[ The Distinction Between Productive and Unproductive Labour]

[VII-299] We come now to the last controversial point in Adam Smith's writings which we have to consider: the [VII-300] distinction between productive and unproductive labour.

//In addition to the foregoing.5 The following quotation shows how little the insipid Say even understood what the question was:

"In order fully to understand this subject of revenues, it is necessary to take into account that the entire value of a product is divided into revenues for various persons; for the total value of each product is composed of the profits of the landowners, of the capitalists and of the craftsmen who have contributed to bring it into existence. This is why the revenue of society is equal to the gross value which has been produced, and not, as the sect of Economists6 imagines, to the net product of the land.... If the only revenues in a nation were the excess of the values produced over the values consumed, this would lead to a truly absurd result: that a nation which had consumed in the year values as great as it had produced would have no revenue" (I.e., Vol. II, pp. 63, 64).a

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 pre-existing 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 pre-existing 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— besides the apparent contradiction in regard to wages7 — there is another confusion: 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.3 This confusion is also to be found in Ricardo in certain passages.//8

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 the meaning of 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 capacity), 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 capacity 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 capacity, [VII-301] then, 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 capacity) 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=his own consumption, and that a worker is unproductive who consumes more than he reproduces.) This productivity is based on relative productivity — that the worker not only replaces an old value, but creates a new one; that he objectifies more labour time in his product than is objectified 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 objectified in a SURPLUS PRODUCE or net product. (But here again they have a wrong conception of this; inasmuch as there is, for example, more wheat than workers 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.9 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.10 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 worker had become more productive, but because the absolute wage (that is to say, the quantity of means of subsistence which the worker 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.

[VII-302] " T H E REMARKABLE INCREASE [OF POPULATION] which has taken place in almost every European State, during the last fifty or sixty years, has perhaps proceeded chiefly from the INCREASED PRODUCTIVENESS of the AMERICAN MINES. An increased abundance of the PRECIOUS METALS" //OF COURSE as a result of the fall in their real value// "raises the price of commodities in a greater proportion than the price of labour; IT DEPRESSES THE CONDITION OF THE LABOURER, and at the same time INCREASES THE GAINS OF HIS EMPLOYER, who is thus induced to enlarge his CIRCULATING CAPITAL to hire HANDS and this favours the increase of population.... Malthus observes, that the DISCOVERY of the MINES of AMERICA, during the time that it raised the PRICE OF CORN between three and four times, did not nearly so much as double the price of labour.... The price of commodities intended for HOME CONSUMPTION (of corn for instance) does not immediately rise in consequence of an INFLUX of MONEY; but as the RATE OF PROFIT in agricultural employments is thus depressed below the rate of profit in manufactures, CAPITAL will gradually be withdrawn from the former to the latter: THUS ALL CAPITAL COMES TO YIELD HIGHER PROFITS THAN FORMERLY, AND A RISE OF PROFITS IS ALWAYS equivalent to A FALL OF WAGES" (John Barton, Observations on the Circumstances which Influence the Condition of the Labouring Classes of Society, London, 1817, pp. 29 sqq.).

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.

(B. II, Ch. Ill) (Vol. II, ed. McCulloch) (p. 93 sq.)⁽¹⁾:

* "There is one sort of labour which adds to the value of the subject upon which it is bestowed; there is another which has no such effect. The former, as it produces a value, may be called productive, the latter, unproductive labour. Thus the labour of a manufacturer adds, generally, to the value of the materials which he works upon, that of his own maintenance, and of his master's profit The labour of a menial servant, on the contrary, adds to the value of nothing. Though the manufacturer has his wages advanced to him by his master, he in reality costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labour is bestowed. But the maintenance of a menial servant never is restored. A man groins rich by employing a multitude of manufacturers: he grows poor by maintaining a multitude of menial servants."*

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 éminemment⁽²⁾ understood by PRODUCTIVE LABOUR is labour which produces a surplus value — ITS "MASTERS PROFIT"—in addition to the reproduction OF THE VALUE "OF HIS- (THE

LABOURER'S) "OWN MAINTENANCE". A l s o , t h e MANUFACTURER C O u l d n o t GROW

RICH "BY EMPLOYING A MULTITUDE OF MANUFACTURERS" (WORKING MEN), U n l e S S t h e 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". Leaving this [VII-303] latter statement out of account for the moment we will first cite other passages in which the first conception is partly repeated, partly formulated more sharply, but particularly also further developed.

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 capacity, and exchanged only in order to be replaced by more labour than they themselves contain. For the use value of labour capacity 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 d'une manière ou d'une autre" 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^[11] "explicitly" includes in the category of employed wage workers 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 I2) 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 e.g.

the agricultural labour of the peasants on corvée) 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, 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 money.

[VII-304] 11 To p. 300.^[13] 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 natura 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 the wear and tear of machinery. But the whole total that enters into the production of other spheres can only be = 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=6 qrs, and the qr=£3 — each qr containing component parts of value for labour added, raw material and machinery— and if he has to use 1 qr as seeds, he would only sell to consumers 5 qrs=£15. They would therefore not pay for the part of the value contained in the 1 qr of seed. And this is the point: how can the value of the product sold be=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?//

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. Its material determination has no connection at all with this quality it possesses of being so embodied; the latter is on the contrary only the expression of a definite social relation of production. It is a determination 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 capacity)—then revenue must be exchanged aut against commodities which capital alone produces and sells, aut^[3] against labour, which just like those commodities is bought in order to be consumed; that is, only for the sake of its particular material determination, its use value — for the sake of the services which, through its particular material determination, 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 [VII-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 material determination of 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.

* "That part of the annual produce of the land and labour of any country which replaces a capital, never is immediately employed to maintain any but productive hands. It pays the wages of productive labour only. That which is immediately destined for constituting a revenue, either as profit or as rent, may maintain indifferently either productive or unproductive hands" * (I.e., p. 98). * "Whatever part of his stock a man employs as a capital, he always expects it to be replaced to him with a profit. He employs it, therefore, in maintaining productive hands only; and after having served in the function of [a] capital to him, it constitutes a revenue to them. Whenever he employs any part of it in maintaining unproductive hands of any kind, that part is from that moment withdrawn from his capital, and placed in his stock reserved for immediate consumption" * (I.e.).

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.

[VII-306] The labour capacity 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 capacity. 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.

* "The labour of some of the most respectable orders in the society is, like that of menial servants, unproductive of any value.... The sovereign, for example, with all the officers both of justice and war who serve under him, the whole army and navy, are unproductive labourers. They are the servants of the public, and are maintained by a part of the annual produce of the industry of other people.... In the same class must be ranked ... churchmen, lawyers, physicians, men of letters of all kinds; players, buffoons, musicians, opera-singers, opera-dancers, etc." * (I.e., pp. 94-95).

In 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 of

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, while 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 capacity 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 differentia specified.

Thus, following through various associations of ideas, he says:

* "The labour of a menial servant" * (as distinct from that of a MANUFACTURER) * "adds to the value of nothing... the maintenance of a menial servant never is restored. A man grows rich by employing a multitude of manufacturers: he grows poor by maintaining a multitude of menial servants. The labour of the latter, however, Aas its value, and deserves its reward as well as that of the former. But the labour of the manufacturer fixes and realises itself in some particular subject or vendible commodity, which lasts for some time at least after that labour is past It is, as it were, a certain quantity of labour stocked and stored up, to be employed, if necessary, upon some other occasion. That subject, or what is the same thing, the price of that subject, can afterwards, if necessary, put into motion a quantity of labour equal to that which had originally produced it. The labour of the menial [VII-307] servant, on the contrary, does not fix or realise itself in any particular subject or vendible commodity. His services generally perish in the very instant of their performance, and seldom leave any trace or value behind them, for which an equal quantity of service could afterwards be procured.... The labour of some of the most respectable orders in the society is, like that of menial servants, unproductive of value, and does not fix or realise itself in any permanent subject, or vendible commodity" * (I.e., pp. 93-94 passim).

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:

*"It"* (the LABOUR of the UNPRODUCTIVE LABOURER) *"is unproductive of value", "adds to the value of nothing", "the maintenance" (of the unproductive labourer) "never is restored", "[it] does not fix or realise itself in any particular subject or vendible commodity".* On the contrary, *"his services generally perish in the very instant of their performance, and seldom leave any trace or value behind them, for which an equal quantity of service could afterwards be procured".* Finally, * "it does not fix or realise itself in any permanent subject, or vendible commodity" .*

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 of 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 labour produces. He pays for the'labour contained in his 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. His 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 the 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 "sterile" and "non-productive".

Thus Adam Smith tells us in the chapter referred to:

"First, this class" (namely the industrial classes, who do not carry on agriculture), "it is acknowledged" [by the Physiocrats], "reproduces annually the value of its own annual consumption, a n d c o n t i n u e s , at least, t h e e x i s t e n c e of t h e s t o c k o r c a p i t a l w h i c h maintains and employs it... Farmers and country labourers, indeed, over and above the stock which maintains and employs them, reproduce annually a neat produce, a free rent to the landlord ... the labour of farmers and country labourers is certainly more productive than that of merchants, artificers, and manufacturers. The superior produce of the one class, however, does not render the other barren or unproductive" ([Garnier,] I.e., t. Ill, p. 530) [Vol. Ill, p. 140].^[14]

Here, therefore, Adam Smith falls back into the Physiocratic [VII-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 of 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".

"Secondly," says Adam Smith, "it seems, on this account, altogether improper to consider artificers, manufacturers, and merchants, in the same light as menial servants. The labour of menial servants does not continue the existence of the fund which maintains and employs them. Their maintenance and employment is altogether at the expense of their masters, and the work which they perform is not of a nature to repay expense. That work consists in services which generally perish in the very instant of their performance, and does not fix or realise itself in any vendible commodity, which can replace the value of their wages and maintenance. The labour, on the contrary, of artificers, manufacturers, and merchants, naturally does fix and realise itself in some such vendible and exchangeable commodity. It is up on this account that, in the chapter in which I treat of productive and unproductive labour, I have classed artificers, manufacturers, and merchants among the productive labourers, and menial servants among the barren or unproductive" ([Garnier,] I.e., p. 531) [Vol. Ill, pp. 140-41].

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 capacity 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 and exchangeable 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, ingénieur, MANAGER, commis,^[3] 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,^[15] etc.?) •>•

[VII-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, or 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 workers 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 of their labour. 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 "HIS SERVICES GENERALLY PERISH IN THE VERY INSTANT OF THEIR PERFORMANCE", etc.b—that neither the special kind of labour nor the form of appearance 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 valorise it, and unproductive when I buy it as a consumer, a spender of revenue, in order to consume its use value, no matter whether this use value perishes with the activity of the labour capacity 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 [VII-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 capacity 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 in "ANY PERMANENT" ("PARTICULAR" is also used) "SUBJECT OR VENDIBLE COMMODITY" (apart from themselves).^[3] 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),^[3] 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. 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 2 great parts. First, labour capacity; second, commodities as distinct from labour capacity itself. As to the purchase of such services as those which train labour capacity, 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 it maintains health and so conserves the source of all values, labour capacity itself, etc.—these are services which yield in return "a vendible commodity, etc.",a namely labour capacity itself, into whose costs of production or reproduction these services enter. Adam Smith knew however how little "EDUCATION" enters into the production costs of the mass of WORKING MEN. And in any case the doctor's services belong to the faux frais de production!' They can be counted as the cost of repairs for labour capacity. 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 capacity. [VII-311] Adam Smith continues:

"Thirdly, it seems, upon every supposition, improper to say, that the labour of artificers, manufacturers, and merchants, does not increase the real revenue of the society. Though we should suppose, for example, as it seems to be supposed in this system, that the value of the daily, monthly, and yearly consumption of this class was exactly equal to that of its daily, monthly, and yearly production; yet it would not from thence follow, that its labour added nothing to the real revenue, to the real value of the annual produce of the land and labour of the society. An artificer, for example, who, in the first six months after harvest, executes 10 pounds worth of work, though he should, in the same time, consume 10 pounds worth of corn, and other necessaries, yet really adds the value of 10 pounds to the annual produce of the land and labour of the society. While he has been consuming a half-yearly revenue of 10 pounds worth of corn and other necessaries, he has produced an equal value of work, capable of purchasing, either to himself, or to some other person, an equal half-yearly revenue. The value, therefore, of what has been consumed and produced during these six months, is equal, not to 10, but to 20 pounds. It is possible, indeed, that no more than 10 pounds worth of this value may ever have existed at any one moment of time. But if the 10 pounds worth of corn and other necessaries which were consumed by the artificer, had been consumed by a soldier, or by a menial servant, the value of that part of the annual produce which existed at the end of the six months, would have been 10 pounds less than it actually is in consequence of the labour of the artificer. Though the value of what the artificer produces, therefore, should not, at any one moment of time, be supposed greater than the value he consumes, yet, at every moment of time, the actually existing value of goods in the market is, in consequence of what he produces, greater than it otherwise would be" ([Gamier,] I.e., pp. 531-33) [Vol. Ill, pp. 141-42].

Is not the value of the commodities at any time in the market greater as a result of the "unproductive labour" than it would be 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:

"When the patrons of this system assert, that the consumption of artificers, manufacturers, and merchants, is equal to the value of what they produce, they probably mean no more than that their revenue, or the fund destined for their consumption, is equal to it" (that is, to the value of what they produce) ([Garnier,] I.e., p. 533) [Vol. Ill, pp. 142-43].

In this the Physiocrats were right in relation to ouvriers and maîtres" taken together, rent forming only a special category of the latter's profit.//

[VII-312] IIAdam Smith notes on the same occasion — i.e., in his criticism of the Physiocrats — 1. IV, ch. IX (edit. Gamier, t. Ill):

"The annual produce of the land and labour of any society can be augmented only in two ways; either, first, by some improvement in the productive powers of the useful labour actually maintained within it; or, secondly, by some increase in the quantity of that labour. The improvement in the productive powers of useful labour depends upon the improvement in the ability of the workman ; and upon that of the machinery with which he works.... The increase in the quantity of useful labour actually employed within any society must depend altogether upon the increase of the capital which employs it; and the increase of that capital, again, must be exactly equal to the amount of the savings from the revenue, either of the particular persons who manage and direct the employment of that capital, or of some other persons, who lend it to them" ([Garnier,] pp. 534-35) [Vol. Ill, pp. 143, 144].

Here we have a double cercle vicieux.^[3] 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 matière bruteh from agriculture. A part of this matière brute, 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.^[16] Later however each process supplements the other.//

//The reason why the Physiocrats preached laissez-faire, laissez-passer,^[17] in short, free competition, is correctly stated in the following passages from Adam Smith:

"The trade which is carried on between these two different sets of people" (country and town) "consists ultimately in a certain quantity of rude produce exchanged for a certain quantity of manufactured produce. The dearer the latter, therefore, the cheaper the former; and whatever tends in any country to raise the price of manufactured produce, tends to lower that of the rude produce of the land, and thereby to discourage agriculture." But all fetters and restrictions placed on manufactures and foreign trade make manufactured commodities, etc., dearer. Therefore, etc. (Smith, [Garnier,] I.e., pp. 554-55) [Vol. Ill, pp. 158, 159].//

[VII-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 c o m m o d i t y . See above.^[3]

* "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 capacity, of which labour itself is the temporary manifestation. Just as it is only in this way that wage labour proper can be explained, so it is with "unproductive labour", which Adam Smith determines throughout by the production costs 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 capacity. 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 riot 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, objectified labour, and that therefore, if it does not appear in the form of a thing, it can only appear in the form of labour capacity itself; but never directly as living labour itself (except only in a roundabout way which in practice seems the same, but this is not so in the determination of different wages). Productive labour would therefore be such labour as produces commodities or directly produces, trains, develops, maintains or reproduces labour capacity 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 capacity 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 "A 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.)

