, 500 of accumulated labour in the machinery ( 100 of which he has not paid for) and 500 labour employed in the production of cotton, 100 of which again he has not paid for. But he calculates like this: the first year I laid out 400 and by exploiting the workers, I produced a machine with this, which is worth 500. I thus made a profit of 25 per cent. The second year I laid out 900, namely, 500 in the said machine and again 400 in labour. If I am again to make 25 per cent, I must sell the cotton at 1,125, i.e., 125 above its value. For this 125 does not represent any labour contained in the cotton, neither labour accumulated in the first year nor labour added in the second. The aggregate amount of labour contained in the cotton only amounts to 1,000. On the other hand, suppose the two exchange with one another, or that half the capitalists find themselves in the position of the cotton-manufacturer and the other half in the position of the farmer. How are the first half to be paid 125? From what fund? Obviously only from the second half. But then it is clear that this second half does not make a profit of 25 per cent, Thus the first half would cheat the second under the pretext of a general rate of profit, while, in fact, the rate of profit would be 25 per cent for the manufacturer and below 25 per cent for the farmer. It must, therefore, come about in a different way. In order to make the illustration clearer and more accurate, let us suppose the farmer uses 900 in the second year. Then, with a profit of 25 per cent, he has made 100 on the 400 laid out in the first year, and 225 in the second, altogether 325. As against this, the manufacturer makes 25 per cent on the 400 in the first year, but in the second only 100 on 900, i.e., only 11 1/9 per cent (since only the 400 laid out in labour yield surplus-value, whereas the 500 in machinery yield none). Or let us suppose the farmer lays out 400 again, then he has made 25 per cent in the first year as well as in the second; which taken together is 25 per cent or 200 on an outlay of 800 in two years. As against this, the manufacturer will have made 25 per cent in the first year and 11 1/9 in the second; i.e., 200 on an outlay of 1,300 in two years which amounts to 15 5/13 per cent. If this were levelled out, the manufacturer would receive 20 5/26 per cent and so would the farmer. In other words, this would be the average profit. This would result in [a price of] less than 500 for the farmer s commodity and more than 1,000 for the manufacturer s commodity. ||535| At all events, the manufacturer here lays out 400 in the first year and 900 in the second, while the farmer lays out only 400 on each occasion. If the manufacturer instead of producing cotton had built a house (if he were a builder) then at the end of the first year, the unfinished house would embody 500 and he would have to spend a further 400 on labour in order to complete it. The farmer, however, whose capital turned over within the year, can recapitalise a part, say 50, of his 100 profit and spend it again on labour, which the manufacturer, in the supposed case, cannot do. If the rate of profit is to be the same in both cases, then the commodity of one must be sold above its value and that of the other below its value. Since competition strives to level out values into cost-prices, this is what happens. But it is incorrect to say, as Ricardo does, that here a variation in the relative values takes place on account of the different degrees of durability of capitals (p. 30) or on account of the time which must elapse before one set of commodities can be brought to market (p. 30). It is, rather, the adoption of a general rate of profit, which despite the different values brought about by the circulation process, gives rise to equal cost-prices which are different from values, for values are determined only by labour-time. Ricardo s illustration consists of two examples. The durability of capital, or the character of capital as fixed capital, does not enter into the second example at all. It only deals with capitals of different size, but of which the same amount is laid out in wages, as variable capital, and where profits are to be equal, although the surplus-values and values must be different. Neither does durability enter into the first example. It is concerned with the longer labour-process the longer period during which the commodity has to remain within the sphere of production, before it becomes a finished commodity and can enter into circulation. In this example of Ricardo the manufacturer also employs more capital in the second year than the farmer although he employs the same amount of variable capital in both years. The farmer, however, could employ a greater variable capital in the second year, because his commodity remains within the labour-process for a shorter period and is converted more quickly into money. Besides, that part of profit which is consumed as revenue, is already available to the farmer at the end of the first year, but to the manufacturer only at the end of the second. The latter must therefore spend an additional amount of capital for his keep which he advances to himself. Incidentally, whether in the second case a compensation can take place and profits can be equalised depends here entirely on the degree to which the profits of the capitals which are turned over in one year are recapitalised, in other words, on the actual amount of profits produced. Where there is nothing, there is nothing to equalise. Here the capitals again produce values, hence surplus-values, hence profits not in proportion to the size of the capital; If profits are to be proportionate to their size, then there must be cost-prices different from the values. Ricardo gives a third illustration, which, however, is again exactly the same as the first example of the first illustration and contains nothing new at all. It is not only the same in fact , but in appearance too, except that in the one case the commodity is called machine and here simply commodity . In the first example, the manufacturer laid out 400 in the first year and 900 in the second. This time he lays out 1,000 in the first and 2,100 in the second. The farmer laid out 400 in the first and 400 in the second. This time, the second man lays out 2,000 in the first year and nothing in the second. That is the whole difference. In both cases, however, the fable turns on the fact that one of the men lays out in the second year the whole of the product of the first (including surplus-value) plus an additional sum. The clumsiness of these examples shows that Ricardo is wrestling with a difficulty which he does not understand and succeeds even less in overcoming. The clumsiness consists in this: The first example of the first illustration is meant to bring in the durability of capital; it does nothing of the sort; Ricardo himself has made this impossible because he does not let any part of fixed capital enter into the commodity as wear and tear, thus excluding the very factor through which the peculiar mode of circulation of fixed capital becomes evident. He merely demonstrates that as a consequence of the longer duration of the labour-process, a greater capital is employed than where the labour-process takes a shorter time. The third example is supposed to illustrate something different, but in reality illustrates the same thing. The second example of the first ||536| illustration, however, is intended to show what differences arise as a result of different ratios of fixed capital. Instead it only shows the difference brought about by two capitals of unequal size, although the same amount of capital is laid out in wages. And, furthermore, the manufacturer operates without cotton and yarn and the farmer without seeds or implements! The complete inconsistency, even absurdity, of this illustration necessarily arises from this underlying lack of clarity. Finally he states the practical conclusions to be drawn from all these illustrations: What does this mean, other than that in a definite period of circulation, for instance a year, a capital must yield 10 per cent whatever its specific period of circulation may be and quite independently of the various surplus-values which according to the proportion of their organic component parts capitals of equal size must produce in different branches of production, irrespective of the circulation process. Ricardo should have drawn the following conclusions: [Firstly:] Capitals of equal size produce commodities of unequal values and therefore yield unequal surplus-values or profits, because value is determined by labour-time, and the amount of labour-time realised by a capital does not depend on its absolute size but on the size of the variable capital, the capital laid out in wages. Secondly: Even assuming that capitals of equal size produce equal values (although the inequality in the sphere of production usually coincides with that in the sphere of circulation), the period within which they appropriate equal quantities of unpaid labour and convert these into money, still varies in accordance with their turnover period. Thus arises a second difference in the values, surplus-values and profits which capitals of equal size must yield in different branches of production in a given period of time. Hence, if profits as a percentage of capital are to be equal over a period, say of a year, so that capitals of equal size yield equal profits in the same period of time, then the prices of the commodities must be different from their values. The sum total of these cost-prices of all the commodities taken together will be equal to their value. Similarly the total profit will be equal to the total surplus-value which all these capitals yield, for instance, during one year. If one did not take the definition of value as the basis, the average profit, and therefore also the cost-prices, would be purely imaginary and untenable. The equalisation of the surplus-values in different spheres of production does not affect the absolute size of this total surplus-value; but merely alters its distribution among the different spheres of production. The determination of this surplus-value itself, however, only arises out of the determination of value by labour-time. Without this, the average profit is the average of nothing, pure fancy. And it could then equally well be 1,000 per cent or 10 per cent. All Ricardo s illustrations only serve him as a means to smuggle in the presupposition of a general rate of profit. And this happens in the first chapter On Value , while wages are supposed to be dealt with only in the fifth chapter and profits in the sixth. How from the mere determination of the value of the commodities their surplus-value, the profit and even a general rate of profit are derived remains obscure with Ricardo. In fact the only thing which he proves in the above illustrations is that the prices of the commodities, in so far as they are determined by the general rate of profit, are entirely different from their values. And he arrives at this difference by postulating the rate of profit to be law. One can see that though Ricardo is accused of being too abstract, one would be justified in accusing him of the opposite: lack of the power of abstraction, inability, when dealing with the values of commodities, to forget profits, a factor which confronts him as a result of competition. Because Ricardo, instead of deriving the difference between cost-prices and values from the determination of value itself, admits that values themselves (here it would have been appropriate to define the concept of absolute or real value or value as such) are determined by influences that are independent of labour-time and that the law of value is sporadically invalidated by these influences, this was used by his opponents, such as Malthus, in order to attack his whole ||537| theory of value. Malthus correctly remarks that the differences between the organic component parts of capital and the turnover periods of capitals in different branches of production develop simultaneously with the progress of production, so that one would arrive at Adam Smith s standpoint, that the determination of value by labour-time was no longer applicable to civilised times. (See also Torrens.) On the other hand his disciples have resorted to the most pitiful scholastic inventions, to make these phenomena consistent with the fundamental principle (see [James] Mill and the miserable McCulloch). Ricardo does not dwell on the conclusion which follows from his own illustrations, namely, that quite apart from the rise or fall of wages on the assumption of constant wages, the cost-prices of commodities must differ from their values, if cost-prices are determined by the same percentage of profit. But he passes on, in this section, to the influence which the rise or fall of wages exerts on cost-prices to which the values have already been levelled out. The matter is in itself extraordinarily simple. The farmer lays out 5,000 at 10 per cent; his commodity equals 5,500. If the profit falls by 1 per cent from 10 to 9, because wages have risen and the rise in wages has brought about this reduction, then he continues to sell at 5,500 (since it is assumed that he lays out the whole of his capital in wages). But of these 5,500 only 454 14/109 belong to him and not 500. The capital of the manufacturer consists of 5,500 for machinery and 5,000 for labour. As before, the latter 5,000 results in a product of 5,500, except that now the manufacturer does not lay out 5,000 but 5,045 95/109 and on this he makes a profit of only 454 14/109, like the farmer. On the other hand he can no longer reckon 10 per cent or 550 on his fixed capital of 5,500 but only 9 per cent or 495. He will therefore sell his commodity at 5,995 instead of at 6,050. Thus, as a result of the rise in wages, the money price of the farmer s commodity has remained the same, while that of the manufacturer has fallen, the value of the farmer s commodity compared with that of the manufacturer has therefore risen. The whole point of the matter is that if the manufacturer sold his commodity at the same value as before, he would make a higher profit than the average, because only the part of his capital that has been laid out in wages is directly affected by the rise in wages. This illustration in itself already assumes cost-prices regulated by an average profit of 10 per cent and differing from the values of the commodities. The question is, how are these cost-prices affected by the rise or fall in profit, when the capitals employed contain different proportion of fixed and circulating capital. This illustration (Ricardo, l.c., pp. 31-32) has nothing to do with the essential question of the transformation of values into cost-prices. But it is a nice point because Ricardo in fact demonstrates here that, if the composition of the capitals were the same, a rise in wages contrary to the vulgar view would only bring about a lowering of profits without affecting the values of the commodities; if the composition of the capitals is unequal, then it will only bring about a fall in the price of some commodities instead of as vulgar opinion maintains a rise in the price of all commodities. Here the fall in the prices of commodities results from a fall in the rate of profit or, which amounts to the same thing, a rise in wages. In the case of the manufacturer a large part of the cost-price of the commodity is determined by the average profit which he reckons on his fixed capital. If therefore this rate of profit falls or rises as a result of the rise or fall in wages, then the price of these commodities will fall or rise correspondingly that is in accordance with that part of the price which results from the profit calculated upon the fixed capital. The same applies to circulating capitals returnable at distant periods, and vice versa. (J.R. McCulloch [The Principles of Political Economy, Edinburgh, 1825, p. 300].) If the capitalists who employ less variable capital were to continue to chalk up their fixed capital at the same rate of profit, and add it to the price of the commodity then their rate of profit would rise and it would rise in the proportion in which they employ more fixed capital than those whose capital consists to a greater extent of variable capital. This would be levelled out by competition. Ricardo proves his point by firstly postulating cost-prices regulated by a general rate of profit. Secondly: There can be no rise in the value of labour without a fall of profits . (David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821, p. 31.) Thus already in Chapter I On Value , those laws are presupposed, which in chapters V and VI On Wages and On Profits should be deduced from the Chapter On Value . Incidentally, ||538| Ricardo concludes quite wrongly, that because there can be no rise in the value of labour without a fall of profits , there can be no rise of profits without a fall in the value of labour. The first law refers to surplus-value. But since profit equals the proportion of surplus-value to the total capital advanced, profit can rise though the value of labour remains the same, if the value of constant capital falls. Altogether Ricardo mixes up surplus-value and profit. Hence he arrives at erroneous laws on profit and the rate of profit. The general conclusion of the last illustration is as follows: Again Ricardo comes to the one point with which he is really concerned in his investigation. These variations in the cost-prices of commodities resulting from a rise or fall in wages are insignificant compared with those variations in the same cost-prices which are brought about by changes in the values of commodities, that is changes in the quantity of labour employed in their production (Ricardo is far from expressing this truth in these adequate terms). One can therefore, by and large, abstract from this and, accordingly, the law of value remains virtually correct. (He should have added that the cost-prices remain unintelligible without values determined by labour-time.) This is the true course of his investigation. In fact it is clear that despite the transformation of the values of commodities into cost-prices, the latter having been assumed, a change in cost-prices in so far as it does not arise from a permanent fall or rise, a permanent alteration, in the rate of profit which can only establish itself in the course of many years can only and solely be caused by a change in the values of commodities, in the labour-time necessary for their production. {And these cost-prices must not be confused with market-prices: they are the average market-prices of the commodities in the different branches of production. Market-price itself already includes an average in so far as commodities of the same sphere are determined by the prices of those commodities which are produced under the mean, average conditions of production of this sphere. By no means under the worst conditions, as Ricardo assumes with rent, because the average demand is related to a certain price, even with corn. A certain amount of the supply is therefore not sold above this price. Otherwise the demand would fall. Those whose conditions of production are not average but below average, must therefore often sell their commodity not only below its value but below its cost price.} He therefore takes no further account of this. The whole of this Section IV of Chapter I On Value is so extraordinarily confused, that, although Ricardo announces at the start that he intends to consider the variations in the va1ues of commodities brought about by the rise or fall in wages in conjunction with different composition of capital, he actually does this only occasionally. In fact, he fills the major part of Section IV with illustrations which prove that, quite independently of the rise or fall of wages he himself assumes that wages remain constant the postulation ||539| of a general rate of profit must result in cost-prices which differ from the values of the commodities and, moreover, that this does not even depend on the difference [in the proportion] of fixed and circulating capital. He forgets this again at the end of the section. He announces the subject of his inquiry in Section IV with the words: In fact, he shows by his illustrations, in the first place, that it is only the general rate of profit which enables the different combinations of types of capital (namely, variable and constant etc.) to differentiate the prices of commodities from their values, that therefore the cause of those variations is the general rate of profit and not the value of labour, which is assumed to be constant. Then only in the second place he assumes cost-prices already differentiated from values as a result of the general rate of profit and he examines how variations in the value of labour affect these. Number 1, the main point, he does not investigate; he loses sight of it altogether and he closes the section as he began it: And in the following Section V (Chapter I) he continues on the same lines, in other words, he only investigates how the cost-prices of commodities can be altered by a variation in the value of labour, or wages, not when the proportion of fixed and circulating capitals is different in two capitals of equal size employed in two different spheres of production, but when there is unequal durability of the capital [c] or unequal rapidity with which it is returned to its employer [d] [l.c., p. 36]. The correct surmise implied in Section IV, regarding the difference between cost-prices and values brought about by the general rate of profit is here no longer noticeable. Only a secondary question is examined here, namely, the variation in the cost-prices themselves. This section, therefore, is in fact of hardly any theoretical interest, apart from the occasional mention of differences in the form of capital arising from the circulation process. Thus the lesser durability and the difference between fixed and circulating capital in general, are reduced to the difference in the period of reproduction. This is certainly a factor of decisive importance. But by no means the only one. Fixed capital enters wholly into the labour-process and only in successive stages and by instalments into the process of creating value. This is another major distinction in their form of circulation. Furthermore: fixed capital enters necessarily enters only as exchange-value into the process of circulation, while its use-value is consumed in the labour-process and never goes outside it. This is another important distinction in the form of circulation. Both distinctions in the form of circulation also concern the period of circulation; but they are not identical with the degrees [of durability of fixed capital] and the differences [in the period of circulation]. Less durable capital constantly requires a greater quantity of labour, <but he is so occupied with his general rate of profit, that he does not see that thereby a relatively great deal of surplus-labour would be continually transferred to the commodity> <Hence very little surplus-labour, hence much less [surplus]-value, if the commodities exchanged according to their values.> In other words: The manufacturer who employs fixed capital of less durability employs relatively less fixed capital and more capital expended in wages, than the one who employs capital of greater durability. This case is therefore identical with the previous one, illustrating how a variation in wages affects capitals, one of which consists of relatively, proportionately, more fixed capital than the other, There is nothing new [here]. What Ricardo further says about machinery on pp. 38-40 should be held over until we come to Chapter XXXI On Machinery . It is curious how Ricardo, at the end, almost expresses the correct idea in a passing phrase only to let it go again and after touching upon it in the passages we are about to quote, returns again to his dominating idea of the effect of a change in the value of labour on cost-prices and finally concludes the investigation with this secondary consideration. The passage containing the allusion is the following: <The final clause is badly worded; it refers moreover not to value but to commodities, and is meaningless, unless it refers to their prices; for to say that values fall in proportion to labour-time means that values fall or rise as they fall or rise.> In fact Ricardo says: Capitals of equal size produce commodities of equal values, if the ratio of their organic component parts is the same; if equally large portions of them are expended on wages and on means of production. The same quantities of labour, therefore equal values (apart from the difference which might arise through the circulation process) are then embodied in their commodities. On the other hand, capitals of equal size produce commodities of very unequal value, when their organic composition is different, namely, when the proportion between the part existing as fixed capital and the part laid out in wages differs considerably. Firstly, only a part of the fixed capital enters into the commodity as a component part of value, consequently the magnitude of their values will greatly vary according to whether much or little fixed capital is employed in the production of the commodity. Secondly, the part laid out in wages calculated as a percentage on capital of equal size is much smaller, therefore also the total [newly added] labour embodied in the commodity, and consequently the surplus-labour (given a working-day of equal length) which constitutes the surplus-value. If, therefore, these capitals of equal size whose commodities are of unequal values and these unequal values contain unequal surplus-values, and therefore unequal profits if these capitals because of their equal size are to yield equal profits, then the prices of commodities (as determined by the general rate of profit on a given outlay) must be very different from the values of the commodities. Hence it follows, not that the values have altered their nature, but that the prices are different from the values. It is all the more surprising that Ricardo did not arrive at this conclusion, for he sees that even if one presupposes cost-prices determined by the general rate of profit, a change in the rate of profit (or rate of wages) must change these cost-prices, so that the rate of profit ||541| in the different spheres of production may remain the same. How much more therefore must the establishment of a general rate of profit change unequal values since this general rate of profit is in fact nothing other than the levelling out of the different rates of surplus-value in different commodities produced by equal capitals. Having thus, if not set forth and comprehended, at any rate virtually demonstrated, the difference between cost and value, cost-prices and values of commodities, Ricardo ends with the following sentence: With this erroneous confusion of cost-prices and values, which he has himself refuted, he then proceeds to consider rent. With regard to the influence of the variations in the value of labour upon the cost-price of gold, Ricardo says the following in Section VI, Chapter I: This is far more applicable to those commodities into whose composition the various organic constituents enter in the average proportion, and whose period of circulation and reproduction is also of average length. For these, cost-price and value coincide, because for them, and only for them, average profit coincides with their actual surplus-value. As inadequate as sections IV and V of Chapter I appear in their consideration of the influence of the variations in the value of labour on relative values , theoretically a secondary matter compared with the transformation of values into cost-prices through the average rate of profits, so important is the conclusion which Ricardo draws from this, thereby demolishing one of the major errors that had persisted since Adam Smith, namely, that the raising of wages, instead of reducing profits, raises the prices of commodities. This is indeed already implied in the very concept of values and is in no way altered by the transformation of values into cost-prices, since this, in any case, only affects the distribution of the surplus-value made by the total capital among the various branches of production or different capitals in different spheres of production. But it was important that Ricardo stressed this point and even proved the opposite to be the case. He is therefore justified in saying in Section VI, Chapter I: <This corresponds to Adam Smith s second explanation of value, according to which it is equal to the quantity of labour a commodity can purchase.> With regard to money prices this seems wrong. When gold rises or falls in value, from whatever causes, then it does so to the same extent for all commodities which are reckoned in gold. Since it thus represents a relatively unchangeable medium despite its changeability, it is not at all clear how any relative combination of fixed capital and circulating capital in gold, compared with commodities, can bring about a difference. But this is due to Ricardo s false assumption that money, in so far as it serves as a medium of circulation, exchanges as a commodity for commodities. Commodities are assessed in gold before it circulates them. Supposing wheat were the medium instead of gold. If, for example, consequent upon a rise in wages, wheat as a commodity into which enters more than the average variable instead of constant capital, were to rise relatively in its price of production, then all commodities would be assessed in wheat of higher relative value . The commodities into which more fixed capital entered, would be expressed in less wheat than before, not because their specific price had fallen compared with wheat but because their price had fallen in general. A commodity which contained just as much [living] labour as against accumulated labour as wheat, would show its rise [in price] by being expressed in more wheat ||542| than a commodity whose price had fallen as compared with wheat. If the same causes which raised the price of wheat, raised, for example, the price of clothes, then although the clothes would not be expressed in more wheat than previously, those [commodities], whose price had fallen compared with wheat, for instance cotton, would be expressed in less. Wheat would be the medium in which the difference in the price of cotton and clothes would be expressed. But what Ricardo means is something different. He means that: because of a rise in wages, wheat has risen as against cotton but not as against clothes. Thus clothes would exchange for wheat at the old price, whereas cottons would exchange against wheat at the higher price. In itself, the assumption that variations in the price of wages in England, for instance, would alter the cost-price of gold in California where wages have not risen, is utterly absurd. The levelling out of values by labour-time and even less the levelling out of cost-prices by a general rate of profit does not take place in this direct form between different countries. But take even wheat, a home product. Say that the quarter of wheat has risen from 40s. to 50s., i.e., by 25 per cent. If the dress has also risen by 25 per cent, then it is worth 1 quarter of wheat as before. If the cotton has fallen by 25 per cent, then the same amount of cotton which was previously worth 1 quarter is now only worth 6 bushels of wheat. And this expression in wheat represents exactly the ratio of the prices of cotton and clothes, because they are being measured in the same medium, in 1 quarter wheat. Moreover, this notion is absurd in another way too. The price of the commodity which serves as a measure of value and hence as money, does not exist at all, because otherwise, apart from the commodity which serves as money I would need a second commodity to serve as money a double measure of values. The relative value of money is expressed in the innumerable prices of all commodities; for in each of these prices in which the exchange-value of the commodity is expressed in money, the exchange-value of money is expressed in the use-value of the commodity. There can therefore be no talk of a rise or fall in the price of money. I can say: the price of money in terms of wheat or of clothes has remained the same; its price in terms of cotton has risen, or, which is the same, that the money price of cotton has fallen. But I cannot say that the price of money has risen or fallen. But Ricardo actually maintains that, for instance, the price of money in terms of cotton has risen or the price of cotton in terms of money has fallen, because the relative value of money has risen as against that of cotton while it has retained the same value as against clothes or wheat, Thus the two are measured with an unequal measure. This Section VI On an Invariable Measure of Value [l.c., p. 41] deals with the measure of value but contains nothing important. The connection between value, its immanent measure i.e., labour-time and the necessity for an external measure of the values of commodities is not understood or even raised as a problem. The very opening of this section shows the superficial manner in which it is handled. Even if there were such a commodity, the influence of the rise or fall in wages, the different combinations of fixed and circulating capital, the different degrees of durability of the fixed capital employed and the [different] length of time before the commodity can be brought to market, etc., would prevent it from being: That is to say, if the [prices of this latter group of] things varied, we could say (provided the value of money did not rise or fall) that the variations were caused by the rise or fall in their values , in the labour-time necessary for their production. With regard to the other things, we could not know whether the variations in their money prices were due to other reasons, etc. Later we shall have to come back to this matter which is quite unsatisfactory. (During a subsequent revision of the theory of money.) Chapter I, Section VII. Apart from the important doctrine on relative wages, profits and rents, to which we shall return later, this section contains nothing but the theory that a fall or rise in the value of money accompanied by a corresponding rise or fall in wages etc. does not alter the relations but only their monetary expression. If the same commodity is expressed in double the number of pounds sterling, so also is that part of it which resolves into profit, wages or rent. But the ratio of these three to one another and the real values they represent, remain the same. The same applies when the profit is expressed by double the number of pounds, 100 is then however represented by 200 so that the relation between profit and capital, the rate of profit, remains unaltered. The changes in the monetary expression affect profit and capital simultaneously, ditto profit, wages and rent. This applies to rent as well in so far as it is not calculated on the acre but on the capital advanced in agriculture etc. In short, in this case the variation is not in the commodities etc. ||543| In developing his theory of differential rent, in Chapter II, On Rent , Ricardo puts forward the following thesis: The last sentence is not entirely correct. The quantity of produce required [is] not a fixed magnitude. [It would be correct to say:] A certain quantity of produce required within certain limits of price. If the latter rises above these limits then the quantity required falls with the demand. The thesis set out above can be expressed in general terms as follows: The value of the commodity which is the product of a particular sphere of production is determined by the labour which is required in order to produce the whole amount, the total sum of the commodities appertaining to this sphere of production and not by the particular labour-time that each individual capitalist or employer within this sphere of production requires. The general conditions of production and the general productivity of labour in this particular sphere of production, for example in cotton manufacture, are the average conditions of production and the average productivity in this sphere, in cotton-manufacture, The quantity of labour by which, for example, [the value of] a yard of cotton is determined is therefore not the quantity of labour it contains, the quantity the manufacturer expended upon it, but the average quantity with which all the cotton-manufacturers produce one yard of cotton for the market. Now the particular conditions under which the individual capitalists produce, for example, in cotton manufacture, necessarily fall into three categories. Some produce under medium conditions, i.e., the individual conditions of production under which they produce coincide with the general conditions of production in the sphere. The average conditions are their actual conditions. The productivity of their labour is at the average level. The individual value of their commodities coincides with the general value of these commodities. If, for example, they sell the yard of cotton at 2s. the average value then they sell it at the value which the yards they produce represent in natura. Another category produces under better than average conditions. The individual value of their commodities is below their general value. If they sell their commodities at the general value, they sell them above their individual value. Finally, a third category produces under conditions of production that are below the average. Now the quantity of produce required from this particular sphere of production is not a fixed magnitude. If the rise of the value of the commodities above the average value exceeds certain limits, the quantity of produce required falls, that is, this quantity is only required at a given price or at least within certain limits of price. Hence it is just as possible that the last-mentioned category has to sell below the individual value of its commodities as the better placed category always sells its products above their individual value, Which of the categories has a decisive effect on the average value, will in particular depend on the numerical ratio or the proportional size of the categories. If numerically the middle category greatly outweighs the others it will determine [the average value]. If this group is numerically weak and that which works below the average conditions is numerically strong and predominant, then the latter determines the general value of the produce of this sphere, although this by no means implies and it is even very unlikely, that the individual capitalist who is the most unfavourably placed in the last group, is the determining factor. (See Corbet.) But let us leave this aside. The general result is that: the general value of the products of this group is the same for all, whatever may be its relation to the particular value of each individual commodity. This common value is the market-value of these commodities, the value at which they appear on the market. Expressed in money, this market-value is the market-price, just as in general, value expressed in money is price. The actual market-price is now above, now below this market-value and coincides with it only by chance. Over a certain period, however, the fluctuations equal each other out and it can be said that the average of the actual market-prices is the market-price which represents the market-value. Whether, at a given moment, the actual market-price corresponds to this market-value in magnitude, i.e., quantitatively or not, at any rate it shares the qualitative characteristic with it, that all commodities of the same sphere of production available on the market have the same price (assuming of course that they are of the same quality), that is, in practice , they represent the general value of the commodities of this sphere. ||544| The above thesis put forward by Ricardo for the purpose of his theory of rent has therefore been interpreted by his disciples to mean that two different market-prices cannot exist simultaneously on the same market or: products of the same kind found on the market simultaneously, have the same price or since we can leave out of account here the accidental features of this price the same market-value. Thus competition, partly among the capitalists themselves, partly between them and the buyers of the commodity and partly among the latter themselves, brings it about here that the value of each individual commodity in a particular sphere of production is determined by the total mass of social labour-time required by the total mass of the commodities of this particular sphere of social production and not by the individual values of the separate commodities or the labour-time the individual commodity has cost its particular producer and seller. It obviously follows from this, however, that, whatever the circumstances, the capitalists belonging to the first group whose conditions of production are more favourable than the average make an excess profit, in other words their profit is above the general rate of profit of this sphere. Competition, therefore , does bring about the market-value or market-price by the equalisation of profits within a particular sphere of production. (For the purpose of this investigation, the distinction [between market-value and market-price] is irrelevant since the differences in the conditions of production hence the different rates of profit for the individual capitalist in the same sphere, remain, whatever may be the relationship of market-price to market-value.) On the contrary, competition here equalises the different individual values to the same, equal, undifferentiated market-value, by permitting differences between individual profits, profits of individual capitalists, and their deviations from the average rate of profit in the sphere. It even creates differences by establishing the same market-value for commodities produced under unequal conditions of production, therefore with unequal productivity of labour, the commodities thus represent individual unequal quantities of labour-time. The commodity produced under more favourable conditions, contains less labour-time than that produced under less favourable conditions, but it sells at the same price, and has the same value, as if it contained the same labour-time though this is not the case. For the establishment of his theory of rent, Ricardo needs two propositions which express not only different but contradictory effects of competition. According to the first, the products of the same sphere sell at one and the same market-value, competition therefore enforces different rates of profit, i.e., deviations from the general rate of profit. According to the second, the rate of profit must be the same for each capital investment, that is competition brings about a general rate of profit. The first law applies to the various independent capitals invested in the same sphere of production. The second applies to capitals in so far as they are invested in different spheres of production. By the first action, competition creates the market-value, that is, the same value for commodities of the same sphere of production, although this identical value must result in different profits, it thus creates the same value despite of, or rather by means of, different rates of profit. The second action (which, incidentally, is brought about in a different way; namely, the competition between capitalists of different spheres throws the capital from one sphere into another, while the other competition, in so far as it is not competition between buyers, occurs between capitals of the same sphere) enables competition to create the cost-price, in other words the same rate of profit in the various spheres of production, although this identical rate of profit is contrary to the inequality of values, and can hence only be enforced by prices which are different from values. Since Ricardo needs both these propositions equal value or price with unequal rate of profit, and equal rate of profit with unequal values, for his theory of rent, it is most remarkable that he does not sense this twofold determination and that even in the Section where he deals ex professo with market-price, in Chapter IV On Natural Price and Market-Price , he does not deal with market-price or market-value at all, although in the above-quoted passage he uses it as a basis to explain differential rent, the excess profit crystallised in the form of rent. ||545| But he deals here merely with the reduction of the prices in the different spheres of production to cost-prices or average prices, i.e., with the relationship between the market-values of the different spheres of production and not with the establishment of the market-value in each particular sphere, and unless this is established market-values do not exist at all. The market-values of each particular sphere, therefore the market-prices of each particular sphere (if the market-price corresponds to the natural price , in other words if it merely represents the value in the form of money) would yield very different rates of profit, for of equal size in different spheres quite apart from the differences arising from their different processes of circulation employ very unequal proportions of constant and variable capita and therefore yield very unequal surplus values, hence very unequal profits. The levelling out of the various market-values, so that the same rate of profit is produced in the different spheres of production, and capitals of equal size yield equal average profits, is therefore only possible by the transformation of market-values into cost-prices which are different from the actual values.