[VII-314] Certain labours of MENIAL SERVANTS may therefore equally well take the form of commodities (potentia) 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 capacity 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 contradictions and inconsistencies unavoidable here. 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 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 mere commodity. 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 the labour that manifests itself in the product is productive already implies that the product at the same time = 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 plus ou moins" into the Mercantilist conception of "permanency" — ix FACT, inconsumability. We can recall the passage in Petty (see my Part I, 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 a!! other things as wealth that is "not perishable".

"In restricting the sphere of wealth" (says Adolphe Blanqui, Histoire de l'économie politique, Brussels, 1843, p. 152 ^[18]) "exclusively to those values which are embodied in material substances, he [Smith] erased from the book of production the whole boundless mass of immaterial values, daughters of the moral capital of civilised nations." etc.⁽³⁾

The polemics against Adam Smith's distinction between productive and unproductive labour were for the most part confined to the dii minorum gentiumA (among whom moreover Storch was the most important); they are not to be found in the work of any economist of significance [VI1-315]—of anyone of whom it can be said that he made some discovery in political economy. They are, however, the hobby-horse of the SF.COND-K.YIF H.LLOWS ?nd 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 BUFFOONS 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 à 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 provide pleasure, and therefore whether they are purchased or not depends entirely on the way in which the agent of production chooses to expend his wages or his profit — in so far on the contrary as they are necessary or make themselves necessary partly 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 faux frais de 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 commerçant proper 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 this scepticism. 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,^[3] 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",h 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 find 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 sciences (natural sciences) were subordinated to it as serving material production—[VII-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 the inanities of Germain Gamier (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, Vol. 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:

"The one always exchanges its labour against the capital of a nation; the other always exchanges it against a part of the national revenue."

Sismondi—likewise following Adam Smith — on surplus value:

"Although the labourer, by his daily labour, may have produced much more than his daily outlay, after sharing with the landowner and the capitalist what remains for him is seldom much beyond what is strictly necessary for his existence" (Sismondi, Nouveaux principes etc., Vol. I, p. 87).a//

Ricardo says:

* "If a landlord, or a capitalist, expends his revenue in the manner of an ancient baron, in the support of a great number of retainers, or menial servants, he will give employment to much more labour, than if he expended it on fine clothes, or costly furniture; on carriages, on horses, or in the purchase of any other luxuries. In both cases the net revenue would be the same, and so would be the gross revenue, but the former would be realised in different commodities. If my revenue were 10,000 /., the same quantity nearly of productive labour would be employed, whether I realised it in fine clothes and costly furniture, etc., or in a quantity of food and clothing of the same value. If, however, I realised my revenue in the first set of commodities, no more labour would be consequently employed: — I should enjoy my furniture and my clothes, and there would be an end of them; but if I realised my revenue in food and clothing, and my desire was to employ menial servants, all those whom I could so employ with my revenue of 10,000 /., or with the food and clothing which it would purchase, would be to be added to the former demand for labourers, and this addition would take place only because I chose this mode of expending my revenue. As the labourers, then, are interested in the demand for labour, they must naturally desire that as much of the revenue as possible should be diverted from expenditure on luxuries, to be expended in the support of menial servants"* (Ricardo, Principles, 3rd ed., 1821, pp. 475-76).

D'Avenant quotes from an old statistician, Gregory King, a list ENTITLED Scheme of the Income and Expence of the Several Families of England, Calculated for the Year, 1688.h 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 K I N G D O M - — 2 , 8 2 5 , 0 0 0 HEADS"; t h u s t h e f o r m e r is the " p r o d u c t i v e " class, t h e latter t h e " u n p r o d u c t i v e " . T h e "productive" class consists of LORDS, BARONETS, KNIGHTS, ESQUIRES, GENTLEMEN,

PERSONS IN OFFICES a n d PLACES, m e r c h a n t s i n o v e r s e a t r a d e , PERSONS IN

THE LAW, CLERGYMEN, FREEHOLDERS, FARMERS, PERSONS IN LIBERAL ARTS AND

SCIENCES, SHOPKEEPERS a n d TRADESMEN, ARTISANS AND HANDICRAFTS, NAVAL

OFFICERS, MILITARY OFFICERS. A S a g a i n s t t h e s e , t h e " u n p r o d u c t i v e " class consists of: sailors (COMMON SEAMEN), LABOURING PEOPLE AND OUT

SERVANTS (these a r e a g r i c u l t u r a l l a b o u r e r s a n d d a y w a g e l a b o u r e r s in manufacture ) , COTTAGERS ( w h o in D ' Avenant ' s t i m e w e r e still Vs of t h e total E n g l i s h p o p u l a t i o n ) , [ V I I - 3 1 7 ] COMMON SOLDIERS, PAUPERS,

GIPSIES, THIEVES, BEGGARS a n d VAGRANTS GENERALLY. D ' A v e n a n t e x p l a i n s this list of r a n k s p r e p a r e d b y t h e l e a r n e d K i n g as follows:

"By which he means, that the first class of the people, FROM LAND, ARTS AND INDUSTRY, maintain themselves, and add every year something to the nation's general STOCK; and besides this, out of their superfluity, contribute every year so MUCH TO THE MAINTENANCE OF OTHERS. That of the second class, some partly maintain themselves BY LABOUR but that the rest, as most of the wives and children of these, are nourish'd at the cost of others; and are a yearly burthen to the publick, CONSUMING ANNUALLY SO much AS WOULD BE OTHERWISE ADDED to the NATION'S GENERAL STOCK" (D'Avenant, An Essay upon the Probable Methods of Making a People Gainers in the Ballance of Trade, London, 1699, pp. 23 and 50).

I n a d d i t i o n t o this, t h e following p a s s a g e f r o m D ' Avenant is r a t h e r c h a r a c t e r i s t i c of the views of the Mercantilists o n s u r p l u s v a l u e :

It is "the exportation of our own product that must make England rich: to be gainers in the balance of trade, we must carry out of our own product, *what will purchase the things of foreign growth that are needful for our own consumption, with some overplus either in bullion or goods to be sold in other countries; which overplus is the profit a nation makes by trade, and it is more or less according to the natural frugality of the people that export," * (a frugality which the Dutch have, but not the English — I.e., pp. 46, 47) * "or as from the low price of labour and manufacture they can afford the commodity cheap, and at a rate not to be undersold in foreign markets"* (D'Avenant, I.e., pp. [45-]46).

//"BY WHAT IS CONSUM'D AT HOME, ONE LOSETH ONLY WHAT ANOTHER GETS, a n d the nation in general is not at all the richer; but ALL FOREIGN CONSUMPTION IS A CLEAR AND CERTAIN PROFIT" (An Essay on the East-India Trade etc., London, 1697) [p. 31].//

/ / T h i s w o r k , printed in the form of an appendix to a n o t h e r w o r k of D ' Avenant ' s , , 9 w h i c h h e tries t o d e f e n d is n o t t h e s a m e as the Considerations on the East-India Trade, 1 7 0 1 , q u o t e d b y M c C u l l o c h . / / I n c i d e n t a l l y , it m u s t n o t b e t h o u g h t t h a t t h e s e Mercantilists were as s t u p i d as t h e y w e r e m a d e o u t t o b e b y t h e later V u l g a r -

FREETRADERS. I n P a r t I I of his Discourses on the Publick Revenues, and on the Trade of England etc., L o n d o n , 1 6 9 8 , D ' Avenant says a m o n g o t h e r t h i n g s :

"Gold a n d silver are indeed the measure of trade, but the spring a n d ORIGINAL OF IT, IN ALL NATIONS, is t h e natural, or artificial product of the country, that is to say, what their land, or what their labour and industry produces. A n d this is so true, that a nation may be suppos'd, by some accident, quite without the species of money, and yet, if the people are numerous, industrious, vers'd in traffick, skill'd in SEA-AFFAIRS, a n d if they have good ports, a n d a soil fertile IN VARIETY OF

COMMODITIES, such a people will have trade, and, A PLENTY OF SILVER AND GOLD: S O that the real a n d effective riches of a country, is its native product" (I.e., p. 15). "Gold a n d silver are so far from being the only things that deserve the n a m e of treasure, or the riches of a nation that in truth, money is AT BOTTOM n o more than the COUNTERS with which m e n in their DEALINGS have been accustom'd to reckon" (I.e., p . 16). " W e u n d e r s t a n d that to be wealth which maintains THE PRINCE, AND T H E

GENERAL BODY of his people, IN PLENTY, EASE a n d SAFETY. W e esteem that to be TREASURE which FOR T H E USE O F MAN has been CONVERTED 3 from gold a n d silver, into buildings a n d IMPROVEMENTS O F T H E COUNTRY. A S ALSO O T H E R T H I N G S

CONVERTIBLE INTO THOSE METALS, AS THE FRUITS OF THE EARTH, MANUFACTURES, OR

FOREIGN COMMODITIES, AND STOCK OF SHIPPING ... e v e n PERISHABLE GOODS, MAY BE

HELD THE RICHES OF A NATION, if t h e y a r e CONVERTIBLE, t h o ' not CONVERTED i n t o gold a n d silver; a n d this we believe does not only hold between MAN AND MAN, but between o n e country a n d a n o t h e r " (I.e., p. 60, etc.). " T h e COMMON PEOPLEb being the stomach of the BODY POLITICK. That stomach in Spain did not take the money as it should have done, [VII-318] a n d failed to digest it — TRADE AND MANUFACTURES are t h e only mediums by which such a digestion and distribution of gold a n d silver can be made , AS WILL BE NUTRITIVE T O T H E BODY POLITICK" (I.e., p p . 62-63). c 2 0

Moreover, Petty too had the conception of productive labourers (though he also includes soldiers):

" Husbandmen , seamen, soldiers, ARTIZANS a n d merchants, are the very PILLARS

OF ANY C O M M O N - W E A L T H ; all the other great professions DO RISE OUT OF THE INFIRMITIES AND MISCARRIAGES OF THESE; NOW THE SEAMAN IS THREE OF THESE FOUR" (NAVIGATOR, MERCHANT, SOLDIER) (Political Arithmetick etc., London, 1699, p. 177). " T h e labour of seamen, a n d freight of ships, is always of the nature OF AN EXPORTED COMMODITY, THE OVERPLUS WHEREOF, ABOVE WHAT IS IMPORTED, BRINGS HOME MONEY, etc." (I.e., p. 179).d

In this connection Petty also explains the advantages of the division of labour:

" T h o s e who have the c o m m a n d of the sea-trade, may WORK at easier freight with more profit, than others at greater:" (higher freight charges) "for a cloth must be cheaper made , when o n e etc., another etc., so those w h o c o m m a n d the trade of shipping, can build different sorts of vessels for different purposes, one sort of vessels for the turbulent sea, another for inland waters a n d rivers o n e sort for war, etc. And this is the chief of several reasons, why the Hollanders can go at less freight than their neighbours, viz., because they CAN AFFORD A PARTICULAR SORT OF VESSELS FOR EACH PARTICULAR TRADE" (I.e., p p . 179-80). a

Here too Petty strikes quite a Smithian note when he continues:

If taxes are taken from industrialists, etc., in order to give [money] to those who "in general are occupied in ways WHICH PRODUCE NO MATERIAL THING, OR THINGS OF REAL USE AND VALUE IN THE COMMONWEALTH: In this case, the wealth of t h e publick will be diminished: O T H E R W I S E T H A N AS SUCH EXERCISES, ARE RECREATIONS AND REFRESHMENTS OF THE MIND; AND WHICH BEING MODERATELY USED, DO QUALIFY AND DISPOSE MEN TO WHAT IN ITSELF IS MORE CONSIDERABLE" (I.e., p. 198).a "After computing how many people a r e needed for industrial work THE REMAINDER may safely a n d without possible prejudice to the Commonwealth, be employed IN T H E ARTS AND EXERCISES OF PLEASURE AND ORNAMENT; THE GREATEST WHEREOF IS THE IMPROVEMENT OF NATURAL KNOWLEDGE" (I.e., p. 199).a " T h e r e is much more to be gained by manufacture than husbandry; a n d by MERCHANDIZE than MANUFACTURE" (I.e., p . 172). " A seaman is in effect three husbandmen " (p. 178).

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 capacity itself are also productive.

"SOURCES OF ENJOYMENT may be accumulated a n d stored u p ; enjoyment itself cannot. T h e wealth of a country consists of the sum total of the PERMANENT SOURCES O F ENJOYMENT, whether material or immaterial, CONTAINED IN I T ; a n d labour o r expenditure which tends to a u g m e n t OR KEEP UP THESE PERMANENT SOURCES, should, we conceive, be termed productive" (I.e., p . 82). " T h e mechanic or the SPINNER, when h e was learning his trade, CONSUMED PRODUCTIVELY, that is to say, his consumption did not tend to diminish, but to increase T H E PERMANENT SOURCES OF ENJOYMENT IN THE COUNTRY, BY EFFECTING A NEW CREATION OF THOSE SOURCES, MORE THAN EQUAL TO THE AMOUNT OF THE CONSUMPTION" (I.e., p . 83). b

We will now briefly run over the twaddle written against Adam Smith in connection with productive and unproductive labour.

[VII-319] The fifth volume [contains G. Garnier's] Notes to his translation of Smith's Wealth of Nations (Paris, 1802).

On "travail productif" in the highest sense Gamier 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,] I.e., t. V, p . 169).

//Before dealing with Gamier, something (by way of a digression) on the above mentioned Mill junior. What is to be said here really belongs later in this section, where Ricardian theory of surplus value is to be discussed; therefore not here, where we are still concerned with Adam Smith.//^[21] In the booklet mentioned above,^[22] which, in fact, contains all that is original in Mr. John Stuart Mill's writings about POLITICAL ECONOMY (in contrast to his bulky compendium ^[3]), he says in Essay IV—"On Profits, and Interest":

"Tools and materials, like other things, have originally cost nothing but labour.... The labour employed in making the tools and materials being added to the labour afterwards employed in working up the materials by aid of the tools, the sum total gives the whole of the labour employed in the production of the completed commodity.... To replace capital, is to replace nothing but the WAGES OF THE LABOUR EMPLOYED" (I.e., p. 94).22

This in itself is quite wrong, because the EMPLOYED LABOUR and the wages paid are by no means identical. On the contrary, the EMPLOYED LABOUR = the sum of wages and profit. T o replace capital means to replace the labour for which the capitalist pays (WAGES) and the labour for which he does not pay but which he nevertheless sells (PROFIT). Mr. Mill is here confusing "EMPLOYED

LABOUR" AND THAT PORTION OF THE EMPLOYED LABOUR WHICH IS PAID FOR BY THE CAPITALIST WHO EMPLOYS IT. This confusion is itself no recommendation for his understanding of the Ricardian theory, which he claims to teach.

Incidentally, it should be noted in relation to constant capital that though each part of it can be reduced to PREVIOUS LABOUR and therefore one can imagine that at some time it represented PROFIT or wages or both, but once it exists as constant capital, one part of it — for example, seeds, etc.—can no longer be transformed into profit or wages.

Mill does not distinguish surplus value from profit. H e therefore declares that the rate of profit (and this is correct for the surplus value which has already been transformed into profit) is equal to the ratio of the price of the product to the price of its means of production (labour included). (See pp. 92-93.) At the same time he seeks to deduce the laws governing the rate of profit directly from the Ricardian law, in which Ricardo confuses surplus value and profit, [and to prove] that "PROFITS DEPEND UPON WAGES; RISING AS WAGES FALL, AND FALLING AS WAGES RISE" [p. 94].

Mr. Mill himself is not quite clear about the question which he seeks to answer. We will therefore formulate his question briefly before we hear his answer. T h e rate of profit is the ratio of surplus value to the total amount of the capital advanced (constant and variable capital taken together) while surplus value itself is the excess of the quantity of labour performed by the labourer over the quantity of labour which is advanced him as wages; that is, surplus value is considered only in relation to the variable capital, or to the capital which is laid out in wages, not in relation to the whole capital. Thus the rate of surplus value and the rate of profit are two different rates, although profit is only surplus value considered sub certa specie? It is correct to say with regard to the rate of surplus value that it exclusively "DEPENDS UPON WAGES; RISING AS

WAGES FALL, AND FALLING AS WAGES RISE". ( B u t it W o u l d b e W r o n g w i t h regard to the total amount of surplus value, for this depends not only on the rate at which the surplus labour of the individual worker is appropriated but likewise on the mass (number) of workers exploited at the same time.) Since the rate of profit is the ratio of surplus value to the total value of the capital advanced, it is naturally affected and determined by the fall or rise of surplus value, and hence, by the RISE OR FALL OF WAGES, but in addition to this, the rate of profit includes factors [VII-320] which are independent of it and not directly reducible to it. Mr. John Stuart Mill, who, on the one hand, directly identifies profit and surplus value, like Ricardo, and, on the other hand (moved by considerations concerning the polemic against the anti-Ricardians), does not conceive the rate of profit in the Ricardian sense, but in its real sense, as the ratio of surplus value to the total value of the capital advanced (variable capital+constant capital), goes to great lengths to prove that the rate of profit is determined directly by the law which determines surplus value and can be simply reduced to the fact that the smaller the portion of the working day the worker appropriates to himself, the greater the portion which goes to the capitalist, and vice versa. We will now observe his torment, the worst part of which is that he is not sure which problem he really wants to solve. If he had formulated the problem correctly, it would have been impossible for him to solve it wrongly in this way.

He says, then:

"Though TOOLS, MATERIALS, and BUILDINGS are themselves the produce of labour, yet the whole of their value is not resolvable into the WAGES of the labourers by whom they were produced." //He said above that the replacement of capital is the replacement of WAGES.// "The profits which the capitalists make on these WAGES, need to be added. The last capitalist producer has to replace from his product not only the WAGES paid both by himself and by the TOOL-MAKER, but also the PROFIT OF THE TOOL-MAKER, ADVANCED by him himself out of his own capital" (I.e., p. 98).b Hence "PROFITS do not compose merely the SURPLUS after replacing the outlay; they also enter into the outlay itself. Capital is expended partly in paying or reimbursing WAGES, and partly in paying the PROFITS of other capitalists, whose concurrence was necessary in order to bring together the means of production" (pp. 98-99). "An article, therefore, may be the produce of the same quantity of labour as before, and yet, if any portion of the profits which the last producer has to make good to previous producers can be saved (economised), the cost of production of the article is diminished.... It is, therefore, strictly true, that the RATE OF PROFITS VARIES INVERSELY AS THE COST OF PRODUCTION OF WAGES" (pp. 102-03).

We are naturally always working on the assumption here that the price of a commodity is equal to its value. It is on this basis that Mr. Mill himself carries on the investigation.

Profit, in the passages quoted, appears d'abord^[3] to bear a very strong resemblance to PROFIT UPON ALIENATION ^[10]; but passons outre* Nothing is more wrong than to say that (if it is sold at its value) an article is "the produce of the same quantity of labour as before" and at the same time that by some circumstance or other "the cost of production of the article" can be "diminished". //Unless it is in the sense I first advanced, i.e., when I distinguished between the production cost of the article and the production cost to the capitalist, since he does not pay a part of the production costs.^[23] In this case, it is indeed true that the capitalist makes his profit out of the unpaid surplus labour of his own workers just as he may also make it by underpaying the capitalist who supplies him with his constant capital, that is, by not paying this capitalist for a part of the surplus labour embodied in the commodity and not paid for by this capitalist (and which precisely for that reason constitutes his profit). This amounts to the fact that he always pays for the commodity less than its value. The rate of profit //that is, the ratio of surplus value to the total value of the capital advanced// can increase either because the same quantity of capital advanced becomes objectively cheaper (due to the increased productivity of labour in those spheres of production which produce constant capital) or because it becomes subjectively cheaper for the buyer, since he pays for it below its value. For him, it is then always the result of a smaller quantity of labour.//

[VII-321] What Mill says first of all, is that the constant capital of the capitalist who manufactures the last commodity resolves not into WAGES alone, but also into PROFITS. His line of reasoning is as follows:

If it were resolvable into WAGES alone, then profit would be the surplus accruing to the last capitalist after he has reimbursed himself for all WAGES paid (and the whole //paid// costs of the product could be reduced to WAGES), which would constitute the whole of the capital advanced. The total value of the capital advanced would be=to the total value of the WAGES embodied in the product. Profit would be the surplus over this. And since the rate of profit is=to the ratio of this surplus to the total value of the capital advanced, then the rate of profit would obviously rise and fall in proportion to the total value of the capital advanced, that is, in proportion to the value of wages, the aggregate of which constitutes the capital advanced. //This objection is, in fact, silly, if we consider the general relation of profits and wages. Mr. Mill needed only to put on one side that part of the whole product which is resolvable into profit (irrespective of whether it is paid to the last or to the previous capitalists, the co-functionaries in the production of the commodity) and then put that part which resolves into wages on the other, and the amount of profit would still be equal to the SURPLUS over the total amount of wages, and it could be asserted that the Ricardian "inverse ratio" applied directly to the rate of profit. It is not true, however, that the whole of the capital advanced can be resolved into profit and wages.// But the capital advanced does not resolve itself into wages alone, but also into profits advanced. Profit therefore is a surplus not only over and above the wages advanced, but also over the profits advanced. The rate of profit is therefore determined not only by the surplus over wages, but by the last capitalist's surplus over the total sum of wages-(-profits, the sum of which, according to this assumption, constitutes the whole of the capital advanced. Hence this rate can obviously be altered not only as a result of a rise or fall in wages, but also as a result of a rise or fall in profit. And if we disregarded the changes in the rate of profit arising from the rise or fall in wages, that is, if we assumed — as is done innumerable times in practice — that the value of the wages, in other words, their production costs, the labour time embodied in them, remained the same, remained unchanged, then, following the path outlined by Mr. Mill, we would arrive at the pretty law that the rise or fall in the rate of profit depends on the rise or fall of profit.

"If any portion of the profits which the last producer has to make good to previous producers can be economised, the cost of production of the article is diminished."^[3]

This is in fact very true. If we assume that no portion of the previous producers' profit was a mere SURCHARGE — PROFIT UPON ALIENATION as James Stuart says, then every economy in one "portion of profit" //so long as it is not achieved by the latter producer swindling the previous one, that is, by not paying him for the whole of the value contained in his commodity// is an economy in the quantity of labour required for the production of the commodity. //Here we disregard the profit paid, for instance, for that time during the period of production, etc., when the capital lies idle.// For example, if 2 days were required to bring raw materials — coal, for instance — from the pit to the factory, and now only 1 day is required, then there is an "economy" of 1 day's work, but this applies as much to that part of it which resolves into wages as to that which resolves into profit.

After Mr. Mill has made it clear to himself that the rate of surplus of the last capitalist, or the rate of profit in general, depends not only on the direct ratio of WAGES to PROFITS, but on the ratio of the last profit, or the profit on every particular capital, to the total value of the capital advanced, which is = to the variable capital (that laid out in wages) + the constant capital — that, in other words, [VII-322] the rate of profit is determined not only by the ratio of profit to the part of capital laid out in wages, that is, not only by the cost of production or the value of wages, he continues:

"It is, therefore, strictly true, that the RATE OF PROFITS VARIES INVERSELY AS THE COST OF PRODUCTION OF WAGES." 3

Although it is false, it is nevertheless true. The illustration which he now gives can serve as a classical example of the way in which economists use illustrations, and it is all the more astonishing since its author has also written a book about the science of logic.b

"Suppose, for example, that 60 agricultural labourers, receiving 60 qrs OF CORN

FOR THEIR WAGES, CONSUME FIXED CAPITAL AND SEED AMOUNTING t o t h e v a l u e of 60 qrs more, and that the result of their operations is a produce of 180 qrs. Assuming profit to be 50%, the SEED and TOOLS must have been the produce of the labour of 40 men: for the WAGES of those 40, together with profit make up 60 qrs. The produce, therefore, consisting of 180 qrs, is the result of the labour altogether of 100 MEN" [pp. 99-100].c

"Now supposing that the amount of labour required remained the same, but as a result of some discovery no FIXED CAPITAL and SEED were needed. A RETURN of 180 qrs could not before be obtained but by an outlay of 120 qrs; it can now be obtained by an outlay of not more than 100" [p. 100].

"The produce (180 qrs) is still the result of the same quantity of labour as before, the labour of 100 MEN. A quarter of corn, therefore, is still the produce of

1 0/ ) 8 of a man's labour" [p. 100].

"For a quarter of corn, which is the REMUNERATION of a single labourer, is indeed the produce of the same labour as before; but its cost of production is nevertheless diminished. It is now the produce of !0/ig of a man's labour, and nothing else; whereas formerly it required for its production [the conjunction of] that quantity of labour plus AN EXPENDITURE, in the form of REIMBURSEMENT OF PROFIT, AMOUNTING to V5 more. If the cost of production OF WAGES had remained the same as before, PROFITS could not have risen. Each labourer received 1 qr of corn; but 1 qr of corn at that time was the result of the same cost of production, as 1 V5 qr NOW. IN ORDER, therefore, that each labourer should receive the same cost of production, each must now receive one qr of com, + l/e," (p[p. 102,] 103).

"Assuming, therefore, that the labourer is paid in the very article he produces, it is EVIDENT that, when any SAVING OF EXPENSE takes place in the production of that article, if the labourer still receives the same COST OF PRODUCTION as before, he must receive an INCREASED QUANTITY, in the very same RATIO in which the productive power of capital has been increased. But, if so, the outlay of the capitalist will bear exactly the same proportion to the return as it did before; and profits will not rise.... The VARIATIONS, therefore, IN THE RATE OF PROFITS, and those IN THE COST OF PRODUCTION OF WAGES, go hand in hand, and are inseparable. Mr. Ricardo's principle is therefore strictly true, if by LOW WAGES be meant not merely WAGES which are the produce of a smaller quantity of labour, but WAGES which are produced at less cost, reckoning LABOUR AND PREVIOUS PROFITS TOGETHER" (I.e., p. 104).

With regard to this wonderful illustration, we note d'abord that, as a result of a discovery, corn is supposed to be produced without seeds (raw materials) and without fixed capital; that is, without raw materials and without instruments of labour, by means of mere manual labour, out of air, water and earth. [VII-323] This absurd presupposition contains nothing but the assumption that a product can be produced without constant capital, that is, simply by means of newly added labour. In this case, what he set out to prove has of course been proved, namely, that profit and surplus value are identical, and consequently that the rate of profit depends solely on the ratio of surplus labour to necessary labour. The difficulty arose precisely from the fact that the rate of surplus value and the rate of profit are two different things because there exists a ratio of surplus value to the constant part of capital — and this ratio we call the rate of profit. Thus if we assume constant capital to be zero, we solve the difficulty arising from the existence of constant capital by abstracting from the existence of this constant capital. Or we solve the difficulty by assuming that it does not exist. Probatum est."

Let us now arrange the problem, or Mill's illustration of the problem, correctly.

According to the first assumption we have:

Constant capital Variable capital Total Profit (FIXED CAPITAL (capital laid out product and SEED) in wages)

60 qrs 60 qrs 180 qrs 60 qrs (60 workmen) It is assumed in this example that the labour which is added to the constant capital =120 qrs and that, since every qr represents the wages of a working day (or of a year's labour, which is merely a working day of 365 working days), the 180 qrs contain only 60 working days, 30 of which account for the wages of the workers and 30 constitute profit. We thus assume in fact that 1 working day is embodied in 2 qrs and that consequently the 60 working days of the 60 workmen are embodied in 120 qrs, 60 of which constitute their wages and 60 constitute the profit. In other words, the worker works one half of the working day for himself, to make up his wages, and one half for the capitalist, thus producing the capitalist's SURPLUS VALUE. The rate of surplus value is therefore 100% and not 50%. On the other hand, since the VARIABLE CAPITAL constitutes only half of the total capital advanced, the rate of profit is not 60 qrs to 60, that is, not 100%, but 60 qrs to 120 and therefore only 50%. If the constant part of the capital had equalled zero, then the whole of the capital advanced would have consisted of only 60 qrs, i.e., only of the capital advanced in wages=30 working days; profit and surplus value, and therefore also their rates, would be identical. Profit would then amount to 100% and not 50%; 2 qrs of corn would be the product of 1 working day, and 120 qrs the product of 60 working days, even though 1 qr of corn would only be the wages of 1 working day and 60 qrs of corn the wages of 60 working days. In other words, the worker would only receive half, 50%, of his product, while the capitalist would receive twice as much — 100% calculated on his outlay.

What is the position with regard to the constant capital of 60 qrs? These were likewise the product of 30 working days, and if it is assumed with regard to this constant capital that the elements which went into its production are so made up that Vs consists of constant capital and ^[2]/3 of newly added labour, and that the surplus value and the rate of profit are also the same as before, we get the following calculation:

Here again the rate of profit would be 50% and the rate of surplus value 100%. The total product would be [VII-324] the product of 30 working days, 10 of which however (=20 qrs) would represent the pre-existing labour (the constant capital) and 20 working days the newly added labour of 20 workers, each of whom would only receive half his product as wages. Two quarters would be the product of one man's labour as in the previous case, although, again as previously, one quarter would represent the wages of one man's labour and one quarter the capitalist's profit, the capitalist thus appropriating half of the man's labour.

The 60 qrs which the last capitalist producer makes as surplus value mean a rate of profit of 50%, because these 60 qrs of surplus value are calculated not only on the 60 advanced in wages but also on the 60 qrs expended in SEED and FIXED CAPITAL, which together amount to 120 qrs.

If Mill calculates that the capitalist who produces the SEED and the fixed capital — a total of 60 qrs — makes a profit of 50%, if he assumes further that the constant and variable capital enter into the product in the same proportion as in the case of the production of the 180 qrs, then it will be correct to say that the profit=20 qrs, wages=20 qrs and the constant capital=20 qrs. Since wages=l qr, then 60 qrs contain 30 working days in the same way as 120 [quarters] contain 60 [working days].

But what does Mill say?

"Assuming profit to be 50%, the SEED and TOOLS must have been the produce of the labour of 40 men: for the WAGES of those 40, together with profit make up 60 qrs." ⁽⁴⁾

In the case of the first capitalist, who employed 60 workers, each of whom he paid 1 qr per day as wages (so that he paid out 60 qrs in wages), and laid out 60 qrs in constant capital, the 60 working days resulted in 120 qrs, of which, however, the workers only receiyed 60 in wages; in other words, wages=only half the product of the labour of 60 men. Thus the 60 qrs of constant capital were only=to the product of the labour of 30 men; if they consisted only of profit and wages, then wages would amount to 30 qrs and profit to 30 qrs, thus wages would=the labour of 15 men and profit as well. But the profit amounted to only 50%, since it is assumed that of the 30 days embodied in the 60 qrs, 10 represent pre-existing labour (constant capital) and only 10 are allocated to wages. Thus, 10 days are embodied in constant capital, 20 are newly added working days, of which, however, the workers only work 10 for themselves, the other 10 being for the capitalist. But Mr. Mill asserts that these 60 quarters are the product of 40 men, while just previously he said that 120 [quarters] were the product of 60 [men]. In the latter case, 1 qr contains V2 working day (although it is the wages paid for a whole working day); in the former, ^[3]A qr would = li working day, whereas Vs of the product (i.e., the 60 qrs) which is laid out in constant capital has just as much value, that is, it contains just as much labour time, as any other 7s of the product. If Mr. Mill desired to convert the constant capital of 60 qrs wholly into wages and profit, then this would not make the slightest difference as far as the quantity of labour time embodied in it is concerned. It would still be 30 working days as before, but now, since there would be no constant capital to replace, profit and surplus value would coincide. Thus, profit would amount to 100%, not to 50% as previously. Surplus value also amounted to 100% in the previous case, but the profit was only 50% precisely because constant capital entered into the calculation.

We have here, therefore, a doubly false manoeuvre on the part of Mr. Mill.