* What competition within the same sphere of production brings about, is the determination of the value of the commodity in a given sphere by the average labour-time required in it, i.e., the creation of the market-value. What competition between the different spheres of production brings about is the creation of the same general rate of profit in the different spheres through the levelling out of the different market-values into market prices, which are cost-prices that are different from the actual market-values. Competition in this second instance by no means tends to assimilate the prices of the commodities to their values, but on the contrary, to reduce their values to cost-prices that differ from these values, to abolish the differences between their values and cost-prices. It is only this latter process which Ricardo considers in Chapter IV and, oddly enough, he regards it as the reduction of the prices of commodities through competition to their values, the reduction of the market-price (a price which is different from value) to the natural price (the value expressed in terms of money). This blunder, however, arises from the error he committed already in Chapter I On Value , where he identified cost-price and value, this in turn was due to the fact that at a point where as yet he was only concerned with explaining value , where he, therefore, as yet, only had to deal with commodity , he plunged in with the general rate of profit and all the conditions arising from the more developed capitalist relations of production. Ricardo s whole procedure in Chapter IV is therefore quite superficial. He starts out from the accidental and temporary variations of [the] price (l.c., p. 80) of commodities resulting from the fluctuating relations between demand and supply. Here the general level of profit prevailing between the particular spheres of production, between the particular employments is already presupposed. But he should have considered first, how the general level of price in the same employment and the general level of profit between different employments is brought about. Ricardo would then have seen that the latter operation already presupposes movements of capital in all directions or a distribution, determined by competition, of the whole social capital between its different spheres of employment. Once it is assumed that the market-values or average market-prices in the different spheres are reduced to cost-prices yielding the same average rate of profit (this is however only the case in spheres where landed property does not interfere; where it interferes, competition within the same sphere can convert the price to the value and the value to the market-price, but it cannot reduce the market-price to the cost-price), persistent deviations of the market-price from the cost-price, when it rises above or falls below it in particular spheres, will bring about new migrations and a new distribution of social capital. The first migration occurs in order to establish cost-prices which differ from values. The second migration occurs in order to equalise the actual market-prices with the cost-prices as soon as they rise above or fall below the latter. The first is a transformation of the values into cost-prices. The second is a rotation of the actual ||546| market-prices of the moment in the various spheres, around the cost-price, which now appears as the natural price, although it is different from the value and only the result of social action. It is this latter, more superficial movement which Ricardo examines and at times unconsciously confuses with the other. Both are of course brought about by the same principle , namely, the principle that while This tendency has the effect of distributing the total mass of social labour-time among the various spheres of production according to the social need. In this way, the values in the different spheres of production are transformed into cost-prices, and on the other hand, the variations of the actual prices in particular spheres from the cost-prices are levelled out. All this is contained in Adam Smith s work. Ricardo himself says: The achievement of Ricardo, whose blunder is on the whole caused by his lack of criticism of Adam Smith in this respect, consists in his more precise exposition of this migration of capital from one sphere to the other, or rather of the manner in which this occurs. He was, however, only able to do this because the credit system was more highly developed in his time than in the time of Adam Smith, Ricardo says: Credit therefore is the means by which the capital of the whole capitalist class is placed at the disposal of each sphere of production, not in proportion to the capital belonging to the capitalists in a given sphere but in proportion to their production requirements whereas in competition the individual capitals appear to be independent of each other. Credit is both the result and the condition of capitalist production and this provides us with a convenient transition from the competition between capitals to capital as credit. At the beginning of Chapter IV, Ricardo says that by natural price he understands the value of the commodities, that is, the price as determined by their relative labour-time, and that by market-price he understands the accidental and temporary deviations from this natural price or value ||547|. Throughout the further course of the chapter and he is quite explicit in this he understands something quite different by natural price, namely, cost-price which is different from value. Thus, instead of showing how competition transforms values into cost-prices, i.e., creates permanent deviations from values, he shows, following Adam Smith, how competition reduces the market-prices in different trades to cost-prices. Thus Chapter IV opens like this: Here therefore natural price equals value and market-price is nothing but the deviation of actual price from value. As against this: Here therefore, natural price equals cost-price, that is, the price at which the relation between the profit and the advances embodied in the commodity is the same, although equal values of commodities produced by capitals in different spheres of production, contain very unequal surplus-values, and thus unequal profits. If the price is to yield the same profit, it must therefore be different from the value of the commodity. On the other hand, capitals of equal size produce commodities of very unequal value, according to whether a larger or a smaller portion of the fixed capital enters into the commodity. But more about this when dealing with the circulation of capitals. By equalisation through competition, Ricardo therefore understands only the rotation of the actual prices or actual market-prices around the cost-prices or the natural price as distinct from the value, the levelling out of the market-price in different branches of production to general cost-prices, i.e., precisely to prices which are different from the real values in different trades.: This is exactly the case. Competition adjusts the prices in the different trades so that the remaining value or overplus , the profit, corresponds to the value of the capital employed, but not to the real value of the commodity, not to the real overplus which it contains after the deduction of expenses. To bring this adjustment about the price of one commodity must be raised above, and that of the other must be depressed below their respective real values, It is not the value of the commodities but their cost-price, i.e., the expenses they contain plus the general rate of profit, around which competition forces the market-prices in the different trades to rotate. Ricardo continues: In fact it is his uncritical belief in the Smithian tradition, which here leads Ricardo astray. As usual, Ricardo closes the chapter by saying that in the following investigations, he wants to leave entirely out of consideration (l.c., p. 85) the accidental deviations of market-prices from the cost-price; but he overlooks the fact that he has paid no regard at all to the constant deviations of market-prices, in so far as they correspond to cost-prices, from the real values of the commodities and that he has substituted cost-price for value. Chapter XXX On the Influence of Demand and Supply on Prices . Here Ricardo defends the proposition that the permanent price is determined by the cost-price, and not by supply or demand: that, therefore, the permanent price is determined by the value of the commodities only in so far as this value determines the cost-price. Provided that the prices of the commodities are so adjusted that they all yield a profit of 10 per cent, then every lasting change in these prices will be determined by a change in their values, in the labour-time required for their production. As this value continues to determine the general rate of profit, so the changes in it continue to determine the variations in cost-prices, although of course the difference between cost-prices and values is thereby not superseded. What is superseded is only that the difference between value and actual price should not ||548| be greater than the difference between cost-prices and values, a difference that is brought about by the general rate of profit. With the changes in the values of commodities, their cost-prices also change. A new natural price (p. 460) is formed. If, for example, the worker can now produce twenty hats in the same period of time which it previously took him to produce ten hats, and if wages accounted for half the cost of the hat, then the expenses, the costs of production, of the twenty hats, in so far as they consist of wages, have fallen by half. For the same wages are now paid for the production of twenty hats as previously for ten. Thus each hat now contains only half the expenditure for wages. If the hat manufacturer were to sell the hats at the same price he would sell them above the cost-price. If the profit had previously been 10 per cent then it would now be 46 2/3 per cent, assuming the outlay for the manufacture of a certain quantity of hats was originally 50 for raw material, etc. and 50 for labour. [The outlay] would now be 50 for raw material etc. and 25 for wages. If the commodity is sold at the old price then the profit is 35/75 or 46 2/3 per cent. As a result of the fall in value, the new natural price will therefore fall to such an extent that the price only yields 10 per cent profit. The fall in the value or in the labour-time necessary for the production of the commodity reveals itself in the fact that less labour-time is used for the same amount of commodity, hence also less paid labour-time, less wages and, consequently, the costs, the wages paid (i.e., the amount of wages; this does not presuppose a fall in the rate of wages) proportionately decline for the production of each individual commodity. This is the case if the change in value has taken place in the hat making itself. Had it occurred in the production of the raw material or of the tools, then this would have been similarly expressed as a diminution of outlay in wages for the production of a certain given quantity of product in these spheres; but to the hat manufacturer it would denote that his constant capital had cost him less. The cost-prices or natural prices (which have nothing to do with nature ) can fall in two ways as a result of a change here a fall in the value of the commodities: [Firstly] because the wages laid out in the production of a given quantity of commodities fall, owing to a fall in the aggregate absolute amount of labour, paid labour and unpaid labour, expended on this quantity of commodities. Secondly: If, as a result of the increased or diminished productivity of labour (both can occur, the one when the proportion of variable capital to constant capital falls, the other when wages rise owing to the means of subsistence becoming dearer), the ratio of surplus-value to the value of the commodity or to the value of the labour contained in it, changes, then the rate of profit rises or falls, and the amount of labour is differently divided up. In the latter case, the prices of production or cost-prices could change only in so far as they are affected by variations in the value of labour. In the first case, the value of labour remains the same. In the second case, however, it is not the values of the commodities which alter, but only the division between [necessary] labour and surplus-labour. A change in the productivity and therefore in the value of the individual commodity would nevertheless take place in this case. The same capital will produce more commodities than previously in the one case and less in the other. The aggregate volume of the commodities in which it is materialised would have the same value, but the individual commodity would have a different value. Although the value of the wage does not determine the value of the commodities, the value of the commodities (which enter into the consumption of the worker) determines the value of the wage. Once the cost-prices of the commodities in the various branches of production are established, they rise or fall relatively to each other with any change in the values of the commodities. If the productivity of labour rises, the labour-time required for the production of a particular commodity decreases and therefore its value falls; whether this change in productivity occurs in the labour used in the final process or in the constant capital, the cost-price of this commodity must also fall correspondingly. The absolute amount of labour employed on it has been reduced, hence also the amount of paid labour it contains and the amount of wages expended on it, even though the rate of wages has remained the same. If the commodity were sold at its former cost-price, then it would yield a higher profit than the general rate of profit, since formerly, this profit was equal to 10 per cent on the higher outlay. It would therefore be now more than 10 per cent on the diminished outlay. If on the contrary the productivity of labour decreases, the real values of the commodities rise. When the rate of profit is given or, which is the same thing, the cost-prices are given the relative rise or fall of the cost-prices is dependent on the rise or fall, the variation, in the real values of the commodities, As a result of this variation, new cost-prices or, as Ricardo says, following Smith, new natural prices take the place of the old. In Chapter XXX, from which we have just been quoting, Ricardo expressly identifies natural price, that is, cost-price, with natural value, i.e., value as determined by labour-time. Here therefore are cost-prices or natural prices directly ||549| identified with natural value , that is, with value . This confusion explains how later a whole lot of fellows post Ricardum, like Say himself, could accept the cost of production as the ultimate regulator of prices, without having the slightest inkling of the determination of value by labour-time, indeed they directly deny the latter while maintaining the former. This whole blunder of Ricardo s and the consequent erroneous exposition of rent etc., as well as the erroneous laws about the rate of profit etc. spring from his failure to distinguish between surplus-value and profit; and in general his treatment of definitions is crude and uncomprehending, just as that of the other economists. The following will show how he allowed himself to be ensnared by Smith. |549|| ||XII-636| Just to add a further comment to what has already been said: Ricardo knows no other difference between value and natural price than that the latter is the monetary expression of value, and that it can therefore change because of a change in value of the precious metals, without value itself changing. This change, however, only affects the evaluation or the expression of value in money. Thus, he says, for instance: ||XI-549| It must first be noted that according to Adam Smith as well, This difference between Ricardo s and Smith s views can therefore be ignored here. Adam Smith first explains that exchange-value resolves itself into a certain quantity of labour and that after deducting raw materials etc., the value contained in exchange-value is resolved into that part of labour for which the labourer is paid and that part for which he is not paid, the latter part consists of profit and rent (the profit in turn may be resolved into profit and interest). Having shown this, he suddenly turns about and instead of resolving exchange-value into wages, profit and rent, he declares these to be the elements forming exchange-value, he makes them into independent exchange-values that form the exchange-value of the product; he constructs the exchange-value of the commodity from the values of wages, profit and rent, which are determined independently and separately. Instead of having their source in value, they become the source of value. Having revealed the intrinsic connection, he is suddenly obsessed again with the aspect of the phenomenon, with the connection, as it appears in competition, and in competition everything always appears in inverted[f] form, always standing on its head. Now it is from this latter inverted starting-point that Smith develops the distinction between the natural price of the commodities and their market-price . Ricardo accepts this from him, but forgets that Adam Smith s natural price is, according to Smith s premises, nothing other than the cost-price resulting from competition and that for Smith himself, this cost-price is only identical with the value of the commodity, in so far as he forgets his more profound conception and sticks to the false concept derived from the external appearance, namely that the exchange-value of commodities is formed by putting together the independently determined values of wages, profit and rent. While Ricardo contests this concept throughout, he accepts Smith s confusion or identification of exchange-value with cost-price or natural price, which is based on that very concept. In the case of Adam Smith this confusion is legitimate, because his whole examination of natural price starts out from his second, false conception of value. But in Ricardo s case, it is wholly unjustifiable, because he nowhere accepts this wrong conception of Adam Smith s, but contests it ex professo as an inconsistency. Adam Smith, however, succeeded in ensnaring him again with his natural price . Having compounded the value of the commodity from the separate and independently determined values of wages, profit and rent, Adam Smith now asks himself how these primary va1ues are determined. And here he starts out from the phenomena as they appear in competition. [In] Chapter VII, Book I Of the Natural and Market Price of Commodities [he says:] This natural price is then the cost-price of the commodity and the cost-price coincides with the value of the commodity, since it is presupposed that the value of the commodity is compounded of the values of wages, profit and rent. Here we have the whole genesis of natural price and, besides, set out in quite appropriate language and logic, since the value of the commodity is composed of the prices of wages, profit and rent, while the true value of the latter is, in turn, constituted by their natural rates; thus it is clear that the value of the commodity is identical with its cost-price and the latter with the natural price of the commodity. The rate of profit, as of wages, is presupposed. They are indeed given for the formation of the cost-price. They are antecedent to the cost-price. To the individual capitalist therefore they also appear as given. The hows, whys and wherefores do not concern him. Adam Smith here adopts the standpoint of the individual capitalist, the agent of capitalist production, who fixes the cost-price of his commodity. So much for wages etc., so much for the general rate of profit. Ergo: This is how this capitalist sees the operation by which the cost-price of the commodity is fixed or, as it further seems to him, the value of the commodity, for he also knows that the market-price is now above, now below, this cost-price, which therefore appears to him as the ideal price of the commodity, its absolute price as distinct from its price fluctuations, in short as its value, in so far as he has any time at all to reflect on matters of this sort. And since Smith transports himself right into the midst of competition, he immediately reasons and argues with the peculiar logic of the capitalist caught up in this sphere. He interjects: In common language, costs do not include the profit made by the seller (which necessarily forms a surplus above his expenses). Why then do you include profit in the cost-price? Adam Smith answers like the profound capitalist to whom this question is put: Profit in general must enter into cost-price, because I would be cheated if only a profit of 9 instead of 10 per cent were to enter into cost-price. The na ve way in which Adam Smith on the one hand expresses the thoughts of the agent of capitalist production and presents things boldly and comprehensively, as they appear to and are thought of by the latter, as they influence him in practice, and as, indeed, they appear on the surface, while, on the other hand, he sporadically reveals their more profound relationships, gives his book its great charm. One can see here too why Adam Smith despite his considerable scruples on this point resolves the entire value of the commodity into rent, profit and wages and omits constant capital, although of course he admits its existence for each individual capitalist. For otherwise he would have to say: The value of a commodity consists of wages, profit, rent and that part of the value of the commodity which does not consist of wages, profit, rent. It would therefore be necessary to determine value independently of wages, profit and rent. If, besides the outlay on average wages etc., the price of the commodity also covers the average profit and if rent enters into the commodity the average rent, then the commodity is sold at its natural or cost-price, and this cost-price is equal to its value, for its value is nothing but the sum of the natural values of wages, profit and rent. ||551| Having taken his stand in competition and assumed the rate of profit etc. as given, Adam Smith for the rest interprets correctly natural price or cost-price, namely, the cost-price as distinct from the market-price. This cost-price of the commodity is different from the actual price or market-price of the commodity. ([O.U.P., Vol. I, p. 62; Garnier,] l.c., p. 112.) The latter is dependent on demand and supply. The [sum of the] costs of production or the cost-price of the commodity is precisely the whole value of the rent, labour, and profit, which must be paid in order to bring it to market ([O.U.P., Vol. I, p. 62; Garnier,] p. 113). If demand corresponds to supply, then the market-price is equal to the natural price. Hence Adam Smith concludes that in general, the What Ricardo conceives as the distribution of total capital among the various branches of production appears here in the as yet more naive form of the [quantity of] industry needed in order to produce a particular commodity . The levelling out of prices among the sellers of the same commodity to the market-price and the levelling out of the market-prices of the various commodities to the cost-price are here as yet jumbled up in complete confusion. At this point Smith, only quite incidentally, touches upon the influence of the variation in the real values of commodities on the natural prices or cost-prices. Namely in agriculture Adam Smith sees here that a mere change in the productivity of equal quantities of labour , therefore, in the actual values of commodities, alters cost-prices. But he makes this again more shallow by reducing it to the relation between supply and demand. According to his own arguments, the proposition as he presents it, is wrong. For, while in agriculture, as a result of varying seasons etc., equal quantities of labour yield different quantities of products, he himself has demonstrated that as a result of machinery, division of labour etc. equal quantities of labour yield very different amounts of product in manufacture etc. It is therefore not this difference which distinguishes agriculture from the other branches of industry; but the fact that in industry the degree of productive power applied is determined beforehand, while in the former, it depends on accidents of nature. But the result remains the same: the value of the commodities or the quantity of labour which, depending on its productivity, has to be expended on a given commodity, affects cost-prices. In the following passage Adam Smith has also [shown] how the migration of capitals from one sphere of production to another establishes cost-prices in the various branches of production. But he is not so clear on this as Ricardo, For if the ||552| price of the commodity falls below its natural price then, according to his argument, this is due to one of the elements of this price falling below the natural rate. Thus it is not due to the withdrawal of capitals alone or to the migration of capitals, but to the migration of labour, capital or land from one branch to another, In this respect his view is more consistent than Ricardo s, but it is wrong. This represents an essential difference between Smith s and Ricardo s conceptions of the levelling out to the natural price. Smith s [conception] is based on his false assumption, that the three elements independently determine the value of the commodity, while Ricardo s is based on the correct assumption that it is the average rate of profit (at a given level of wages), which alone determines the cost-prices. In chapters VIII, IX, X and XI of Book I, Adam Smith then seeks to determine the natural rate of these component parts , wages, rent and profit, and the fluctuations in these rates. Chapter VIII: Of the Wages of Labour At the start of the chapter on wages, Smith forsaking the illusory standpoint of competition in the first place shows the true nature of surplus-value and [regards] profit and rent as mere forms of surplus-value. The basis from which he determines the natural rate of wages is the value of labour-power itself, the necessary wage. This, however, becomes meaningless again because he never asks himself how the value of the necessary means of subsistence, i.e., of the commodity in general is determined. And here, since he has moved away from his main conception, Adam Smith would have to say: The price of wages is determined by the price of the means of subsistence and the price of the means of subsistence is determined by the price of wages. Having once assumed that the value of wages is fixed, he gives an exact description of its fluctuations, as they appear in competition, and the circumstances that cause these fluctuations. This belongs to the exoteric part [of his work] and does not concern us here. <In particular [he deals with] the accumulation of capital, but he does not tell us what determines it, since this accumulation can only be rapid either if the rate of wages is relatively low and the productivity of labour high (in this case a rise in wages is always the result of a permanently low level of wages during the preceding period) or if the rate of accumulation is low but the productivity of labour is high. From his standpoint, he would have to deduce the rate of wages in the first case from the rate of profit (i.e., from the rate of wages), and in the second case from the gross amount of profit, but this would in turn necessitate his investigating the value of the commodity.) He tries to derive the value of the commodity from the value of labour which is one of its constituent parts. And on the other hand he explains the level of wages by saying that In fact the chapter contains nothing relevant to the question except the definition of the minimum wage, alias the value of labour-power. Here Adam Smith instinctively resumes the thread of his more profound argument, only to lose it again, so that even the above-cited definition [signifies] nothing. For how [does he propose to] determine the value of the necessary means of subsistence and therefore of commodities in general? Partly by the natural price of labour. And how is this to be determined? By the value of necessaries, or commodities in general. A vicious circle. As to the rest, the chapter contains not a word on the issue, the natural price of labour, ||553| but only investigations into the rise of wages above the level of the natural rate, demonstrating that the rise of wages is proportionate to the rapidity with which capital accumulates, that is, to the progressive accumulation of capital. Then he examines the various conditions of society in which this takes place, and finally he gives a slap in the face to the determination of the value of the commodity by wages and of wages by the value of the necessary means of subsistence, by showing that this does not appear to be the case in England. In between comes a piece of Malthusian population theory because wages are determined by the means of subsistence necessary, not only to maintain the life of the worker, but [should be sufficient] for the reproduction of the population. Namely after attempting to prove that wages rose during the eighteenth century, especially in England, Adam Smith raises the question whether this is to be regarded as an advantage, or as an inconveniency, to the society ([O.U.P., Vol. I, p. 87; Garnier,] l.c., p. 159). In this connection he returns temporarily to his more profound approach, according to which profit and rent are merely parts of the product of the worker. The workmen, he says: In this connection he touches upon the theory of population: The connection between the wages minimum and the varying conditions of society is as follows: He then shows that the slave is dearer than the free labourer, because the latter himself looks after his wear and tear whereas that of the former is [controlled] by a negligent master or careless overseer ([O.U.P., Vol. I, p. 90; Garnier,] l.c., p. 164). The fund for replacing the wear and tear is frugally used by the free labourer whereas for the slave it is wastefully and disorderly administered. It is characteristic in the determination of the minimum wage or the natural price of labour, that it is lower for the free wage-labourer than for the slave. This occurs also to Adam Smith: Adam Smith continues to plead for a high wage. It not only encourages the propagation , but also increases the industry of the common people. The wages of labour are the encouragement of industry, which, like every other human quality, improves in proportion to the encouragement it receives. A plentiful subsistence increases the bodily strength of the labourer, and the comfortable hope of bettering his condition animates him to exert that strength to the utmost. Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expeditious than where they are low ([O.U.P., Vol. I, pp. 90-91; Garnier,] l.c., p. 166). But high wages spur the workmen on to over-exertion and to premature destruction of their labour-power. He goes on to argue against the view that a little more plenty than ordinary may render some workmen idle ( [O.U.P., Vol. I, p. 92; Garnier,] l.c., p. 169). Then he examines whether it is true that the workmen are more idle in years of plenty than in years of scarcity and what is the general relation between wages and the price of the means of subsistence. Here again comes the inconsistency. [He then examines] why because of the demand for labour wages can rise in years of plenty and fall in years of scarcity. ([O.U.P., Vol. I, p. 96 et seq.; Garnier,] l.c., p. 176 et seq.) The causes [of the rise and fall] in good and had years counterbalance one another. As against the concept of wages as the source of the value of commodities, he finally, after all this zigzagging, again advances his original, more profound view, that the value of commodities is determined by the quantity of labour; and if in good years, or with the growth of capital, the worker receives more commodities, then he also produces far more commodities, that is to say the individual commodity contains a smaller quantity of labour. He can therefore receive a greater quantity of commodities of less value and thus this is the implied conclusion profit can grow, despite rising absolute wages. The labour is better paid, but less labour is contained in the individual commodity, hence a smaller amount has to be paid out. He thus allows his false theory, according to which the value of the commodity is determined by the wage as a constituent element of the value, to be annulled, or rather paralysed, counterbalanced by his correct theory, according to which the value [of the commodity] is determined by the quantity of labour it contains. ||555| Chapter IX: Of the Profits of Stock . Here accordingly the natural rate of the second element that determines and constitutes the natural price or value of the commodities is to be ascertained. What Adam Smith says about the cause of the fall in the rate of profit ([Garnier,] l.c., pp. 179, 189, 190, 193, 196, 197, etc.) shall be considered at a later stage. Adam Smith is confronted here by considerable difficulties. He says that even the determination of average wages amounts merely to ascertaining the most usual wages ([O.U.P., Vol. I, p.98; Garnier], l.c., p. 179), the actual given rate of wages. although it is precisely through the natural rate of profit, as one of the component elements of value , that we are supposed to determine the natural price of these commodities. This [the determination of the natural rate of profit] is already difficult for a single capitalist in a single trade. But one may form some notion of the average profits of stock from the interest of money . Adam Smith does not say the rate of interest determines profits. He expressly states the reverse. But there are records of the rate of interest for different epochs etc.; such records do not exist for the rate of profit. The rates of interest are therefore indices from which the approximate level of the rate of profit can be judged. But the task set was not to compare the levels of actual rates of profit, but to determine the natural level of the rate of profit. Adam Smith seeks refuge in a subsidiary investigation into the level of the rate of interest in different periods, which in no way touches upon the problem he has set himself, He makes a cursory examination of various periods in England and then compares these with Scotland, France and Holland and finds that with the exception of the American colonies Here Adam Smith tries, like Ricardo but to a certain extent with more success to give some approximate explanation of high profits: This is one of the foundations of the Ricardian explanation of why profits fall, although it is presented in a different way. On the whole, Smith explains everything here by the competition between capitals; as capitals grow, profit falls and as they diminish, profit grows, and accordingly wages rise or fall conversely. ||556| The diminution of the capital stock of the society, or of the funds destined for the maintenance of industry, however, as it lowers the wages of labour, so it raises the profits of stock, and consequently the interest of money. By the wages of labour being lowered, the owners of what stock remains in the society can bring their goods at less expense to market than before, and less stock being employed in supplying the market than before, they can sell them dearer ([O.U.P., Vol. I, p. 104; Garnier,] l.c., pp. 191-92). Then he talks about the highest possible and the lowest possible rates [of profit]. The highest rate is that which, in the price of the greater part of commodities, eats up the whole of what should go to the rent of the land, and leaves only what is sufficient to pay the labour of preparing and bringing them to market, according to the lowest rate at which labour can anywhere be paid, the bare subsistence of the labourer ([O.U.P., Vol. I, p. 108; Garnier,] l.c., pp. 197-98). Adam Smith himself in fact characterises what he says about the natural rate of profit : And indeed, Smith calls this common and usual profit neither moderate nor good, but his term for it is the natural rate of profit . However, he does not tell us at all what it is or how it is determined although we are supposed to determine the natural price of the commodity by means of this natural rate of profit . Low profits and high wages are not reciprocally opposed here, but the same cause the quick growth or accumulation of capital produces both. Both enter into the price; they constitute it. If therefore one is high while the other is low, the price remains the same, and so on. Adam Smith here regards profit purely as a surcharge, for at the end of the chapter he says: At the end of this chapter Adam Smith also tells us the source of the whole notion, that the price of the commodity, or its value, is made up out of the values of wages and profits namely, the amis du commerce,[h] the faithful practitioners of competition: Chapter X [is entitled] Of Wages and Profit in the Different Employments of Labour and Stock. This is only concerned with detail and therefore belongs into the chapter on competition. In its way, it is very good. It is completely exoteric. {Productive and unproductive labour: Similarly he says of soldiers: And of sailors in the navy: Ironically: He expressly says of men of letters that they are underpaid because of their too great numbers and he recalls that before the invention of printing, a scholar and a beggar ([O.U.P., Vol. I, p. 151; Garnier,] l.c., pp. 276-77) were synonymous and seems to apply this, in a certain sense, to men of letters.} The chapter is full of acute observations and important comments . Regarding the false statistical presentation of wages, for instance in the sixteenth and seventeenth etc. centuries, Adam Smith quite rightly observes that the wages here were only, for example, the wages of cotters, who, when not occupied around their cottages or working for their masters (who gave them a house, a small garden for pot-herbs, as much grass as will feed a cow, and, perhaps, an acre or two of bad arable land , and, when he employed them, a very poor wage) He makes the altogether true observation that: This point, incidentally, has already been quite well set forth by Steuart, particularly in relation to agricultural wages as soon as time becomes precious. ||558| With regard to the accumulation of capital in the towns during the Middle Ages, Adam Smith very correctly notes in this chapter, that it was principally due to the exploitation of the country (by trade as well as by manufacture). (There were in addition the usurers and even haute finance; in short, the money merchants.) {Here, therefore, l.c., t, 1, l. 1, ch. X, p.259 Adam Smith returns to the correct determination of value, the determination of value by the quantity of labour. This should be quoted as an example when dealing with his theory of surplus-value. If the prices of the commodities which are exchanged between town and country are such that they represent equal quantities of labour, then they are equal to their values. Profit and wages on both sides of the exchange cannot, therefore, determine these values, but the division of these values determines profit and wages. That is why Adam Smith finds that the town, which exchanges a smaller quantity of labour against a greater quantity of labour from the countryside, draws excess profit and excess wages compared with the country. This would not be the case if it did not sell its commodities to the country for more than their value. In that case wages and profits would not increase beyond what they otherwise would be . If, therefore, wages and profits are at their natural level, then they do not determine the value of the commodity, but are determined by it. Profit and wages can then only arise from the division of the given value, which is their precondition, this value however cannot be the result of preconceived profits and wages.} Thus, according to Smith s presentation of the matter, if the commodities of the town and those of the country were sold in proportion to the quantity of labour which they each contain, then they would be sold at their values, and consequently the profit and wages on both sides of the exchange could not determine these values, but would be determined by them. The levelling out of profits which vary because of the varying organic composition of capitals does not concern us here, since it does not lead to differences between profits; but equalises them. ||559| The inhabitants of a town, being collected into one place, can, easily combine together. The most insignificant trades carried on in towns have, accordingly, in some place or other, been incorporated ([O.U.P., Vol. I, p. 142; Garnier] l.c., p. 261). The inhabitants of the country, dispersed in distant places, cannot easily combine together. They have not only never been incorporated, but the incorporation spirit never has prevailed among them. No apprenticeship has ever been thought necessary to qualify for husbandry, the great trade of the country ([O.U.P., Vol. I, p. 143; Garnier,] l.c., p. 262). In this connection Smith comes to speak of the disadvantages of the division of labour . The farmer practises a trade requiring more intelligence than the manufacturing worker, who is subject to the division of Labour. The division of labour develops the social productive power of labour or the productive power of social labour, but at the expense of the general productive ability of the worker. This increase in social productive power confronts the worker therefore as an increased productive power, not of his labour, but of capital, the force that dominates his labour. If the town labourer is more developed than the country labourer, this is only due to the circumstance that his mode of work causes him to live in society, whereas that of the agricultural labourer makes him live directly with nature. This is an act, no longer of the town bourgeoisie, but of the bourgeoisie already legislating on a national scale as the corps de nation or as the Third Estate of the State Assembly or the Lower House. The specific acts of the town bourgeoisie directed against the country are the excise and duties levied at the gates, and, in general, the indirect taxes, which have their origin in the towns (see H llmann), while the direct taxes are of country origin. It might appear that the excise, for example, is a tax which the town imposed indirectly upon itself. The countryman must advance it, but reimburses himself in the price of the product. But this was not the case in the Middle Ages. The demand for his products in so far as he converted these into commodities and money at all [was, in so far as it came] from the town, mostly compulsorily restricted to the area under the jurisdiction of the town, so that he did not have the power to raise the price of his product by the full amount of the town tax. In Chapter XI of Book I, Smith then seeks to determine the natural rate of rent, the third element which constitutes the value of the commodity. We shall postpone consideration of this and first return again to Ricardo. This much is clear from the foregoing: When Adam Smith identifies the natural price or cost-price of the commodity with its value, he does so after first abandoning his correct conception of value, and substituting for it the view which is evoked by and arises from the phenomena of competition. In competition, the cost-price and not the value appears as the regulator of the market-price so to speak, as the immanent price, the value of the commodity. But in competition this cost-price appears to be represented by the given average rate of wages, profit and rent. Hence Adam Smith tries to establish these separately and independently of the value of the commodity rather as elements of the natural price, Ricardo, whose main concern has been the refutation of this Smithian ||560| aberration, accepts the result that necessarily follows from it namely the identity of values and cost-prices although with Ricardo this result is logically impossible. * Here Herr Rodbertus can see that in England seeds are bought . [a] In the manuscript: upon . Ed. [b] Marx wrote this paragraph in English. Ed. [c] In the manuscript: of fixed capital . Ed. [d] In the manuscript: unequal rapidity in the return of the capitals to their owners . Ed. * it is possible that the rate of surplus-value is not equalised in the different spheres of production (for instance because of unequal length of working time). This is not necessary because the surplus-values themselves are equalised. * Here Roscher could have seen once again what the Englishman understands by the term monied class . The monied class is here diametrically opposed to the industrious part of the community . [e] Marx quotes here from Recherches sur la nature et les causes de la richesse des nations. Paris, 1802, Garnier s translation of Adam Smith s work. All passages taken by Marx from the French translation are marked Garnier in this edition and are printed in English according to A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford University Press, London, 1928 (referred to hereafter as O.U.P.). The French text, as that of all other quotations taken by Marx from French and German sources, can be found in the Appendices. Ed. [f] In the German original: verkehrt which may mean: upside down, reversed, or: wrong. Ed. [g] In Garnier s translation: naturellement . Ed [h] Friends of commerce (an expression used by Fourier). Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 10