In the case of the first 180 qrs, the difficulty consisted in the fact that surplus value and profit did not coincide, because the 60 qrs surplus value had to be calculated not only on 60 qrs (that part of the total product which represented wages) but [VII-325] on 120 qrs, i.e., 60 qrs constant capital+60 qrs wages. Surplus value therefore amounted to 100%, and profit only to 50%. With regard to the 60 qrs which constituted constant capital, Mr. Mill disposes of this difficulty by assuming that, in this case, the whole product is divided between capitalist and worker, i.e., that no constant capital is required to produce the constant capital, that is, the 60 qrs consisting of SEED and tools. The circumstance which had to be explained in the case of capital I, is assumed to have disappeared in the case of capital II, and in this way the problem ceases to exist.

But secondly, after he has assumed that the value of the 60 qrs which constitute the constant capital of capital I contains only labour, but no pre-existing labour, no constant capital, that profit and surplus value therefore coincide, and consequently also the rate of profit and the rate of surplus value, that no difference exists between them, he then assumes, on the contrary, that just as in the case of capital I, a difference between them does exist, and that therefore the PROFIT is only 50% as in the case of capital I. If Vs of the product of capital I had not consisted of constant capital, then profit would have been the same as surplus value; the whole product consisted of only 120 qrs=60 working days, 30 of which (=60 qrs) are appropriated by the workers and 30 (=60 qrs) by the capitalist. The rate of profit was the same as the rate of surplus value, 100%. It was 50% because the 60 qrs of surplus value were not calculated on 60 qrs (wages) but on 120 qrs (wages, SEED and fixed capital). In [the case of capital] II, he assumes that it contains no constant capital. He also assumes that wages remain the same in both cases— 1 qr. But he nevertheless assumes that profit and surplus value are different, that profit amounts only to 50%, although surplus value amounts to 100%. In actual fact he assumes that the 60 qrs, Va of the total product, contain more labour time than another Vs of the total product; he assumes that these 60 qrs are the product of 40 working days while the other 120 qrs were the product of only 60.

In actual fact, however, there PEEPS OUT THE OLD DELUSION OF PROFIT UPON ALIENATION, which has nothing whatever to do with the labour time contained in the product and likewise nothing to do with the Ricardian definition of value. For he [Mill] assumes that the wages a man receives for working for a day are equal to what he produces in a working day, i.e., that they contain as much labour time as he works. If 40 qrs are paid out in wages, and if the profit = 20 qrs, then the 40 qrs embody 40 working days. The payment for the 40 working days=the product of the 40 working days. If 50% profit, or 20 qrs, is made on 60 qrs, it follows that 40 qrs=the product of the labour of 40 men, for, according to the assumption, 40 qrs constitute wages and 1 man receives 1 qr per day. But in that case where do the other 20 qrs come from? The 40 men work 40 working days because they receive 40 qrs. A quarter is therefore the product of 1 working day. The product of 40 working days is consequently 40 qrs, and not a BUSHEL more. Where, then, do the 20 qrs which make up the profit come from? The old DELUSION of profit UPON ALIENATION, of a merely nominal price increase on the product over and above its value, is behind all this. But here it is quite absurd and impossible, because the value is not represented in money but in a part of the product itself. Nothing is easier than to imagine that — if 40 qrs of grain are the product of 40 workers, each one of whom receives 1 qr per day or per year, they therefore receive the whole of their product as wages, and if 1 qr of grain in terms of money is £3, 40 qrs therefore=£120— the capitalist sells these 40 qrs for £180 and makes £60, i.e., 50% profit=20 qrs. But this notion is reduced ad absurdum if out of 40 qrs — which have been produced in 40 working days and for which he pays 40 qrs — the capitalist sells 60 qrs. He has in his possession only 40 qrs, but he sells 60, 20 more than he has to sell.

[VII-326] Thus first of all Mill proves the Ricardian law, that is, the false Ricardian law, which confuses surplus value and profit, by means of the following convenient assumptions:

1) he assumes that the capitalist who produces constant capital does not himself IN HIS TURN need constant capital, and thus he assumes out of existence the whole difficulty which is posed by constant capital;

2) he assumes that, although the capitalist does not [need] constant capital, the difference between surplus value and profit caused by constant capital nevertheless continues to exist although no constant capital exists:

3) he assumes that a capitalist who produces 40 qrs of wheat can sell 60, because his total product is sold as constant capital to another CAPITALIST, whose constant capital=60 qrs, and because capitalist No. II makes a profit of 50% on these 60 qrs.

This latter absurdity resolves itself into the notion of PROFIT UPON ALIENATION, which appears here so absurd only because the profit is supposed to stem not from the nominal value expressed in money, but from a part of the product which has been sold. Thus, Mr. Mill, in seeking to justify Ricardo, has abandoned his basic concept and fallen far behind Ricardo, Adam Smith and the Physiocrats.

His first justification of Ricardo's teachings therefore consists in his abandoning them de prime abord," namely, abandoning the basic principle that profit is only a part of the value of the commodity, i.e., merely that part of the labour time embodied in the commodity which the capitalist sells in his product although he has not paid the worker for it. Mill makes the capitalist pay the worker for the whole of his working day and still derive a profit.

Let us see how he proceeds. He does away with the need for seed and agricultural implements in the production of corn by means of an invention, that is, he does away with the need for constant capital in the case of the last capitalist in the same way as he abandoned SEED and fixed capital in the case of the producer of the first 60 qrs. Now he ought to have argued as follows:

Capitalist I does not now need to lay out 60 qrs in SEED and fixed capital, for we have stated that his constant capital=0. He therefore has to lay out only 60 qrs for the wages of 60 workers who work 60 working days. The product of these 60 working days=120 qrs. The workers receive only 60 qrs. The capitalist therefore makes 60 qrs profit, i.e., 100%. His rate of profit is exactly equal to the rate of surplus value, that is, it is exactly equal to that of the labour time the workers worked not for themselves, but for the capitalist. They worked 60 days. They produced 120 qrs, they received 60 qrs in wages. They thus received the product of 30 working days as wages, although they worked 60 days. The quantity of labour time which 2 qrs cost still= 1 working day. The working day for which the capitalist pays still=l qr, i.e., it is equal to half the working day worked. The product has fallen by /$, from 180 qrs to 120, but the profit has nevertheless risen by 50%, namely, from 50 to 100. Why? Of the total of 180 qrs, Vs merely replaced outlays for constant capital, it did not therefore constitute either profit or wages. On the other hand, the 60 qrs, or the 30 working days during which the workers produced or worked for the capitalist, were calculated not on the 60 qrs spent on wages, that is, the 30 days during which they worked for themselves, but on the 120 qrs, i.e., the 60 working days, which were expended on wages, seed and fixed capital. Thus, although out of the total of 60 days they worked 30 days for themselves and 30 for the capitalist, and although a capital outlay of 60 qrs on wages yielded 120 quarters to the capitalist, his rate of profit was not 100%, but only 50%, because it was calculated differently, in the one case on 2x60 and in the other on 60. The surplus value [V1I-327] was the same, but the rate of profit was different.

But how does Mill tackle the problem? He does not assume that the capitalist with an outlay of 60 qrs obtains 120 (30 out of 60 working days), but that he now employs 100 men who produce 180 qrs for him, always on the supposition that the wage for 1 working day=l qr. The calculation is therefore as follows:

Capital expended Total Profit (only variable, only on wages) product

100 qrs (wages for 100 180 qrs 80 qrs working days)

This means that the capitalist makes a profit of 80%. Profit is here equal to surplus value. Therefore the rate of surplus value is likewise only 80%. Previously it was 100%, i.e., 20% higher. Thus we have the phenomenon that the rate of profit has risen by 30% while the rate of surplus value has fallen by 20%.

If the capitalist had only expended 60 qrs on wages as he did previously, we would have the following calculation:

100 qrs yield 80 qrs surplus value

10 " " 8 " 60 " " 48 "

But 60 qrs previously yielded 60 qrs (that means it has fallen by 20%). O r to put it another way, previously:

Totai Surplus product value 60 qrs 120 qrs 60 qrs 10 20 10 J 00 200 100 T h u s the surplus value has fallen by 20%, from 100 to 80 (we must take 100 qrs as the basis of the calculation in both [cases]).

(60:48=100:80; 60:48=10:8; 60:48=5:4; 4 x 6 0 = 2 4 0 and 48X5 = 240.)

Further, let us consider the labour time o r the value of a qr. Previously, 2 qrs = l working day, or 1 qr = 1/2 working day, or /la of a man's labour. As against this, 180 qrs are now the product of 100 working days, 1 qr is therefore the product of ^[100]/iso or ^[10]/i^[8] of a working day. That is, the product has become dearer by Vis of a working day, or the labour has become less productive, since previously a man required ^[9]/i8 of a working day to produce 1 qr, whereas now h e requires ^[10]/]8 of a working day. T h e rate of profit has risen although the surplus value has fallen and, CONSEQUENTLY, the productivity of labour has fallen or the real value, the COST OF PRODUCTION, OF WAGES has risen by Vis or by llV 9 % . 180 qrs were previously the product of 90 working days (1 qr, ^[9] /i8o, = ^[1]/2 working day= ^[9]/is of a working day). Now they are the product of 100 working days (1 qr=^[100]/i8o=^[10]/is of a working day). Let us assume that the working day lasts 1"2 hours, i.e., 6 0 x 1 2 or 720 minutes. [VII-328] One-eighteenth part of a working day= ^{[7 2]}%8, therefore=40 minutes. In the first case, the worker gives the capitalist %8 or half of these 720 minutes=360 minutes. 60 workers will therefore give him 3 6 0 x 6 0 minutes. In the 2nd case, the worker gives the capitalist only ^[8]/i8, that is, 320 minutes out of the 720. But the first capitalist employs 60 men and therefore obtains 3 6 0 x 6 0 minutes. T h e second employs 100 men and therefore obtains 100x320=32,000 minutes. T h e first gets 3 6 0 x 6 0 , 21,600 minutes. Thus the second capitalist makes a larger profit than the first because 100 workers at 320 minutes a day amounts to more than 60 [workers] at 360 minutes. His profit is bigger only because he employs 40 more men, but he obtains relatively less from each worker. He has a higher profit, although the rate of surplus value has declined, that is, the productivity of labour has declined, the production costs of REAL WAGES have therefore risen, in other words, the quantity of labour embodied in them has risen. But Mr. Mill wanted to prove the exact opposite.^[24]

Assuming that capitalist No. I, who has not "discovered" how to produce corn without seed or fixed capital, likewise uses 100 working days (like capitalist No. II), whereas he only uses 90 days in the above calculation. He must therefore use 10 more working days, 3^[1]/^[24] of which are accounted for by his constant capital (seed and fixed capital) and 3 Vs by wages. The product of these 10 working days on the basis of the old level of production=20 qrs, 6^[2]/s qrs of which, however, would replace constant capital, while 12/3 would be the product of 6^[2]/3 working days. Of this, wages would take 6^[2]/s and surplus value 6^[2]/3. We would thus arrive at the following calculation:

Constant capital Wages Total Surplus value qrs qrs product

qrs

662/^[3] (=331/3 662/3 (wages 200(100 662/ ^[3](=33V ^[3] working days) for 66^[2]/j working working days) working days) days) Surplus value =100%

He makes a profit of 33 V3 working days on the total product of 100 working days. Or 66^[2]/ä qrs on 200. Or, if we calculate the capital he lays out in qrs, he makes a profit of 66^[2]/s on 133 Vs qrs (the product of 66^[2]/3 working days), whereas capitalist II makes a profit of 80 qrs on an outlay of 100. Thus the profit of II is greater than that of I. Since I produces 200 qrs in the same labour time that it takes the other to produce 180; 1 qr of I = '/2 working day and 1 qr of II = '%8 or ^[5]/^[9] of a working day, that is, it contains V2 of the ninth part or Vis more labour time and would consequently be dearer, and I would drive II out of business. The latter would have to give up his discovery and accommodate himself to using seed and fixed capital in corn production, as before.

The profit of I amounted to 60 qrs on 120, or to 50% (the same as 66^[2]/^[3] qrs on 133 Vs).

The profit of II amounted to 80 qrs on 100, or to 80%. The profit of II compared to that of I = 80:50 = 8:5 = l:^[5]/s. As against this, the surplus value of II compared to that of 1=80:100=8:10= l:^[10]/^[8]= 1:1^/8= 1:1 V^[4].

The rate of profit" of II is 30% higher than that of I. The surplus value of II is 20% smaller than that of I. II employs 66^[2]/s% more working days, while I appropriates only Vis, or 11 ⁽⁵⁾/g%, more labour in a single day.

[VII-329] Mr. Mill has therefore proved that capitalist I — who uses a total of 90 working days, ^[1]/^[3] of which [is embodied] in constant capital (seed, machinery, etc.), and employs 60 workers whom, however, he pays only [the product of] 30 days — produces one quarter of corn in V2 a day or in ^[9]/is of a day; so that in 90 working days he produces 180 qrs, 60 qrs of which represent the 30 working days contained in the constant capital, 60 qrs the wages for 60 working days or the product of 30 working days, and 60 qrs the surplus value (or the product of 30 working days). The surplus value of this capitalist 1 = 100%, his profit=50%, for the 60 qrs of surplus value are not calculated on the 60 qrs, the part of the capital laid out in wages, but on 120 qrs, i.e., capital twice as large (=variable capital + constant capital).

He has proved further that capitalist II, who uses 100 working days and lays out nothing in constant capital (by virtue of his discovery), produces 180 qrs, 1 qr therefore=^[10]/ig of a day, or Vis of a day (40 minutes) dearer than that of I. His labour is Vis less productive. Since the worker receives a daily wage of 1 qr, as he did previously, his wages have risen by Vis in REAL VALUE, that is, in the labour time required for their production. Although the production cost OF WAGES has now risen by Vis and his total product is smaller in relation to labour time, and the surplus value produced by him amounts only to 80%, whereas that of I was 100%, his rate of profit is 80%, while that of the first was 50. Why? Because, although the COST OF WAGES has risen for II, he employs more workers, and because the rate of surplus value=the rate of profit in the case of II, since his surplus value is calculated only on the capital laid out in wages, the constant capital amounting to zero. But Mill wanted on the contrary to prove that the rise in the rate of profit was due to a reduction in the production cost of wages according to the Ricardian law. We have seen that this rise took place despite the increase in the production cost of wages, that, consequently, the Ricardian law is false if profit and surplus value are directly identified with one another, and the rate of profit is understood as the ratio of surplus value or gross profit (which=the surplus value) to the total value of the capital advanced.

Mr. Mill continues:

"A RETURN of 180 qrs could not before be obtained but by an outlay of 120 qrs; it can now be obtained by an outlay of not more than 100." ^[3]

Mr. Mill forgets that in the first case, the outlay of 120 qrs=an outlay of 60 working days. And that in the 2nd case, the outlay of 100 qrs=an outlay of 55^[5]/g working days (that is, 1 qr=^[9]/is of a working day in the first case and ^[10]/is in the 2nd).

"The produce (180 qrs) is still the result of the [same] quantity of labour as before, the labour of 100 MEN."^[3]

Pardon me! The 180 qrs were previously the result of 90 working days. Now they are the result of 100.

"A quarter of corn, therefore, is still the produce of "Vis of a man's labour."^[3]

(Pardon me! It was previously the produce of ^[9]/is of a man's labour.)

"For a quarter of corn, which is the REMUNERATION of a single labourer, is indeed the produce of the same labour as before."^[3]

(Pardon me! Firstly, now 1 qr of corn is "indeed the produce" of ⁽⁶⁾%8 of a working day, whereas previously it was the produce of ^[9]/i8; it therefore costs Vis of a day more labour; and secondly, whether the qr costs ^[9]/is or ^[10]/i^[8] of his working day, the REMUNERATION of an individual worker should never be confused with the product of his labour; since it is always only a part of that product.)

"It is now the produce of ^[10]/i8 of a man's labour, and nothing else" (this is correct); "whereas formerly it required for its production the CONJUNCTION of that quantity of labour+AN EXPENDITURE, in the form of REIMBURSEMENT OF PROFIT, AMOUNTING TO V5 more." 3

Stop! First of all [VII-330] it is wrong, as has been emphasised repeatedly, to say that 1 qr previously cost ^[10]/is of a working day. It only cost ^[9]/i8. It would be even more wrong (if a gradation in absolute falsehood were possible) if there were added to these ^[9]/is of a working day "the conjunction of REIMBURSEMENT OF PROFIT, AMOUNTING TO V5 MORE". In 90 working days (taking constant and variable capital together) 180 qrs are produced. 180 qrs = 90 working days. 1 qr=^[90]/i8o = '/2 working day=^[9]/is. Consequently, no "conjunction" whatsoever is added to these ^[9]/i^[8] of a working day, or to V2 working day which 1 qr cost in CASE No. I. We here discover the real DELUSION which is the centre around which the whole of this nonsense revolves. Mill first of all made A FOOL OF HIMSELF BY SUPPOSING THAT, IF 1 ^[2] 0 q r s a r e THE PRODUCE OF 6 0 DAYS OF

LABOUR, THE PRODUCE OF WHICH WAS DIVIDED TO EQUAL PARTS BETWEEN THE

^[6] 0 LABOURERS AND THE CAPITALISTS, THE 6 0 q r S WHICH REPRESENT THE CONSTANT

CAPITAL COULD BE THE PRODUCE OF 4 0 DAYS OF LABOUR. T H E Y COULD ONLY BE THE

PRODUCE OF 3 0 DAYS, IN WHATEVER PROPORTION THE CAPITALIST AND THE LABOURERS

PRODUCING THOSE 6 0 q r S MIGHT HAPPEN TO SHARE IN THEM. Mais, passons outre.* In order to make the DELUSION quite clear, let us assume that not Vs. i-e., 20 qrs of the 60 qrs of constant capital, would be resolved into profit, but THE WHOLE AMOUNT OF THE 60 qrs. We can make this assumption all the more readily since it is not in our interest, but in Mill's, and simplifies the problem. Moreover it is easier to believe that the CAPITALIST who produces 60 qrs of constant capital, discovers that 30 workers, who produce 60 qrs or an equivalent value in 30 days, can be made to work for nothing, without being paid any wages at all (as happens in the case of

corvée), than to believe in the ability of Mill's capitalist to produce 180 qrs of corn without seed or fixed capital, simply by means of a "discovery". Let us therefore assume that the 60 qrs contain only the profit of capitalist II, the producer of constant capital for capitalist I, since capitalist II has the product of 30 working days to sell without having paid a single FARTHING to the 30 workers, each of whom worked one day. Would it then be correct to say that these 60 qrs, which can be entirely resolved into profit, enter into the production costs of wages on the part of capitalist I, in "CONJUNCTION" with the labour time worked by these workers?

Of course, the capitalist and the workers in case I could not produce 120 qrs or even one single quarter without the 60 qrs which form their constant capital and can be resolved into profit alone. These are conditions of production necessary for them, and conditions of production, moreover, which have to be paid for. Thus the 60 qrs were necessary to produce 180. 60 of these 180 qrs replace the 60. Their 120 qrs — the product of their 60 working days — are not affected by this. If they had been able to produce the 120 qrs without the 60, then their product, the product of the 60 working days, would have been the same, but the total product would have been smaller, precisely because the 60 pre-existing working days would not have been reproduced. The capitalist's rate of profit would have been greater because his production costs would not have included the expenditure on, or the cost of, the conditions of production enabling him to make a surplus value of 60 qrs. The absolute amount of profit would have been the same=60 qrs. These 60 qrs, however, would have required an outlay of only 60 qrs. Now they require an outlay of 120. This outlay on constant capital therefore enters into the production costs of the capitalist, but not into the production costs of wages.

Let us assume that capitalist III, also without paying his workers, can produce 60 qrs in 15 working days by means of some "discovery", partly because he uses better machines, and so on. This capitalist III would drive capitalist II out of the market and secure the custom of capitalist I. The capitalist's outlay would now have fallen [VII-331] from 60 to 45 working days. The workers would still require 60 working days to transform the 60 qrs into 180. And they would need 30 working days in order to produce their wages. For them 1 qr='/2 working day. But the 180 qrs would only cost the capitalist an outlay of 45 working days instead of 60. Since however it would be absurd to suggest that corn under the name of seed costs less labour time than it does under the name of corn pure and simple, we would have to assume that in the case of the first 60 qrs, seed corn costs just as much as it did previously, but that less seed is necessary, or that the fixed capital which forms part of the value of the 60 qrs has become cheaper.

Let us write down first of all the results so far obtained from the analysis of Mill's "illustration".

First, it has emerged that: Supposing that the 120 qrs were produced without any constant capital and were the product of 60 working days as they were previously, whereas formerly, the 180 qrs, 60 qrs of which were constant capital, were the product of 90 working days. In this case, the capital of 60 qrs laid out in wages=30 working days but commanding 60 working days, would produce the same product as formerly, namely, 120 qrs. The value of the product would likewise remain unchanged, that is, 1 qr would = Va working day. Previously the product was=to 180 qrs instead of 120 as at present; but the 60 additional qrs represented only the labour time embodied in the constant capital. The production cost of WAGES has thus remained unchanged, and the WAGES themselves — in terms of both use value and exchange value — have also remained unchanged — 1 qr being equal to V2 working day. Surplus value would similarly remain unchanged, namely, 60 qrs for 60 qrs, or V2 working day for V2 working day. The rate of surplus value in both cases=100%. Nevertheless the rate of profit was only 50% in the first case, while it is now 100%. Simply because 60:60=100%, while 60:120 = 50%. The increase in the rate of profit, in this case, is not [due] to any change in the production cost of WAGES, but merely to the fact that constant capital has been assumed to be zero. The position is approximately similar when the value of constant capital diminishes, and with it the total value of the capital advanced; that is, the proportion of surplus value to capital increases, and this proportion is the rate of profit.

As rate of profit surplus value is not only calculated on that part of capital which really increases and creates surplus value, namely, the part laid out in wages, but also on the value of the raw materials and machinery whose value only reappears in the product. It is calculated moreover on the value of the whole of the machinery, not only on the part which really enters into the valorisation process, i.e., the part whose wear and tear has to be replaced, but also on that part which enters only into the labour process.

Secondly, in the second example it was assumed that capital I yields 180 qrs, = 90 working days, so that 60 qrs (30 working days)=constant capital; 60 qrs=variable capital (representing 60 working days, for 30 of which the workers are paid); thus wages = 60 qrs (30 working days) and surplus value=60 qrs (30 working days); on the other hand, capital II also yields 180 qrs, but these equal 100 working days, so that 100 qrs of the 180 = =wages, and 80 surplus value. In this case, the whole of the capital advanced is laid out in wages. Here constant capital=0; the real value of wages has risen although the use value the workers receive has remained the same — 1 qr; but 1 qr is now=to ^[10]/i8 of a working day whereas previously it was only = to ^[9]/is. The surplus value has declined from 100% to 80%, that is, by 7^[5]=20%. The rate of profit has increased from 50% to 80%, that is, by ^[3]/^[5] = 60%. In this case, therefore, the real production cost of WAGES has not simply remained unchanged, but has risen. Labour has become less productive and consequently the surplus labour has diminished. And yet the rate of profit has risen. Why? Firstly, because in this case there is no constant capital and the rate of profit consequently=the rate of surplus value. In all cases where capital is not exclusively laid out on wages — an almost impossible contingency in capitalist production — the rate of profit must be smaller than the rate of surplus value and it must be smaller in the same proportion as the total value of the capital advanced is greater than the value of the part of the capital laid out in wages. Secondly, [the rate of profit has risen because] II employs a considerably greater number of workers than I, thus more than counterbalanc-ing the difference in the productivity of the labour they respectively employ.

Thirdly, from one point of view, the cases outlined under the headings Firstly and Secondly are a conclusive proof that variations in the rate of profit can take place quite independently of the production cost of WAGES. For under the heading Firstly it was demonstrated that the rate of profit can rise although the production costs of labour remain the same. Under Secondly it was demonstrated that the rate of profit for capital II compared with that for capital I rises although the productivity of labour declines, in other words, although the production costs of WAGES rise. This case therefore proves [VIII-332] that if, on the other hand, we compare capital I with capital II, the rate of profit falls although the surplus value rises, the productivity of labour increases and consequently the production costs of WAGES fall. They amount to only ^[9]/is of a working day for I, whereas for II they amount to ^[10]/i8 of a working day; but despite this, the rate of profit is 60% higher in II than in I. In all these cases, not only are variations in the rates of profit not determined by variations in the production costs of WAGES, but they take place in the same proportions. Here it must be noted that it does not follow from this that the movement of one is the cause of movement of the other (for example, that the rate of profit does not fall because the production costs of WAGES fall, or that it does not rise because the production costs of WAGES rise), but only that different circumstances paralyse the opposite movements. Nevertheless, the Ricardian law that variations in the rate of profit take place in the opposite direction to variations in wages, that one rises because the other falls, and vice versa, is false. This law applies only to the rate of surplus value. At the same time, there exists however a necessary connection (although not always) in the fact that the rate of profit and the value of wages rise and fall not in the opposite but in the same direction. More manual labour is employed where the labour is less productive. More constant capital is applied where the labour is more productive. Thus in this context the same circumstances which bring about an increase or a decline in the surplus value, must as a consequence bring about a decline in the rate of profit, and so on, in the opposite direction.^[25]

But we shall now outline the case as Mill himself conceived it, although he did not formulate it correctly. This will at the same time clarify the real meaning of his TALK about the profits advanced by the capitalist.

Despite any kind of "discovery" and any possible "CONJUNCTION",^[3] the example cannot be left in the form in which Mill puts it forward, because it contains absolute contradictions and absurdities and the various presuppositions he makes cancel one another out.

Of the 180 qrs, 60 qrs (SEED and fixed capital) are supposed to consist of 20 qrs for profit and 40 qrs for 40 working days, so that if the 20 qrs profit are omitted, the 40 working days still remain. According to this presupposition, the workers therefore receive the whole product for their labour, and consequently it is absolutely impossible to see where the 20 qrs profit and their value come from. If it is assumed that they are merely nominal surcharge de prix,b if they do not constitute labour time appropriated by the capitalist, their omission would be just as profitable as if 20 qrs wages for workers who had not done any work were included in the 60 qrs. Furthermore, the 60 qrs here simply express the value of the constant capital. They are however supposed to be the product of 40 working days. On the other hand, it is assumed that the remaining 120 qrs are the product of 60 working days. But here working days must be understood as equal average labour. The assumption is therefore absurd.

Thus one must assume, firstly, that in the 180 qrs only 90 working days are embodied and in the 60 qrs=the value of the constant capital, only 30 working days. The assumption that the profit=20 qrs or 10 working days can be omitted, is once again absurd. For it must then be assumed that the 30 workers employed in the production of constant capital, although not working for a capitalist, are nevertheless so obliging that they are content to pay themselves wages, V2 their labour time, and not to reckon the other half in their commodity. In a word, that they sell their working day 50% below its value. Hence this assumption too is absurd.

But let us assume that capitalist I, instead of buying his constant capital from capitalist II and then working it up, combines both the production and the working up of constant capital in his own undertaking. He thus supplies seed, agricultural implements, etc., to himself. Let us likewise ignore the discovery which makes seed and fixed capital unnecessary. Supposing that he expends 20 qrs (=10 working days) on constant capital (for the production of his constant capital) and 10 qrs on wages for 10 working days, of which the workers work 5 days for nothing, the calculation would then be as follows: [VIII-333]

Constant Variable capital Surplus value Total product capital for 80 workers

20 qrs 60+20=80 qrs 60+20=80 qrs 180 qrs (10 working (wages for 80 work-(=40 working (=90 working days) ing days) (=40 days) days) working days)

The actual production costs of wages have remained the same, and consequently the productivity of labour too. The total product has remained the same, = 180 qrs, and the value of the 180 qrs has also remained unchanged. The rate of surplus value has remained the same — 80 qrs on 80 qrs. The total AMOUNT or quantity of surplus value has risen from 60 to 80 qrs, that is, by 20 qrs. The capital advanced has fallen from 120 to 100 qrs. Previously, 60 qrs were made on 120 qrs, or a rate of profit of 50%. Now 80 qrs are made on 100 qrs, or a rate of profit of 80%. The total value of the capital advanced has fallen from 120 qrs by 20 qrs and the rate of profit has risen from 50 to 80%. The profit itself, irrespective of its rate, now amounts to 80 qrs, whereas previously it was 60, that is, it has risen by 20 qrs, or as much as the amount (not the rate) of the surplus value.

Thus there has been no change here, no variation in the production costs of REAL WAGES. The rise in the rate of profit is due:

Firstly, to the fact that although the rate of surplus value has not risen, the total AMOUNT has increased from 60 qrs to 80, that is, by Va; and it has risen by V3, by 33 ^[1]/Î%, because the capitalist now directly employs 80 workers and not 60 as previously, that is, he exploits V3 or 33 Vs% more living labour; and obtains the same rate of surplus value from the 80 workers he now employs as previously when he employed only 60 workers.

Secondly. While the absolute magnitude of surplus value (that is, the GROSS PROFIT) has risen by 33 ^[1]k%, from 60 qrs to 80 ars, the rate of profit has risen from 50% to 80%, by 30, that is, by 7s (since Vs of 50=10, and ^[3]/5 = 30), i.e., by 60%. That is to say, the value of the capital laid out has fallen from 120 to 100, although the value of the part of capital laid out in wages has risen from 60 to 80 qrs (from 30 to 40 working days). This part of the capital has increased by 10 working days (=20 qrs). On the other hand, the constant portion of capital has decreased from 60 to 20 qrs (from 30 working days to 10), that is, by 20 working days. If we subtract the 10 working days by which the part of capital laid out in wages has increased, then the total capital expended decreases by 10 working days ( = 20 qrs). Previously, it amounted to 120 qrs (=60 working days). Now it amounts to only 100 qrs (=50 working days). It has therefore decreased by '/6, that is, by 16^[2]/s%-

Incidentally, this whole VARIATION in the rate of profit is only an illusion, only a TRANSFER from one account book to another. Capitalist I has 80 qrs profit instead of 60 qrs, that is, an additional profit of 20 qrs. This, however, is the exact amount of profit that the producer of constant capital made previously and which he has now lost because capitalist I, instead of buying his constant capital, now produces it himself, that is, instead of [VIII-334] paying that producer the surplus value of 20 qrs (10 working days) which the latter obtained from the 20 workers employed by him, capitalist I now keeps it for himself.

80 qrs profit is made on 180 qrs as previously, the only difference being that previously it was divided between 2 people. The rate of profit appears to be bigger, because previously capitalist I regarded the 60 qrs as constant capital only, which in fact they were for him; he therefore disregarded the profit accruing to the producer of constant capital. The rate of profit has not altered, any more than the surplus value or any condition of production, including the productivity of labour. Previously, the CAPITAL laid out by the producer=40 qrs (20 working days); that laid out by capital 7 = 60 qrs (30 working days), making a total of 100 qrs (50 working days), and the profit of the first came to 20 qrs, that of the other to 60, together 80 qrs (40 working days). The whole product=90 working days (180 qrs) yielded 80 profit on 100 laid out in wages and constant capital. For society, the revenue deriving from the profit has remained the same as before; ditto the ratio of surplus value to wages.

The difference arises from the fact that, when the capitalist enters the commodity market as a buyer, he is simply a commodity owner. He has to pay the full value of a commodity, the whole of the labour time embodied in it, irrespective of the proportions in which the fruits of the labour time were divided or are divided between the capitalist and the worker. If, on the other hand, he enters the labour market as a buyer, he buys in actual fact more labour than he pays for. If, therefore, he produces his raw materials and machinery himself instead of buying them, he himself appropriates the surplus labour he would otherwise have had to pay out to the seller of the raw materials and machinery.