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch10.htm

The main points were dealt with when discussing Rodbertus. Just a few more gleanings here. Firstly, some comments on the historical aspect: Ricardo was first of all concerned with the period 1770-1815, which came approximately within his own experience, and during which wheat prices were constantly rising. Anderson [on the other hand] was concerned with the eighteenth century, at the close of which he was writing. During the first half of that century wheat prices were falling and during the second half they were rising. Hence for Anderson, the law he discovered was in no way connected with a diminishing productivity of agriculture or a normal <for Anderson an unnatural> rise in the price of the product. For Ricardo however such a connection existed. Anderson believed that the abolition of the corn laws (at that time export premiums) caused the rise in prices during the second half of the eighteenth century. Ricardo knew that the introduction of corn laws (1815) was intended to prevent the fall in prices, and to a certain degree was bound to do so. With regard to the latter [it was] therefore necessary to point out that, if left to itself, the law of rent within a definite territory was bound to result in recourse to less fertile land, thus leading to dearer agricultural products and increased rent at the cost of industry and the mass of the population. And here Ricardo was right, both historically and in practice. Anderson on the other hand [maintained] that corn laws (and he also favours a duty on imports) must further the even development of agriculture within a definite territory and that for this even development agriculture needs security. Consequently he [maintained] that this progressive development in itself through the law of rent he discovered would lead to increased productivity in agriculture and thereby to a fall in the average prices of agricultural produce. Both of them, however, start out from the viewpoint which, on the continent, seems so strange: 1. That there is no Landed property to shackle any desired investment of capital in land. 2. That expansion takes place from better land to worse (this process is absolute for Ricardo, provided one leaves out of account the interruptions caused by the response of science and industry; for Anderson the worse land is in turn transformed into better land and so it is relative). 3. That a sufficient amount of capital is always available for investment in agriculture. Now so far as 1. and 2. are concerned, it must seem very odd to the continentals, that in the country in which, according to their conception, feudal landed property has maintained itself most stubbornly, the economists, Anderson as well as Ricardo, start out from the conception that no landed property exists. The explanation for this is: firstly: the peculiarity of the English law of enclosures , which is in no way analogous with the continental portioning out of common land; secondly: nowhere in the world has capitalist production, since Henry VII, dealt so ruthlessly with the traditional relations of agriculture, adapting and subordinating the conditions to its own requirements. In this respect England is the most revolutionary country in the world. Wherever the conditions handed down from history were at variance with, or did not correspond to, the requirements of capitalist production on the land, they were ruthlessly swept away; this applies not only to the position of the village communities but to the village communities themselves, not only to the habitats of the agricultural population but to the agricultural population itself, not only to the original centres of cultivation, but to cultivation itself. The German, for example, meets with economic relations that are determined by traditional circumstances such as land boundaries, the position of the economic centres, given conglomerations of the population. The Englishman meets with historical conditions of agriculture which have been progressively created by capital since the end of the 15th century. Clearing of estates , a technical term [well-known] in the United Kingdom, will not be found in any continental country. But what is the meaning of this clearing of estates ? It means that without any consideration for the local inhabitants, who are driven away, for existing village communities, which are obliterated, for agricultural buildings, which are torn down, for the type of agriculture, which is transformed in one fell swoop, for instance arable land converted into grazing pasture [in short] none of the conditions of production are accepted as they have traditionally existed but are historically transformed in such a way that under the circumstances, they will provide the most profitable investment for capital. To that extent, therefore, no landed property exists; it gives capital i.e., the farmer full scope, since it is only concerned with monetary income. A Pomeranian landowner, therefore, with his head full of ancestral land boundaries, centres of economy and lectures on agriculture etc., may well be amazed by Ricardo s unhistorical view of the ||561| development of conditions in agriculture. This shows merely that he na vely confuses Pomeranian conditions with those prevailing in England. But it cannot be said that Ricardo, who in this case starts from the conditions in England, is just as narrow-minded as the Pomeranian landowner, who can think only in terms of Pomeranian conditions. English conditions are the only ones in which modern landownership, i.e., landownership which has been modified by capitalist production, has been adequately developed. For the modern the capitalist mode of production, the English view is here the classical view. The Pomeranian, on the other hand, judges the developed relations from a historically lower and as yet inadequate form. Indeed, most of Ricardo s continental critics even take as their starting-point conditions in which the capitalist mode of production, adequate or inadequate, does not as yet exist at all. It is as if a guild-master wanted, lock, stock and barrel, to apply Adam Smith s laws which presuppose free competition to his guild economy. The presupposition of the movement from better to worse land relatively to the particular stage in the development of the productive power of labour as with Anderson, and not absolutely as with Ricardo could only arise in a country such as England, where within a relatively very small territory capital has farmed so ruthlessly and has for centuries mercilessly sought to adapt to its own needs all traditional relationships of agriculture. Thus it [the presupposition] could only arise where, unlike the continent, capitalist production in agriculture does not date from yesterday and does not have to fight against old traditions. A second factor influencing the English was the knowledge they gained through their colonies. We have seen that Adam Smith s work with direct reference to the colonies already contains the basis for the entire Ricardian viewpoint. In these colonies, and especially in those which produced only merchandise such as tobacco, cotton, sugar etc. and not the usual foodstuffs, where, right from the start, the colonists did not seek subsistence but set up a business, fertility was of course decisive, given the situation [of the land], and given the fertility, the situation of the land was decisive. They did not act like the Germans, who settled in Germany in order to make their home there, but like people who, driven by motives of bourgeois production, wanted to produce commodities, and their point of view was, from the outset, determined not by the product but by the sale of the product. That Ricardo and other English writers transferred this point of view which emanated from people who were themselves already the product of the capitalist mode of production from the colonies to the course of world history and that they took the capitalist mode of production as a premise for agriculture in general, as it was for their colonists, is due to the fact that they saw in these colonies, only in more obvious form, without the fight against traditional relations, and therefore untarnished, the same domination of capitalist production in agriculture as hits the eye everywhere in their own country. Hence, if a German professor or landowner belonging to a country which differs from all others in its complete lack of colonies considers such a view to be false , then this is quite understandable. Finally the presupposition of a continuous flow of capital from one sphere of production into another, this basic assumption of Ricardo s amounts to nothing more than the assumption that developed capitalist production predominates. Where this domination is not yet established, this presupposition does not exist. For instance, a Pomeranian landowner will find it strange that neither Ricardo nor indeed any English writer ever suspects that agriculture might lack capital. The Englishman does, indeed, complain of lack of land in proportion to capital, but never of a lack of capital in proportion to the land. Wakefield, Chalmers, etc. try to explain the fall in the rate of profit from the former circumstance. The latter does not exist for any English writer; Corbet notes as a self-explanatory fact, that capital is always redundant in all branches of production. On the other hand, bearing in mind the situation in Germany, the landowner s difficulties in borrowing money because mostly it is the landowner himself who cultivates the land and not a capitalist class which is quite independent of him it is understandable that Herr Rodbertus, for example, is surprised at the Ricardian fiction, that the supply of capital is regulated by the desire to invest it . ([Sociale Briefe an v. Kirchmann. Dritter Brief, Berlin, 1851] p. 211.) What the Englishman lacks is a field of action , opportunity for investment of the available stock of capital. But a desire for capital to invest , on the part of the only class which has capital to invest the capitalist class this does not exist in England. ||562| This desire for capital is Pomeranian. The objection made by English writers against Ricardo was not that capital was not available in any desired quantity for particular investments, but that the return flow of capital from agriculture encountered specific technical etc. obstacles. This kind of critical-continental censoriousness of Ricardo, therefore, only shows the lower stage in the conditions of production from which these sages start out. Now to the matter in hand. In the first place, in order to isolate the problem, we must leave aside entirely differential rent, which alone exists for Ricardo. By differential rent I understand the difference in the magnitude of rent the greater or smaller rent which is due to the different fertility of the various types of land. (Given equal fertility, differential rent can only arise from differences in the amounts of capital invested. This case does not exist for our problem and does not affect it.) This differential rent merely corresponds to the excess profits which, given the market-price or, more correctly, the market-value, will be made in every branch of industry, for example cotton spinning, by that capitalist whose conditions of production are better than the average conditions of this particular trade. For the value of the commodity of a particular sphere of production is determined, not by the quantity of labour which the individual commodity costs, but by the quantity which the commodity costs that is produced under the average conditions of the sphere. Manufacture and agriculture only differ from one another here in that in the one, the excess profits fall into the pocket of the capitalist himself, whereas in the other they are pocketed by the landowner, and furthermore, that in the former they are f l u i d, they are not lasting, are made by this capitalist or that, and always disappear again, while in the latter they become fixed because of their enduring (at least for a long period) natural basis in the variations in the land. This differential rent must therefore be left out of account, but it should be noted that it may exist not only when a movement from better to inferior land takes place but also from inferior to better land. In both cases the only requirement is that the newly cultivated land is necessary but at the same time only just sufficient to satisfy the additional demand. If the newly cultivated, better land were more than sufficient to satisfy the additional demand then, according to the volume of the additional demand, part or all of the inferior land would be thrown out of cultivation or, at any rate, out of cultivation of that product which forms the basis of the agricultural rent, i.e., in England of wheat and in India of rice. Thus differential rent does not presuppose a progressive deterioration of agriculture, but can equally well spring from a progressive improvement in it. Even where it is based on the descent to worse types of land, firstly this descent may be due to an improvement in the productive forces of agriculture, in that the cultivation of the worse land, at the price which is set by demand, is only made possible by greater productive power. Secondly, the worse land can be improved; the differences will nevertheless remain, although they will become smaller, so that as a result there is only a relative, comparative decrease in productivity whereas absolute productivity increases. This was in fact the presupposition made by Anderson, the original author of the Ricardian law. Then, in the second instance, only the agricultural rent in the strict sense should be considered here, in other words the rent of the land which supplies the chief vegetable foods. Smith has already explained that the rents of land which supplies the other products, such as stock-raising etc., are determined by that rent; that they are themselves derived, determined by the law of rent and not determining it. In themselves therefore these rents do not furnish any useful material for the understanding of the law of rent in its original, pure condition: There is nothing primary about them. This settled, the question is reduced to the following: Does an absolute rent exist? That is, a rent which arises from the fact that capital is invested in agriculture rather than manufacture; a rent which is quite independent of differential rent or excess profits which are yielded by capital invested in better land? It is clear that Ricardo correctly answers this question in the negative, since he starts from the false assumption that values and average prices of commodities are identical, If this were the case, it would be a tautology to say that the price of agricultural products is above their cost-price when ||563| the constant price of agricultural products yields, beyond the average profits, also an extra rent, a constant surplus over and above the average profit for this cost-price equals the advances plus the average profit and nothing else. Were the prices of agricultural products to stand above their cost-prices, and always to yield an excess profit, they would consequently stand above their value. There would be no alternative but to assume that agricultural products are perpetually sold above their value, which, however, equally presupposes that all other products are sold below their value, or that value in general is something quite different from that which the theory requires it to be. Taking into account all compensations which take place between the different capitals owing to differences arising from the process of circulation, the same quantity of labour (immediate and accumulated) would produce a higher value in agriculture than in manufacture. The value of the commodity would therefore not be determined by the quantity of labour contained in it. The whole foundation of political economy would thus be thrown overboard. Ergo, Ricardo rightly concludes: no absolute rents. Only differential rent is possible; in other words the value of the agricultural product grown on the worst land equals the cost-price of the product, as [with] every other commodity, [this is equal to its] value. The capital invested in the worst land differs from capital invested in manufacture only by the type of investment, by its being a particular species of investment. Here therefore the universal validity of the law of value becomes apparent. Differential rent and this is the sole rent on better land is nothing but the excess profit yielded by capitals employed in above-average conditions owing to the [establishment of] one identical market-value in every sphere of production. This excess profit consolidates itself only in agriculture because of its natural basis and, furthermore, the excess profit flows not into the pocket of the capitalist but into that of the landowner since it is the landowner who represents this natural basis. The entire argument collapses together with Ricardo s assumption, that cost-price equals value. The theoretical interest which forces him into a denial of absolute rent disappears. If the value of the commodities differs from their cost-price, then they necessarily fall into three categories. In the first category, cost-price is equal to the value of the commodity, in the second, the value is below its cost-price and in the third it is above its cost-price. The fact, therefore, that the price of the agricultural product yields a rent, only shows that the agricultural product belongs to that group of commodities whose value is above their cost-price. The only remaining problem requiring solution would be: why, in contrast to other commodities whose value is also above their cost-price, competition between capitals does not reduce the value of agricultural products to their cost-price. The question already contains the answer. Because, according to the presupposition, this can only happen in so far as the competition between capitals is able to effect such an equalisation, and this in turn can only occur to the extent that all the conditions of production are either directly created by capital or are equally elementally at its disposal as if it had created them. With land this is not the case, because landed property exists and capitalist production starts its career on the presupposition of landed property, which is not its own creation, but which was already there before it. The mere existence of landed property thus answers the question. All that capital can do is to subject agriculture to the conditions of capitalist production. But it cannot deprive landed property of its hold on that part of the agricultural product which capital could appropriate not through its own action but only on the assumption of the non-existence of landed property. Since landed property exists, capital must however leave the excess of value over cost-price to the landowner. But this difference [between value and cost-price] itself only arises from a difference in the composition of the organic component parts of capital. All commodities whose value, in accordance with this organic composition, is above the cost-price, thereby show that the labour expended on them is relatively less productive than that expended on the commodities whose value is equal to the cost-price and even less productive than that expended on the commodities whose value is below the cost-price; for they require a greater quantity of immediate labour in proportion to the past labour contained in the constant capital; they require more labour in order to set in motion a definite capital. This is a historical difference and can therefore disappear. The same chain of reasoning which demonstrates the possibility of the existence of absolute rent, shows its reality, its existence, as a purely historical fact, which belongs to a certain stage of development of agriculture and which may disappear at a higher stage. Ricardo explained differential rent from an absolute decrease in productivity in agriculture. Differential rent does not presuppose this, nor does Anderson make this assumption. On the other hand Ricardo denies the existence of absolute rent because he ||564| assumes the organic composition of capital to be the same in industry and agriculture and so denies the purely historical fact of the lower development of the productive power of labour in agriculture as compared with manufacture. Hence lie falls into a twofold historical error: On the one hand, he assumes that the productivity of labour in agriculture is absolutely the same as in industry, thus denying a purely historical difference in their actual stage of development. On the other hand, he assumes an absolute decrease in the productivity of agriculture and regards this as its law of development. He does the one in order to make cost-price on the worst land equal value and he does the other in order to explain the differences between the cost-prices [of the products] of the better kinds of land and their values. The whole blunder originates in the confusion of cost-price with value. Thus the Ricardian theory is disposed of. The rest was dealt with earlier, in the chapter on Rodbertus. I have already indicated that Ricardo opens the chapter by stating that it is necessary to examine whether the appropriation of land, and the consequent creation of rent ([David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821], p. 53) do not interfere with the determination of value by labour-time. And he says later: This direct and conscious connection which Ricardo s theory of rent has with the determination of value is its theoretical merit. Apart from that this Chapter II On Rent is rather inferior to West s exposition. It contains much that is queer, petitio principii and unfair dealing with the problem. Actual agricultural rent, which Ricardo justifiably here treats as rent proper, is that which is paid for the permission to invest capital, to produce capitalistically, in the element land. Here land is the element of production. This does not apply, for example, to rent for buildings, waterfalls etc. The powers of nature which are paid for in these cases enter into production as a condition, be it as productive power or as sine qua non, but they are not the element in which this particular branch of production is carried on. Again, in rents for mines, coal-mines etc., the earth is the reservoir, from whose bowels the use-values are to be torn. In this case payment is made for the land, not because it is the element in which production is to take place, as in agriculture, not because it enters into production as one of the conditions of production, as in the case of the waterfall or the building site, but because it is a reservoir containing the use-values, which are to be got hold of through industry. Ricardo s explanation that: is poor. Firstly, the soil has no indestructible powers . (A note on this is to follow at the end of this chapter.) Secondly, it has no original powers either, since the land is in no way original , but rather the product of an historical and natural process. But let that pass. By original powers of the land we understand here those, which it possesses independently of the action of human industry, although, on the other hand, the powers given to it by human industry, become just as much its original powers as those given to it by the process of nature. Apart from this, it is correct to say that rent is a payment for the use of natural things, irrespective of whether it is for the use of the original powers of the soil or of the power of the waterfall or of land for building or of the treasures to be found in the water or in the bowels of the earth. As distinct from the agricultural rent proper, Adam Smith (says Ricardo) speaks of the rent paid for wood from virgin forests, rent of coal-mines and stone-quarries. The way in which Ricardo disposes of this is rather strange. He begins by saying that the rent of land must not be confused with the interest and profit of capital (l.c., p. 53), that is: From this he immediately [passes on] to the above-mentioned examples from Adam Smith. With regard to virgin forests: Similarly with the stone-quarries and coal-mines. This is very strange logic. One must distinguish rent paid to the owner of the land for the use of the original and indestructible powers of the soil from the interest and profit which is paid to him for the capital he has invested in ameliorating the land, etc. The compensation which is paid to the owner of naturally-grown forests for the right to remove wood, or to the owner of stone-quarries and coal-mines for the right to remove stones and coal, is not rent, because it is not a payment for the use of the original and indestructible powers of the soil . Very well. But Ricardo argues as though this compensation were the same as the profit and interest which are paid for capital invested in ameliorations of the land. But this is wrong. Has the owner of a virgin forest invested capital in it so that it may bear wood or has the owner of stone-quarries and coal-mines invested capital in these, so that they may contain stones and coal ? Whence, therefore, his compensation ? It is by no means as Ricardo tries to make out profit or interest of capital. Therefore it is rent and nothing else, even if it is not rent as defined by Ricardo. But this only shows that his definition of rent excludes those forms of it where the compensation is paid for mere natural things, in which no human labour is embodied, and where it is paid to the owner of these natural things only because he is the owner , the owner of land, whether this consists of soil, forest, fish pond, waterfall, building land or anything else. But, says Ricardo, the man who paid for the right to fell trees in the forest, paid in consideration of the valuable commodity which was then standing on the land and actually repaid himself with a profit, by the sale of the timber [p. 54]. Stop! When Ricardo here calls the wood, i.e., the trees standing on the land in the virgin forest a valuable commodity , then this means only that it is potentially a use-value. And this use-value is expressed here in the word valuable . But it is not a commodity . Because for this it would, at the same time, have to be exchange-value, in other words, to contain a certain quantity of labour expended upon it. It only becomes a commodity by being separated from the virgin forest, by being felled, removed and transported by being transformed from wood into timber. Or does it only become a commodity by the fact it is sold? Then arable land too becomes a commodity by the mere act of selling? Then we would have to say: Rent is the price paid to the owner of natural forces or mere products of nature for the right of using those forces or appropriating (by labour) those products. This is in fact the form in which all rent appears originally. But then the question remains to be solved, how things which have no value can have a price and how this is compatible with the general theory of value. The question: for what purpose does the man pay a compensation for the right to remove timber from the land upon which it stands, has nothing to do with the real question. The question is: from what fund does he pay? Well, says Ricardo, by the sale of the timber . That is, out of the price of the timber. And furthermore, this price was such that, as Ricardo says, the man actually repaid himself with a profit . Now we know where we are. The price of the timber must at any rate equal the sum of money representing the quantity of labour necessary to fell the timber, to remove it, to transport it, to bring it to market. Now is the profit with which the man repays himself, an addition over and above this value, this exchange-value just imparted to the wood through the labour expended upon it? If Ricardo said this then he would fall into the crudest conception, far beneath his own doctrine. No. Given that the man was a capitalist, the profit is part of the labour he employed in the production of the timber , the part for which he did not pay; and the man would have made the same profit, if he had set in motion the same amount of labour, shall we say, in cotton spinning. (If the man is not a capitalist, then the profit is equal to that quantity of his labour which he exerts beyond that which is necessary to cover his wages, and which would have constituted the profit of the capitalist, had a capitalist employed him, but which now constitutes his own profit because he is his own wage-labourer and his own capitalist in one and the same person.) But here we come to the ugly word that this timber man actually repaid himself with a profit . This gives the whole transaction a very ordinary look and corresponds to the crude manner of thinking which this capitalist, who removes timber, may himself have of the source of his profit. First he pays the owner of the virgin forest for the use-value wood, which, however, has no value (value in exchange) and which, so long as it stands upon the land has not even a use-value. He may pay him 5 per ton. And then he sells the same wood to the public (setting aside his other costs) at 6 and so actually pays back to himself the 5 with a profit of 20 per cent. [He] actually repaid himself with a profit . If the owner of the forest had only demanded compensation of 2 (40 s.), then the timber man would have sold the ton at 2 8s. instead of at 6. ||566| Since he always adds the same rate of profit, the price of timber would be high or low here because the rent is high or low. The latter would enter into the price as a constituent part but would in no way be the result of the price. Whether the rent compensation is paid to the owner of the land for the use of the power of the land or for the use of the natural products of the land, in no way alters the economic relations, in no way alters the fact that money is paid for a natural thing (power or produce of the earth) upon which no previous human labour has been spent. And thus on the second page of his chapter On Rent Ricardo would have overthrown his whole theory in order to avoid a difficulty. It would appear that Adam Smith was a great deal more far-sighted here. The same case with the stone-quarries and coal-mines. No! But there is a very significant connection with the original and destructible productions of the soil . The word value is just as ugly here as the phrase repaid himself with a profit was above. Ricardo never uses the word value for utility or usefulness or value in use . Does he therefore mean to say that the compensation is paid to the owner of the quarries and coal-mines for the value the coal and stone have before they are removed from the quarry and the mine in their original state? Then he invalidates his entire doctrine of value. Or does value mean here, as it must do, the possible use-value and hence also the prospective exchange-value of coal and stone? Then it means nothing but that their owner is paid rent for the permission to use the original composition of the soil for the production of coal and stones. And it is absolutely incomprehensible why this should not be called rent , in the same way as if the permission were given to use the powers of the land for the production of wheat. Or we end up again with the annulment of the whole theory of rent, as explained in connection with wood. According to the correct theory, there are no difficulties involved here at all. The labour, or capital, employed in the production <not reproduction> of wood, coal or stone (this labour, it is true, does not create these natural products, but separates them from their elementary connection with the earth and so produces them as usable wood, coal or stone) evidently belongs to those spheres of production in which the part of capital laid out in wages is greater than that laid out in constant capital, [where consequently the amount of] direct labour is greater than that of past labour the result of which serves as a means of production. If, therefore, the commodity is sold at its value here, then this value will be above its cost-price, i.e., the wear and tear of the instruments of labour, the wages, and the average profit. The excess can thus be paid as rent to the owner of forest, quarry or coal-mine. But why these clumsy manoeuvres of Ricardo s, such as the wrong use of value etc.? Why this clinging to the explanation of rent as a payment for the use of the original and indestructible powers of the land ? Perhaps the answer will emerge later. In any case, he wants to distinguish, to mention specifically, the agricultural rent in the strict sense and at the same time to open the way for differential rent, by saying that payment for this elementary power can only be made in so far as it develops different degrees of power. [a] In the manuscript: soil . Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 11

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch11.htm

A further comment on the above: Supposing more productive or better situated coal-mines and stone-quarries were discovered, so that, with the same quantity of labour, they yield-ed a larger product than the older ones, and indeed so large a product that it covered the entire demand. Then the value and therefore the price of coal, stones, timber, would fall and as a result the old coal-mines and stone-quarries would have to be closed. They would yield neither profit, nor wages, nor rent. Nevertheless, the new ones would yield rent just as the old ones did previously although less (at a lower rate). For every increase in the productivity of labour reduces the amount of capital laid out [in] wages, in proportion to the constant capital which is in this case laid out in tools. Is this correct? Does this also apply here, where the change in the productivity of labour does not arise from a change in the method of production itself, but from the natural fertility of the coal-mine or the stone-quarry, or from their situations? One can only say here that in this case the same quantity of capital yields more tons of coal or stone and that therefore each individual ton contains less labour; the total tonnage, however, contains as much as, or even more [labour], if the new mines or quarries satisfy not only the old demand which was previously supplied by the old mines and quarries, but also an additional demand, and, moreover, an additional demand which is greater than the difference between the productivity of the old and that of the new mines and quarries. But this would not alter the organic composition of the capital employed. It would be true to say that the price of a ton, an individual ton, contained less rent, but only because altogether it contained less labour, hence also less wages and less profit. The proportion of the rate of rent to profit would, however, not be affected by this. Hence we can ||567| only say the following: If demand remains the same, if, therefore, the same quantity of coal and stone is to be produced as before, then less capital is employed now in the new richer mines and quarries than before, in the old ones, in order to produce the same mass of commodities. The total value of the latter thus falls, hence also the total amount of rent, profit, wages and constant capital employed. But the proportions of rent and profit change no more than those of profit and wages or of profit and the capital laid out, because there has been no organic change in the capital employed. Only the size and not the composition of the capital employed has changed, hence neither has the method of production. If there is an additional demand to be satisfied, an additional demand moreover that equals the difference in fertility between the new and the old mines and quarries, then the same amount of capital will be used now as previously. The value of the individual ton falls. But the total tonnage has the same value as before. As regards the individual ton, the size of the portions of value which resolve into profit and rent decreased together with the value it contained. But since the amount of capital has remained the same and with it the total value of its product and no organic change has taken place in its composition, the absolute amount of rent and profit has remained the same. If the additional demand is so great that with the same capital investment it is not covered by the difference in fertility between the new and the old mines and quarries, then additional capital will have to be employed in the new mines. In this case provided the growth of the total capital invested is not accompanied by a change in the distribution of labour, the application of machinery, in other words provided there is no change in the organic composition of the capital the amount of rent and profit grows because the value of the total product grows, the value of the total tonnage, although the value of each individual ton falls and therefore also that part of its value which resolves into rent and profit. In all these instances, there is no change in the rate of rent, because there is no change in the organic composition of the capital employed (however much its magnitude may alter). If, on the other hand, the change arose out of such a change i.e., from a decrease in the amount of capital laid out in wages as compared with that laid out in machinery, etc., so that the method of production itself is altered then the rate of rent would fall, because the difference between the value of the commodity and the cost-price would have decreased. In the three cases considered above, this does not decrease. For though the value falls, the cost-price of the individual commodity falls likewise, in that less labour is expended upon it, less paid and unpaid labour. Accordingly, therefore, when the greater productivity of labour, or the lower value of a certain measure of commodities produced, arises only from a change in the productivity of the natural elements, from the difference between the natural degree of fertility of soils; mines, quarries etc., then the amount of rent may fall because, under the altered conditions, a lesser quantity of capital is employed; it may remain constant if there is an additional demand; it may grow, if the additional demand is greater than the difference in productivity between the previously employed and the newly employed natural agencies. The rate of rent, however, could only grow with a change in the organic composition of the capital employed. Thus the amount of rent does not necessarily fall if the worse soil, quarry, coal-mine etc. is abandoned. The rate of rent, moreover, can never fall if this abandoning is purely the result of lesser natural fertility. Ricardo distorts the correct idea, that in this case, depending on the state of demand, the amount of rent may fall, in other words depending upon whether the amount of capital employed decreases, remains the same or grows; he confuses it with the fundamentally wrong idea, that the rate of rent must fall, which is an impossibility on the assumption made, since it has been assumed that no change in the organic composition of capital has taken place, therefore no change affecting the relationship between value and cost-price, the only relationship that determines the rate of rent. But what happens to differential rents in this case? Supposing that three groups of coal-mines were being worked: I, II and III. Of these, I bore the absolute rent, II a rent which was twice that of I, and III a rent which was twice that of II or four times that of I. In this example, I bears the absolute rent R, II 2R and III 4R. Now if No. IV is opened up, and if this is more productive than I, II and III, and if it is so extensive that the capital invested in it can be as great as that in I, [then] in this case the former state of demand remaining constant the same amount of capital as was previously invested in I would now be invested in IV. I would thereupon be closed and a part of the capital invested in II would have to be withdrawn. IV would suffice to replace I and a part of II, but III and IV would not suffice to supply the whole demand, without part of II continuing to be worked. Let us assume, for the sake of the illustration, that IV using the same amount of capital as was previously invested in I is capable of providing the whole of the supply from I and half the supply from II. If, therefore, half the previous capital were invested in II, the old capital in III and the new in IV, then the whole market would be supplied. ||568| What changes had taken place, or how would the changes accomplished affect the general rental, the rents of I, II, III and IV? The[a] absolute rent, derived from IV, would, in amount and rate, be absolutely the same as that formerly derived from I; in fact the absolute rent, in amount and rate, would also before have been the same on I, II and III, always supposing that the same amount of capital was employed in those different classes. The value of the produce of IV would be exactly identical to that formerly employed on I, because it is the produce of a capital of the same magnitude and of a capital of the same organic composition. Hence the difference between [the] value [of the product] and its cost-price must be the same; hence [also] the rate of rent. Besides, the amount [of rent] must be the same, because at a given rate of rent capitals of the same magnitude would have been employed. But, since the [market] -value of the coal is not determined by the [individual] value of the coal derived from IV, it would bear an excess rent, or an overplus over its absolute rent; a rent derived, not from any difference between value and cost-price, but from the difference between the market-value and the individual value of the produce No. IV. When we say that the absolute rent or the difference between value and cost-price on I, II, III, IV, is the same, provided the magnitude of the capital invested in them, and therefore the amount of rent with a given rate of rent is the same, then this is to be understood in the following way: The (individual) value of the coal from I is higher than that from II and that from II is higher than that from III, because one ton from I contains more labour than one ton from II and one ton from II more than one ton from III. But since the organic composition of the capital is in all three cases the same, this difference does not affect the individual absolute rent yielded by I, II, III, For if the value of a ton from I is greater, so is its cost-price; it is only greater in the proportion that more capital of the same organic composition is employed for the production of one ton in I than in II and of one ton in II than in III. This difference in their va1ues is, therefore, exactly equal to the difference in their cost-prices, in other words to [the difference in] the relative amount of capital expended to produce one ton of coal in I, II and III. The variation in the magnitudes of value in the three groups does not, therefore, affect the difference between value and cost-price in the various classes. If the value is greater, then the cost-price is greater in the same proportion, for the value is only greater in proportion as more capital or labour is expended; hence the relation between value and cost-price remains the same, and hence absolute rent is the same. But now let us go on to see what is the situation regarding differential rent. Firstly, less capital is now being employed in the entire production of coal in II, III and IV. For the capital in IV is as great as the capital in I had been. Furthermore, half the capital employed in II is now withdrawn. The amount of rent on II therefore will at all events drop by a half. Only one change has taken place in capital investment, namely in II, because in IV the same amount of capital is invested as was previously invested in I. We have, moreover, assumed that capitals of the same size were invested in I, II and III, for example 100 in each, altogether 300; now therefore only 250 are invested in II, III and IV, or one-sixth of the capital has been withdrawn from the production of coal. Moreover, the market-value of coal has fallen. We saw that I yielded R, II 2R and III 4R. Let us assume that the product of 100 on I was 120, of which R equalled 10 and 10 equalled the profit, then the market-value of II was 130 ( 10 profit and 20 rent), and of III 150 ( 10 profit and 40 rent). If the product of I was 60 tons ( 2 per ton), then that of II was 65 tons and that of III was 75 tons and the total production was 60+65+75 tons=200 tons. Now 100 will produce as much in IV as the total product of I and half the product of II, namely, 60+32 1/2 tons=92 1/2 tons, which, according to the old market-value, would have cost 185 and since the profit was 10 would thus have yielded a rent of 75, amounting to 7 1/2 R, for the absolute rent equalled 10. II, III and IV continue to yield the same number of tons, 200, since 32 1/2+75+92 1/2=200 tons. But what is the position now, with regard to market-value and differential rents? In order to answer this we must see what is the amount of the absolute individual rent of II, We assume that the absolute difference between value and cost-price in this sphere of production equals 10, i.e. equals the rent yielded by the worst mine, although this is not necessary unless the market-value was absolutely determined by the value of I. ||569| If this was, indeed, the case, then the rent on I (if the coal from I were sold at its value) in fact represented the excess of value over its own cost-price and the general cost-price of commodities in this sphere of production. II would therefore be selling its products at their value, if it sold its tonnage (the 65 tons) at 120, i.e., the individual ton at 1 11/13. That instead it sold them at 2 was only due to the excess of the market-value, as determined by I, over its individual value; it was due to the excess, not of its value, but of its market-value over its cost-price. Moreover, on the assumption made, II now sells instead of 65, only 32 1/2 tons, because a capital of only 50 instead of a capital of 100, is now invested in the mine. II therefore now sells 32 1/2 tons at 60. 