It certainly makes a difference to the individual capitalist although not to the rate of profit, whether he himself derives a profit or pays it out to someone else. (In calculating the reduction in the rate of profit as a result of the growth of constant capital, the social average is always taken as the basis, that is, the aggregate amount of constant capital employed by society at a particular moment and the proportion of this amount to the amount of capital laid out directly in wages.) But this point of view is seldom decisive and can seldom be decisive even for the individual capitalist in the case of such combinations as occur, for example, when the capitalist is at the same time engaged in spinning and weaving, making his own bricks, etc. What is decisive here is the real saving in production costs, through saving of time on transport, savings on buildings, on heating, on motive power, etc., greater control over the quality of the raw materials, etc. If he himself decided to manufacture the machines he required, he would then produce them on a small scale like a small producer who works to supply his own needs or the individual needs of a few customers, and the machines would cost him more than they would if he bought them from a machine manufacturer who produced them for the market. Or if he wished at the same time to spin and to weave and to make machines not only for himself, but also for the market, he would require a greater amount of capital, which he could probably invest to greater advantage (division of labour) in his own enterprise. This point of view can only apply when he provides for himself a market sufficient to enable him to produce his constant capital himself on an advantageous scale. His own demand must be large enough to achieve this. In this case, even if his work is less productive than that of the proper producers of constant capital, he appropriates a share of the surplus labour for which he would otherwise have to pay another capitalist.

It can be seen that this has nothing to do with the rate of profit. If — as in the example cited by Mill — 90 working days and 80 workers were involved previously, then nothing is saved from the production costs by the fact that the surplus labour of 40 days (=80 qrs) contained in the product is now pocketed by one capitalist instead of by 2, as was the case previously. The 20 qrs profit (10 working days) simply disappears from one account book in order to appear again in another.

This saving on previous profit, if it does not coincide with a saving in labour time and thus with a saving in wages, is therefore a pure DELUSION.^{[3] [6]}

See this volume, pp. 114, 282-88.— Ed.

5» [VIII-335] Thirdly, there remains, however, the case in which the value of constant capital decreases as a result of the increased productivity of labour, and it remains for us to investigate whether or not, and to what extent, this case is related to the REAL production cost OF WAGES OR [to the] VALUE OF LABOUR. The question is, therefore, to what extent a real change in the value of constant capital causes at the same time a variation in the ratio of profit to wages. The value of constant capital, its production costs, can remain constant, yet more or less of it can be embodied in the product. Even if its value is assumed to be constant, the constant capital will increase in the measure that the productivity of labour and production on a large scale develop. Variations in the relative amount of constant capital employed while the production costs of the constant capital remain stable—variations which all affect the rate of profit — are excluded de prime abord^[1] from this investigation.

Furthermore, all branches of production whose products do not enter directly or indirectly into the consumption of the worker are likewise excluded. But variations in the real rate of profit (that is, the ratio of the surplus value really produced in these branches of industry to the capital expended) in these branches of industry affect the general rate of profit, which arises as a result of the levelling of profits, just as much as variations in the rate of profit in branches of industry whose products enter directly or indirectly into the consumption of the workers.

The question moreover must be reduced to the following: How can a change in the value of constant capital retrospectively affect the surplus value? For once surplus value is assumed as given, the ratio of surplus to necessary labour is given, and therefore also the value of wages, i.e., their production costs. In these circumstances, no change in the value of constant capital can have any effect on the value of wages, any more than on the ratio of surplus labour to necessary labour, although it must always affect the rate of profit, the production costs of the surplus value for the capitalist, and in certain circumstances, namely, when the product enters into the consumption of the worker, it affects the quantity of use values into which wages are resolved, although it does not affect the exchange value of wages.

Let us assume that wages are given, and that, for example, in a cotton factory the wage= 10 working hours and SURPLUS VALUE=2 working hours. The price of raw cotton falls by half as a result of a good harvest. The same amount of cotton which previously cost the manufacturer £100, now costs him only £50. The same amount of cotton requires just the same amount of spinning and weaving as it did before. With an expenditure of £50 for cotton, the capitalist can now acquire as much surplus labour as he did previously with an expenditure of £100, or, should he continue to spend £100 on cotton, he will now receive, for the same price as before, a quantity of cotton with which he will be able to acquire twice the amount of surplus labour. In both cases, the rate of surplus value, that is, the ratio of surplus value to wages, will be the same, but in the second case the AMOUNT of surplus value will rise, since twice as much labour will be employed at the same rate of surplus labour. The rate of profit will rise in both cases, although there has been no change in the production costs of wages. It will rise because, to obtain the rate of profit, the surplus value is calculated on the production costs of the capitalist, that is, on the total value of the capital he expends, and these have fallen. He now needs a smaller outlay in order to produce the same amount of surplus value. In the second case, not only the rate but also the AMOUNT of profit will rise, because surplus value itself has risen as a consequence of the increased employment of labour, without this increase resulting in an additional cost for raw material. Here again, increases in the rate and the AMOUNT of profit will take place without any kind of change in the value of labour.

Suppose on the other hand that cotton doubles in value as a result of a bad harvest so that the same amount of cotton [VIII-336] which formerly cost £100 now costs £200. In this case, the rate of profit will fall at all events, but in certain circumstances, the amount or ABSOLUTE MAGNITUDE OF PROFIT may fall as well. If the capitalist employs the same number of workers, who do the same amount of work as they did before, under exactly the same conditions as before, the rate of profit will fall, although the ratio of surplus labour to necessary labour, and therefore the rate and the yield of surplus value, will remain the same. The rate of profit falls because the production costs of surplus value have risen, i.e., the capitalist has to spend £100 more on raw material in order to appropriate the same amount of other people's labour time as before. However, if the capitalist is now forced to allocate a part of the money which he formerly spent on wages to buying cotton, e.g., to spend £150 on cotton, of which sum £50 formerly went on wages, then the rate and the AMOUNT of profit fall, the amount decreases because less labour is being employed, even though the rate of surplus value remains the same. The result would be the same if, owing to a bad harvest, there were not enough cotton available to absorb the same amount of living labour as formerly. In both cases, the AMOUNT and the rate of profit would fall, although the VALUE OF LABOUR would remain the same; in other words, the rate of surplus value or the quantity of unpaid labour which the capitalist receives in relation to the labour for which he pays wages, remains unchanged.

Thus, when the rate of surplus value, that is, when the VALVE OF LABOUR, remains unchanged, a change in the value of constant capital must produce a change in the rate of profit and may be accompanied by a change in the GROSS AMOUNT of profit.

On the other hand, as far as the worker is concerned: If the value of cotton, and therefore the value of the product into which it enters, falls, he still receives wages=10 hours of labour. But he can now buy the cotton goods which he himself uses more cheaply, and can therefore spend part of the money he previously spent on cotton goods on other things. It is only in this proportion that the means of subsistence available to him increase in quantity, that is, in the proportion in which he saves money on the price of cotton goods. For apart from this, he now receives no more for a greater quantity of cotton goods than he did previously for a smaller quantity. Other goods have risen in the same proportion as cotton goods have fallen. In short, a greater quantity of cotton goods now has no more value than the smaller quantity had previously. In this case, therefore, the value of wages would remain the same, but it would represent a greater quantity of other commodities (use values). Nevertheless, the rate of profit would rise although, given the same circumstances, the rate of surplus value could not rise.

The opposite is the case when cotton becomes dearer. If the worker is employed for the same amount of time and still receives a wage=10 hours as he did previously, the value of his labour would remain the same, but its use value would fall in so far as the worker himself is a consumer of cotton goods. In this case, the use value of wages would fall, its value, however, would remain unchanged, although the rate of profit would also fall. Thus, whereas surplus value and (real) wages^[27] always fall and rise in inverse ratio (with the exception of the case where the worker participates in the [yield of the] absolute lengthening of his working day; but when this happens, the worker uses up his labour capacity all the more quickly), it is possible for the rate of profit to rise or fall in the first case although the VALUE of wages remains the same and their use value increases, in the 2nd case although the VALUE of wages remains the same, while their use value falls.

Consequently, a rise in the rate of profit resulting from a fall in the value of constant capital, has no direct connection whatever with any kind of variation in the real value of wages (that is, in the labour time contained in the wages).

If we assume, as in the above case, that cotton falls in value by 50%, then nothing could be more incorrect than to say either that the production costs of WAGES have fallen or that, if the worker is paid in cotton goods and receives the same value as he did previously, that is, if he receives a greater amount of cotton goods than he did previously (since although 10 hours, for example, still = 10s., I can buy more cotton goods for 10s. than I could before, because the value of raw cotton has fallen), the rate of profit would remain the same. The rate of surplus value remains the same, but the [VIII-337] rate of profit rises. The production costs of the product fall, because an element of the product — its raw material — now costs less labour time than previously. The production costs of wages remain the same as before, since the worker works the same amount of labour time for himself and the same for the capitalist as he did before. (The production costs of wages do not depend however on the labour time which the means of production used by the worker cost, but on the time he works in order to reproduce his wages. According to Mr. Mill, the production costs of a worker's wages would be greater if, for example, he worked up copper instead of iron, or flax instead of cotton; and they would be greater if he sowed flax seed rather than cotton seed, or if he worked with an expensive machine rather than with no machine at all, but simply with tools.) The production costs of profit would fall because the aggregate amount, the sum total of the capital advanced in order to produce the surplus value would fall. The cost of surplus value is never greater than the cost of the part of capital spent on wages. On the other hand, the cost of profit=the total cost of the capital advanced in order to create this surplus value. It is therefore determined not only by the value of the portion of capital which is spent on wages and which creates the surplus value, but also by the value of the elements of capital necessary to bring into action the one part of capital which is exchanged against living labour. Mr. Mill confuses the production costs of profit with the production costs of surplus value, that is, he confuses profit and surplus value.

This analysis shows the importance of the cheapness or dearness of raw materials for the industry which works them up (not to speak of the relative cheapening of machinery. By relative cheapening of machinery, I mean that the absolute value of the amount of machinery employed increases, but that it does not increase in the same proportion as the mass and EFFICIENCY of the machinery), even assuming that the market price=the value of the commodity, i.e., that the market price of the commodity falls in exactly the same ratio as do the raw materials embodied in it.

COLONEL Torrens is therefore correct when he says with regard to England:

* "To a country in the condition of England, the importance of a foreign market must be measured, not by the quantity of finished goods which it receives, but by the quantity of the elements of reproduction which it returns" * (R. Torrens, A Letter to Sir Robert Peel etc. on the Condition of England etc., 2nd ed., London, 1849, p. 275).

//The way Torrens seeks to prove this, however, is bad. The usual talk about SUPPLY AND DEMAND. According to him it would appear that if, for example, English capital which manufactures COTTON goods grows more rapidly than capital WHICH GROWS COTTON, IN THE UNITED STATES FOR INSTANCE, then the price of cotton rises and then, he says:

* "The value of cotton fabrics will decline in relation to the elementary cost of their production" * [p. 240],

That is to say, while the price of the raw material is rising due to the growing demand from England, the price of COTTON FABRICS, raised by the rising price of the raw material, will fall; we can indeed observe at the present time (spring 1862), for instance, that cotton twist is scarcely more expensive than raw cotton and woven cotton hardly any dearer than yarn. Torrens, however, assumes that there is an adequate supply of COTTON, though at a rather high price, available for consumption by English industry. The price of COTTON rises above its value. Consequently, if COTTON FABRICS are sold at their value, this is only possible provided the COTTON-GROWER secures more SURPLUS VALUE from the total product than is his due, by actually taking part of the SURPLUS VALUE due to the COTTON MANUFACTURER. The latter cannot replace this portion by raising the price, because DEMAND would fall if prices rose. On the contrary, [the price of] his product may decline even more as a consequence of falling demand than it does as a consequence of the

COTTON-GROWERS SURCHARGE.

The demand for raw materials — raw cotton, for example — is regulated annually not only by the effective demand existing at a given moment, but by the average demand throughout the year, that is, not only by the demand from the mills that are working at the time, but by this demand increased by the number of mills which, experience shows, will start operating during the course of the coming year, that is, by the relative increase in the number of mills taking place during the year, or by the SURPLUS demand [VIII-338] corresponding to this relative increase.

Conversely, if the price of cotton, etc., should fall, e.g., as a result of an especially good harvest, then in most cases the price falls below its value, again through the law of demand and supply. The rate of profit — and possibly, as we saw above, the GROSS AMOUNT OF PROFIT — increases, consequently, not only in the proportion in which it would have increased had the price of the cotton which has become cheaper been = to its value; but it increases because the finished article has not become cheaper in the total proportion in which the COTTON-GROWER sold his raw cotton below its value, that is, because the manufacturer has pocketed part of the SURPLUS VALUE due to the COTTON-GROWER. This does not diminish the demand for his product, since its price falls in any case due to the decrease in the value of cotton. However, its price does not fall as much as the price of raw cotton falls below its own value.

In addition, demand increases at such times because the workers are fully employed and receive full wages, so that they themselves act as consumers on a significant scale, consumers of their own product. In cases in which the price of the raw material declines, not as a result of a permanent or continuous fall in its average production costs but because of either an especially good or an especially bad year (weather conditions), the workers' wages do not fall, the demand for labour, however, grows. The EFFECT produced by this demand is not merely proportionate to its growth. On the contrary, when the product suddenly becomes dearer, on the one hand many workers are dismissed, and on the other hand the manufacturer seeks to recoup his loss by reducing wages below their normal level. Thus the normal demand on the part of the workers declines, intensifying the now general decline in demand, and worsening the effect this has on the market price.//

It was mainly his (Ricardian) conception of the division of the product between worker and capitalist which led Mill to the idea that changes in the value of constant capital alter the value of labour or the production costs of labour; for example, that a fall in the value of the constant capital advanced results in a decline in the value of labour, in its production costs, and therefore also in wages. The value of yarn falls as a result of a decrease in the value of the raw material — raw cotton, for example. Its production costs decline; the amount of labour time embodied in it is reduced. If, for example, a pound of cotton twist were the product of one man working a 12-hour day, and if the value of the cotton contained in this twist fell, then the value of a lb. of twist would fall in the precise degree that the value of the cotton used for spinning fell. For example, 1 lb. of No. 40 MULE YARN 2ND QUALITY was 12d. (Is.) on MAY 22nd, 1861. It was lid. on May 22nd, 1858 (ll^[6]/^[8]d. in actual fact, since its price did not fall to the same extent as that of raw cotton). But in the first case a lb. of FAIR raw cotton cost 8d. (87sd. in actual fact) and 7d. (7^[3]/^[8]d. in actual fact) in the 2nd. In these cases, the value of the yarn fell in exactly the same degree as the value of raw cotton, its raw material. Consequently, says Mill, the amount of labour remains the same as it was previously; if it was 12 hours, the product is the result of the same 12 hours of labour. But there was Id. less worth of the pre-existing labour in the second case than in the first. The labour is the same, but the production costs of labour have been reduced (by Id.).

Now although one lb. of cotton twist as twist, as a use value, remains the product of 12 hours' labour as it was previously, the value of the lb. of twist is neither now, nor was it previously, the product of 12 hours'work by the spinner. The value of the raw cotton, which in the first case amounted to ^[2]/$ of 12d. = 8d., was not the product of the spinner; in the 2nd case, z/s of lid., that is, 7d., was not his product. In the first case the remaining 4d. is the product of 12 hours' labour and just the same amount — 4d.—is the product in the second. In both cases, his labour adds only '/s to the value of the twist. Thus, in the first case, only V3 lb. of twist out of 1 lb. of twist was the product of the spinner (disregarding machinery) and it was the same in the 2nd case. The worker and the capitalist have only 4d. = Vs lb. of twist to divide between them, the same as previously. If the worker buys cotton twist with the 4d., he will receive a greater quantity of it in the second case than in the first, now however a bigger quantity of twist is worth the same as a smaller quantity of twist was previously. But the division of the 4d. between worker and capitalist remains the same. If the time worked by the worker to reproduce or produce his wages=T0 hours, his surplus labour=2 hours, as it did previously. He receives ^[5]/e of 4d. or of V3 lb. of cotton twist — as he did previously — and the capitalist receives '/6- Therefore no [VIII-339] CHANGE has taken place in respect of the division of the product, of the cotton twist. None the less, the rate of profit has risen, because the value of the raw material has fallen and, consequently, the ratio of surplus value to the total capital advanced, or to the production costs of the capitalist, [has increased].