10 on 50 [the capital advanced] is 20 per cent. Of the 60, 5 are profit and 5 rent. Thus we have for II: Value of the product, 1 11/13 per ton; number of tons is 32 1/2; total value of the product is 60; rent is 5. The rent has fallen from 20 to 5. If the same amount of capital were still employed, then it would only have fallen to 10. The rate has therefore only fallen by half. That is, it has fallen by the total difference that existed between the market-value as determined by I and its own value, the difference therefore that existed over and above the difference between its own value and cost-price. Its differential rent was 10; its rent is now 10, equal to its absolute rent. In II, therefore, with the reduction of the market-value to the value (of coal from II) differential rent has disappeared and consequently also the increased rate of rent which was doubled by this differential rent. Thus it has been reduced from 20 to 10; with this given rate of rent, however, the rent has been further reduced from 10 to 5, because the capital invested in II has fallen by half. Since the market-value is now determined by the value of II, i.e., by 1 11/13 per ton, the market-value of the 75 tons produced by III is now 138 6/13, of which 28 6/13 are rent. Previously the rent was 40. It has, therefore, fallen by 11 7/13. The difference between this rent and the absolute rent used to be 30; now it only amounts to 18 6/13 (for 18 6/13+10=28 6/13), Previously it was 4R, now it is only 2R+ 8 6/13. As the amount of capital invested in III has remained the same, this fall is entirely due to the fall in the rate of differential rent, i.e., the fall in the excess of the market-value of III over its individual value. Previously, the whole amount of the rent in III was equal to the excess of the higher market-value over the price of production, now it is only equal to the excess of the lower market-value over the cost-price; the difference is thus coming closer to the absolute rent of III. With a capital of 100. III produces 75 tons, whose [individual] value is 120; one ton is therefore equal to 1 3/5. But III sold the ton at 2, the previous market-price, therefore, at 2/5 more [than its individual value]. On 75 tons, this amounted to 2/5 75= 30, and this was in fact the differential rent of rent III, for the rent was 40 ( 10 absolute and 30 differential rent). Now, according to the new market-value, the ton is sold at only 1 11/13. How much above its [individual] value is this? 1 3/5 = 1 39/65 and 1 11/13=1 55/65 [1 55/65-1 39/65=16/65]. Thus the price at which the ton is sold is 16/65 above its [individual] value. On 75 tons this amounts to 18 6/13, and this is exactly the differential rent, which is thus always equal to the number of tons multiplied by the excess of the market-value of the ton over the [individual] value of the ton. It now remains to work out the fall in rent by 11 7/13. The excess of the market-value over the value of III has fallen from 2/5 of a per ton (when it was sold at 2) to 16/65 per ton (at 1 11/13), i.e., from 2/5=26/65 to 16/65, [which is by] 10/65. On 75 tons this amounts to 750/65= =150/13=11 7/13, and this is exactly the amount by which the rent in III has fallen. ||570| The 92 1/2 tons from IV, at 1 11/13 [per ton], cost 170 10/13. The rent here is 60 10/13 and the differential rent is 50 10/13. If the 92 1/2 tons were sold at their value ( 120), then 1 ton would cost 1 11/37, Instead it is being sold at 1 11/13. But 1 11/13= 1 407/481 and 1 11/37= 1 143/481. This makes the excess of the market-value of IV over its value equal to 264/481. On 92 1/2 tons this amounts to exactly 50 10/13, which is the differential rent of IV. Now let us put these two cases together, under A and B. A The total number of tons = 200. Total absolute rent = 30. Total differential rent = 40. Total rent = 70. B Total capital = 250. Absolute rent = 25. Differential rent = 69 3/13. Total rent = 94 3/13. The total value of the 200 tons has fallen from 400 to 369 3/13. These two tables give rise to some very important considerations. First of all we see that the amount of absolute rent rises or falls proportionately to the capital invested in agriculture, that is, to the total amount of capital invested in I, II, III. The rate of this absolute rent is quite independent of the size of the capitals invested for it does not depend on the difference in the various types of land but is derived from the difference between value and cost-price; this latter difference however is itself determined by the organic composition of the agricultural capital, by the method of production and not by the land. In II B, the amount of the absolute rent falls from 10 to 5, because the capital has fallen from 100 to 50; half ||571| the capital has been withdrawn [from the land]. Before making any further observations on the two tables, let us construct some other tables. We saw that in B the market-value fell to 1 11/13 per ton. But [let us assume that] at this value, there is no necessity either for I A to disappear completely from the market, or for II B to employ only half the previous capital. Since in I, the rent is 10 out of the total value of the commodity of 120, or 1/12 of the total value, [this applies] equally to the value of the individual ton which is worth 2. 2/12, however, is 1/6 or 3 1/3s. (3 1/3s.X60= 10). The cost-price of a ton from I is thus [ 2-3 1/3s.=] 1 16 2/3s. The [new] market-value is 1 11/13, or 1 16 12/13s. 1 16 2/3s., however, is 1 16s. 8d. or 1 1626/39s. Against this, 1 1612/13s. are 1 16 36/39s. or 10/39s. more. This would be the rent per ton, at the new market-value and would amount to a total rent of 15 5/13s. for 60 tons. Therefore I put less than 1 per cent rent on the capital of 100. For I A to yield no rent at all, the market-value would have to fall to its cost-price, namely, to 1 162/3s, or to 1 5/6 (or to 110/12). In this case the rent on I A would have disappeared. It could, however, continue to be exploited with a profit of 10 per cent. This would only cease if the market-value were to fall further, below [the cost-price of] 1 5/6. So far as II B is concerned, it has been assumed in Table B that half of the capital is withdrawn. But since the market-value of 111/13 still yields a rent of 10 per cent, it will do so just as well on 100 as on 50. If, therefore, it is assumed that half the capital has been withdrawn, then only because under these circumstances, II B still yields an absolute rent of 10 per cent. For if II B had continued to produce 65 tons instead of 32 1/2, then the market would be over-supplied and the market-value of IV, which dominates the market, would fall to such an extent, that the capital investment in II B would have to be reduced in order to yield the absolute rent. It is however clear that, if the whole capital [of] 100 yields rent at 9 per cent, the sum total is greater than that yielded by [a capital of] 50 at 10 per cent. Thus if, according to the state of the market, a capital of only 50 were required in II to satisfy the demand, the rent would have to be forced down to 5. It would, in fact, fall even lower, if it is assumed that the 321/2 tons cannot always be disposed of, i.e., if they were thrown out of the market. The market-value would fall so low, that not only the rent on II B would disappear, but the profit would also be affected. Then capital would be withdrawn in order to diminish supply, until the correct point of 50 had been reached and then the market-value would have been re-established at 1 11/13, at which II B would again yield the absolute rent, but only on half the capital previously invested in it. In this instance too, the whole process would emanate from IV and III, who dominate the market. But it does not by any means follow that if the market only absorbs 200 tons at 1 11/13 per ton, it will not absorb an additional 32 1/2 tons if the market-value falls, i.e., if the market-value of 232 1/2 tons is forced down through the pressure of 32 1/2 surplus tons on the market. The cost-price in II B is 1 9/13 or 1 13 11/13s. But the market-value is 1 11/13 or 1 16 12/13s. If the market-value fell to such an extent that I A no longer yielded a rent, i.e., [if the market-value fell] to the cost-price of I A, to 1 16 2/3s. or 1 5/6 or 1 10/12, then for II B to use his whole capital, demand would have to grow considerably; since I A could continue to be exploited, as it yields the normal profit. The market would have to absorb not 32 1/2 but 92 1/2 additional tons, 292 1/2 tons instead of 200, i.e. [almost] half as much again. This is a very significant increase. If a moderate increase is to take place, the market-value would have to fall to such an extent that I A is driven out of the market. That is, the market-price would have to fall below the cost-price of I A, i.e., below 1 10/12, say, to 1 9/12 or 1 15s. It would then still be well above the cost-price of II B. We shall therefore add a further three tables to the tables A and B, namely, C and D and E. And we shall assume in C that the demand grows, that all classes of A and B can continue to produce, but at the market-value of B, at which I A still yields a rent. In D we assume that [the demand] is sufficient for I A to continue to yield the normal profit but no longer a rent. And we shall assume in E that the price falls sufficiently to eliminate I A from the market ||572| but that the fall of the price simultaneously leads to the absorption of the 32 1/2 surplus tons from II B. The case assumed in A and B is possible. It is possible that if the rent is reduced from 10 to barely 16s., I A would withdraw his land from this particular form of exploitation and let it out to another sphere of exploitation, in which it can yield a higher rent. But in this case, II B would be forced through the process described above, to withdraw half his capital, if the market did not expand upon the appearance of the new market-value. C D E ||573| Now let us compile the tables A, B, C, D and E, but in the manner which should have been adopted from the outset. Capital, Total value, Total product, Market-value per ton, Individual value [per ton], Differential Value [per ton], Cost-Price [per ton], Absolute rent, Absolute rent in tons, Differential rent, Differential rent in tons, Total rent, And then the totals of all classes in each table. ||575| Comment on the Table (p. 574) It is assumed that a capital of 100 (constant and variable capital) is laid out and that the labour it employs provides surplus-labour (unpaid labour) amounting to one-fifth of the capital advanced, or a surplus-value of 100/5. If, therefore, the capital advanced equals 100, the value of the total product must be 120. Supposing furthermore that the average profit is 10 per cent, then 110 is the cost-price of total product, in the above example, of coal. With the given rate of surplus-value or surplus-labour, the 100 capital transforms itself into a value of 120, whether poor or rich mines are being exploited; in a word: The varying productivity of labour whether this variation be due to varying natural conditions of labour or varying social conditions of labour or varying technological conditions does not alter the fact that the value of the commodities equals the quantity of labour materialised in them. Thus to say the value of the product created by the capital of 100 equals 120, simply means that the product contains the labour-time materialised in the 100 capital, plus one-sixth of labour-time which is unpaid but appropriated by the capitalist. The total value of the product equals 120, whether the capital of 100 produces 60 tons in one class of mines or 65, 75 or 92 1/2 in another. But clearly, the value of the individual part, be it measured by the quarter or yard etc., varies greatly according to the productivity. But to stick to our table (the same applies to every other mass of commodities brought about by capitalist production) the value of l ton equals 2, if the total product of the capital is 60 tons, i.e., 60 tons are worth 120 or represent labour-time equal to that which is materialised in 120. If the total product amounts to 65 tons, then the value of the individual ton is 11 1/13 or 1 16 12/13s., if it amounts to 75 tons, then the value of the individual ton is l 9/15 or 1 12s.; finally, if it comes to 92 1/2 tons, then the value per ton is 1 11/37 or 1 5 35/37s. Because the total mass of commodities or tons produced by the capital of 100 always has the same value, equal to 120, since it always represents the same total quantity of labour contained in 120, the value of the individual ton varies, according to whether the same value is represented in 60, 65, 75 or 92 1/2 tons, in other words, it varies with the different productivity of labour. It is this difference in the productivity of labour which causes the same quantity of labour to be represented sometimes in a smaller and sometimes in a larger total quantity of commodities, so that the individual part of this total contains now more, now less, of the absolute amount of labour expended, and, therefore, accordingly has sometimes a larger and sometimes a smaller value. This value of the individual ton, which varies according to whether the capital of 100 is invested in more fertile or less fertile mines, and therefore according to the different productivity of labour, figures in the table as the individual value of the individual ton. Hence nothing could be further from the truth than the notion that when the value of the individual commodity falls with the rising productivity of labour, the total value of a product produced by a particular capital for instance, 100 rises because of the increased mass of commodities in which it is [now] represented. For the value of the individual commodity only falls because the total value the total quantity of labour expended is represented by a larger quantity of use-values, of products. Hence a relatively smaller part of the total value or of the labour expended falls to the individual product and this only to the extent to which a smaller quantity of labour is absorbed in it or a smaller amount of the total value falls to its share. Originally, we regarded the individual commodity as the result and direct product of a particular quantity of labour. Now, that the commodity appears as the product of capitalist production, there is a formal change in this respect: The mass of use-values which has been produced represents a quantity of labour-time, which is equal to the quantity of labour-time contained in the capital (constant and variable) consumed in its production, plus the unpaid labour-time appropriated by the capitalist. If the labour-time contained in the capital, as expressed in terms of money, amounts to 100 and this capital of 100 comprises 40 laid out in wages, and if the surplus labour-time amounts to 50 per cent on the variable capital, in other words, the rate of surplus-value is 50 per cent, then the value of the total mass of commodities produced by the capital of 100 equals 120. As we have seen in the first part of this work, if the commodities are to circulate, their exchange-value must first be converted into a price, i.e., expressed in terms of money. Thus ||576| before the capitalist throws the commodities on to the market, he must first work out the price of the individual commodity, unless the total product is a single indivisible object, such as, for example, a house, in which the total capital is represented, a single commodity, whose price according to the assumption would then be 120, equal to the total value as expressed in terms of money. Price here equals monetary expression of value. According to the varying productivity of labour the total value of 120 will be distributed over more or fewer products. Thus the value of the individual product will, accordingly, be proportionally equal to a larger or a smaller part of 120. The whole operation is quite simple. For example, if the total product equals 60 tons of coal, 60 tons are equal to 120 and 1 ton equals 120/60, i.e., 2; if the product is 65 tons, the value of the individual ton equals 120/65, i.e., 1 11/13 or 1 16 12/13s. ( 1 16s. 1 11/13d). If the product equals 75 tons, the value of the individual ton is 120/75, i.e., 1 12 s.; if it equals 92 1/2 tons, then it is 1 11/37, which is 1 5 35/37s. The value (price) of the individual commodity is thus equal to the total value of the product divided by the total number of products, which are measured according to the standard of measurement such as tons, quarters, yards etc. appropriate to them as use-values. ||574| If, therefore, the price of the individual commodity equals the total value of the mass of commodities produced by a capital of 100, divided by the total number of commodities, then the total value equals the price of the individual commodity multiplied by the total number of individual commodities or it equals the price of a definite quantity of individual commodities multiplied by the total amount of commodities, measured by this standard of measurement. Furthermore: The total value consists of the value of the capital advanced to production plus the surplus-value; that is of the labour-time contained in the capital advanced plus the surplus labour-time or unpaid labour-time appropriated by the capital. Thus the surplus-value contained in each individual part of the commodity is proportional to its value. In the same way as the 120 is distributed among 60, 65, 75 or 92 1/2 tons, so the 20 surplus-value is distributed among them. When the number of tons is 60, and therefore the value of the individual ton equals 120/60, which is 2 or 40s., then one-sixth of this 40s. or 2, that is, 6 2/3s., is the share of the surplus-value which falls to the individual ton; the proportion of surplus-value in the ton which costs 2 is the same as in the 60 which cost 120. The [ratio of] surplus-value to value remains the same in the price of the individual commodity as in the total value of the mass of commodities. In the above example, the total surplus-value in each individual ton is 20/60=2/6=1/3 of , which is equal to 1/6 of 40 as above. Hence the surplus-value of the single ton multiplied by 60 is equal to the total surplus-value which the capital has produced. If the portion of value which falls to the individual product the corresponding part of the total value is smaller because of the larger number of products, i.e., because of the greater productivity of labour, then the portion of surplus-value which falls to it, the corresponding part of the total surplus-value which adheres to it, is also smaller. But this does not affect the ratio of the surplus-value, of the newly-created value, to the value advanced and merely reproduced. Although, as we have seen, the productivity of labour does not affect the total value of the product, it may however increase the surplus-value, if the product enters into the consumption of the worker; then the falling price of the individual commodities or, which is the same, of a given quantity of commodities, may reduce the normal wage or, amounts to the same, the value of the labour-power. In so far as the greater productivity of labour creates relative surplus-value, it increases not the total value of the product, but that part of this total value which represents surplus-value, i.e., unpaid labour. Although, therefore, with greater productivity of labour, a smaller portion of value falls to the individual product because the total mass of commodities which represents this value has grown and thus the price of the individual product falls, that part of this price which represents surplus-value, nevertheless, rises under the above-mentioned circumstances, and, therefore, the proportion of surplus-value to reproduced value grows (actually here one should still refer to variable capital, for profit has not yet been mentioned). But this is only the case because, as a result of the increased productivity of labour, the surplus-value has grown within the total value. The same factor the increased productivity of labour which enables a larger mass of products to contain the same quantity of labour thus lowering the value of a given part of this mass or the price of the individual commodity, reduces the value of the labour-power, therefore increases the surplus or unpaid labour contained in the value of the total product and hence in the price of the individual commodity. Although thus the price of the individual commodity falls, although the total quantity of labour contained in it, and therefore its value, falls, the proportion of surplus-value, which is a component part of this value, increases. In other words, the smaller total quantity ||577| of labour contained in the individual commodity comprises a greater quantity of unpaid labour than previously, when labour was less productive, when the price of the individual commodity was therefore higher, and the total quantity of labour contained in the individual commodity greater. Although in the present case one ton contains less labour and is therefore cheaper, it contains more surplus-labour and therefore yields more surplus-value. Since in competition everything appears in a false form, upside down, the individual capitalist imagines 1. that he [has] reduced his profit on the individual commodity by reducing its price, but that he makes a greater profit because of the increased mass [of commodities] (here a further confusion is caused by the greater amount of profit which is derived from the increase in capital employed, even with a lower rate of profit); 2. that he fixes the price of the individual commodity and by multiplication determines the total value of the product whereas the original procedure is division and multiplication is only correct as a derivative method based on that division. The vulgar economist in fact does nothing but translate the queer notions of the capitalists who are caught up in competition into seemingly more theoretical language and seeks to build up a justification of these notions. Now to return to our table. The total value of the product or of the quantity of commodities created by a capital of 100, equals 120, however great or small according to the varying degree of the productivity of labour the quantity of commodities may be. The cost-price of this total product, whatever its size, equals 110 if, as has been assumed, the average profit is 10 per cent. The excess in value of the total product, whatever its size, equals 10, which is one-twelfth of the total value or one-tenth of the capital advanced. This 10, the excess of value over the cost-price of the total product, constitutes the rent. It is evidently quite independent of the varying productivity of labour resulting from the different degrees of natural fertility of the mines, types of soil, in short, of the natural element in which the capital of 100 has been employed, for those different degrees in the productivity of the labour employed, arising from the different degrees of fertility of the natural agent, do not prevent the total product from having a value of 120, a cost-price of 110, and therefore an excess of value over cost-price of 10. All that the competition between capitals can bring about, is that the cost-price of the commodities which a capitalist can produce with 100 in coal-mining, this particular sphere of production, is equal to 110. But competition cannot compel the capitalist to sell the product at 110 which is worth 120 although such compulsion exists in other industries. Because the landlord steps in and lays his hands on the 10. Hence I call this rent the absolute rent. Accordingly it always remains the same in the table, however the fertility of the coal-mines and hence the productivity of labour may change. But, because of the different degrees of fertility of the mines and thus of the productivity of labour, it is not always expressed in the same number of tons. For, according to the varying productivity of labour, the quantity of labour contained in 10 represents more or less use-values, more or less tons. Whether with the variation in degrees of fertility, this absolute rent is always paid in full or only in part, will be seen in the further analysis of the table. There is furthermore on the market coal produced in mines of different productivity. Starting with the lowest degree of productivity, I have called these, I, II, III, IV. Thus, for instance, the first class produces 60 tons with a capital of 100, the second class produces 65 tons etc. Capital of the same size 100, of the same organic composition, within the same sphere of production does not have the same productivity here, because the degree of productivity of labour varies according to the degree of productivity of the mine, type of soil, in short of the natural agent. But competition establishes one market-value for these products, which have varying individual values. This market-value itself can never be greater than the individual value of the product of the least fertile class. If it were higher, then this would only show that the market-price stood above the market-value. But the market-value must represent real value. As regards products of separate classes, it is quite possible, that their [individual] value is above or below the market-value. If it is above the market-value, the difference between the market-value and their cost-price is smaller than the difference between their individual value and their cost-price. But as the absolute rent equals the difference between their individual ||578| value and their cost-price, the market-value cannot, in this case, yield the entire absolute rent for these products. If the market-value sank down to their cost-price, it would yield no rent for them at all. They could pay no rent, since rent is only the difference between value and cost-price, and for them, individually, this difference would have disappeared, because of the [fall in the] market-value. In this case, the difference between the market-value and their individual value is negative, that is, the market-value differs from their individual value by a negative amount. The difference between market-value and individual value in general I call differential value. Commodities belonging to the category described here have a minus sign in front of their differential value. If, on the other hand, the individual value of the products of a class of mines (class of land) is below the market-value, then the market-value is a b o v e their individual value. The value or market-value prevailing in their sphere of production thus yields an excess above their individual value. If, for example, the market-value of a ton is 2, and the individual value of a ton is 1 12s., then its differential value is 8s. And since in the class in which the individual value of a ton is 1 12s. the capital of 100 produces 75 tons, the total differential value of these 75 tons is 8 s. 75= 30. This excess of the market-value for the total product of this class over the individual value of its product, which is due to the relatively greater fertility of the soil or the mine, forms the differential rent, since the cost-price for the capital remains the same as before. This differential rent is greater or smaller, according to the greater or smaller excess of the market-value over the individual value. This excess in turn is greater or smaller, according to the relatively greater or smaller fertility of the class of mine or land to which this product belongs, compared with the less fertile class whose product determines the market-value. Finally, the individual cost-price of the products is different in the different classes. For instance, for the class in which a capital of 100 yields 75 tons the cost-price of the individual commodity would be 1 9 1/3 s., since the total value is 120 and the cost-price 110, and if the market-value were equal to the individual value in this class, i.e., 1 12 s., then the 75 tons sold at 120 would yield a rent of 10, while 110 would represent their cost-price. But of course, the individual cost-price of a single ton varies according to the number of tons in which the capital of 100 is represented, or according to the individual value of the individual products of the various classes. If, for example, the capital of 100 produces 60 tons, then the value per ton is 2 and its cost-price 1 16 2/3 s.; 55 tons would be equal to 110 or to the cost-price of the total product. If, however, the 100 capital produces 75 tons, then the value per ton is 1 12s., its cost-price 1 9 1/3s., and 68 3/4 tons of the total product would cost 110 or would replace the cost-price. The individual cost-price, i.e., the cost-price of the individual ton, varies in the different classes in the same proportion as the individual value. It now becomes evident from all the five tables, that absolute rent always equals the excess of the value of the commodity over its own cost-price. The differential rent, on the other hand, is equal to the excess of the market-value over its individual value. The total rent, if there is a differential rent (apart from the absolute rent), is equal to the excess of the market-value over the individual value plus the excess of the individual value over the cost-price, or the excess of the market-value over the individual cost-price. Because here the purpose is only to set forth the general law of rent as an illustration of my theory of value and cost-prices since I do not intend to give a detailed exposition of rent ||579| till dealing with landed property ex professo I have removed all those factors which complicate the matter: namely the influence of the location of the mines or types of land; different degree of productivity of different amounts of capital applied to the same mine or the same type of land; the interrelationship of rents yielded by different lines of production within the same sphere of production, for example, by different branches of agriculture; the interrelationship of rents yielded by different branches of production which are, however, interchangeable, such as, for instance, when land is withdrawn from agriculture in order to be used for building houses, etc. All this does not belong here. Now for a consideration of the tables. They show how the general law explains a great multiplicity of combinations, while Ricardo, because he had a false conception of the general law of rent, perceived only one side of differential rent and therefore wanted to reduce the great multiplicity of phenomena to one single case by means of forcible abstraction. The tables are not intended to show all the combinations but only those which are most important, particularly for our specific purpose. In Table A, the market-value of a ton of coal is determined by the individual value of a ton in class I, where the mine is least fertile, hence the productivity of labour is the lowest, hence the mass of products yielded by the capital investment of 100 is the smallest and, therefore, the price of the individual product (the price as determined by its value) is the highest. It is assumed that the market absorbs 200 tons, neither more nor less. The market-value cannot be above the [individual] value of a ton in I, i.e., of that commodity which is produced under the 1east favourable conditions of production, II and III sell the ton above its individual value because their conditions of production are more favourable than those of other commodities produced within the same sphere, this does not, therefore, offend against the law of value. On the other hand, the market-value could only be above the value of a ton in I, if the product of I were sold above its value, quite regardless of market-value. A difference between market-value and [individual] value arises in general not because products are sold absolutely above their value, but only because the value of the individual product may be different from the value of the product of a whole sphere; in other words because the labour-time necessary to supply the total product in this case 200 tons may differ from the labour-time which produces some of the tons in this case those from II and III in short, because the total product supplied has been produced by labour of varying degrees of productivity. The difference between the market-value and the individual value of a product can therefore only be due to the fact that the definite quantities of labour with which different parts of the total product are manufactured have different degrees of productivity. It can never be due to the value being determined irrespective of the quantity of labour altogether employed in this sphere. The market-value could be above 2 per ton, only if I, on the whole, quite apart from its relation to II and III, were to sell its product above its value. In this case the market-price would be above the market-value because of the state of the market, because of demand and supply. But the market-value which concerns us here and which here is assumed to be equal to the market-price cannot rise above itself. The market-value here equals the value of I, which, more-over, supplies three-tenths of the entire product on the market. since II and III only supply sufficient amounts to meet the total demand, i.e., to satisfy the additional demand over and above that which is supplied by I, II and III have no cause, therefore, to sell below 2 since the entire product can be sold at 2. They cannot ||580| sell above 2 because I sells at 2 per ton. This law, that the market-value cannot be above the individual value of that product which is produced under the worst conditions of production but provides a part of the necessary supply, Ricardo distorts into the assertion that the market-value cannot fall below the value of that product and must therefore always be determined by it. We shall see later how wrong this is. Because the market-value of a ton coincides with the individual value of a ton in I, the rent it yields represents the absolute excess of the value over its cost-price, the absolute rent, which is 10. II yields a differential rent of 10 and III of 30, because the market-value, which is determined by I, yields an excess of 10 for II and of 30 for III, over their individual value and therefore over the absolute rent of 10, which represents the excess of the individual value over the cost-price. Hence II yields a total rent of 20 and III of 40, because the market-value yields an excess over their cost-price of 20 and 40 respectively. We shall assume that the transition is from I, the least fertile mine, to the more fertile II, and from this to the yet more fertile mine III, It is true that II and III are more fertile than I, but they satisfy only seven-tenths of the total demand and, as we have just explained, can therefore sell their product at 2, although its value is only 1 16 12/13s. and 1 12s. respectively. It is clear that when the particular quantity required to satisfy demand is supplied, and gradation takes place in the productivity of labour which satisfies the various portions of this demand, whether the transition is in one direction or the other, in both cases the market-value of the more fertile classes will rise above their individual value; in one case because they find that the market-value is determined by the unfertile class and the additional supply provided by them is not great enough to occasion any change in the market-value as determined by class I; in the other case, because the market-value originally determined by them determined by class III or II is now determined by class I, which provides the additional supply required by the market and can only meet this at a higher value, which now determines the market-value. In the case under consideration, for example, Ricardo would say: We start out from class III. The additional supply will, in the first place, come from II. Finally, the last additional supply demanded by the market comes from I, and since I can provide the additional supply of 60 tons only at 120, that is at 2 per ton, and since this supply is needed, the market-value of a ton which was originally 1 12 s. and later 1 16 12/13 s., now rises to 2. But, on the other hand, it is equally true, that if we start out from I, which satisfied the demand for 60 tons at 2, then, however, the additional supply is provided by II, the product of II is sold at the market-value of 2 although the individual value of it is only 1 16 12/13 s., for it is still only possible to supply the 125 tons required if I provides 60 tons at a value of 2 per ton. The same applies, if a new additional supply of 75 tons is required, but III provides only 75 tons, only supplies the additional demand, and therefore, as before, 60 tons have to be supplied by I at 2. Had I supplied the whole demand of 200 tons, they would have been sold at 400. And this is what they are [sold] at now, because II and III do not sell at the price at which they can satisfy the additional demand for 140 tons, ||XII-581| but at the price at which I, which only supplies three-tenths of the product, could satisfy it. The entire product required, 200 tons, is in this case sold at 2 per ton, because three-tenths of it can only be supplied at a value of 2 per ton, irrespective of whether the additional portions of the demand were met by proceeding from III via II to I or from I via II to III. Ricardo says: If III and II are the starting-points, their market-value must rise to the value (cost-price with him) of I, because the three tenths supplied by I are required to meet the demand and the decisive point here is therefore the required volume of the product and not the individual value of particular portions of it. But it is equally true that the three-tenths from I are just as essential as before when I is the starting-point and II and III only provide the additional supply. If, therefore, I determined the market-value in the descending line, it determines it in the ascending line for the same reasons. Table A thus shows us the incorrectness of the Ricardian concept that differential rent depends on the diminishing productivity of labour, on the movement from the more productive mine or land to the less productive. It is just as compatible with the reverse process and hence with the growing productivity of labour. Whether the one or the other takes place has nothing to do with the nature and existence of differential rent but is a historical question. In reality, the ascending and descending lines will cut across one another, the additional demand will sometimes be supplied by going over to more, sometimes to less fertile types of land, mine or natural agent. [In this it is] always supposed that the supply provided by the natural agent of a new, different class be it more fertile or less fertile only equals the additional demand and does not, therefore, bring about a change in the relation between demand and supply. Hence it can only bring about a change in the market-value itself, if the supply, can only be made available at higher cost not however if it can be made available at lower cost. Table A thus reveals to us from the outset the falseness of this fundamental assumption of Ricardo s, which, as Anderson shows, was not required, even on the basis of a wrong conception of absolute rent. If production proceeds in a descending line, from III to Il and from II to I with recourse to natural agents of a gradually decreasing fertility then III, in which a capital of 100 has been invested, will at first sell its commodities at their value, at 120. This, since it produces 75 tons, will amount to 1 12s. per ton. If an additional supply of 65 is then required, II, which invests a capital of 100, will similarly sell its product at a value of 120. This amounts to 1 1612/13s. per ton. And if, finally, an additional supply of 60 tons were required, which can only be provided by I, then it too will sell its product at its value of 120, which amounts to 2 per ton. In this process III would yield a differential rent of 18 6/13 as soon as II came on the market, whereas previously it only yielded the absolute rent of 10. II would yield a differential rent of 10 as soon as I came into the picture and differential rent of III would then rise to 30. Descending from III to I, Ricardo discovers that I does not yield a rent, because in considering III he started out from the assumption that no absolute rent exists. There is indeed a difference between the ascending and descending line. If the passage is from I to III, so that II and III only provide the additional supply, then the market-value remains equal to the individual value of I which is 2. And if, as the supposition is here, the average profit is 10 per cent, then it can be assumed that the price of coal ([or] price of wheat a quarter of wheat etc. can always be substituted for a ton of coal) will have entered into its calculation, since coal enters into the consumption of the worker as a means of subsistence as well as figuring as an auxiliary material of considerable importance in constant capital. It can therefore also be assumed that the rate of surplus-value would have been higher and therefore the surplus-value itself greater, hence also the rate of profit higher than 10 per cent, if I [were] more productive or the value of the ton had been below 2. This, however, would be the case if III was the starting-point. The [market]-value of the ton of coal was then only 1 12 s.; when ||582| II entered, it rose to 1 16 12/13s. and finally when I appeared, it rose to 2. It can thus be assumed that when only III was being worked all other circumstances, length of surplus labour-time and other conditions of production etc. being taken as constant and unchanged the rate of profit was higher (the rate of surplus-value was higher because one element of the wage was cheaper; because of the higher rate of surplus-value, the mass of surplus-value, and therefore also the rate of profit, was higher; in addition however with the surplus-value thus modified the rate of profit was higher because an element of cost in the constant capital was lower). The rate of profit became lower with the appearance of II and finally sank to 10 per cent, as the lowest level, when I appeared. In this case therefore one would have to assume that (regardless of the data) for instance the rate of profit was 12 per cent when only III was being worked; that it sank to 11 per cent when II came into play and finally to 10 per cent when I entered into it. In this case the absolute rent would have been 8 with III because the cost-price would have been 112; it would have become 9 as soon as II came into play because now the cost-price would have been 111 and it would finally have been raised to 10 because the cost-price would have fallen to 110. Here then a change in the rate of absolute rent itself would have taken place and this in inverse ratio to the change in the rate of profit. The rate of rent would have progressively grown because the rate of profit had progressively fallen. The latter would, however, have fallen because of the decreasing productivity of labour in the mines, in agriculture, etc. and the corresponding increase in the price of the means of subsistence and auxiliary materials. In this case the rate of rent rose because the rate of profit fell. Now did it fall because there was a change in the organic composition of the capital? If the average composition of the capital was 80c+ 20v, did this composition remain the same? It is assumed that the normal working-day remains the same. Otherwise the influence of the increased price of the means of subsistence could be neutralised. We must differentiate between two factors here. Firstly, an increase may occur in the price of the means of subsistence, hence reduction in surplus-labour and surplus-value. Secondly, constant capital may become more expensive because, as in the case of coal, the auxiliary material, or in the case of wheat, another element of constant capital, namely seeds, rises in value or also, [because] due to the increased price of wheat, the cost-price of other raw produce (raw material) may rise. Finally, if the product was iron, copper etc., the raw material of certain branches of industry and the raw material of machinery (including containers) of all branches of industry would rise. On the one hand it is assumed that no change has taken place in the organic composition of capital; in other words that no change has taken place in the manner of production decreasing or increasing the amount of living labour employed in proportion to the amount of constant capital employed. The same number of workers as before is required (the limits of the normal working-day remaining the same) in order to work up the same volume of raw material with the same amount of machinery etc., or, where there is no raw material, to set into motion the same amount of machinery, tools, etc. Besides this first aspect of the organic composition of capital, however, a second aspect has to be considered, namely, the change in the value of the elements of capital although as use-values they may be employed in the same portions. Here again we must distinguish: The[b] change in value affects both elements variable and constant equally. This may never occur in practice. A rise in the price of certain agricultural products such as wheat etc., raises the (necessary) wage and the raw material (for instance seeds). A rise in coal prices raises the necessary wage and the auxiliary material of most industries. While in the first case the rise in wages occurs in all branches of industry, that in raw materials occurs only in some. With coal, the proportion in which it enters into wages is lower than that in which it enters into production. As regards total capital, the change in the value of coal and wheat is thus hardly likely to affect both elements of capital equally. But let us suppose this to be the case. Let the value of the product of a capital 80c+ 20v be 120. Considering capital as a whole, the value of the product and its cost-price coincide, for the difference is equalised out for the aggregate capital [of the country]. The rise in value of an article such as coal which, according to the assumption, enters into both component parts of capital in equal proportions, brings about a rise in cost by one-tenth for both elements. Thus 80c would now only buy as many commodities as could previously be bought with [approximately] 70c and with 20v only as many workers could be paid as previously with [approximately] 18v. Or, in order to continue production on the old scale, [approximately] 90c and 22v would now have to be laid out. The value of the product, as previously, is now 120, of which, however, the outlay amounts to 112 ( 90 constant and 22 variable). Thus the profit is 8 and on 112 this works out at 1/14, which is 7 1/7 per cent. Hence the value of the product from 100 capital advanced is now equal to 107 1/7. What is the ratio in which c and v now enter into this new capital? Previously the ratio v:c was as 20:80, as 1:4; now it is as 22:90 [or] as 11:45. 1/4=45/180; 11/45=44/180. That means that variable capital has decreased by 1/180 ||583| as against constant capital. In keeping with the assumption that the increase in price of coal etc. has proportionally the same effect on both parts of the capital, we must put it as 88c+ 22v. For the value of the product is 120; from this has to be deducted an outlay of 88+ 22= 110. This leaves a profit of 10. 22:88=20:80. The ratio of c to v would have remained the same as in the old capital. As before, the ratio would be v:c as 1:4. But 10 profit on 110 is 1/11, which is 9 1/11 per cent. If production is to be continued on the same scale, 110 capital will have to be invested instead of 100, and the value of the product [would continue to be] 120. The composition of a capital of 100 however would be 80c+ 20v, the value of the product being 109 1/11. If, in the above case, the value 80c had remained constant and only v had varied, i.e., 22v instead of 20v, then the previous ratio having been 20:80 or 10:40, it would now be 22:80 or 11:40. Now if this change had taken place, then [the capital would amount to] 80c+ 22v [and the] value of the product would be 120; therefore the outlay [would be] 102 and the profit 18 i.e., 17 33/51 per cent. [But] 22:18 is as 21 29/51:17 33/51. If 22v capital need to be laid out in wages, in order to set in motion a constant capital of 80 in value, then 21 29/51 are required in order to move a constant capital of 78 22/51 in value. According to this ratio, only 78 22/51 would be laid out in machinery and raw material from a capital of 100; 21 29/51 would have to go to wages, whereas previously 80 was spent on raw material etc. and only 20 on wages. The value of the product is now 117 33/51. And the composition of the capital: 7822/51c+ 21 29/51v. But 21 29/51+ 17 33/51= 39 11/51. Under the previous composition [of capital], the total labour put in was equal to 40; now it is 39 11/51 or less by 40/51, not because the constant capital has altered in value, but because there is less constant capital to be worked on, hence a capital of 100 can set in motion a little less labour than before, although more dearly paid for. If, therefore, a change in an element of cost, here a rise in price a rise in value only alters (the necessary) wage, then the following takes place: Firstly, the rate of surplus-value falls; secondly, with a given capital, less constant capital, less raw material and machinery, can be employed. The absolute amount of this part of the capital decreases in proportion to the variable capital, and provided other conditions remain the same, this must always bring about a rise in the rate of profit (if the value of constant capital remains the same). The [physical] volume of the constant capital decreases although its value remains the same. But the rate of surplus-value decreases and also the [amount of] surplus-value itself, because the falling rate is not accompanied by an increase in the number of workers employed. The rate of surplus-value of surplus-labour falls more than the ratio of variable to constant capital. For the same number of workers as before, that is the same absolute quantity of labour, needs to be employed in order to set in motion the same amount of constant capital. Of this absolute quantity of labour more, however, is necessary labour and less of it is surplus-labour. Thus the same quantity of labour must be paid for more dearly. Of the same capital 100 for instance less can thus be laid out in constant capital, since more has to be laid out in variable capital to set in motion a smaller constant capital. The fall in the rate of surplus-value in this case is not connected with an increase in the absolute quantity of labour which a particular capital employs, or with the increase in the number of workers employed by it. The [amount of] surplus-value itself cannot therefore rise here, although the rate of surplus-value falls. Provided, therefore, that the organic composition of the capital remains the same, in so far as its physical component parts regarded as use-values are concerned; that is, if change in the composition of the capital is not due to a change in the method of production within the sphere in which the capital is invested, but only to a rise in the value of the labour-power and hence to a rise in the necessary wage, which is equal to a decrease in surplus-labour or the rate of surplus-value, which in this case can be neither partly nor wholly neutralised by an increase in the number of workers employed by a capital of given size for instance 100 then the fall in the rate of profit is simply due to the fall in surplus-value itself. If the method of production and the ratio between the amounts of immediate and accumulated labour used remain constant, this same cause then gives rise to the change in the organic composition of capital a change which is only due to the fact that the value (the proportional value) of the amounts employed has changed. The same capital employs ||584| less immediate labour proportionately as it employs less constant capital, but it pays more for this smaller amount of labour. It can therefore only employ less constant capital because the smaller amount of labour which sets in motion this smaller amount of constant capital, absorbs a greater part of the total capital. In order, for example, to set in motion 78 of constant capital, it must lay out 22 in variable capital, while previously 20v sufficed to set in motion 80c. This therefore happens when an increase in the price of a product subjected to landed property, only affects wages. The converse would result from the product becoming cheaper. But now let us take the case assumed above. The increased price of the agricultural product is supposed to affect constant and variable capital proportionately to the same degree. According to the assumption, therefore, there is no change in the organic composition of the capital. Firstly, no change in the method of production. The same absolute amount of immediate labour sets in motion the same amount of accumulated labour as before. The ratio of the amounts remains the same. Secondly, no change in the proportion of value as between accumulated and immediate labour. If the value of one rises or falls, so does that of the other in the same proportion to its relative size, which thus remains unchanged. But previously [we had] : 80c+ 20v; value of the product 120. Now 88c+ 22v, value of the product [likewise] 120. This yields 10 on 110 or 9 1/11 per cent [profit; for a capital of] 80c+ 20v therefore the value of [the product is] 109 1/11, Previously we had: Now we have: 80c represents less raw material etc. here and 20v less absolute labour in the same proportion. The raw material etc. has become dearer and [a capital of] 80 therefore buys a smaller quantity of raw material etc.; thus, because the method of production has remained the same, it requires less immediate labour. But the smaller quantity of immediate labour costs as much as the larger quantity of immediate labour did before, and it has become dearer exactly to the same extent as the raw material etc, and has therefore decreased in the same proportion. If, therefore, the surplus-value had remained the same, then the rate of profit would have sunk in the same proportion in which the raw material etc. had become dearer and in which the ratio of the value of the variable to the constant capital had changed. The rate of surplus-value however has not remained the same, but has changed in the same proportion as the value of the variable capital has grown. Let us take [another] example. The value of a pound of cotton has gone up from 1s. to 2s. Previously, 80 (we take machinery etc. here as equal to nil) could buy 1,600 lbs. Now 80 will only buy 800 lbs. Previously, in order to spin 1,600 lbs., 20 [were] required to pay the wages of, say, 20 workers. In order to spin the 800 lbs, only 10 [workers are needed], since the method of production has remained the same. The 10 had previously cost 10, now they cost 20, just as the 800 lbs. would previously have cost 40, and now cost 80. Assume now that the profit was previously 20 per cent. This would involve: For if the surplus-value created by 20 workers is 20, then that created by 10 is 10; in order to produce it, however, 20 needs to be paid out, as before, whereas according to the earlier relationship, only 10 was paid. The value of the product, of the ||585| lb. of yarn, must in this case rise at any rate, because it contains more labour, accumulated labour (in the cot-ton which enters into it) and immediate labour. If only cotton had risen and wages had remained the same, then the 800 lbs. of cotton would also have been spun by 10 workers. But these 10 workers would only have cost 10. That is, the surplus-value of 10 [would] as before have amounted to 100 per cent. In order to spin 800 lbs. of cotton, 10 workers [would be] needed with a capital outlay of 10. Thus total capital outlay would have been 90. Now according to the assumption there would always be 1 worker per 80 lbs. of cotton. Hence on 800 lbs. 10 workers and on 1,600 lbs. 20. How many pounds therefore could the total capital of 100 spin now? 88 8/9 could be used to buy cotton and 11 1/9 could be laid out in wages. The relative proportions would be: In this case, where no change in the value of variable capital takes place, and the rate of surplus-value therefore remains the same, [we have the following]: In I, variable capital is to constant capital as 20:80=1:4. In III, it is as 11 1/9:88 8/9=1:8; it has thus fallen proportionally by one half, because the value of constant capital has doubled. The same number of workers spin up the same amount of cotton, but 100 now only employ 11 1/9 workers, while the remaining 88 8/9 only buy 888 8/9 lbs. of cotton instead of 1,600 lbs. [as in] I. The rate of surplus-value has remained the same. But owing to the change in the value of the constant capital, the same number of workers can no longer be employed by a capital of 100; the ratio between variable and constant capital has changed. Consequently the amount of surplus-value falls and with it the profit, since this surplus-value is calculated on the same amount of capital outlay as before. In the first case, the variable capital (i.e. 20) was 1/4 of the constant capital (20:80) and 1/5 of the total capital. Now it is only 1/8 of the constant capital (11 1/9:88 8/9) and 1/9 of 100, the total capital. But 100 per cent on 100/5 or 20 is 20 and 100 per cent on 100/9 or 11 1/9 is only 11 1/9. If the wage remains the same here, or the value of the variable capital remains the same, its absolute amount falls, because the value of the constant capital has risen. Therefore the percentage of the variable capital falls and with it surplus-value itself, its absolute amount, and hence the rate of profit. If the value of the variable capital remains the same and the method of production remains the same, and therefore the ratio between the amounts of labour, raw material and machinery employed remains the same, a change in the value of the constant capital brings about the same variation in the composition of capital as if the value of constant capital had remained the same, but a greater amount of capital of unchanged value (thus also a greater capital value) had been employed, in proportion to the capital laid out in labour. The consequence is necessarily a fall in profit. (The opposite takes place if the value of constant capital falls.) Conversely, a change in the value of the variable capital in this case a rise increases the proportion of variable to constant capital and therefore also the percentage of variable capital, or its proportional share in the total capital. Nevertheless, the rate of profit falls here, instead of rising, for the method of production has remained the same. The same amount of living labour as before is employed now, in order to convert the same amount of raw materials, machinery etc. into products. Here, as in the above case, only a smaller total amount of immediate and accumulated labour can be set in motion with the same capital of 100 ||586|; but the smaller amount of labour costs more. The necessary wage has risen. A larger share of this smaller amount of labour represents necessary labour and therefore a smaller amount forms surplus-labour. The rate of surplus-value has fallen, while at the same time the number of workers or the total quantity of labour under the command of the same capital has diminished. The variable capital has increased in proportion to constant capital and hence also in proportion to total capital, although the amount of labour employed in proportion to the amount of constant capital has decreased. The surplus-value consequently falls and with it the rate of profit. Previously, the rate of surplus-value remained the same, while the rate of profit fell, because the variable capital fell in proportion to the constant capital and hence in proportion to the total capital, or the surplus-value fell because the number of workers decreased, its multiplier decreased, while the rate remained the same. This time the rate of profit falls because the variable capital rises in proportion to the constant capital, hence also to the total capital; this rise in variable capital is, however, accompanied by a fall in the amount of labour employed (of labour employed by the same capital), in other words, the surplus-value falls, because its decreasing rate is bound up with the decreasing amount of labour employed. The paid labour has increased in proportion to the constant capital, but the total quantity of labour employed has decreased. These variations in the value therefore always affect the surplus-value itself, whose absolute amount decreases in both cases because either one or both of its two factors fall. In one case it decreases because the number of workers decreases while the rate of surplus-value remains the same, in the other, because both the rate decreases and the number of workers employed by a capital of 100 decreases. Finally we come to case II, where the change in the value of an agricultural product affects both parts of capital in the same proportion and where this change of value is therefore not accompanied by a change in the organic composition of capital. In this case (see p. 584) the pound of yarn rises from 1s, 6d. to 2s. 9d., since it is the product of more labour-time than before. It contains just as much immediate (although more paid and less unpaid) labour as before, but more accumulated labour. Due to the change in the value of cotton from is, to 2s., 2s. instead of 1s. is incorporated in the value of the lb. of yarn. Example II on page 584 however is incorrect. We had: The labour of 20 workers is represented by 40. Of this, half is unpaid labour here, hence 20 surplus-value. According to this ratio, 10 workers will produce (a value of) 20 and of this 10 [are] wages and 10 surplus-value. If, therefore, the value of the labour-power rose in the same proportion as that of the raw material, i.e., if it doubled, then it would be 20 for 10 workers as compared with 20 for 20 workers before. In this case, there would be no surplus-labour left. For the value, in terms of money, which the 10 workers produce is equal to 20, if that which the 20 produce is equal to 40. This is impossible. If this were the case, the basis of capitalist production would have disappeared. Since, however, the changes in value of constant and variable capital are supposed to be the same (proportionally), we must put this case differently. Therefore say the value of cotton rose by one-third; 80 now buy 1,200 lbs. cotton, whereas previously they bought 1,600. Previously 1=20 lbs. [cotton] or 1 lb. [cotton]= 1/20=1s. Now 1=15 lbs, or 1 lb.= 1/15= =1 1/3s. or 1s. 4d. Previously 1 worker cost 1, now 1 l/3= 1 6 2/3s. or 1 6s. 8d. and for 15 men [that] amounts to 20 ( 15+ l5/3). ||587| Since 20 men produce a value of 40, 15 men produce a value of 30. Of this value, 20 [are] now their wages and 10 surplus-value or unpaid labour, Thus we have the following: This 1s. 10d. [contains] cotton worth 1s. 4d. and labour worth 6d. The product becomes dearer because the cotton has become dearer by a third. But the product is not dearer by a third. Previously, in I, it was equal to 18d.; if, therefore, it had become dearer by one-third, it would now be 18d.+6d.=24d., but it is only equal to 22d. Previously 1,600 lbs. yarn contained 40 labour, i.e., 1 lb., 1/40 or 20/40s. or 1/2s.=6d. labour. Now 1,200 lbs. [yarn] contain 30 labour, 1 lb. therefore contains 1/40=1/2s. or 6d. labour. Although the labour has become dearer in the same ratio as the raw material, the quantity of immediate labour contained in 1 lb. of yarn has remained the same, though more of this quantity is now paid and less unpaid labour. This change in the value of wages does not, therefore, in any way affected the value of the lb. of yarn, of the product. Now as before, labour only accounts for 6d., while cotton now accounts for 1s. 4d., instead of is., as previously. Thus, if the commodity is sold at its value, the change in the value of wages cannot after all bring about a change in the price of the product. Previously, however, 3d. of the 6d. were wages and 3d. surplus-value; now 4d. are wages and 2d. surplus-value. In fact 3d. on wages per lb. of yarn comes to 3 1,600d.= 20 for 1,600 lbs. yarn. And 4d. per pound amounts to 4 1,200= 20 for 1,200 lbs. And 3d. on 15d. (1s. cotton plus. 3d. wages) in the first example comes to 1/5 profit=20 per cent. On the other hand, 2d. on 20d. (16d. cotton and 4d. wages) comes to 1/10 or 10 per cent. If, in the above example, the price of cotton had remained the same [then we would have the following]: 1 man spins 80 lbs., since the method of production has remained the same in all the examples, and the pound is again equal to 1s. Now the capital is made up as follows: This calculation is wrong; for if a man spins 80 lbs., 20 [men] spin 1,600 and not l,466 2/3, since it is assumed that the method of production has remained the same. This fact can in no way be altered by the difference in the remuneration of the man. The example must therefore be constructed differently. Of this 6d., 4d. wages and 2d, profit. 2 on 16=1/8=12 1/2 per cent. Finally, if the value of the variable capital remained the same as before, [i.e.], 1 man received 1, whereas the value of the constant capital altered, so that l lb. cotton cost 1s. 4d. or 16d., instead of 1s. then: ||588| The profit [would be] 3d. On 19d. this comes to exactly 15 15/19 per cent. Now let us put all these examples together, beginning with I, where no change of value has as yet taken place. The price of the product has changed in III and IV, because the value of constant capital has changed. On the other hand, a change in the value of variable capital does not bring about a change in price because the absolute quantity of immediate labour remains the same and is only differently apportioned between necessary labour and surplus-labour. Now what happens in example IV, where the change in value affects constant and variable capital in equal proportions, where both rise by one-third? If only wages had risen (II), then the profit would have fallen from 20 per cent to 12 1/2, i.e., by 7 1/2 per cent. If constant capital alone had risen (III), profit would have fallen from 20 per cent to 15 15/19 per cent, i.e., by 4 4/19 per cent. Since both rise to the same extent, profit falls from 20 per cent to 10 per cent, i.e., by 10 per cent. But why not by 7 1/2+4 4/19 per cent or by 11 27/38, which is the sum of the differences of II and III? This 1 27/38 must be accounted for; in accordance with that, the profit should have fallen (IV) to 8 11/38, instead of to 10. The amount of profit is determined by the amount of surplus-value and this is determined by the number of workers, when the rate of surplus-labour is given. In I there are 20 workers and half their labour-time is unpaid. In II, only a third of the total labour is unpaid, thus the rate of surplus-value falls; moreover, 1 1/4 less workers are employed and therefore the number [of workers] or the total labour decreases. In III the rate of surplus-value is again the same as in I, one-half of the working-day is unpaid, but as a result of the rise in value of the constant capital, the number of workers falls from 20 to 15 15/19 or by 4 4/19. In IV (the rate of surplus-value having fallen again to the level of that in II, namely, one-third of the working-day), the number of workers decreases by 5, namely, from 20 to 15. Compared with I, the number of workers in IV decreases by 5, compared with II by 3 3/4 and compared with III by 15/19; but compared with I it does not decrease by 11/4+4 4/19, i.e., by 5 35/76. Otherwise the number of workers employed in IV would be 14 41/76. Hence it follows that variations in the value of commodities which enter into constant or variable capital when the method of production, or the physical composition of capital, remains the same, in other words, when the ratio of immediate and accumulated labour remains constant do not bring about a change in the organic composition of the capital if they affect variable and constant capital in the same proportion, as in IV (where for instance cotton becomes dearer to the same degree as the wheat which is consumed by the workers). The rate of profit falls here (while the value of constant and variable capital increases), firstly because the rate of surplus-value falls due to the rise in wages, and secondly, because the number of workers decreases. The change in value if it affects only constant capital or only variable capital acts like a change in the organic composition of capital and changes the relative value of the component parts of capital, although the method of production remains the same. When only the variable capital is affected, it rises in relation to the constant capital ||589| and to the total capital; and not only the rate of surplus-value decreases, but also the number of workers employed. Consequently the amount of constant capital (whose value [remains] unchanged) employed is also smaller (II). If the change in value only affects the constant capital, then the variable capital falls in proportion to the constant capital and to the total capital. Although the rate of surplus-value remains the same, its amount decreases because the number of workers employed falls (III). Finally, it would be possible for the change in value to affect both constant and variable capital, but in uneven proportions. This case only requires to be fitted into the above categories. Suppose, for instance, that constant and variable capital were affected in such a way that the value of the former rose by 10 per cent and the latter by 5. Then in so far as they both rose by 5 per cent, one by 5+5 and the other by 5, we would have case IV. But in so far as the constant capital changed by a further 5 per cent, we would have case III. In the above, we have only assumed a rise in value. With a fall we have the opposite effect. For example, going from IV to I can be considered as a fall in value which affected both component parts in equal proportions. To assess the effect of a fall in only [one component part], II and III would have to be modified. |589|| ||600| I would make the following further observation on the influence of the variation of value upon the organic com-position of capital: With capitals in different branches of production with an otherwise equal physical composition it is possible that the higher value of the machinery or of the material used, may bring about a difference. For instance, if the cotton, silk, linen and wool [industries] had exactly the same physical composition, the mere difference in the cost of the material used would create such a variation. |600|| ||589| Returning to Table A it thus follows, that the assumption, that the profit of 10 per cent has come about through a decrease (in that the rate of profit, starting from III was higher, in II it was lower than in III, but still higher than in I, where it was 10 per cent) may be correct, namely, if the development actually proceeded along the descending line; but this assumption by no means necessarily follows from the gradation of rents, the mere existence of differential rents; on the contrary with the ascending line, this [gradation of rents] presupposes that the rate of profit remains the same over a long period. Table B. As has already been explained above, in this example the competition from III and IV, forces [the cultivator of] II to withdraw half his capital. With a descending line, it would on the contrary appear that an additional supply of only 32 1/2 tons is required, hence only a capital of 50 has to be invested in II. But the most interesting aspect of the table is this: Previously a capital of 300 was invested, now only 250, i.e., one-sixth less. The amount of product has however remained the same 200 tons. The productivity of labour has thus risen and the value of the individual commodity fallen. The total value of the commodities has likewise fallen, from 400 to 369 3/13. As compared with A, the market-value per ton has fallen from 2 to 1 16 12/13s., since the new market-value is determined by the individual value of II instead of, as previously, by the higher one of I. Despite all these circumstances decrease in the capital invested, decrease in the total value of the product with the same volume of production, fall in the market-value, exploitation of more fertile classes=the rent in B, as compared with A, has risen absolutely, by 24 3/13 ( 94 3/13 as against 70). If we examine how far the individual classes participate in the increase in total rent, we find that in class II the absolute rent, in so far as its rate is concerned, has remained the same for 5 on 50 equals 10 per cent; but its amount has fallen by half, from 10 to 5, because the capital investment in II B has fallen by half, from 100 to 50. Class II B, instead of effecting an increase in the rental, effects a decrease by 5. Furthermore, the differential rent for II B has completely disappeared, because the market-value is now equal to the individual value of II; this results in a second loss of 10. Altogether then the reduction in rent for class II amounts to 15. In III the amount of absolute rent is the same; but as a result of the fall in market-value, its differential value has also fallen; hence also the differential rent. It amounted to 30, now it amounts only to 18 6/13. This is a reduction by 11 7/13. The rent for II and III taken together has therefore fallen by 26 7/13. It remains to account for a rise, not of 24 3/13, as at first sight it would seem, but of 50 10/13. Furthermore, however, for B as compared with A, the absolute rent of I A has disappeared as class I itself has disappeared. This represents a further reduction by 10. Thus, all in all, 60 10/13 must be accounted for. But this is the rental of the new class IV B. The rise in the rental of B is therefore only to be explained by the rent from IV B. The absolute rent for IV B, like that of all other classes, is 10. The differential rent of 50 10/13, however, is due to ||590| the fact that the differential value of IV is 10 470/481s. per ton, and this has to be multiplied by 92 1/2 for that is the number of tons. The fertility of II and III has remained the same. The least fertile class has been removed entirely and yet the rental rises because, due to its relatively great fertility, the differential rent of IV alone is greater than the total differential rent of A had been previously. Differential rent does not depend on the absolute fertility of the classes that are cultivated for 1/2 II, III, IV [B are] more fertile than I, II, III [A], and yet the differential rent for 1/2 II, III, IV [B] is greater than it was for I, II, III [A] because the greatest portion of the product 92 1/2 tons is supplied by a class whose differential value is greater than that occurring in I, II, III A. When the differential value for a class is given, the absolute amount of its differential rent naturally depends on the amount of its product. But this amount itself is already taken into account in the calculation and formation of the differential value. Because with 100, IV produced 92 1/2 tons, no more and no less, its differential value in B where the market-value is 1 16 12/13s. per ton, amounts to 10 470/481s. per ton. The whole rental in A amounts to 70 on 300 capital, which is 23 1/3 per cent. On the other hand in B, leaving out of account the 3/13, it is 94 on 250, which is 37 3/5 per cent. Table C. Here it is assumed that class IV having come into the picture and class II determining the market-value, demand does not remain the same, as in Table B, but it increases with the falling price, so that the whole of the 92 1/2 tons which have been newly added by IV is absorbed by the market. At 2 per ton only 200 tons would be absorbed; at 1 11/13, the demand grows to 292 1/2. It is wrong to assume that the limits of the market are necessarily the same at 1 11/13 per ton as at 2 per ton. On the contrary, the market expands to a certain extent with the falling price even in the case of a general means of subsistence, such as wheat. This, for the time being, is the only point to which we want to draw attention in Table C. Table D. Here it is assumed that the 292 1/2 tons are absorbed by the market only if the market-value falls to 1 5/6, which is the cost-price per ton for class I, which therefore bears no rent but only yields the normal profit of 10 per cent. This is the case which Ricardo assumes to be the normal case and on which we should therefore dwell at somewhat greater length. As in the preceding tables, the ascending line is here presupposed at the outset; later we shall look at the same process in the descending line. If II, III and IV only provided an additional supply of 140, that is, an additional supply which the market absorbs at 2 per ton, then I would continue to determine the market-value. But this is not the case. There is an overplus of 92 1/2 tons on the market, produced by class IV. If this were, in fact, surplus production, which exceeded the absolute requirements of the market, then I would be completely thrown out of the market and II would have to withdraw half its capital as in B. II would then determine the market-value as in B. But it is assumed that if the market-value decreases, the market can absorb the 92 1/2 tons. How does this occur? IV, III and 1/2II dominate the market absolutely. In other words if the market could only absorb 200 tons, they would throw out I. But to begin with let us take the actual position. There are now 292 1/2 tons on the market whereas previously there were only 200. II would sell at its individual value, at 1 11/13, in order to make room for itself and to drive I, whose individual value is 2, out of the market. But since, even at this market-value, there is no room for the 292 1/2 tons, IV and III exert pressure on II, until the market-price falls to 1 5/6, at which price the classes IV, III, II and I find room for their product on the market, which at this ||591| market-price absorbs the whole product. Through this fall in price, supply and demand are balanced. As soon as the additional supply surpasses the capacity of the market, as determined by the old market-value, each class naturally seeks to force the whole of its product on to the market to the exclusion of the product of the other classes. This can only be brought about through a fall in price, and moreover a fall to the level where the market can absorb all products. If this reduction in price is so great that the classes I, II etc. have to sell below their costs of production, they naturally have to withdraw [their capital from production]. If, however, the situation is such that the reduction does not have to be so great in order to bring the output into line with the state of the market, then the total capital can continue to work in this sphere of production at this new market-value. But it is further clear that in these circumstances it is not the worst land, I and II, but the best, III and IV, which determines the market-value, and so also the rent on the best sorts of land determines those on the worse, as Storch correctly grasped in relation to this case. IV sells at the price at which it can force its entire product on to the market overcoming all resistance from the other classes. This price is 1 5/6. If the price were higher, the market would contract and the process of mutual exclusion would begin anew. That I determines the market-value [is correct] only on the assumption that the additional supply from II etc. is only the additional supply which the market can absorb at the market-value of I. If it is greater, then I is quite passive and by the room it takes up, only compels II, III, IV to react until the price has contracted sufficiently for the market to be large enough for the whole product. Now it happens that at this market-value, which is in fact determined by IV, IV itself pays a differential rent of 49 7/12 in addition to the absolute rent, III pays a differential rent of 17 1/2 in addition to the absolute rent, II, on the other hand, pays no differential rent and moreover, only pays a part of the absolute rent, 9 1/6, instead of 10, i.e., not the full amount of the absolute rent. Why? Although the new market-value of 1 5/6 is above its cost-price, it is below its individual value. If market-value were equal to its individual value, it would pay the absolute rent of 10, which is equal to the difference between individual value and cost-price. But since it is below that, it only pays a part of its absolute rent, 9 1/6 instead of 10; the actual rent it pays is equal to the difference between market-value and cost-price, but this difference is smaller than that between its individual value and its cost-price. <The actual rent is equal to the difference between market-value and cost-price.