If, for the sake of simplification, we abstract from the machines, etc., then the two CASES stand as follows:

Price of Con-Labour Wages Total Surplus Rate of ^[1] lb. of twist

stant capital

added expenditure of the capitalist

gain profit

1st 12d. 8d. 4d. 131/3 iid. i/^[3] 22/3 5'5/^[17]9ä CASE farthings farthings

farthings

2nd lid. 7d. 4d. 131/3 lOd. 4/^[3] 22/3 6^[14]/^[3]i^ CASE farthings farthings

farthings

Thus the rate of profit here has risen although the value of labour has remained the same and the use value of the labour as expressed in cotton twist has risen. The rate of profit has risen without any kind of variation in the labour time which the worker appropriates for himself, solely because the value of the cotton, and consequently the total value of the production costs of the capitalist, has fallen. 2^[2]/s farthings on lld.^[4]/^[3] farthings expenditure is naturally less than 2^[2]/3 farthings on lOd. ^[4]/^[3] farthings expenditure.

In the light of what has been said above, the fallaciousness of the following passages with which Mill concludes his illustration becomes clear.^[3]

"If the cost of production OF WAGES had remained the same as before, profits could not have fallen (risen}). Each labourer received one qr of corn; but 1 qr of corn at that time was the result of the same cost of production, as l'/ ^[5] qr NOW. IN ORDER, therefore, that each labourer should receive the same cost of production, each must receive 1 qr of corn+V ^[5]" (I.e., p. 103).

"Assuming, therefore, that the labourer is paid in the very article he produces, it is EVIDENT that, when any SAVING OF EXPENSE takes place in the production of that article, if the labourer still receives the same COST OF PRODUCTION as before, he must receive an INCREASED QUANTITY, in the very same RATIO in which the PRODUCTIVE POWER of capital has been increased. But, if so, the outlay of the capitalist will bear exactly the same proportion to the RETURN as it did before; and PROFITS will not rise..." (this is wrong). "...The VARIATIONS, therefore, in the RATE OF PROFITS, and those in the COST OF PRODUCTION OF WAGES, go hand in hand, and are inseparable. Mr. Ricardo's principle is strictly true, if by LOW WAGES be meant not merely WAGES which are the produce of a smaller quantity of labour, but WAGES which are produced at less cost, reckoning LABOUR and PREVIOUS PROFITS TOGETHER" (I.e., p. 104).

Thus according to Mill's illustration, Ricardo's view is strictly true if LOW WAGES (or the production cost of WAGES in general) are taken to mean not only the opposite of what he said they mean, but if they are taken to mean absolute nonsense, namely, that the production costs of WAGES are taken to mean not that portion of the working day which the worker works to replace his wages, but also the production costs of the raw material he works up and the machinery he uses, that is, labour time which he has not expended at all — neither for himself nor for the capitalist.

Fourthly. Now comes the real question: How far can a change in the value of constant capital affect the surplus value?

If we say that the value of the average daily wage is equal to 10 hours or, what amounts to the same thing, that from the whole working day of, let us say, 12 hours which the worker labours,

10 hours are required in order to produce and replace his wages, and that only the time he works over and above this is unpaid labour time in which he produces values which the capitalist [VIII-340] receives without having paid for them; this means nothing more than that 10 hours of labour time are embodied in the total quantity of means of subsistence which the worker consumes. These 10 hours of labour are expressed in a certain sum of money with which he buys the means of subsistence.

The value of commodities however is determined by the labour time embodied in them, irrespective of whether this labour time is embodied in the raw material, the machinery used up, or the labour newly added by the worker to the raw material by means of the machinery. Thus, if there were to be a constant (not temporary) change in the value of the raw material or of the machinery which enter into this commodity — a change brought about by a change in the productivity of labour which produces this raw material and this machinery, in short, the constant capital embodied in this commodity — and if, as a result of this change, more or less labour time were required in order to produce this part of the commodity, the commodity itself would consequently be dearer or cheaper (provided both the productivity of the labour which transforms the raw material into the product and the length of the working day remained unchanged). This would lead either to a rise or to a fall in the production costs, i.e., the value, of labour capacity; in other words, if previously out of the 12 hours the worker worked 10 hours for himself, he must now work

11 hours, or, in the opposite case, only 9 hours for himself. In the first case, his labour for the capitalist, i.e., the surplus value, would have declined by half, from 2 hours to 1 ; in the second case it would have risen by half, from 2 hours to 3. In this latter case, the rate of profit and the GROSS profit of the capitalist would rise, the former because the value of constant capital would have fallen, and both because the rate of surplus value (and its AMOUNT in absolute figures) would have increased.

This is the only way in which a change in the value of constant capital can affect the VALUE OF LABOUR, the production cost of wages, or the division of the working day between capitalist and worker, hence also the surplus value.

However, this simply means that for the capitalist who, for example, spins cotton, the necessary labour time of his own workers is determined not only by the productivity of labour in the spinning industry, but ditto by that in the production of cotton, of machinery, etc., just as it is also determined by the productivity in all branches of industry whose products — although they do not enter as constant capital, that is, either as raw material or as machinery, etc., into his product (a product which, it is assumed, enters into the consumption of the worker), into the yarn — constitute a part of the circulating capital which is expended in wages, that is, by the productivity in the industries producing food, etc. What appears as the product in one industry appears as material of labour or means of labour in another; the constant capital of one industry thus consists of the products of another industry; in the latter it does not constitute constant capital, but is the result of the production process within this branch. To the individual capitalist it makes a great deal of difference whether the increased productivity of labour (and therefore also the fall in the value of labour capacity) takes place within his own branch of industry or amongst those which supply his industry with constant capital. For the capitalist class, for capital as a whole, it is all the same.

Thus this CASE //in which a fall (or a rise) in the value of constant capital is not due to the fact that the industry employing this constant capital produces on a large scale, but to the fact that the production costs of constant capital itself have changed// concurs with the laws elaborated for surplus value.^[28]

When in general we speak about profit or rate of profit, then surplus value is supposed to be given. The influences therefore which determine surplus value have all operated. This is the presupposition.

Fifthly. In addition, one could have set forth how the ratio of constant capital to variable capital and hence the rate of profit is altered by a particular form of SURPLUS VALUE. Namely, by the lengthening of the working day beyond its normal limits. [VIII-341] This results in the diminution of the relative value of the constant capital or of the proportionate part of value which it constitutes in the total value of the product. But we will leave this till Chapter III ^{[2 9]} where the greater part of what has been dealt with here really belongs.

Mr. Mill, basing himself on his brilliant illustration, advances the general (Ricardian) proposition:

* "The only expression of the law of profits ... is, that they depend upon the cost of production of wages" * (I.e., pp. 104-05).

On the contrary, one should say: The rate ol profit //and this is what Mr. Mill is talking about// depends exclusively on the COST OF PRODUCTION OF WAGES only in one single case. And this is when the rate of surplus value and the rate of profit are identical. But this can only occur if the whole of the capital advanced is laid out directly in wages, so that no constant capital, be it raw material, machinery, factory buildings, etc., enters into the product, or that the raw material, etc., in so far as it does enter, is not the product of labour and costs nothing — a case which is virtually impossible in capitalist production. Only in this case are the variations in the rate of profit identical with the variations in the rate of surplus value, or, what amounts to the same thing, with the variations in the production costs of WAGES.

In general however (and this also includes the exceptional case mentioned above) the rate of profit is equal to the ratio of surplus value to the total value of the capital advanced.

If we call the surplus value S, and the value of the capital

5 advanced C, then profit=5:C or— . This ratio is determined not only by the size of S //and all the factors which determine the production cost of WAGES enter into the determination of SI I but also by the size of C. But C, the total value of the capital advanced, consists of the constant capital, c, and the variable capital, v (laid out in wages). The rate of profit therefore=S:(i» + c) = S:C. But S itself, the surplus value, is determined not only by its own rate, i.e., by the ratio of surplus labour to necessary labour, in other words, by the division of the working day between capital and labour, that is, its division into paid and unpaid labour time. The quantity of surplus value, i.e., the total amount of surplus value, is likewise determined by the number of working days which capital exploits simultaneously. And, for a particular capital, the amount of labour time employed at a definite rate of unpaid labour depends on the time in which the product remains in the actual production process without labour being applied or without the same amount of labour as was required formerly (for example, wine before it has matured, corn once it has been sown, skins and other materials which are subjected to chemical treatment for a certain period, etc.), as well as on the length of time involved in the circulation of the commodity, the length of time required for the metamorphosis of the commodity, that is, the interval between its completion as a product and its reproduction as a commodity. How many days can be worked simultaneously //if the VALUE OF WAGES, and therefore the rate of surplus value, is given// depends in general on the amount of capital expended on wages. But on the whole, the factors mentioned above modify the total amount of living labour time which a capital of a given size can employ during a definite period—during a year, for example. These circumstances determine the absolute amount of labour time which a given capital can employ. This does not, however, alter the fact that surplus value is determined exclusively by its own rate multiplied by the number of days worked simultaneously. These circumstances only determine the operation of the last factor, the amount of labour time employed.

The rate of surplus value is equal to the ratio of surplus labour in one working day, that is, it is equal to the surplus value yielded by a single working day. For example, if the working day =12 hours and the surplus labour=2 hours, then these 2 hours = '/6 of 12 hours; but we must calculate them on the necessary labour (or on the wages paid for it; they represent the same quantity of labour time in objectified form) = Vs. Vs of 10 hours = 2 hours (7s=20%). In this case the amount of surplus value (yielded in a single day) is determined entirely by the rate. If the capitalist operates on the scale of 100 such [VIII-342] days, then the surplus value (its total amount) = 200 working hours. The rate has remained the same — 200 hours for 1,000 hours of necessary labour, = 7s = 20%. If the rate of surplus value is given, its amount depends entirely on the number of workers employed, that is, on the total amount of capital expended on wages, variable capital. If the number of workers employed is given, i.e., the amount of capital laid out in wages, the variable capital, then the amount of surplus value depends entirely on its rate, i.e., on the ratio of surplus labour to necessary labour, on the production costs of WAGES, on the division of the working day between capitalist and worker. If 100 workers (working 12 hours a day) provide me with 200 working hours, then the total amount of surplus value=200, the rate='/5 of a working day, or 2 hours. And the surplus value=2 hoursXlOO. If 50 workers provide me with 200 working hours, then the total amount of the surplus value is 200 hours; the rate=^[2]/^[5] of a (paid) working day, =4 hours. And the surplus value=4 hoursX50=200. Since the total amount of surplus value = the product of its rate and the number of working days, it can remain the same although the factors change in an inverse ratio.

The rate of surplus value is always expressed in the ratio of surplus value to variable capital. For variable capital is=to the total amount of the paid labour time; surplus value is equal to the total amount of unpaid labour time. Thus the ratio of surplus value to variable capital always expresses the ratio of the unpaid part of the working day to the paid part. For example, in the case mentioned previously, let the wage for 10 hours =1 thaler, where 1 thaler represents a quantity of silver which contains 10 hours of labour. 100 working days are consequently paid for with 100 thaler. Now if the surplus value = 20 thaler, the rate is ^[20]/ioo=I/5 = 20%. Or what amounts to the same thing, the capitalist receives 2 hours for every 10 working hours (=1 thaler); for 100x10 working hours, that is, 1,000 hours, he receives 200 hours=20 thaler.

Thus, although the rate of surplus value is determined exclusively by the ratio of surplus labour time to necessary time, in other words, by the corresponding part of the working day which the worker requires to produce his wages, by the production costs of wages, the amount of surplus value is moreover determined by the number of working days, by the total quantity of labour time which is employed at this definite rate of surplus value, that is, by the total amount of capital expended on wages (if the rate of surplus value is given). But since profit is the ratio, not of the rate of surplus value, but of the total amount of surplus value to the total value of the capital advanced, then clearly its rate is determined not only by the rate, but also by the total amount of surplus value, an amount which depends on the compound ratio of the rate and the number of working days, on the amount of capital expended on wages and the production costs of wages.

If the rate of surplus value is given, then its amount depends exclusively on the amount of capital advanced (laid out in wages). Now the average wage is the same, i.e. it is assumed that workers in all branches of industry receive a wage of 10 hours, for example. (In those branches of industry where wages are higher than the average, this, from our point of view and for the matter under consideration, would amount to the capitalist employing a greater number of unskilled workers.) Thus, if it is assumed that the surplus labour is equal, and this means that the entire normal working day is equal (the inequalities cancel one another out in part since 1 hour of skilled labour, for example,=2 hours of unskilled labour), [VHI-343] then the amount of the surplus value depends entirely on the amount of capital expended. It can therefore be said that the amounts of surplus value are proportional to the amounts of capital laid out (in wages). This does not, however, apply to profit, since profit [expresses] the ratio of surplus value to the total value of the capital expended, and the portion which capitals of equal size lay out in wages, or the ratio of variable capital to the total capital, can be and is very different. The amount of profit — as regards the different capitals — here depends rather on the ratio between the variable

V capital and the total capital, that is, on • Thus, if the rate of c + v s surplus value is given, and it is always expressed by ,by the ratio of surplus value to variable capital, then the rate of profit is determined entirely by the ratio of variable capital to the total capital. The rate of profit is thus determined, firstly, by the rate of surplus value, that is, by the ratio of unpaid labour to paid labour; and it changes, rises or falls (in so far as this action is not rendered ineffectual by movements of the other determining factors), with changes in the rate of surplus value. This, however, rises or falls in direct proportion to the productivity of labour and in inverse proportion to the production costs of WAGES or the quantity of necessary labour, i.e. to the VALUE OF LABOUR.

Secondly, however, the rate of profit is determined by the ratio

V of variable capital to the total capital, by The total amount of surplus value, where its rate is given, depends of course only on the size of the variable capital, which, on the assumption made, is determined by, or simply expresses, the number of working days worked simultaneously, that is, the total amount of labour time employed. But the rate of profit depends on the ratio of this absolute magnitude of surplus value, which is determined by the variable capital, to the total capital, that is, on the ratio between

variable capital and total capital, on . Since S, surplus value, c + v has been assumed as given in calculating the rate of profit, and therefore v is likewise assumed as given, any VARIATIONS occurring

V in can be due only to VARIATIONS in c, i.e. in constant capital.

6-176 For if t; is given, the sum c + v = C can only change if c changes and the ratio or — changes with changes in the sum. c + v (

v 100 1 If u = 100, c=400, then v + c = 500 and = = — =20%. v + c 500 5 Therefore, if the rate of surplus value=^[5]/io, = '/2, [surplus value] =50. But since the variable capital is only=to Vs the total capital, the profit therefore = '/2 of 75=7io and, in fact, Vio of

V 500 = 50=10%. The ratio changes with every change in c, but naturally not by the same numerical quantity. If we assume that v and c amount originally to 10 each, i.e., that the total capital consists of half variable and half constant capital, then v _ 10 _ 10 _ 1 _ ~~u+ in+10 20 — T ^ t n e s u r P m s r a t e = 12 O I v' then it= U of C. In other words, if the surplus value = 50%, then in this case, where

C the variable capital=—. the rate of profit=25%. If we now assume

that the constant capital is doubled, i.e., it increases from 10 to 20,

v 10 10 1 then = =— =—• (The surplus rate, 12 of 10, would now c + v 20+10 30 3 v F ' be 7s of 7^[3] of C, i.e. = 7^[6] of 30=5. Thus 7^[2] of 10 = 5, 5 calculated on 10 is 50%, 5 calculated on 30 is 16^[2]/^[3]%. On the other hand, 5 calculated on 20 = 74 = 25%.) The constant capital has doubled, i.e. it has increased from 10 to 20. But the sum c + v has only increased by half, namely, from 20 to 30. The constant capital has

V increased by 100%, the sum c + v only by 50%. The ratio , originally ^[10]/2o, has fallen only to ^[10]/30, i-e. from 72 to 7s, i.e. from ^[3]/Ô to ^[2]/6. Thus it has fallen by only '/e, whereas the constant capital has been doubled. How the growth or decline in the constant

V capital affects the ratio depends evidently on the proportion in which c and v originally constitute parts of the whole capital C (consisting of c + v).