> The absolute rent is equal to the difference between individual value and cost-price. The differential rent is equal to the difference between market-value and individual value. The actual or total rent is equal to the absolute rent plus the differential rent, in other words, it is equal to the excess of the market-value over the individual value plus the excess of the individual value over the cost-price or [it is] equal to the difference between market-value and cost-price. If, therefore, the market-value is equal to the individual value, the differential rent is nil and the total rent is equal to the difference between individual value and cost-price. If the market-value is greater than the individual value, the differential rent is equal to the excess of the market-value over the individual value, the total rent, however, is equal to this differential rent plus the absolute rent. If the market-value is smaller than the individual value, but greater than the cost-price, the differential rent is a negative quantity, hence the total rent is equal to the absolute rent plus this negative differential rent, i.e., the excess of the individual value over the market-value. If the market-value is equal to the cost-price, then on the whole rent is nil. In order to put this down in the form of equations, we shall call the absolute rent AR, the differential rent DR, the total rent TR, the market-value MV, the individual value IV and the cost-price CP. We then have the following equations: ||592| 1. AR=IV-GP=+y 2. DR=MV-IV=x 3. TR=AR+DR=MV-IV+IV-CP= y+x=MV-CP If MV>IV then MV-IV=+x. Hence: DR positive and TR= y+x. And MV-CP=y+x. Or MV-y-x=CP or MV=y+x+CP. If MV<IV then MV-IV=-x. Hence: DR negative and TR=y-x. And MV-CP=y-x. Or MV+x=IV. Or MV+x-y=CP. Or MV=y-x+CP. If MV=IV, then DR=0, x=0, because MV-IV=0. Hence TR=AR+DR=AR+0=MV-IV+IV-CP=0+IV-CP=IV-CP=MV-CP=+y. If MV=CP [then] TR or MV-CP=0 In the circumstances assumed, I pays no rent. Why not? Because the absolute rent is equal to the difference between the individual value and the cost-price. The differential rent, however, is equal to the difference between the market-value and the individual value. But the market-value here is equal to the cost-price of I. The individual value of I is 2 per ton, the market-value 1 5/6. The differential rent of I is therefore 1 5/6- 2, which is - 1/6. The absolute rent of I, however, is 2= 1 5/6, in other words, it is equal to the difference between its individual value and its cost-price, which is + 1/6. Since, therefore, the actual rent of I is equal to the absolute rent (+ 1/6) and the differential rent (- 1/6), it is equal to + 1/6- 1/6=0. Thus category I pays neither differential rent nor absolute rent, but only the cost-price, The value of its product is 2; [it is] sold at 1 5/6, that means 1/12 below its value which is 8 1/3 per cent below its value. Category I cannot sell at a higher price, because the market is determined not by I but by IV, III, II in opposition to I. Category I can merely provide an additional supply at the price of 1 5/6. That I pays no rent, is due to the fact that the market-value is equal to its cost-price. This fact, however, is the result: Firstly of the relatively low productivity of I. What it has to supply, is 60 additional tons at 1 5/6. Suppose instead of supplying only 60 tons for 100, I supplied 64 tons for 100, i.e., 1 ton less than class II. Then only 93 3/4 capital would have to be invested in I in order to supply 60 tons. The individual value of one ton in I would then be 1 7/8 or 1 17 1/2s.; its cost-price: 1 14 3/8s. And since the market-value is 1 5/6= = 1 16 2/3s., the difference between cost-price and market value is 2 7/24s. And on 60 tons this would amount to ||593| a rent of 6 17 1/2s. If therefore all the circumstances remained the same and I were more productive than it is by 1/15 (since 60/15=4), it would still pay a part of the absolute rent because there would be a difference between the market-value and its cost-price, although a smaller difference than between its individual value and its cost-price. Here the worst land would therefore still bear a rent if it were more fertile than it is. If I were absolutely more fertile than it is, II, III IV would be relatively less fertile compared with it. The difference between its [value] and their individual values would be smaller. The fact that I bears no rent is therefore just as much due to the circumstance that it is not absolutely more fertile as to the fact that II, III, IV are not relatively less fertile. Secondly, however: Given the productivity of I as 60 tons for 100. If II, III, IV, and especially IV, which enters the market as a new competitor, were less fertile, not only relatively as against I, but absolutely, then category I could yield a rent, even though this would only consist of a fraction of the absolute rent. For since the market absorbs 292 1/2 tons at 1 5/6, it would absorb a smaller number of tons, for instance 280 tons at a market-value higher than 1 5/6. Every market-value, however, which is higher than 1 5/6, i.e., higher than the production costs of I, yields a rent for I, equal to the market-value minus the cost-price of I. It can thus equally well be said that I yields no rent because of the absolute productivity of IV, for as long as II and III were the only competitors on the market, it yielded a rent and would continue to do so even despite the advent of IV, despite the additional supply although it would be a lower rent if for a capital outlay of 100 IV produced 80 tons instead of 92 1/2 tons. Thirdly: We have assumed that the absolute rent for a capital outlay of 100 is 10, that is, 10 per cent on the capital or 1/11 on the cost-price, and that therefore the value [of the product yielded by] a capital of 100 in agriculture is 120 of which 10 are profit. It would be wrong to assume that if we [say]: 100 capital is laid out in agriculture and if one working-day equals 1, then 100 working-days are laid out. In general, if a capital of 100 equals 100 working-days then, in whatever branch of production this capital may be laid out, [the newly-created value] is never [equal to 100 working-days]. Supposing that one gold sovereign equals one working-day of 12 hours, and that this is the normal working-day, then the first question is, what is the rate of exploitation of labour? That is, how many of these 12 hours does the worker work for himself, for the reproduction (of the equivalent) of his wage, and how many does he work for the capitalist gratis? [How great], therefore is the labour-time which the capitalist sells without having paid for it and which is therefore the source of the surplus-value and serves to augment the capital? If the rate of exploitation is 50 per cent, then the worker works 8 hours for himself and 4 gratis for the capitalist. The product equals 12 hours, which is 1 (since according to the assumption, 12 hours labour-time are contained in one gold sovereign). Of these 12 hours, equal to 1, 8 recoup the capitalist for the wage and 4 form his surplus-value. Thus on a wage of 13 1/3s., surplus-value equals 6 2/3s.; or on a capital outlay of 1, it is 10s, and on 100, 50. Then the value of the commodity produced with the 100 capital would be 150. The profit of the capitalist in fact consists in the sale of the unpaid labour contained in the product. The normal profit is derived from this sale of that which has not been paid for. ||594| But the second question is this: What is the organic composition of the capital? That part of the value of the capital which consists of machinery etc. and raw material is simply reproduced in the product, it reappears remaining unaltered. This part of the capital the capitalist must pay for at its value. It thus enters into the product as a given predetermined value. Only the labour used by the capitalist is merely partly paid for by him, although it enters wholly into the value of the product [and] is wholly bought by him. Assuming the above to be the rate of exploitation of labour, the amount of surplus-value for capital of the same size will, therefore, depend on its organic composition. If the capital A consists of 80c+ 20v, then the value of the product is 110 and the profit is 10 (although it contains 50 per cent unpaid labour). If the capital B consists of 40c+ 60v, then the value of the product is 130, and the profit is 30 although it too contains only 50 per cent unpaid labour. If the capital C consists of 60c+ + 40v, then the value of the product is 120 and the profit is 20 although, in this case too, it comprises 50 per cent unpaid labour. Thus the three capitals, equal to 300, yield a total profit of 10+ 30+ 20= 60, and this makes an average of 20 per cent for 100. This average profit is made by each of the capitals if it sells the commodity it produces at 120. The capital A: 80c+ 20v, sells at 10 above its value; capital B: 40c+ 60v, sells at 10 below its value; capital C: 60c+ 40v sells at its value. All the commodities taken together, are sold at their value: 120+ 120+ 120= 360. In fact the value of A+B+C equals 110+ 130+ 120= 360. But the prices of the individual categories are partly above, partly below and partly at their value so that each yields a profit of 20 per cent. The values of the commodities, thus modified, are their cost-prices, which competition constantly sets as centres of gravitation for market-prices. Now assume that the 100 laid out in agriculture is composed of 60c+ 40v (which, incidentally, is perhaps still too low for v), then the value [of the product] is 120. But this would be equal to the cost-price in the industry. Suppose therefore in the above case that the average price [of the product produced] by a capital of 100 is 110. We now say that if the agricultural product is sold at its value, its value is 10 above its cost-price. It then yields a rent of 10 per cent and this we assume to be the normal thing in capitalist production, that in contrast to other products, the agricultural product is not sold at its cost-price, but at its value, as a result of landed property. The composition of the aggregate capital is 80c+ 20v, if the average profit is 10 per cent. We assume that that of the agricultural capital is 60c+ 40v, that is, in its composition wages immediate labour have a larger share than in the total capital invested in the other branches of industry. This indicates a relatively lower productivity of labour in this branch. It is true, that in some types of agriculture, for instance in stock-raising, the composition may be 90c+ l0v, i.e., the ratio of v:c may be smaller than in the total industrial capital. Rent is, however, not determined by this branch, but by agriculture proper, and, furthermore, by that part of it which produces the principal means of subsistence, such as wheat, etc. The rent in the other branches is not determined by the composition of ||595| the capital invested in these branches themselves, but by the composition of the capital which is used in the production of the principal means of subsistence. The mere existence of capitalist production presupposes that vegetable food, not animal food, is the largest element in the means of subsistence. The interrelationship of the rents in the various branches is a secondary question that does not interest us here and is [therefore] left out of consideration. In order, therefore, to make the absolute rent equal to 10 per cent, it is assumed that the general average composition of the non-agricultural capital is 80c+ 20v and that of agricultural capital is 60c+ 40v. The question now is whether it would make any difference to case D, where class I pays no rent, if the agricultural capital were differently constituted, for example 50c+ 50v or 70c+ 30v? In the first case, the value of the product would be 125, in the second, 115. In the first case, the difference arising from the different composition of the non-agricultural capital would be 15, in the second it would be 5. That is, the difference between the value of the agricultural product and cost-price would in the first case be so per cent higher than has been assumed above, and in the second 50 per cent lower. If the former were the case, if the value [of the product] of 100 were 125, then the value per ton for I [would be] equal to 2 1/12 in Table A. And this would be the market-value for A, for class I determines the market-value here. The cost-price for I A, on the other hand, would be 1 5/6, as before. Since, according to the assumption, the 292 1/2 tons are only saleable at 1 5/6, this would therefore make no difference, just as it would make no difference if the agricultural capital [were] composed of 70c+ 30v or the difference between the value of the agricultural produce and its cost-price [were] only 5, i.e., half the amount [previously] assumed. If the cost-price, and therefore the average organic composition of the non-agricultural capital, were assumed to be constant at 80c+ 20v, then it would make no difference to this case <I D> whether it [the organic composition of the agricultural capital] were higher or lower, although it would make a considerable difference to Table A and it would make a difference of 50 per cent in the absolute rent. But let us now assume the opposite, that the composition of the agricultural capital remains 60c+ 40v, as before and that of the non-agricultural capital varies. Instead of being 80c+ 20v, let it be either 70c+ 30v or 90c+ l0v. In the first case the average profit [would be] 15 or 50 per cent higher than in the supposed case; in the other, 5 or 50 per cent lower. In the first case the absolute rent [would be] 5. This would again make no difference to I D. In the second case the absolute rent [would be] 15. This too would make no difference to the case I D. All this would therefore be of no consequence to I D, however important it may continue to be for tables A, B, C, and E, i.e., for the absolute determination of the absolute and differential rent, whenever the new class be it in the ascending or the descending line only supplies the necessary additional demand at the old market-value. Now the following question arises: Can this case D occur in practice? And even before this, we must ask: is it, as Ricardo assumes, the normal case? It can only be the normal case: Either: if the agricultural capital is equal to 80c+ 20v, that is, to the average composition of the non-agricultural capital, so that the value of the agricultural produce would be equal to the cost-price of the non-agricultural produce. For the time being this is statistically wrong. The assumption of this relatively lower productivity of agriculture is at any rate more appropriate than Ricardo s assumption of a progressive absolute decrease in its productivity. ||596| In Chapter I On Value Ricardo assumes that the average composition of capital prevails in gold and silver mines (although he only speaks of fixed and circulating capital here; but we shall correct this). According to this assumption, these mines could only yield a differential rent, never an absolute rent. The assumption itself, however, in turn rests on the other assumption, that the additional supply provided by the richer mines is always greater than the additional supply required at the old market-value. But it is absolutely incomprehensible why the opposite cannot equally well take place. The mere existence of differential rent already proves that an additional supply is possible, without altering the given market-value. For IV or III or II would yield no differential rents if they did not sell at the market-value of I, however this may have been determined, that is, if they did not sell at a market-value which is determined independently of the absolute amount of their supply. Or: case D would always have to be the normal one, if the [conditions] presupposed in it are always the normal ones; in other words, if I is always forced by the competition from IV, III and II, especially from IV, to sell its product below its value by the whole amount of the absolute rent, that is, at the cost-price. The mere existence of differential rent in IV, III, II proves that they sell at a market-value which is above their individual value. If Ricardo assumes that this cannot be the case with I, then it is only because he presupposes the impossibility of absolute rent, and the latter, because he presupposes the identity of value and cost-price. Let us take case C where the 292 1/2 tons find a sale at a market-value of 1 16 12/13 s. And, like Ricardo, let us start out from IV, So long as only 92 1/2 tons are required, IV will sell at 1 5 35/37s. per ton, i.e., it will sell commodities that have been produced with a capital of 100 at their value of 120, which yields the absolute rent of 10. Why should IV sell its commodity below its value, at its cost-price? So long as it alone is there, III, II, I cannot compete with it. The mere cost-price of III is above the value which yields IV a rent of 10, and even more so the cost-price of II and I. Therefore III etc. could not compete, even if they sold these tons at the bare cost-price. Let us assume that there is only one class the best or the worst type of land, IV or I or III or II, this makes no difference whatsoever to the theory let us assume that its supply is unlimited, that is, relatively unlimited compared to the amount of the given capital and labour which is in general available and can be absorbed in this branch of production, so that land forms no barriers and provides a relatively unlimited field of action for the available amount of labour and capital. Let us assume, therefore, that there is no differential rent because there is no cultivation of land of varying natural fertility, hence there is no differential rent (or else only to a negligible extent). Furthermore, let us assume that there is no landed property; then clearly there is no absolute rent and, therefore (as, according to our assumption, there is no differential rent), there is no rent at all. This is a tautology. For the existence of absolute rent not only presupposes landed property, but it is the posited landed property, i.e., landed property contingent on and modified by the action of capitalist production. This tautology in no way helps to settle the question, since we explain that absolute rent is formed as the result of the resistance offered by landed property in agriculture to the capitalist levelling out of the values of commodities to average prices. If we remove this action on the part of landed property this resistance, the specific resistance which the competition between capitals comes up against in this field of action we naturally abolish the precondition on which the existence of rent is based. Incidentally (as Mr. Wakefield sees very well in his colonial theory), there is a contradiction in the assumption itself: on the one hand, developed capitalist production, on the other hand, the non-existence of landed property. Where are the wage-labourers to come from in this case? A somewhat analogous development takes place in the colonies, even where, legally, landed property exists, in so far as the government gives [land] gratis as happened originally in the colonisation from England; and even where the ||597| government actually institutes landed property by selling the land, though at a negligible price, as in the United States, at 1 dollar or something of the sort per acre. Two different aspects must be distinguished here. Firstly: There are the colonies proper, such as in the United States, Australia, etc. Here the mass of the farming colonists, although they bring with them a larger or smaller amount of capital from the motherland, are not capitalists, nor do they carry on capitalist production. They are more or less peasants who work themselves and whose main object, in the first place, is to produce their own livelihood, their means of subsistence. Their main product therefore does not become a commodity and is not intended for trade. They sell or exchange the excess of their products over their own consumption for imported manufactured commodities etc. The other, smaller section of the colonists who settle near the sea, navigable rivers etc., form trading towns. There is no question of capitalist production here either. Even if capitalist production gradually conies into being, so that the sale of his products and the profit he makes from this sale become decisive for the farmer who himself works and owns his land; so long as, compared with capital and labour, land still exists in elemental abundance providing a practically unlimited field of action, the first type of colonisation will continue as well and production will therefore never be regulated according to the needs of the market at a given market-value. Everything the colonists of the first type produce over and above their immediate consumption, they will throw on the market and sell at any price that will bring in more than their wages. They are, and continue for a long time to be, competitors of the farmers who are already producing more or less capitalistically, and thus keep the market-price of the agricultural product constantly below its value. The farmer who therefore cultivates land of the worst kind, will be quite satisfied if he makes the average profit on the sale of his farm, i.e., if he gets back the capital invested, this is not the case in very many instances. Here therefore we have two essentially different conditions competing with one another: capitalist production is not as yet dominant in agriculture; secondly, although landed property exists legally, in practice it only exists as yet sporadically, and strictly speaking there is only possession of land. Or although landed property exists in a legal sense, it is in view of the elemental abundance of land relative to labour and capital as yet unable to offer resistance to capital, to transform agriculture into a field of action which, in contrast to non-agricultural industry, offers specific resistance to the investment of capital. In the second type of colonies plantations where commercial speculations figure from the start and production is intended for the world market, the capitalist mode of production exists, although only in a formal sense, since the slavery of Negroes precludes free wage-labour, which is the basis of capitalist production. But the business in which slaves are used is conducted by capitalists. The method of production which they introduce has not arisen out of slavery but is grafted on to it. In this case the same person is capitalist and landowner. And the elemental [profusion] existence of the land confronting capital and labour does not offer any resistance to capital investment, hence none to the competition between capitals. Neither does a class of farmers as distinct from landlords develop here. So long as these conditions endure, nothing will stand in the way of cost-price regulating market-value. All these preconditions have nothing to do with the preconditions in which an absolute rent exists: that is, on the one hand, developed capitalist production, and on the other, landed property, not only existing in the legal sense but actually offering resistance and defending the field of action against capital, only making way for it under certain conditions. In these circumstances an absolute rent will exist, even if only IV or III or II or I are cultivated. Capital can only win new ground in that solely existing class [of land] by paying rent, that is, by selling the agricultural product at its value. It is, moreover, only in these circumstances that there can first be talk of a comparison and a difference between the capital invested in agriculture (i.e., in a natural element as such, in primary production) and that invested in non-agricultural industry. But the next question is this: If one starts out from I, then clearly II, III, IV, if they only provide the additional supply admissible at the old market-value, will sell at the market-value determined by I, and therefore, apart from the absolute rent, they will yield a differential rent in proportion to their relative fertility. On the other hand, if IV is the starting-point, then it appears that certain objections ||598| could be made. For we saw that II [in tables B and C] draws the absolute rent if the product is sold at its value of 1 11/13 or at 1 16 12/13s. In Table D the cost-price of III, the next class (in the descending line) is higher than the value of IV, which yields a rent of 10. Thus there cannot be any question of competition or underselling here even if III sold at cost-price. If IV, however, no longer satisfies the demand, if more than 92 1/2 tons are required, then its price will rise. In the above case, it would have to rise by 3 43/111s. per ton, before III could enter the field as a competitor, even at its cost-price. The question is, will it enter into it in these circumstances? Let us put this case in another way. For the price of IV to rise to 1 12s., the individual value of III, the demand would not have to rise by 75 tons. This applies especially to the dominant agricultural product, where an insufficiency in supply will bring about a much greater rise in price than corresponds to the arithmetical deficiency in supply. But if IV had risen to 1 12s., then at this market-value, which is equal to III s individual value, the latter would pay the absolute rent and IV a differential rent. If there is any additional demand at all, III can sell at its individual value, since it would then dominate the market-value and there would be no reason at all for the landowner to forgo the rent. But say the market-price of IV only rose to 1 9 1/3s., the cost-price of III. Or in order to make the example even more striking: suppose the cost-price of III is only 1 5s., i.e., only 1 8/37s. higher than the cost-price of IV. It must be higher because its fertility is lower than that of IV, Can III be taken in hand now and thus compete with IV, which sells above III s cost-price, namely, at 1 5 35/37 s.? Either there is an additional demand or not. In the first case the market-price of IV has risen above its value, above 1 5 35/37s. And then, whatever the circumstances, III would sell above its cost-price, even if not to the full amount of its absolute rent. Or there is no additional demand. Here in turn we have two possibilities. Competition from III could only enter into it if the farmer of III were at the same time its owner, if to him as a capitalist landed property would not be an obstacle, would offer no resistance, because he has control of it, not as capitalist but as landowner. His competition would force IV to sell below its hitherto prevailing price of 1 5 35/37 s, and even below the price of 1 5s. And in this way III would be driven out of the field. And IV would be capable of driving III out every time. It would only have no reduce the price to the level of its own costs of production, which are lower than those of III. But if the market expanded as a result of the reduction in price engendered by III, what then? Either the market expands to such an extent that IV can dispose of its 92 1/2 tons as before, despite the newly-added 75, or it does not expand to this degree, so that a part of the product of IV and III would be surplus. In this case IV, since it dominates the market, would continue to lower [the price] until the capital in III is reduced to the appropriate size, that is until only that amount of capital is invested in it as is just sufficient for the entire product of IV to be absorbed. But at 1 5s. the whole product would be saleable and since III sold a part of the product at this price, IV could not sell above that. This however would be the only possible case: temporary over-production not engendered by an additional demand, but leading to an expansion of the market. And this can only be the case if capitalist and landowner are identical in III i.e., if it is assumed once again that landed property does not exist as a power confronting capital, because the capitalist himself is landowner and sacrifices the landowner to the capitalist. But if landed property as such confronts capital in III, then there is no reason at all why the landowner should hand over his acres for cultivation without drawing a rent from them, why he should hand over his land before the price of IV has risen to a level which is at least above the cost-price of III. If this rise is only ||599| small, then, in any country under capitalist production, III will continue to be withheld from capital as a field of action, unless there is no other form in which it can yield a rent. But it will never be put under cultivation before it yields a rent, before the price of IV is above the cost-price of III, i.e., before IV yields a differential rent in addition to its old rent. With the further growth of demand, the price of III would rise to its value, since the cost-price of II is above the individual value of III. II would be cultivated as soon as the price of III had risen above 1,13 11/13s., and so yielded some rent for II. But it has been assumed in D that I yields no rent. But this only because I has been assumed to be already cultivated land which is being forced to sell below its value, at its cost-price because of the change in market-value brought about by the entry of IV. It will only continue to be thus exploited, if the owner is himself the farmer, and therefore in this individual case landed property does not confront capital, or if the farmer is a small capitalist prepared to accept less than 10 per cent or a worker who only wants to make his wage or a little more and hands over his surplus-labour, which is equal to 10 or 9 or less, to the landowner instead of the capitalist. Although in the two latter cases fermage is paid, yet economically speaking, no rent, and we are concerned with the latter. In the one case the farmer is a mere labourer, in the other something between labourer and capitalist. Nothing could be more, absurd than the assertion that the landowner cannot withdraw his acres from the market just as easily as the capitalist can withdraw his capital from a branch of production. The best proof of this is the large amount of fertile land that is uncultivated in the most developed countries of Europe, such as England, the land which is taken out of agriculture and put to the building of railways or houses or is reserved for this purpose, or is transformed by the landlord into rifle-ranges or hunting-grounds as in the highlands of Scotland etc. The best proof of this is the vain struggle of the English workers to lay their hands on the waste land. Nota bene: In all cases where the absolute rent, as in II D, falls below its normal amount, because, as here, the market-value is below the individual value of the class or, as in II B, owing to competition from the better land, a part of the capital must be withdrawn from the worse land or where, as in I D, rent is completely absent, it is presupposed: 1. that where rent is entirely absent, the landowner and capitalist [are] one and the same person; here therefore the resistance of landed property against capital and the limitation of the field of action of capital by landed property disappear but only in individual cases and as an exception. The presupposition of landed property is abolished as in the colonies, but only in separate cases; 2. that the competition of the better lands or possibly the competition from the worse lands (in the descending line) leads to over-production and forcibly expands the market, creates an additional demand by forcing prices down. This however is the very case which Ricardo does not foresee because he always argues on the assumption that the supply is only sufficient to satisfy the additional demand; 3. that II and I in B, C, D either do not pay the full amount of the absolute rent or pay no absolute rent at all, because they are forced by the competition from the better lands to sell their product below its value, Ricardo on the other hand presupposes that they sell their product at its value and that the worst land always determines the market-value, whereas in case I D, which he regards as the normal case, just the opposite takes place. Furthermore his argument is always based on the assumption of a descending line of production. If the average composition of the non-agricultural capital is 80c+ 20v, and the rate of surplus-value is 50 per cent, and if the composition of the agricultural capital is 90c+ l0v, i.e., higher than that of industrial capital which ||600| is historically incorrect for capitalist production [then there is] no absolute rent; if it is 80c+ 20v, which has not so far been the case, [there is] no absolute rent; if it is lower, for instance 60c+ 40v, [there is an] absolute rent. On the basis of the theory, the following possibilities can arise, according to the relationship of the different categories to the market i.e., depending on the extent to which one or another category dominates the market: A. The last class pays absolute rent. It determines the market-value because all classes only provide the necessary supply at this market-value. B. The last class determines the market-value; it pays absolute rent, the full rate of rent, but not the full previous amount because competition from III and IV has forced it to withdraw part of the capital from production. C. The excess supply which classes I, II, III, IV provide at the old market-value, forces the latter to fall; this however, being regulated by the higher classes, leads to the expansion of the market. I pays only a part of the absolute rent, II pays only the absolute rent. D. The same domination of market-value by the better classes or of the inferior classes by oversupply destroys rent in I altogether and reduces it to below its absolute amount in II; finally in E. The better classes oust I from the market by bringing down the market-value below the cost-price [of I]. II now regulates the market-value because at this new market-value only the necessary supply [is] forthcoming from all three classes. |600|| ||600| Now back to Ricardo. It goes without saying that when dealing with the composition of the agricultural capital the value or price of the land does not enter into this. The latter is nothing but the capitalist rent. [a] This paragraph is in English in the manuscript. Ed. [b] In the manuscript: First. The . Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 12

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch12.htm

Back to Ricardo, Chapter II On Rent : He begins by presenting the colonial theory , already known from Smith, and here it is sufficient to state briefly the logical sequence of ideas. On the first settling of a country, in which there is an abundance of rich and fertile land, a very small proportion of which is required to be cultivated for the support of the actual population, or indeed can be cultivated with the capital which the population can command, there will be no rent; for no one would pay for the use of land, when there was an abundant quantity not yet appropriated, and, therefore, (because not appropriated, which Ricardo entirely forgets later on), at the disposal of whosoever might choose to cultivate it. ([David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821], p. 55.) <Here the assumption therefore is: no landed property. Although this description of the process is approximately correct for the settlings of modern peoples, it is, firstly, inapplicable to developed capitalist production; and [secondly] equally false if put forward as the historical course of events in the old Europe.> We shall examine this point more closely. The logical sequence is this: If land, rich and fertile land exists in elemental abundance in practically unlimited quantity compared to the actual population and capital and Ricardo assumes this on the first settling of a country (Smith s colonial theory) and if, furthermore, an abundant quantity of this land is not yet appropriated and therefore, because it is not yet appropriated , is at the disposal of whosoever might choose to cultivate it , in this case, naturally, nothing is paid for the use of land, [there is] no rent. If land were [available] in unlimited quantity not only relatively to capital and population, but if it were in fact an unlimited element (unlimited like air and water) then indeed its appropriation by one person could not exclude its appropriation by another. No private (also no public or state) property in land could exist. In this case if all land is of the same quality no rent could be paid for it at all. At most, [rent would be paid] to the possessor of land which possessed peculiar advantages of situation. Thus, under the circumstances assumed by Ricardo namely, that land is not appropriated and uncultivated land is therefore at the disposal of whosoever might choose to cultivate it if rent is paid, then this is only possible because land is not unlimited in quantity and uniform in quality , in other words, because different types of land exist and land of the same type is limited . We say that, on Ricardo s assumption, only a differential rent can be paid. But instead of confining it to this, he jumps at once to the conclusion that quite apart from his assumption of the non-existence of landed property absolute rent is never paid for the use of land, only differential rent. The whole point therefore is: If land confronts capital in elemental abundance, then capital operates in agriculture in the same way as in every other branch of industry. There is then no landed property, no rent. At most, where one piece of land is more fertile than another, there can be excess profits as in industry. In this case these will consolidate themselves as differential rent, because of their natural basis in the different degrees of fertility of the soil. If, on the other hand, land is 1. limited, 2. appropriated, and capital finds landed property as a precondition and this is the case where capitalist production develops: where capital does not find this precondition, as it does in the old Europe, it creates it itself, as in the United States thus land is from the outset not an elementary field of action for capital. Hence [there is absolute] rent, in addition to differential rent. But in this case also the transitions from one type of land to another be it ascending: I, II, III, IV or descending IV, III, II, I work out differently than they did under Ricardo s assumption. For the employment of capital meets with the resistance of landed property both in category I and in II, III, IV; and similarly, in the reverse process, when the transition is from IV to III etc. In the transition from IV to III etc., it is not sufficient for the price of IV to rise high enough to enable the capital to be employed in III with an average profit. The price must rise to such an extent that rent can be paid on III. If the transition is made from I to II etc., then it is self-evident that the price which paid a rent for I, must not only pay this rent for II, but a differential rent besides. By postulating the non-existence of landed property, Ricardo has not, of course, eliminated the law that arises with the existence and from the existence of landed property. Having just shown how, on his assumption, a differential rent can come into being, Ricardo continues; (which, however, by no means implies that every step in the progress of population will oblige a country to have recourse to land of worse quality), This is all right. Ricardo now passes on to [an] example. But, quite apart from other points to be noted later, this example presupposes the descending line. This, however, is mere presupposition. In order to smuggle it in, he says: But the case would [be] the same, if, relatively to the colonists, there was an abundance of poor and sterile land not yet appropriated . The non-payment of rents does not depend on the richness or fertility of the land, but on the fact that it is unlimited, unappropriated and of uniform quality, whatever might be that quality as regards the degree of its fertility. Hence Ricardo himself goes on to formulate his assumption thus : He does not say and cannot say, if it were rich and fertile , because this condition would have absolutely nothing to do with the law. If, instead of being rich and fertile, the land were poor and sterile, then each colonist would have to cultivate a greater proportion of the whole land, and thus, even where the land is unappropriated, they would, with the growth of population, more rapidly approach the point where the practical abundance of land, its actual unlimitedness in proportion to population and capital, would cease to exist. It is of course quite certain that the colonists will not pick out the least fertile land, but will choose the most fertile, i.e., the land that will produce most, with the means of cultivation at their disposal. But this is not the sole limiting factor in their choice. The first deciding factor for them is the situation, the situation near the sea, large rivers etc. The land in West America etc. may be as fertile as any; but the settlers of course established themselves in New England, Pennsylvania, North Carolina, Virginia etc., in short, on the east coast of the Atlantic. If they selected the most fertile land, then they only selected the most fertile land in this region. This did not prevent them from cultivating more fertile land in the West, at a later stage, as soon as growth of population, formation of capital, development of means of communication, building of towns, made the more fertile land in this more distant region accessible to them. They do not look for the most fertile region, but for the most favourably situated region, and within this, of course given equal conditions so far as the situation is concerned they look for the most fertile land. But this certainly does not prove that they progress from the more fertile region to the less fertile region, only that within the same region provided the situation is the same the more fertile land is naturally cultivated before the unfertile. Ricardo, however, having rightly amended abundance of rich and fertile land to read land of the same properties unlimited in quantity uniform in quality , comes to his example and from there jumps back into the first false assumption: He senses the weakness and spuriousness [in this] and therefore adds the new condition to the most fertile land : and the most favourably situated , which was missing at the outset. The most fertile land within the most favourable situation is how it should obviously read, and surely this absurdity cannot be carried so far [as to say] that the region of the country that happens to be the most favourably situated for the newcomers, since it enables them to keep in contact with the mother country and the old folks at home and the outside world, is the most fertile region in the whole of the land, which the colonists have not yet explored and are as yet unable to explore. The assumption of the descending line, the transition from the more fertile to the less fertile region, is thus surreptitiously brought in. All that can be said is this: In the region that is first cultivated, because it is the most favourably situated, no rent is paid until, within this region, there is a transition from the more fertile to the less fertile land. Now if, however, there is a transition to a second, more fertile region than the first, then, according to the assumption, this is worse situated. Hence it is possible that the greater fertility of the soil is more than counterbalanced by the greater disadvantage of the situation, and in this case the land of region I will continue to pay rent. But the situation is a circumstance which changes historically, according to the economic development, and must continually improve with the installation of means of communication, the building of towns, etc., and the growth of the population. Hence it is clear that by and by, the product produced in region II will be brought on to the market at a price which will lower the rent in region I again (for the same product), and that in time it will emerge as the more fertile soil in the measure in which the disadvantage of situation disappears. ||603| It is therefore clear, that where Ricardo himself states the condition for the formation of differential rent correctly and in general form: all land had[b] the same properties unlimited in quantity uniform in quality , the circumstance of the transition from more fertile to less fertile land is not included, that this [transition] is also historically incorrect for the settlement in the United States which, in common with Adam Smith, he has in mind; therefore Carey s objections, which were justified on this point, that Ricardo himself reverses the problem again, by his addendum on situation : The most fertile, and most favourably situated, land will be first cultivated , that Ricardo proves his arbitrary presupposition by an example in which that which is to be proved, is postulated, namely, the transition from the best to increasingly worse land, that, finally <it is true, already with an eye to the explanation of the tendency of the general rate of profit to fall> he presupposes this, because he could not otherwise account for differential rent, although the latter in no way depends on whether there is a transition from I to II, III, IV or from IV to III, II, I. In the example, three sorts of land are postulated, Nos. 1, 2, 3, which, with an equal capital investment, yield a net produce of 100, 90, 80 quarters of corn. No. 1 is the first to be cultivated In this case the whole net produce belongs to the cultivator and will be the profits of the stock which he advances (l.c., p. 57). That this net produce is immediately regarded as profit of stock, although no capitalist production has been postulated in this case <we are not speaking of plantations> is also unsatisfactory here. But it may be that the colonist coming from the old country , looks at it in this way himself. If the population grows only to such an extent that No. 2 has to be cultivated, then No. 1 bears a rent of 10 quarters. It is of course assumed here that No. 2 and No. 3 are unappropriated and that their quantity has remained practically unlimited in proportion to population and capital. Otherwise there could be a different turn to events. Under this assumption, therefore, No. 1 will bear a rent of 10 quarters: In fact, there would be two rates of profit in agricultural capital, that is, No. 1 supplied an excess profit of 10 quarters (which, in this case, can consolidate itself as rent). But two pages later, Ricardo himself says that not only two but many very different rates of profit on capital of the same description within the same sphere of production, hence also on agricultural capital, are not only possible but inevitable: Thus in each particular industry [there are] not only two, but many rates of profit, that is to say, deviations from the general rate of profit. At this point it is not necessary to go into the further details of the example (pp. 58-59), which is concerned with the effect of employing different amounts of capital on the same land. Only these two propositions [to be noted]: 1. Rent is always the difference between the produce obtained by the employment of two ||604| equal quantities of capital and labour (l.c., p. 59). In other words, there is only a differential rent (according to the assumption that there is no landed property). For: 2. there cannot be two rates of profit (l.c., p. 59). My earlier explanations render it unnecessary to expand here on the erroneousness of the proposition that the value of corn is regulated by the quantity of labour bestowed on its production on that quality of land which pays no rent (l.c., p. 63). I have shown that whether the last type of land pays rent, [or] pays no rent, [whether it] pays the whole of the absolute rent, [only a] part of it, or it pays besides the absolute rent a differential rent (if the line is ascending), partly depends on the direction of the line, whether it is ascending or descending, and at all events, it depends on the relative composition of agricultural capital as compared with the composition of nonagricultural capital and, if as a result of the difference in this composition absolute rent is presupposed, the above cases depend on the state of the market. But the Ricardian case in particular can only occur under two circumstances (although even then fermage can yet be paid, though no rent); either when landed property does not exist, in law or in fact, or when the best land provides an additional supply which can only find its place within the market if there is a fall in market-value. But there is more besides which is wrong or one-sided in the above passage. The comparative value which here means nothing but market-value of raw produce can rise for reasons other than the above. [Firstly] if, up to now, it was sold below its value, perhaps below its cost-price; this is always the case in a certain state of society, where the production of raw produce is as yet largely directed to the subsistence of the cultivator (also in the Middle Ages, when the product of the town secured a monopoly price); secondly, it can also happen when the raw produce in contrast to the other commodities which are sold at their cost-price is not yet sold at its value. Finally, it is correct to say that it makes no difference to the price of corn if the landlord forgoes the differential rent and the farmer pockets it. But this does not apply to absolute rent. It is wrong to say here that landed property does not enhance the price of the raw produce. On the contrary the price goes up because the intervention of landed property causes the raw produce to be sold at its value which exceeds its cost-price. Supposing, as above, that the average non-agricultural capital consists of 80c+20v and the surplus-value is 50 per cent, then the rate of profit is 10 [per cent] and the value of the produce is 110, The agricultural ||605| capital on the other hand consists of 60c+40v, the value [of the produce] is 120. The raw produce is sold at this value. If landed property did not exist legally or in practice, because of the relative abundance of land as in the colonies then it would be sold at 115. For the total profit of the first and the second capital (i.e., on the 200) equals 30, hence average profit equals 15. The non-agricultural produce would be sold at 115 instead of 110; the agricultural produce at 115 instead of 120. The relative value of the agricultural produce compared with the non-agricultural produce would thus fall by one-twelfth; the average profit for both capitals or the total capital, agricultural as well as industrial would, however, rise by 50 per cent, from 10 to 15. |605|| ||636| Of his own conception of rent, Ricardo says: (that is, never acting as a monopoly, hence also never the result of monopoly. For him the only result of monopoly could be that the rent is pocketed by the owner of the better types of land rather than by the farmer), Here surplus produce is equal to the excess over the product absorbed by the wages. Assuming that certain land never pays rent Ricardo s assertion is only correct if this land, or rather its product, regulates the market-value. If, on the other hand, its product pays no rent because the market-value is regulated by the more fertile land, then this fact proves nothing. It would, indeed, benefit the farmers if the differential rent were relinquished by landlords . The relinquishment of absolute rent, on the other hand, would reduce the price of agricultural products and increase that of industrial products to the extent that the average profit grew by this process. |636|| ||605| The rise of rent is always the effect of the increasing wealth of the country, and of the difficulty of providing food for its augmented population (l.c., pp. 65-66). The latter is wrong. The absolute amount of rent can also grow when the rate of rent remains the same and only the capital invested in agriculture is growing with the growth of population; it can grow when no rent is paid on I and only a part of the absolute rent on II, but the differential rent has risen considerably as a result of their relative fertility etc. (See the table.) There is much confusion here, resulting from the jumbling up of natural price (for that is the price under discussion here) and value, Ricardo has adopted this confusion from Smith. In the case of the latter it is relatively correct, because, and in so far as, Smith departs from his own correct explanation of value. Neither rent nor profit nor wages form a component part of the value of a commodity. On the contrary, the value of a commodity being given, the different parts into which that value may be divided, belong either to the category of accumulated labour (constant capital) or wages or profit or rent. On the other hand, when referring to the natural price or cost-price, Smith can speak of its component parts as given preconditions. But by confusing natural price with value, he carries this over to the value of the commodity. Apart from the fact that the raw material and machinery (in short the constant capital) enter into production with a fixed price, which to the capitalist in each particular sphere of production appears as determined from outside, there are two things the capitalist must do when calculating the price of his commodity: he has to add the price of the wages, and this also appears to him as given (within certain limits). The natural price of the commodity is not the market-price but the average market-price over a long period, or the central point towards which the market-price gravitates. In this context therefore the price of wages is on the whole determined by the value of labour-power. But the rate of profit the natural rate of profit is determined by the value of the aggregate of commodities created by the aggregate of capitals employed in non-agricultural industry. For it is the excess of this value over the value of the constant capital contained in the commodity plus the value of wages. The total surplus-value which the total capital creates, forms the absolute amount of profit. The ratio of this absolute amount to the whole capital advanced determines the general rate of profit. Thus this general rate of profit too, appears not only to the individual capitalist, but to the capital in each particular sphere of production to be determined externally. The capitalist must add the general profit, say of 10 per cent, ||606| to the price of the raw material, etc., contained in the product, and the natural price of wages thus as it must appear to him by way of addition of component parts, or by composition to form the natural price of a given commodity. Whether the natural price is paid, or more, or less, depends on the level of the market-price prevailing at the time. Only wages and profit enter into cost-price as distinguished from value; rent enters only in so far as it is already contained in the price of the expended raw material, machinery, etc. That is, it does not enter as rent for the capitalist, to whom, in any case, the price of raw produce, machinery, in short of the constant capital, appears as a predetermined total. Rent does not enter into cost-price as a component part. If, in special circumstances, the agricultural product is sold at its cost-price, then no rent exists. Economically landed property does not then exist for capital, that is, when the product of the type of land that sells at the cost-price, regulates the market-value of the product of its sphere. (The position in I, Table D is different.) Or (absolute) rent exists. In this case the agricultural product is sold above its cost-price. It is sold at its value, which is above its cost-price. Rent, however, enters into the market-value of the product, or, rather, forms a part of the market-value. But to the farmer rent appears as predetermined, in the same way as profit does to the industrialist. It is determined by the excess of the value of the agricultural product over its cost-price. The farmer, however, calculates just like the capitalist: First the outlay, secondly wages, thirdly the average profit, finally the rent, which likewise appears to him as fixed. This is for him the natural price of wheat, for instance. Whether he obtains it, depends, in turn, on the prevailing state of the market. If the distinction between cost-price and value is properly maintained, then rent can never enter into cost-price as a constituent part, and one can talk of constituent parts only in relation to the cost-price as distinguished from the value of the commodity. (Like excess profit, differential rent never enters into cost-price, because it is nothing but the excess of the market cost-price over individual cost-price, or the excess of the market-value over individual value.) Accordingly, Ricardo is in substance right when, in opposition to Adam Smith, he declares that rent never enters into cost-price. But again he is wrong in that he proves this, not by differentiating between cost-price and value, but by identifying the two, as Adam Smith did, for neither rent nor profit, nor wages form constituent parts of value, although value is dissolvable into wages and profits and rent, and, furthermore, the three parts are of equal importance, if all three exist. Ricardo reasons thus: Rent forms no constituent part of the natural price of agricultural produce, because the price of the product of the worst land, which is equal to the cost-price of this product, and to the value of this product, determines the market-value of agricultural produce. Thus rent forms no [constituent] part of the value because it forms no [constituent] part of the natural price and this latter is equal to value. This however is wrong. The price of the product grown on the worst land equals its cost-price, either because this product is sold below its value therefore not as Ricardo says, because it is sold at its value or because the agricultural product belongs to that type, to that class, of commodities in which, by way of exception, value and cost-price are identical. This is the case when the surplus-value which is made in a particular sphere of production on a given capital, of say 100, happens to coincide with the surplus-value which on the average falls to the same relative portion of the total capital (say 100). This then is Ricardo s confusion. As to Adam Smith: in so far as he identifies cost-price with value, he is justified, on the basis of this false assumption, in saying that rent, as well as profit and wages, form constituent parts of the natural price . On the contrary it is rather inconsistent that later in his further exposition he asserts that rent does not enter into the natural price in the same way as wages and profits. He commits this inconsistency because observation and correct analysis compel him nevertheless to recognise that there is a difference in the determination of the natural price of non-agricultural produce and the market-value of agricultural produce. But more about this when discussing Smith s theory of rent. ||607| We have seen, that with every portion of additional capital which it becomes necessary to employ on the land with a less productive return, rent would rise. (But not every portion of additional capital yields a less productive return.) That is [lower] absolute rent, not necessarily differential rent. (See Table B.) Such circumstances might be the reduction in the capital of a country followed by a reduction in the population. But also a higher development of the productive powers of agricultural labour. (Oddly enough, Ricardo forgets here: improvements as shall have the effect of improving the quality of poorer lands and converting these into richer ones, an aspect stressed by Anderson.) The following proposition of Ricardo s is entirely wrong: Quite apart from the fact that, with a fall in the price of corn, an additional demand for other raw produce, green vegetables, meat, etc., will spring up and that schnaps, etc., can be made from corn, Ricardo assumes here that the entire population consumes as much corn as it likes, This is wrong. { Our enormous increase of consumption in 1848, 49, 50, shows that we were previously underfed, and that prices were forced up by the deficiency of supply. (F. W. Newman, Lectures on Political Economy, London, 1851, p. 158.) The same Newman says: Indeed, [it is] in any case wrong to say that if he withdraws the land from the production of corn, he may not get a rent by converting it into pasture or building grounds or, as in some counties in the highlands of Scotland, into artificial woods for hunting purposes. Ricardo distinguishes two kinds of improvements in agriculture. The one type In this case, according to Ricardo, the rent must fall. and while I employed these portions, the rent would remain the same, although the produce of each should have an equal augmentation. (If it had an unequal augmentation, it would be possible for the rent to rise despite the increased fertility.) Apart from demand being able to rise without a growth in population when the price falls (Ricardo himself assumes that it has risen by 5 quarters), there is a constant going over to soils of decreasing fertility, because the population grows every year, i.e., the part of the population that consumes corn, eats bread, and this part grows more rapidly than the population [as a whole], because bread is the chief means of subsistence of the majority. It is thus not necessary to assume that the demand does not grow with the productivity of capital, and that consequently the rent falls. And the rent can rise, if the difference in the degree of fertility has been unevenly affected by the improvement. Otherwise it is certain (Tables B and E), that the increase in fertility while demand remains constant can not only throw the worst land out of the market but can even force a part of the capital on better land (Table B) to withdraw from the production of corn. In this case the corn rent falls, if the augmentation of the produce is equal on the different types of land. Now Ricardo passes on to the second aspect of agricultural improvements. <Ricardo should also have adhered to this when dealing with the natural fertility of the soils. Whether the transition to these reduces the differential rent, leaves it stationary, or increases it, depends on whether the difference in the produce of the capital employed on these different more fertile soils, be increased, stationary, or diminished.> This is correct for differential rent, which alone exists for Ricardo. On the other hand, Ricardo does not touch upon the real question at all. For the solution of this question it does not matter whether the value of the individual quarter falls or whether the same quantity of land, the same types of land as previously, needs to be cultivated, but whether as a result of the reduction in the price of constant capital which, according to the assumption, costs less labour the quantity of immediate labour employed in agriculture is reduced, increased or unaltered. In short, whether or not the capital undergoes an organic change. Let us take our example from Table A (page 574, notebook XI) and let us substitute quarters of corn for tons. It is assumed here that the composition of the non-agricultural capital is 80c+ 20v, that of the agricultural capital 60c+ 40v, the rate of surplus-value in both cases being 50 per cent. Hence the rent on the agricultural capital, or the excess of its value over its cost-price, is 10. Thus we have the following: 30 35 In order to examine the problem in its pure form, one must assume that the magnitude of the capital employed in I, II, III is in all three classes affected equally by the reduction in the price of constant capital (100). For the uneven effect only concerns differential rent, and has nothing to do with the matter in hand. Supposing, therefore, that as a result of improvements, the same amount of capital, which previously cost 100, now only costs 90, it would thus be reduced by one-tenth, or 10 per cent. The question is then how the improvements affect the composition of agricultural capital. If the proportion of capital used as wages [to constant capital] remains the same, then if 100 consists of 60c+ 40v, 90 consists of 54c+ 36v, and in this case the value of the 60 quarters on land I is 108. But if the reduction in price were such that the same constant capital which previously cost 60, now only cost 54, but that v (or the capital laid out in wages) now only cost 32 2/5 instead of 36 (had also fallen by 1/10) , then 86 2/5 would be laid out instead of 100. The composition of this capital would be 54c+32 2/5v. And reckoned on 100, the composition would be 62 1/2c+ 37 1/2v. Under these circumstances, the value of the 60 quarters on I would be equal to 102 3/5. Finally, let us assume that although the value of the constant capital decreases, the capital laid out in wages remains the same absolutely, it therefore grows in proportion to the constant capital; so that the capital of 90 which has been laid out consists of 50c+40v, the composition of [a capital of] 100 would be 55 5/9c+44 4/9v. Now let us see what happens to corn and money rent in these three cases. In case B the proportion of c to v remains the same although the value of both decreases. In C the ||610| value of c decreases, but proportionately, that of v decreases even more. In D, only the value of c decreases, not that of v. First let us reproduce the original table contained on the previous page [and then let us compare it with the new tables B, C and D, representing the cases just described illustrating changes in value of the organic component parts of the agricultural capital][d] ||611| From the accompanying table it is evident that : Originally in A the ratio is 60c+ 40v; the capital invested m each class is 100. The rent in money amounts to 70, in corn to 35 quarters. In B the constant capital becomes cheaper so that only 90 [are] invested in each class, the variable capital however becomes cheaper in the same proportion, so that the ratio remains the same. Here the money rent falls, the corn rent remains the same; [the] absolute rent is also the same. Money rent decreases because the capital invested decreases. Corn rent remains the same, because less money [produces relatively] more corn the ratio remaining the same. In C cheaper constant capital; but [the value of] v decreases even more, so that the constant capital becomes relatively dearer. Absolute rent falls. Corn rent falls and money rent falls. Money rent, because capital in general has decreased significantly, and corn rent, because absolute rent has fallen while the differences (between the various categories] have remained the same, therefore all of them fall equally. In D, however, the case is completely the reverse. Only the constant capital falls; the variable capital remains the same. This was Ricardo s assumption. In this case, because of the fall in capital, the money rent falls, though the fall is quite insignificant, in absolute figures it is only 1/3, but in proportion to the capital laid out, it rises considerably. The corn rent, on the other hand, grows absolutely. Why? Because the absolute rent has risen from 10 to 12 2/9 per cent, because v has grown in proportion to c. Hence: Ricardo continues: The inequality can be increased, while capital is withdrawn and while fertility increases, or even while the less fertile land is thrown out of the market. {Landlord and capitalist. In a leader of 15th July, 1862, the Morning Star [examines] whose duty it is (voluntarily or compulsorily) to support the distressed (as a result of the cotton famine and the civil war in America) workmen in the cotton manufacture districts of Lancashire, etc. It says: The capitalist is the direct exploiter of the workers, not only the direct appropriator but the direct creator of surplus-labour. But since (for the industrial capitalist) this can only take place through and in the process of production, he is himself a functionary of this production, its director. The landlord, on the other hand, has a claim through landed property (to absolute rent) and because of the physical differences of the various types of land (differential rent)-which enables him to pocket a part of this surplus-labour or surplus-value, to whose direction and creation he contributes nothing. Where there is a conflict, therefore, the capitalist regards him as a mere super-fetation, a Sybarite excrescence, a parasite on capitalist production, the louse that sits upon him.} Chapter III On the Rent of Mines [David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821, p. 76]. Here again: So far as absolute rent is concerned, it is neither effect nor cause of the high value , but the effect of the excess of value over cost-price. That this excess is paid for the produce of the mine, or the land, and thus absolute rent is formed, is the effect, not of that excess, because it exists for a whole class of trades, where it does not enter into the price of the produce of those particular branches of production, but is the effect of landed property. In regard to differential rent it may be said, that it is the effect of high value ; so far as by high value is understood the excess of the market-value of the produce over its real or individual value, for the relatively more fertile classes of land or mine. That Ricardo understands by the exchangeable value regulating the produce of the poorest land or mine, nothing but cost-price, by cost-price nothing but the advances plus the ordinary profit, and that he falsely identifies this cost-price with real value, will also be seen from the following passage: Here, therefore, [he says] in plain language: rent equals excess of the price (exchangeable value is the same here) of the agricultural produce over its cost-price, that is over the value of capital advanced plus the usual (average) profits of stock. Hence, if the value of the agricultural produce is higher than its cost-price, it can pay rent quite irrespectively of differences in land, the poorest land and the poorest mine can pay the same absolute rent as the richest. If its value were no higher than its cost-price, rent could only arise from the excess of the market-value over the real value of the produce derived from relatively more fertile soils, etc. What applies to gold and mines, applies to corn and land. Hence if the same types of land continued to be exploited and continued to yield the same product for the same outlay in labour ||613|, then the value of the pound of gold or the quarter of wheat would remain the same, although its quantity would increase with the demand. Thus its rent (the amount, not the rate of rent) [would] also grow without any change in the price of produce. More capital would be employed, although productivity would remain constant. This is one of the major causes of the rise in the absolute amount of rent, quite apart from any rise in the price of produce, and, therefore, without any proportional change in the rents paid by produce of different soils and mines. Chapter XXIV Doctrine of Adam Smith concerning the Rent of Land. This chapter is of great importance for the difference between Ricardo and Adam Smith. We shall postpone a fuller discussion of this (in so far as it affects Adam Smith), to when we consider ex professo Adam Smith s doctrine after that of Ricardo. Ricardo begins by quoting a passage from Adam Smith showing that he correctly determined when the price of the agricultural produce yields a rent and when it does not. But on the other hand Smith thought that some parts of the produce of land, such as food, must always yield a rent. In this context Ricardo says the following, which is significant for him: Indeed, these principles are substantially different . Where no landed property exists actual or legal no absolute rent can exist. It is absolute rent, not differential rent, which is the adequate expression of landed property. To say that the same principles regulate rent, where landed property exists and where it does not exist, means that the economic form of land-ed property is independent of whether landed property exists or not. Besides, what is the meaning of there is land of such a quality that it cannot yield a produce more than sufficiently valuable to replace the stock with the ordinary profits (l.c., pp. 389-390). If the same quantity of labour produces 4 quarters, the product is no more valuable than if it produces two, although the value of the individual quarter is in one case twice as great as in the other. Whether or not it yields a rent, is therefore in no way independent on the magnitude of this value of the produce as such. It can only yield a rent if its value is higher than its cost-price, which depends on the cost-price of all other products or, in other words, on the quota of unpaid labour which is, on an average, appropriated by a capital of 100 in each sphere of production. But whether its value is higher than its cost-price is in no way dependent on its absolute size, but on the composition of the capital employed on it, compared with the average composition of the capital employed in non-agricultural industry. Ricardo admits here that also the worst land can bear a rent. How does he explain this? To provide the additional supply which has become necessary in consequence of an additional demand, a second amount of capital is employed on the worst land ||614|. This will only yield the cost-price if the price of grain is rising. Hence the first amount would now yield a surplus that is rent over and above this cost-price. In fact therefore before the second amount is invested the first amount of capital yields a rent on the worst land, because the market-value is above the cost-price. Thus the only question is whether, for this to happen, the market-value has to be above the value of the worst product, or whether on the contrary its value is above its cost-price, and the rise in price merely enables it to be sold at its value. Furthermore: Why must the price be so high that it equals the cost-price, i.e., the capital advanced plus average profit? Because of the competition of capitals in the different branches of production and the transfer of capital from one branch to another. That is, as a result of the action of capital upon capital. But by what action could capital compel landed property to allow the value of the product to fall to the cost-price? Withdrawal of capital from agriculture cannot have this effect, unless it is accompanied by a fall of the demand for agricultural produce. It would achieve the reverse, and cause the market-price of agricultural produce to rise above its value. Transfer of new capital to land cannot have this effect either. For it is precisely the competition of capitals amongst themselves, which enables the landlord to demand from the individual capitalist that he should be satisfied with an average profit and pay over to him the overplus of the value over the price affording this profit. But, it may be asked: If landed property gives the power to sell the product above its cost-price, at its value, why does it not equally well give the power to sell the product above its value, at an arbitrary monopoly price? On a small island, where there is no foreign trade in corn, the corn, food, like every other product, could unquestionably be sold at a monopoly price, that is, at a price only limited by the state of demand, i.e., of demand backed by ability to pay, and according to the price level of the product supplied the magnitude and extent of this effective demand can vary greatly. Leaving out of account exceptions of this kind which cannot occur in European countries; even in England a large part of the fertile land is artificially withdrawn from agriculture and from the market in general, in order to raise the value of the other part landed property can only affect and paralyse the action of capitals, their competition, in so far as the competition of capitals modifies the determination of the values of the commodities. The conversion of values into cost-prices is only the consequence and result of the development of capitalist production. Originally commodities are (on the average) sold at their values. Deviation from this is in agriculture prevented by landed property. Ricardo says that when a farmer takes land on a lease of seven or fourteen years, he calculates that with a capital investment of, say, 10,000, the value of the corn (average market-value) permits him to replace his outlay plus average profit, plus the contracted rent. In so far as he takes a lease of a piece of land, therefore, his first consideration is the average market-value, which is equivalent to the value of the product; profit and rent are only parts into which this value is resolved, but they do not constitute it. The existing market-price is for the capitalist what the presupposed value of the product is for the theory and the inner relationships of production. Now to the conclusion which Ricardo draws from this. If the farmer adds another 1,000, he only considers whether, at the given market-price, it yields him the usual profit. Ricardo therefore seems to think that the cost-price is the determining factor and that profit enters into this cost-price as a regulating element, but rent does not. Firstly, profit too does not enter into it as a constituent element. For, according to the assumption, the farmer takes the market-price as his starting-point, and weighs up whether, at this given market-price, the 1,000 will yield him the usual profit. This profit is therefore not the cause, but the effect of that price. But Ricardo continues his train of thought the investment of the 1,000 itself is determined by the calculation of whether or not the price yields the profit. Thus the profit is the decisive factor for the investment of the 1,000, and for the price of production. Furthermore: If the capitalist found that the 1,000 did not yield the usual profit, he would not invest it. The production of the additional food would not take place. If it were necessary for the additional demand, then the demand would have to raise the price, i.e., the market-price, until it yielded the profit. Thus profit in contradistinction to rent enters as a constituent element, not because it creates the value of the product, but because the product ||615| itself would not be created if its price did not rise high enough to pay the usual rate of profit as well as the capital expended. In this case, however, it is not necessary for it to rise so high as to pay rent. Hence, there exists an essential difference between rent and profit, and in a certain sense, it can be said that profit is a constituent element of price, whereas rent is not. (This thought is evidently also at the back of Adam Smith s mind.) In this case, it is correct. But why? Because in this case landed property cannot confront capital as landed property, thus the very combination [of circumstances] under which rent, absolute rent, is formed, is not present according to the assumption. The additional corn produced with the second investment of 1,000, provided the market-value remains the same, in other words when an additional demand arises only on the assumption that the price remains the same, must be sold below its value at the cost-price. This additional produce of the 1,000 thus occurs under the same circumstances as when new worse land is cultivated, which does not determine the market-value, but can provide the additional supply only on the condition that it supplies it at the previously existing market-value, i.e., at a price determined independently of this new production. Under these circumstances it depends entirely on the relative fertility of the additional soil whether it yields a rent precisely because it does not determine the market-value. It is just the same with the additional 1,000 on the old land. And for this very reason, Ricardo concludes conversely, that the additional land or the additional amount of capital determines the market-value because, with a given, quite independently determined market-value, the price of its product yields not rent, but only profit, and only covers the cost-price but not the value of the product. This is a contradiction in terms. Nevertheless, the product is produced in this case, although it yields no rent! Certainly. Landed property as an independent opposing element does not exist for the farmer, i.e., the capitalist, during the period in which the lease in fact makes him the landowner of the land which he has rented. Capital moves unimpeded in this element, and capital is satisfied with the cost-price of the product. Even when the lease expires, the farmer will naturally make the amount of rent dependent on how far capital investment in the land will supply a product which can be sold at its value thus yielding a rent. Capital investment which, with the given market-value, yields no excess over the cost-price, no more enters into the calculation than would the payment of rent or contractual undertaking to pay rent on land whose relative fertility is so low that the market-price is merely equal to the cost-price [of its product]. In practice matters do not always work out in the Ricardian manner. If the farmer possesses some spare capital or acquires some during the first years of a lease of 14 years, he does not demand the usual profit, unless he has borrowed additional capital. For what is he to do with the spare capital? Conclude a new lease for additional land? Agricultural production favours to a much higher degree more intensive capital investment, than a more extensive cultivation of land with a larger capital. Moreover, if no land could be leased in the immediate vicinity of the old land, two farms would split up the farmer s work of super-intending them to a much greater extent, than six factories would split up the work of one capitalist in manufacture. Or should he invest the money with the bank, for interest, in government bonds, railway shares, etc.? Then, from the outset, he forgoes at least a half or a third of the usual profit. Hence, if he can invest it as additional capital on the old farm, even below the average rate of profit, say at 10 per cent, if his profit was 12, then, he will still be gaining 100 per cent if the rate of interest is 5 per cent. To invest the additional 1,000 in the old farm is, therefore, still a profitable speculation for him. ||616| Hence it is quite wrong for Ricardo to identify this investment of additional capital with the application of additional capital to new soils. In the first case, the product does not have to yield the usual profit, even in capitalist production. It must only yield as much above the usual rate of interest as will make worth while the trouble and risk of the farmer to prefer the industrial employment of his spare capital to its employment as money capital. But the following conclusion which Ricardo draws from this observation is, as has been shown, quite absurd. His illustration proves just the reverse: that the application to land of this last portion of capital has been regulated by a market-price which, independent of that application, existed before it took place and, therefore comprises no rent, but only profit. That profit is the only regulator for capitalist production is quite true. And it is therefore true that no absolute rent would exist if production were regulated solely by capital. It arises precisely at the point where the conditions of production enable the landowner to set up barriers against the exclusive regulation of production by capital. Secondly, Ricardo reproaches Adam Smith (p. 391, et seq.) for developing the correct principles of rent [only] with regard to coal-mines; [he] even says: Adam Smith senses that, under certain circumstances, the landlord has the power to offer effective resistance to capital, to bring landed property into play, and thus to demand absolute rent, though, under different circumstances, he does not possess this power; that in particular however the production of food establishes the law of rent, whereas in other applications of capital to land, the rent is determined by the agricultural rent. In his reply, Ricardo comes closest to the real principle of rent. He says: Here Ricardo formulates the correct principle of rent, If the worst land pays a rent, if therefore rent is paid independently of the different natural fertility of the land i.e., absolute rent then this rent must equal the excess of the value of the produce above the expenditure of capital and the ordinary profits of stock [l.c., pp. 392-93] that is to say, it must equal the excess of the value of the produce above its cost-price. Ricardo presupposes that such an excess cannot exist, because, in contradiction to his own principles, he wrongly accepts the Smithian doctrine ||617| that value equals cost-price of the produce. As for the rest, he falls again into error. Differential rent would of course be determined by the relative fertility . Absolute rent would have nothing to do with the natural fertility . Smith however would indeed be right when he asserts that the actual rent paid by the worst land may depend on the absolute fertility of the other soils and the relative fertility of the worst soil, or on the absolute fertility of the worst soil and the relative fertility of the other soils. For the actual amount of rent paid by the worst land depends not, as Ricardo thinks, on the excess of the value of its own produce over its cost-price, but on the excess of the market-value over its cost-price. But these are very different things If the market-price were determined by the product of the worst land, then the market-value would be equal to its real value, hence, the excess of its market-value over its cost-price would be equal to the excess of its own individual value, its real value, over its cost-price. But this is not the case if quite irrespective of this product the market-price is determined by the other types of land. Ricardo assumes a descending line. He assumes that the worst land is cultivated last and is only cultivated (in the case postulated), when the additional demand has necessitated an additional supply at the value of the produce derived from the worst and last cultivated soil. In this case the value of the worst land regulates the market-value. In the ascending line (even according to him) this will only occur when the additional supply of the better sorts of land only equals the additional demand at the old market-value. If the additional supply is greater, Ricardo assumes that the old land must be thrown out of cultivation, but it only follows from this that it will yield a lower rent than before (or no rent at all). The same happens in the descending line. Whether, and to what extent, the worse land yields rent, if the additional supply can only by provided at the old market-value, depends on how much this market-value stands above the cost-price of the product of the new, worse land. In both cases its rent is determined by the absolute fertility, not the relative fertility. It depends on the absolute fertility of the new land how far the market-value of the produce of better lands stands above its own real, individual value. Adam Smith makes a correct distinction here between land and mines, because with the latter he presupposes that there is never a transition to worse sorts always to better ones and that they always provide more than the necessary additional supply. The rent of the worst land is then dependent on its absolute fertility. Adam Smith is mistaken when he declares the particular set of circumstances on the market, under which the most fertile mine (or land) dominates the market, to be the rule. But provided such a case is assumed his reasoning is correct (on the whole) and Ricardo s wrong. Adam Smith presupposes that as a result of the state of demand and because of its relative superior fertility, the best mine can only force the whole of its product on to the market if it undersells its competitors, if its product is below the old market-value. This causes the price to fall for the worse mines too. The market-price falls. This in any case lowers the rent on worse mines and can even make it disappear completely. For the rent is equal to the excess of market-value over cost-price of the produce, whether that market-value be like the individual value of the produce of a certain class [of land], or mines, or not. What Smith fails to notice, is that the profit can only be diminished by this if it becomes necessary to withdraw capital and reduce the scale of production. If the market-price regulated, as it is under the given circumstances, by the produce of the best mines falls so low as to afford no excess above cost-price for the product of the worst mine, then it can be worked only by its owner. At this market-price, no capitalist will pay him a rent. His ownership of land does not, in this case, give him power over capital, but as far as he is concerned it annuls the resistance which other capitalists meet who wish to apply capital to land. Landed property does not exist for him because he himself is the landed proprietor. Hence he can use his land as a mine, or in any other sphere of production, i.e., he can employ it if the market-price, which he finds predetermined and does not determine himself if the market-price of the product yields him the average profit, that is, his cost-price. And from this Ricardo concludes that Smith contradicts himself! Because the old market-price determines how far new mines can be opened up by their owners in other words they can be worked in circumstances where landed property disappears, since at the old market-price they yield their cultivators the cost-price he concludes that this cost-price determines the market-price! But again he takes refuge in the descending line and allows the less fertile mine to be cultivated only when the market-price of the product rises above the value of the product of the better mines, whereas it is only necessary that it rises above the cost-price or even that it equals the cost-price in the case of the worse mines exploited by their proprietors themselves. Incidentally, his assumption that if by new processes the quantity (of coal) should be increased, the price would fall, and some mines would be abandoned [l.c., p. 394], depends only on the degree of the fall in price and the state of demand. If, with this fall of prices, the market can absorb the whole product, then the bad mines will still yield a rent provided the fall of market-price still leaves an excess of market-value over the cost-price of the poorer mines, and [the mines will] be worked by their owners, if the market-value only covers, or is equal to, the cost-price. In either case, however, [it is] absurd to say that the cost-price of the worst mine regulates the market-price. Although the cost-price of the worst mine determines the relation of the price of its produce to the ruling market-price, and therefore decides the question whether or not ||618| the mine can be worked. But the fact that a piece of land or a mine of a particular degree of fertility can be exploited at a given market-price, is obviously not related to or identical with the determination of the market-price by the cost-price of the produce of these mines. If an increased market-value would make an additional supply necessary or possible then the worst land would regulate the market-value, but then it would also yield absolute rent. This is the exact opposite of the case assumed by Adam Smith. Thirdly, Ricardo reproaches Smith for believing (p. 395, et. seq.) that cheapness of raw produce, for instance substitution of potatoes for corn, which would lower the wage and diminish the cost of production, would cause a larger share as well as a larger quantity to fall to the landlord, Ricardo on the other hand [maintains that] : This is positively wrong. The share of rent would fall and, therefore, its quantity would decrease relatively. The introduction of potatoes as the principal means of subsistence, would reduce the value of labour-power, shorten the necessary labour-time, increase the surplus labour-time and therefore the rate of surplus-value, hence other circumstances remaining the same the composition of the capital would be altered, the value of the variable part would diminish in comparison with that of the constant part, although the quantity of living labour employed remained the same. The rate of profit would therefore rise. In this case [there would be] a fall in absolute rent and proportionately in differential rent. (See page 610 Table C.) This factor would affect equally agricultural and non-agricultural capital. The general rate of profit would rise and the rent would consequently fall. Chapter XXVIII. On the comparative Value of Gold, Corn, and Labour, in Rich and Poor Countries. Chapter XXXII. Mr. Malthus s Opinions on Rent. [a] In the manuscript: soil . Ed. [b] In the manuscript: of instead of had . Ed. [c] In the manuscript: a .-Ed. [d] There follow the tables. Marx did not fill in some columns in tables C and D. The missing figures, as well as the heading of the last column, have been inserted by the editors. Ed. [e] In the manuscript: of . Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 13

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch13.htm

||619| At this stage we shall not examine Smith s interesting account of how the rent of the principal vegetable food dominates all other strictly agricultural rents (stock raising, timber, industrial crops), because each of these branches of production can easily be transformed into one of the others. Adam Smith excludes rice from this, wherever it is the principal vegetable food, since rice fields (or bogs) are not convertible into grass land, wheat lands, etc. and vice versa. [In Chapter XI, Book I] Adam Smith correctly defines rent as the price paid for the use of land ([O.U.P., Vol. I, p. 162; Garnier,] t, I, p. 299), the term land is intended to mean every power of nature as such, therefore also water, etc. In contrast to Rodbertus s peculiar notion, Smith, from the outset, enumerates the items of agricultural capital: Now what is this price paid for the use of land? Smith refuses to confuse rent with the interest on capital invested in the land. and, he adds, even this second form of rent [i.e., the rent on the improved land] is peculiar in that the interest from the capital used on improvement is interest on a capital which has not been laid out by the landlord, but by the farmer. Smith stresses very strongly, that it is landed property, the landlord, who as landlord demands the rent . [Regarded] as a mere effluence of landed property, rent is monopoly price, this is perfectly correct, since it is only the intervention of landed property which enables the product to be sold for more than the cost-price, to be sold at its value. It is in fact a price which is only enforced through the monopoly of landed property, and as a monopoly price, it differs from the price of the industrial product. From the standpoint of capital and capital dominates production the cost-price only requires that the product should pay the average profit in addition to the capital advanced. In this case, the product, be it product of the land or any other product, can be brought to market . Why does rent enter into price differently from wages and profit? That is the question. Originally, Smith had resolved value correctly, into wages, profits and rents (apart from constant capital). But almost at once he takes the opposite course and identifies value with natural price (the average price determined by competition or the cost-price of the commodities) and builds up the latter from wages, profit and rent. In these passages, the resolving of value into wages, etc. and the compounding of price from wages, etc., are jumbled together (this applies to Chapter VI in general which deals with the Component Parts of the Price of Commodities ). (Natural price and market-price are for the first time discussed in Chapter VII). Book I, Chapters I, II, III deal with the division of labour , Chapter IV with money. In these, as in the following chapters, value is determined in passing. Chapter V deals with the real and nominal price of commodities, with the transformation of value into price; the Component Parts of the Price of Commodities are considered in Chapter VI; the natural and market-price in Chapter VII. Then Chapter VIII deals with the wages of labour, Chapter IX with the profits of stock; Chapter X with the Wages and Profit in the different Employments of Labour and Stock; finally, Chapter XI with the Rent of Land. But in this connection we want first to draw attention to the following: According to the passages cited above, there are commodities whose price consists solely of wages, others, whose price consists only of wages and profit, and finally a third group of commodities, whose price consists of wages, profit and rent. Hence: According to this, there would be no grounds for saying that rent enters into price in a different manner from profit and wages, but one could say that rent and profit enter into price in a different way from wages, since the latter always enters [into price], the former not always. Whence, then, the difference? Moreover, Smith should have investigated, whether it is possible that the few commodities which only comprise wages, are sold at their value, or whether the poor people who gather the Scotch pebbles are not in fact the wage-labourers of the stone-cutters, who pay them only the usual wages for the commodity, in other words for a whole working-day, which apparently belongs to them, these people receive only as much as a worker in other trades, where part of the working-day forms profit and belongs not to him but to the capitalist. Smith should have either affirmed this or else asserted that in this case the profit only seems to be confounded with wages. He says himself: He nevertheless works out this problem in the following manner: If an independent labourer (like those poor people of Scotland) uses only labour (without recourse to capital), if, altogether, he only employs his labour and the elements, then the price resolves itself solely into wages. If he employs a small capital as well, then the same individual receives wages and profit. If, finally, he employs his labour, his capital and his landed property, then he unites in his person the characters of landowner, farmer and worker. {The whole absurdity of Smith s approach comes to light in one of the final passages of Chapter VI, Book I: The produce of labour [is] not equal to the value of this produce. On the contrary (one may gather) this value is increased by the addition of profit and rent. The produce of labour can therefore command, purchase, more labour, i.e., pay a greater value in labour, than the labour contained in it. This proposition would be correct if it ran like this: (Here Smith returns again to his second conception of value, a concept of which he writes the following in the same chapter. (In Chapter VI, the resolution of value into wages, profit and rent is still dominant. It is only in Chapter VII, on the natural price and market-price, that the compounding of the price from these constituent elements wins the upper hand.) Hence: The exchangeable value of the annual product of labour consists not only of the wages of the labour employed in order to bring forth this product, but also of profit and rent. This labour however is only commanded or purchased with that part of the value which resolves into wages. It is thus possible to set into motion a much larger amount of labour, if a part of the profit and rent is used to command or purchase labour, i.e., if it is converted into wages. So it amounts to this: the exchangeable value of the annual product of labour resolves itself into paid labour (wages) and unpaid labour (profit and rent). If therefore a part of that part of the value which resolves itself into unpaid labour is converted into wages, one can purchase a greater quantity of labour than if one merely assigns that part of the value which consists of wages, to the purchase of new labour.) Let us go back then: This is indeed confounded. Is not the whole the earnings of his labour ? And are not, on the contrary, the conditions of capitalist production in which, with the alienation of labour from its objective conditions, the worker, capitalist and landowner confront one another as different characters too transferred to this gardener, so that the product of his labour or rather the value of the product is regarded, part of it as wages, in payment of his labour, part of it as profit, on account of the capital employed, and part of it as rent, as the portion due to the land or rather the proprietor of the land? Within capitalist production(it is) quite correct, when considering those conditions of labour in which these elements are not separated (in actual fact), to assume them to be separated and so to regard this gardener as his own ||622| journeyman and as his own landowner in one person. The vulgar conception however that wages arise from labour, but profit and rent independently of the labour of the worker arise out of capital and land as separate sources, not for the appropriation of alien labour, but of wealth itself, evidently creeps into Adam Smith s writing already at this stage. In this fantastic fashion, the profoundest concepts intermingle with the craziest notions, such as the common mind forms in an abstract manner from the phenomena of competition. Having first resolved value into wages, profits, rents, he then on the contrary compounds value out of wages, profit and rent, whose magnitudes are determined independently of value. Since Adam Smith has thus forgotten the origin of profit and rent correctly explained by himself, he is able to say: In accordance with his own explanation, he should have said: From the passages quoted it can be seen how in Chapter VI, on the Component Parts of the Price of Commodities , Adam Smith arrives at the resolution of price into wages, where only (immediate) labour enters into the production; into wages and profit, where, instead of the independent workman, a journeyman is employed by a capitalist (i.e., capital); and finally into wages, profit and rent, where land enters into the production besides capital and labour. In this latter case, however, it is assumed that the land is appropriated, that consequently alongside the worker and the capitalist, there is also a landowner (although he notes that it is possible for all three or two of these characters to be united in one person). In Chapter VII, on natural price and market-price, rent (where land enters into the production) is presented as a component part of the natural price in exactly the same way as wages and profit. The following passages will show this: (Book I, Chapter VII). ||623| If, in consequence of the state of the market, his rent sinks below, or rises above, its natural rate, Adam Smith allows the landowner to withdraw his land or transfer it from the production of one commodity (such as wheat) to that of another (such as pasture for instance). After this exposition of the subject in Chapter VII, it is difficult to see how Adam Smith can justify his proposition in Book I, Chapter XI, Of the Rent of Land , that rent does not always enter into price where appropriated land enters into production; how he can differentiate between the manner in which rent enters into price from that in which profit and wages enter into it, since in chapters VI and VII he has turned rent into a component part of the natural price, in just the same way as profit and wages. Now let us return to this Chapter XI (Book I). We have seen that there rent is defined as the surplus which remains from the price of the product, after the expenses of the capitalist (farmer) plus the average profit have been paid. In this Chapter XI, Smith makes a complete turn-about. Rent no longer enters into the natural price. Or, rather, Adam Smith takes refuge in an ordinary price which is as a rule different from the natural price, although we were told in Chapter VII, that the ordinary price can never, for any length of time, be below the natural price and that none of the component parts of the natural price can for any length of time, be paid below its natural rate and even less, not paid at all, as he now asserts in relation to rent. Neither does Adam Smith tell us whether the produce is sold below its value when it pays no rent, or whether it is sold above its value, when it pays rent. Previously, the natural price of the commodity was Now we are told that: The ordinary price is therefore not the natural price, and the natural price need not be paid, in order to bring these commodities to market. ||624| Previously we were told that if the ordinary price (that time, the market-price) were not sufficient to pay the whole rent ( the whole value of the rent, etc.), land will be withdrawn until the market-price rises to the level of the natural price and pays the whole rent. Now, on the other hand: Thus rent, from being a component part of the natural price suddenly turns into a surplus over the sufficient price,[a] a surplus whose existence or non-existence depends on the state of demand. But the sufficient price is that price which is required for the commodity to appear on the market, and therefore to be produced, thus it is the price of production of the commodity. For the price which is required for the supply of the commodity, the price which is required for it to come into existence at all, to appear as a commodity on the market, is of course its price of production or cost-price, That [is the condition] sine qua non of the existence of the commodity. On the other hand the demand for certain products of the land must always be such that their ordinary price pays a surplus over and above the price of production, that is, a rent. For others it may or may not be so. So instead of the natural price we have the sufficient price here. The ordinary price, in turn, is different from this sufficient price. The ordinary price if it includes the rent is above the sufficient price. If it does not comprise rent it is equal to the sufficient price. It is even characteristic of the sufficient price that rent is excluded. The ordinary price is below the sufficient price, when it does not pay the average profit, in addition to replacing the capital. Thus the sufficient price is in fact the price of production or cost-price as abstracted by Ricardo from Adam Smith and as it indeed presents itself from the standpoint of capitalist production, in other words the price which, apart from the outlay of the capitalist, pays the ordinary profit; [it is] the average price brought about by the competition of capitalists in the different employments of capital. It is this abstraction based on competition which induces Adam Smith to confront his natural price with the sufficient price, although in his presentation of the natural price he on the contrary declares that in the long run only the ordinary price which pays rent, profit and wages, the component parts of the natural price, is sufficient. Since the capitalist controls the production of commodities, the sufficient price is [that] which is sufficient for capitalist production from the standpoint of capital and the price which is sufficient for capital does not include rent, but, on the contrary, excludes it. On the other hand: This sufficient price is not sufficient for some products of the land. For them the ordinary price must be high enough to yield a surplus over and above the sufficient price, a rent for the landowner. For others it depends on the circumstances. The contradiction that the sufficient price is not sufficient that the price which suffices to bring the product to market does not suffice to bring it to market does not worry Adam Smith. Although he does not turn back, even for one moment, to glance at chapters V, VI and VII, he admits to himself (not as a contradiction, but as a new discovery which he has suddenly hit upon), that with the sufficient price, he has overthrown his whole doctrine of natural price. Let us take the final proposition first. The sufficient price, the cost-price, which only pays wages and profit, excludes rent. If the product pays a great deal more than the sufficient price, then it pays a high rent. If it pays only a little more, then it pays a low rent. If it pays only exactly the sufficient price, then it pays no rent. It pays no rent if the actual price of the product coincides with the sufficient price, which pays profit and wages. Rent is always a surplus over and above the sufficient price. By its very nature, the sufficient price excludes rent. This is Ricardo s theory. He accepts the concept of the sufficient price, the cost-price, from Adam Smith; but avoids Adam Smith s inconsistency of differentiating it from the natural price, and sets it forth consistently. Having committed all these inconsistencies, Smith is sufficiently inconsistent to demand, for certain products of the land, a price which is higher than their sufficient price. But this inconsistency itself is in turn the result of a more correct observation . The beginning of the passage is truly amazing in its naivet . In Chapter VII Smith explained that rent, profit and wages enter equally into the corn position of the natural price, having first turned the dissolution of value into rent, profit and wages upside down and transformed it into the composition of value from the natural price of rent, profit and wages. Now he tells us that rent enters into the composition of the price of commodities differently from profit and wages. And in what way does it enter differently into that composition? By not entering into that composition at all. And here we are first given a true explanation of the sufficient price. The price of the commodities is dear or cheap, high or low, because wages and profit their natural rates are high or low. The commodity will not be brought to market, will not be produced, unless these high or low profits and wages are paid. They form the price of production of the commodity, its cost-price; and are thus in fact, the constituent elements of its value or price. Rent, on the other hand, does not enter into the cost-price, the price of production. It is not a constituent element of the exchangeable value of the commodity. It is only paid when the ordinary price of the commodity is above its sufficient price. Profit and wages as constituent elements of the price are causes of the price; rent, on the other hand, is only its effect, its result. It does not, therefore, enter into the composition of the price as an element, as do profit and wages. And this is what Smith calls entering into this composition in a different way from profit and wages. He does not appear to be in the slightest bit aware of the fact that he has thrown over his doctrine of natural price. For what was the natural price? The central point around which the market-price gravitated: the sufficient price, below which in the long run the product could not fall, if it were to be produced and brought to market. Thus rent is now the surplus over the natural price, previously [it was] a component part of the natural price; now [it is the] effect, previously [it was] the cause, of price. There is however no contradiction in Adam Smith s assertion that for certain products of the land, the circumstances of the market are always such that their ordinary price must be above their sufficient price, in other words: that landed property has the power to force the price above that level which would be sufficient for the capitalist if he were not confronted by a counteracting influence. ||626| Having thus, in Chapter XI, thrown overboard chapters V, VI and VII, he calmly proceeds by saying that: he will now make it his business to consider 1. the produce of the land which always affords rent; 2. the produce of the land which sometimes affords rent and sometimes not; finally 3. the variations which take place, in the different periods of development of society, in the relative value, partly of these two sorts of produce compared with one another and partly in their relationship to manufactured commodities. Part I. Of the Produce of Land which always affords Rent. Adam Smith begins with the theory of population. The mean s of subsistence always create a demand for themselves. If the means of subsistence increase, then the people, the consumers of the means of subsistence, also increase. The supply of these commodities thus creates the demand for them. This sounds quite physiocratic and contains neither proof nor explanation of why the price of these particular commodities pays a rent, a surplus over and above the sufficient price . As an example he immediately refers to pasture and uncultivated pasture. Then follows the proposition on differential rent: On this occasion rent and profit appear as mere surplus of the product, after that part of it has been deducted in kind which feeds the worker. (This is really the physiocratic view, which is based on the fact that in an agricultural country man lives almost exclusively on the agricultural product, and industry manufacture, itself appears as a rural side-line which uses the local product of nature.) The growing of corn must therefore yield a greater profit than pasture. (Thus it is not a question of price here, but of the absolute quantity of food for man.) (Although corn costs more labour, the cornfield yields a larger surplus of food, after labour has been paid, than a meadow used for stock raising. And it is worth more, not because corn costs more labour, but because the surplus in corn contains more nourishment.) Having replaced the natural price by the sufficient price, and declared rent to be the surplus over and above the sufficient price, Smith forgets altogether, that it is a question of price, and derives rent from the ratio between the amount of food yielded by agriculture and the amount of food consumed by the agricultural worker. In point of fact apart from this physiocratic interpretation he postulates that the price of the agricultural product which supplies the principal food pays rent in addition to profit. This is the starting-point for his further arguments. With the extension of cultivation, the natural pastures become insufficient for stock raising and cannot satisfy the demand for butcher s meat. Cultivated land has to be employed for this purpose. ||627| The price of meat therefore has to rise to the point where it pays not only the labour which is employed in stock raising, but also: (In this passage Adam Smith correctly derives the differential rent from the surplus of the market-value over the individual value. In this case, however, the market-value rises, not because there is a transition from better to worse, but from less fertile to more fertile land.) Having thus set forth the relationship between rent yielded by pasture and by tilled land, Smith continues: Then he speaks of vineyards, fruit and vegetable gardens, etc Then he passes on to sugar cultivation in the colonies [and] tobacco. Adam Smith then returns to the physiocratic theory, as interpreted by him, namely that food creates consumers for itself. [He asserts that] if corn were replaced by some other crop, which with the same amount of labour yielded a much greater quantity of food on the most common land, then Adam Smith cites rice as an example. ||628| The rice field, however Second example potatoes (Ricardo s criticism of this has been mentioned earlier). If potatoes became the principal food, in place of corn, A few more comments on wheaten bread, bread made of oatmeal, and on potatoes conclude the first section of Chapter XI. One can therefore sum up this section, which deals with the product of land which always pays a rent, as follows: after postulating the rent of the principal vegetable food, it sets forth how this rent regulates the rent of cattle-breeding, wine-growing, market gardening, etc. There is nothing about the nature of rent itself, except the general thesis that, provided rent exists, its amount is determined by fertility and situation. But this only relates to differences in rents, differences in the magnitude of rents. But why does his product always pay a rent? Why is its ordinary price always higher than its sufficient price? Smith leaves price out of account here and reverts to the physiocratic theory. What runs through it, however, is that the demand is always so great because the product itself creates the demand, [since it creates] its own consumers. Even provided that this were so it is incomprehensible why the demand should rise above the supply and thus force the price above the sufficient price. But there is here a secret recollection of the image of the natural price which includes rent as well as profit and wages and which is paid when supply corresponds with demand. It is however characteristic that Adam Smith nowhere in this section states this clearly. In opening Chapter XI, he had just said that rent does not enter into price as a component part. The contradiction was too conspicuous. Part II: Of the Produce of Land which sometimes does, and sometimes does not, afford Rent. It is actually only in this section that the general nature of rent is first discussed. ||629| Here therefore an explanation of rent [is] derived, from the excess of demand over the supply which can be provided at the sufficient price. Foreign trade here raises the price of an agricultural by-product to such an extent, that the land which produces it can yield some rent. What Smith says here, is the true physical basis of Physiocracy, namely, that the creation of surplus-value (including rent) always has its basis in the relative productivity of agriculture. The first real form of surplus-value is surplus of agricultural produce (food) , and the first real form of surplus labour arises when one person is able to produce the food for two. Otherwise this has nothing to do with the development of rent, this specific form of surplus-value, which presupposes capitalist production. Adam Smith continues: Here therefore again: Rent arises from the demand being greater than the supply at the sufficient price which only includes wages and profits, but no rent. What else does this mean, but that the supply at the sufficient price is so great that landed property cannot offer any resistance to the equalisation of capitals or labour? That therefore, even though landed property exists legally, it does not exist in practice, or cannot be effective as such in practice? Adam Smith s mistake is that he fails to recognise that if landed property sells [products] above the sufficient price, it sells [them] at their value. His positive point, compared with Ricardo, is that he realises it depends on the circumstances, whether or not landed property can assert itself economically. It is therefore essential to follow this part of his argument step by step. He begins with the coal mine, then goes over to timber and then returns to the coal mine, etc. Accordingly we shall let him start with timber. Thus in fact, the rent of woodland is by nature identical with that of pasture. It belongs therefore in this category, although wood does not serve for food. The economic category does not depend on the use-value of the product, but on whether or not it is convertible into arable land and vice versa. Coal mines. Smith observes correctly, that the fertility or in-fertility of mines in general depends on whether the same quantity of labour can extract a larger or a smaller amount of mineral from the mine. Infertility can offset the favourable situation, so that such mines cannot be exploited at all. On the other hand, an unfavourable situation can offset the fertility, so that despite its natural fertility, such a mine cannot be exploited. This is in particular the case where there are neither good roads, nor shipping ([O.U.P., Vol. I, pp. 188-89; Garnier,] l.c., pp. 346-47). There are mines whose produce just reaches the sufficient price. Hence they pay profit for the entrepreneur but no rent. They can therefore be worked only by the landowner himself. In this way he gets the ordinary profit of the capital which he employs . There are many mines of this type in Scotland. These could not be exploited in any other way. Here Adam Smith has correctly defined under what circumstances land which has been appropriated pays no rent, namely where landowner and entrepreneur are one person. He has already told us earlier that this is so in the colonies. A farmer cannot cultivate the land there because he cannot pay any rent. But the owner can cultivate it with profit, although it does not pay him a rent. This is the case, for example, in the colonies in Western America, because new land can always be appropriated. The land as such is not an element that offers resistance, and the competition of landowners who cultivate the land themselves is here in fact competition between workers or capitalists. The position of coal mines, or mines in general, is different in the supposed circumstances. The market-value, as determined by the mines which supply their product at this value, yields a smaller rent, or no rent at all but just covers the cost-price in the case of mines that are less fertile or less favourably situated. These mines can only be worked by persons for whom the resistance of landed property and the consequent exclusion of others from the land, does not exist, because they are landowners and capitalists in one person; [this] only happens where in fact landed property disappears as an independent element opposed to capital. The position differs from that of the colonies in that: in the latter, the landowner cannot prohibit the exploitation of new land by anyone. In the former he can do so. He only gives himself the permission to exploit the mine. This does not enable him to draw a rent, but it does enable him to exclude others and to invest his capital in the mine, with profit. What Adam Smith writes about the regulation of rent by the most fertile mine, I have already commented on, when discussing Ricardo and his polemic. Here only one proposition needs to be stressed: It is evident that the sufficient price has taken the place of the natural price, Ricardo regards them as identical, and rightly so. ||631| Smith maintains, Adam Smith correctly sets forth here the case presented in Table C. When speaking of rent in connection with precious metals. Adam Smith again gives his interpretation of the sufficient price, which he puts in the place of the natural price. Where he speaks of non-agricultural industry, he has no need for this, since the sufficient and the natural price coincide here, according to his original explanation namely that it is the price which repays the capital outlay plus the average profit. With regard to precious stones, he observes that: There can only be a differential rent here. The products of the less fertile precious metal and precious stone mines carry no rent, because it is always the most fertile mine which determines market-value and ever more fertile new mines are being opened up the line is always in the ascending direction, Hence they are sold below their value, merely at their cost-price. Then Adam Smith s argument again goes somewhat wrong. (But only if it does not produce the same product as the fertile lands in its neighbourhood; only if this product of the barren lands does not compete with that of the more fertile. In this case Adam Smith is right and indeed, this is of importance to the way in which the total amount of rent from different kinds of natural products may increase in consequence of the fertility of the land which yields food.) But in all this, Adam Smith does not offer any explanation for absolute rent, which he presupposes to exist for land that produces food. He is correct when he observes that it does not necessarily exist for other lands, mines, for instance, because they are always available in such relatively unlimited quantities (in comparison with demand), that landed property cannot offer any resistance to capital [so that] even if it exists in a legal sense, it does not exist in the economic sense. (See p. 641 on house rent.) |632|| ||641| See p. 632. On house rent Adam Smith says: In the case of the ground-rent of houses, situation constitutes just as decisive a factor for the differential rent, as fertility (and situation) in the case of agricultural rent. Adam Smith shares with the Physiocrats, not only the partiality for agriculture and the landlord, but also the view that they are particularly suitable objects of taxation. He says: The considerations which Ricardo (p. 230) advances against Adam Smith s views on the subject, are very philistine. |641|| ||632| Part III, Of the variations in the Proportion between the respective Values of that sort of Produce which always affords Rent, and of that which sometimes does, and sometimes does not, afford Rent. ([Garnier,] Book I, Vol. II, Ch. XI.) The peculiar manner in which Adam Smith mixes up the measuring of value by the quantity of labour, with the price of labour or the quantity of labour which a commodity can command, is evident from the above quotation, and especially from the following passage, which also shows how it has come about that at times he elevates corn to the measure of value. When comparing the value of gold and silver, Adam Smith once more sets forth his views on the sufficient price and notes ||633| expressly that it excludes rent: There are three sorts of raw products ([O.U.P., Vol. I, p. 248; Garnier,] Vol. II, p. 89). The first, whose increase is almost, or entirely, independent of human industry; the second, which can be increased in proportion to the demand; the third, upon whose increase human industry only exercises a limited or uncertain influence. First sort: Fishes, rare birds, different sorts of game, almost all wild-fowl, in particular the birds of passage, etc. The demand for these increases greatly with wealth and luxury. According to Adam Smith, the gradual rise in the price of these raw products only proves that, little by little, they are becoming products of human industry, while previously, they were practically only products of nature. Their transformation from products of nature into products of industry is itself the result of the advance of cultivation, which is increasingly limiting the scope of the spontaneous productions of nature. On the other hand, under less developed conditions of production, a large part of these products was sold below its value. The commodities are sold at their value (hence the rise in prices), as soon as they cease to be a by-product and become an independent product of some branch of agriculture. Here it is once more evident, how Smith is only able to use value as determined by the quantity of labour it [value] can buy, in so far as he confuses it with value as determined by the quantity of labour required for the production of the commodities. Third sort: This is the raw product, Wool and raw hides are limited by the number of large and small cattle that are kept. But the first by-products already have a large market, while the animal itself does not yet have this. The market for butcher s meat is almost always confined to the inland market. Wool and raw hides, even in the rude beginnings [of cultivation], are in most cases already sold in foreign markets. They are easily transported and furnish the raw material of many manufactured goods. They may thus find a market in countries which are more developed industrially when the industry in the country where they are produced does not yet require them. Here Adam Smith therefore determines the real price by the quantity of labour necessary for the production of the commodity. According to Adam Smith, the real price of vegetable food (corn, etc.) must fall in the course of civilisation. Adam Smith sees that the price of manufactured commodities in general has fallen wherever On the other hand, he asserts that the real price of labour, i.e., wages, has risen with the progress in production. Hence also, according to him, the prices of commodities do not necessarily rise because of a rise in wages, or the price of labour, although wages [form] a component part of the natural price and even of the sufficient price or the lowest price at which commodities can be brought to market . So how does Adam Smith explain this? By a fall in profits? No. (Although he assumes that the general rate of profit falls in the course of civilisation.) Or of rent? No again. He says: Thus the value of the commodities falls, because a smaller quantity of labour is required to produce them; the value moreover falls although the real price of labour rises. If here the real price of labour means the value [of labour], then the profit must fall, if the price of the commodity falls as a result of the fall in its value. If, on the other hand, it means the quantity of the means of subsistence received by the worker, then the Smithian thesis is correct even where profit is rising. The extent to which Adam Smith uses the correct definition of value, wherever he actually analyses [facts] can be seen at the end of the chapter where he examines why woollen cloths were dearer in the 16th century, etc. The mistake here consists only in the use of the word price. Conclusion of the Chapter. Adam Smith concludes his chapter on rent with the observation that In exactly the same way Ricardo explains the increase in the proportion of rent, as the price of corn rises on the more fertile land, only this rise in price is not the result of improvement, and therefore leads Ricardo to the opposite conclusion from Adam Smith. Adam Smith says that the landlord moreover benefits from every development of the productive power of labour in manufacture. From this Adam Smith concludes that the interests of the landlord are always in harmony with the general interest of society . This also applies to the labourers ([O.U.P., Vol. I, pp. 287-88; Garnier,] Vol. II, pp. 161-62). But Adam Smith is honest enough to make the following distinction: The interests of the capitalists (manufacturers and merchants), on the other hand, are not identical with the [a] The term prix suffisant (sufficient price) is used in the French translation of the Wealth of Nations from which Marx quotes. Ed. [b] i.e., out of the product of the land situated at a greater distance from the market. Ed. [c] requisite for each particular article inserted by Garnier in the French version. Ed.

Economic Manuscripts: Theories of Surplus-Value, Chapter 14

https://www.marxists.org/archive/marx/works/1863/theories-surplus-value/ch14.htm