[VIII-344] The constant capital (i.e. its value) can firstly rise (or fall) although the amounts of raw material, machinery, etc., employed, remain the same. In this case therefore, the variations in constant capital are not determined by the conditions of production prevailing in the industrial process into which it enters as constant capital, but are independent of them. Whatever the causes bringing about the change in value may be, they always influence the rate of profit. In this case, the same amount of raw material, machinery, etc., has more or less value than it did previously, because more or less labour time was required to produce them. The variations, then, are determined by the conditions of production of the processes from which the component parts of constant capital emerge as products. We have already⁽⁷⁾ examined how this affects the rate of profit.

As far as the rate of profit is concerned, whether in a particular industry constant capital, raw material, for example, rises or falls in value because its own production has become dearer, etc., amounts to the same thing as if in some branch of industry (or even in the same branch) more expensive raw material were used for the production of one type of commodity than for that of another type, while the outlay on wages remained unchanged.

When there is equal expenditure on wage labour, but the raw material worked up by one kind of capital (corn, for example) is dearer than the raw material worked up by another (oats, for example) (or, for that matter, silver and copper, etc., or wool and cotton, etc.), the rate of profit for the two capitals must be in inverse proportion to the dearness of the raw material. Thus, if on the average the same profit is made in both branches of industry, then this is only possible through a communal division of the surplus value among the capitalists, not in accordance with the ratio of surplus value which each capitalist produces in his own particular sphere of production but in relation to the size of the capital they employ. This can happen in two ways. A, who works up the cheaper material, sells his commodity at its real value; he thereby also pockets the surplus value he himself has produced. The price of his commodity is equal to its value. B, who works up dearer material, sells his commodity above its value and charges as much in his price as if he had been working up a cheaper material. If A and B exchange their commodities, then it is the same for A as if he had included a smaller amount of surplus value in the price of his commodity than it actually contains. Or as if both A and B had from the very beginning charged a rate of profit commensurate with the size of the capital invested, i.e., had divided the total surplus value between them on the basis of the amount of the capital they had invested. And this is what the term general rate of profit denotes.^[30]

Naturally this equalisation does not take place when the constant capital in a particular capital such as raw materials, for example, falls or rises temporarily under the influence of the seasons, etc. Although the extraordinary profits made by the COTTON-SPINNERS, for example, in years of especially good cotton crops, undoubtedly lead to an influx of a mass of new capital into this branch of industry and give rise to the building of a large number of new factories and of textile machinery. If a bad year for cotton ensues, then the loss will be all the greater.

Secondly, the production costs of machinery, raw materials, in short of constant capital, remain the same, but larger amounts of them may be required; their value therefore grows in proportion to the growing amount used as a result of the changed conditions of production in the processes into which those elements enter as means of production. In this case, as in the previous example, the increase in the value of constant capital results of course in a fall in the rate of profit. On the other hand, however, these variations in the conditions of production themselves indicate that labour has become more productive and thus that the rate of surplus value has risen. For more raw material is now being consumed by the same amount of living labour only because it can now work up the same amount in less time, and more machinery is now being used only because the cost of machinery is smaller than the cost of the labour it replaces. Thus here the fall in the rate of profit is more or less made up by increase in the rate of surplus value and therefore also the total amount of surplus value.

Finally, the two factors responsible for the change in value can operate together in very different combinations. For example, [VIII-345] the average value of raw cotton has fallen, but simultaneously the value of the amount of cotton which can be worked up in a certain time, has increased even more. The value of cotton has risen, and so has the value of the total amount of it which can be worked up in a given time. More massive machinery has become dearer in absolute terms, but has become cheaper in relation to its EFFICIENCY, etc.

It has been assumed hitherto that the variable capital remains unchanged. Variable capital, however, can also decline not only relatively but absolutely, as for example in agriculture; i.e. it can decline not only relative to the size of the constant capital. Alternatively, variable capital can increase absolutely. In this case, however, it is the same as if it remained unchanged, in so far as the constant capital grows in a greater or in the same ratio for the reasons mentioned above.

If the constant capital remains unchanged, then any rise or fall of it in relation to the variable capital is accounted for only by a relative rise or fall of the constant capital d u e to an absolute fall or rise of the amount of variable capital.

If the variable capital remains unchanged, then every rise or fall in the constant capital can be explained only by its own absolute rise or fall.

If variations take place in both [variable and constant capital] simultaneously, then after deducting the variations which are identical in both, the result is the same as if one had remained unchanged while the other had risen or fallen.

Once the rate of profit is given, the amount of profit depends on the size of the capital employed. A large capital with a low rate of profit yields a larger profit than a small capital with a high rate of profit.

So much for this digression. Apart from this, only the 2 following passages from John Stuart Mill require comment:

" CAPITAL, STRICTLY SPEAKING, HAS NO PRODUCTIVE POWER. The only productive power is that of labour; assisted, no doubt, by TOOLS, and ACTING UPON MATERIALS" (I.e., p. 90).

STRICTLY SPEAKING, he here confuses capital with the material elements of which it is constituted. However, the passage is valuable for those who do the same thing and who nevertheless assert that capital has productive power. Of course, here too the matter is only stated correctly in so far as THE PRODUCTION OF VALUE is considered. After all, nature also produces in so far as it is only a question of use value.

"PRODUCTIVE POWER OF CAPITAL can only mean the quantity of real productive power which the capitalist, by means of his capital, can command" (I.e., p. 91).

Here capital is conceived correctly as a production relation. // Malthus (in his Essai sur la population, 5TH ed., trad, de P. Prévost, Genève, 1836, 3me éd., t. IV, p p . 104-05) makes the following remark, laced with his usual "profound philosophy", against any plan to provide the cottagers ^{[3 1]} of England with cows:

"It has been observed that those cottagers, who keep cows, are more industrious and more regular in their conduct, than those who do not.... Most of those who keep cows at present have purchased them with the fruits of their own industry. It is therefore more just to say that their industry has given them a cow, than that a cow has given them their industry."3

And it is therefore correct that diligence in labour (together with the exploitation of other people's labour) has given cows to the parvenus amongst the bourgeoisie, while the cows give their sons the goût de l'oisiveté." If one took away from their cows not the ability to give milk, but to command other people's unpaid labour, it would be a very good thing for their goût du travailb

The selfsame "profound philosopher" remarks (I.e., p. 112):

"But it is evident that all cannot be in the middle. Superior and inferior parts are in the nature of things absolutely necessary; and" (naturally there can be no mean without extremes) "strikingly beneficial. If no man could hope to rise, or fear to fall in society; if industry did not bring with it its reward, and indolence its punishment; we could not expect to see that animated activity in bettering our condition, which now forms the masterspring [VIII-346] of public prosperity."c

Thus there must be lower classes in order that the upper ones may fear to fall and there must be upper classes in order that the lower ones may hope to rise. In order that INDOLENCE may carry its own punishment, the worker must be poor and the rentier and the landlord, so beloved of Malthus, must be rich. But what does Malthus mean by the reward of industry? As we shall see later,^[32]

he means that the worker must perform part of his labour without an equivalent return. A wonderful stimulus, provided the "reward" and not hunger were the stimulus. What it all boils down to is that a worker may hope to exploit other workers some day.

Rousseau says: "The more monopoly spreads, the heavier do the chains become for the exploited." c 3 3

Malthus, "the profound thinker", has different views. His supreme hope, which he himself describes as plus ou moins^[6]

Utopian, is that the mass of the classe moyenne" should grow and that the proletariat (those who work) should constitute a constantly declining proportion (even though it increases absolutely) of the total population. This in fact is the course taken by bourgeois society.

"We might even venture," says Malthus, "to indulge a hope that at some future period the processes for abridging human labour, the progress of which has of late years been so rapid, might ultimately supply all the wants of the most wealthy society with less personal effort than at present; and if they did not diminish the severity of individual exertion" (he must go on risking just as much as before, and relatively more and more for others and less and less for himself), "might, at least, diminish the number of those employed in severe toil" (he, p. 113).//c

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.

*"If a man [can] bring to London an ounce of silver out of the earth in Peru, in the same time that he can produce a bushel of corn, then one is the natural price of the other; now, if, by reason of new and more easier mines, a man can get two ounces of silver as easily as formerly he did one, then corn will be as cheap at 10s, the bushel as it was before at 5s., caeteris paribus.*"

"Let a hundred men work 10 years upon corn, and the same number of men the same time upon silver; I say that the neat proceed of the silver is the price of the whole neat proceed of the corn, and like parts of the one the price of like parts of the other."

"Corn will be twice as dear when there are 200 husbandmen to do the same work which an hundred could perform" * (On Taxes and Contributions, 1667) (in the edit, of 1679, pp. 31, 24, 67).^[34]

The passages to which I alluded above are the following:

* "As trades and curious arts increase; so the trade of husbandry will decrease, or else the wages of husbandmen must rise, and consequently the rents of land must fall"* (p. 193). *"If trade and manufacture have increased in England ... if a greater part of the people, apply themselves to those faculties, than there did heretofore, and if the price of corn be no greater now, than when husbandmen were more numerous, and the tradesmen fewer; it follows from that single reason ... that the rents of land must fall:* As for example, suppose the price of wheat be 5s. OR 60d. the BUSHEL; now if the rent of the land whereon it grows be the third SHEAF"; (i.e., PART, SHARE) "then of the 60d. 20d. is for the land, and 40d. for the HUSBANDMAN; but if the HUSBANDMAN'S wages should rise Vg, or from 8d. to 9d. per day, then the HUSBANDMAN'S SHARE IN THE BUSHEL OF WHEAT rises FROM 40d. TO 45 d. AND CONSEQUENTLY THE RENT OF THE LAND MUST FALL FROM 20d. TO 15d. ... FOR WE SUPPOSE THE PRICE OF THE WHEAT STILL REMAINS THE SAME: ESPECIALLY SINCE WE CANNOT RAISE IT, FOR IF WE DID ATTEMPT IT, CORN WOULD [VIII-347] BE BROUGHT IN TO US (AS INTO HOLLAND) FROM FOREIGN PARTS, WHERE THE STATE OF HUSBANDRY WAS NOT CHANGED" (Political Arithmetick etc., edit. London, 1699, p p . 193, 194.) We come back to productive and unproductive labour. Garnier. See Notebook VII, p. 319.b

Gamier. (G.) He brings forward various arguments against Adam Smith (which are in part repeated by later authors).c

First.

"This distinction is false, inasmuch as it is based on a difference which does not exist. All labour is productive in the sense in which the author uses this word productive. The labour of the one as of the other of these two classes is equally productive of some enjoyment, commodity or utility for the person who pays for it, otherwise this labour would not find wages."d //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, Gamier 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:

"The servant who is in my service, who lights my fire, who dresses my hair, who cleans and keeps in order my clothes and my furniture, who prepares my food, etc., performs services absolutely of the same kind as the laundress or the seamstress who cleans and keeps in order her customers' linen; ... as the eating-house keeper, cook-shop proprietor or publican who carries on his trade of preparing food for persons whom it suits better to come and dine with him; as the barber, the hairdresser, etc."

(for Adam Smith, however, most of these fellows are as little reckoned among productive workers as the servants)

"who perform immediate services; finally as the mason, the tiler, the joiner, the glazier, the stove-setter, etc., etc., and the multitude of building labourers who come when they are called to carry out restorations and repairs, and whose annual income depends as much on simple repair and maintenance work as on new construction."

(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.)^[3]

"This kind of labour consists less in producing than in maintaining; its aim is less to add to the value of the subjects to which it is applied than to prevent their decay. All these labourers, including the servants, save the person who pays them the labour of maintaining his own things. " b

(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 2 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.)

"It is for that and for that alone that they most often labour" (for one person to save the labour of looking after himself, 10 have to look after him — a curious way of "saving" labour; besides "unproductive labour" of this kind is most often made use of by those who do nothing);

"thus, either they are all productive, or none of them is productive" (I.e., pp. 171-72).

[VIII-348] Secondly. A Frenchman cannot forget the ponts et chaussées." Why, he says, call productive

"the labour of an inspector or director of a private enterprise in trade or manufacture, and non-productive, the labour of the government official who, watching over the upkeep of public highways, of navigable canals and ports, of monies and other important instruments destined to enliven commercial activity, watching over the security of transport and communications, the carrying out of conventions, etc., can with justice be regarded as the inspector of the great social manufacture? It is labour of absolutely the same nature, though on a vaster scale" (pp. 172-73).

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 Gamier 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?

"All of them have, as the final aim of their labour, a consumption of the same kind. If the result which some of them have in view does not deserve to be counted among the products of the labour of society, why should one treat more favourably what is nothing but a means for attaining this result?" (I.e., p. 173).

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 result? 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 chaussées; No. Ill 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 2nd definition, calls the same kinds of labour [VII1-349] 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 Gamier finally comes to the point.

"The only general difference that can, it seems, be observed between the two classes assumed by Smith, is that in the class which he calls productive, there is or may always be some intermediary person between the maker of the object and the person who consumes it; whereas in the class that he calls non-productive, there cannot be any intermediary, and the relation between the labourer and the consumer is necessarily direct and immediate. It is evident that there is necessarily a direct and immediate relation between the person who uses the experience of the physician, the skill of the surgeon, the knowledge of the lawyer, the talent of the musician or actor, or finally the services of the domestic servant, and each of these different hired workers at the moment of their labour; while in the professions constituting the other class, the thing to be consumed being material and palpable, it can be the subject of many intermediary exchanges after leaving the person who makes it before it reaches the one who consumes it" (p. 174).

In these last words Gamier shows, malgré lui,^[3] 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).b 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 Gamier 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.

"It would also always be necessary to deduct from his productive class all labourers whose labour consists purely of cleaning, conserving or repairing finished articles, and consequently does not put any new product into circulation" (p. 175).

(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 [VIII-350] their labour against capital but against revenue.)

"It is in consequence of this difference that the non-productive class, as Smith has observed, subsists only on revenues. In fact, since this class allows of no intermediary between itself and the consumer of its products, that is to say, the person who enjoys its labour, it is paid immediately by the consumer; and he pays only from revenues. As against these, the labourers of the productive class, being as a rule paid by an intermediary who intends to make a profit from their labour, are most often paid by capital. But this capital is always in the end replaced by the revenue of a consumer, otherwise it would not circulate and therefore would not yield any profit to its possessor" [p. 175].

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 year's labour. It also replaces the value of the past labour which was objectified in the means of production. Therefore the part of the total product which is=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=to Vs of all the component parts of capital: i.e. 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 —, —, —, are only F ^[7] 3 3 3 3 equal to the value which the constant elements of z, z', z", z'" had before they entered into the day's labour. Therefore also —, —, —, —or a third part of the use values produced, represent 3 3 3 3 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 capacity and the conditions of labour existing as capital.//

Z=x; yet x is the value of the total z,^[36] but 7sx = the value of the raw material, etc., contained in the total z. Thus 7s 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 pre-existing labour combined with the day's labour reappears and is replaced. Now it is true that each aliquot part of z, which is simply the quantity of actual products (iron, coal, etc.), represents in its value ^[35]ls pre-existing labour and ^[2]/3 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 2 parts, putting 7s on one side and ^[2]/g on the other, it is the same as if the Is represents only pre-existing labour and the other ^[2]/3 only the day's labour. In fact the first 7s represents all past labour which entered into the total product, the full value of the means of production consumed. After deducting this ^[1]/^[3], therefore, the other ^[2]/s can represent only the product of the day's labour. The ^[2]/3 in fact represent the total amount of the day's labour that was added to the means of production.

The last ^[2]/3 are therefore equal to the producer's revenue (profit and wages). He can consume them, i.e. spend them on articles which enter into his individual consumption. Suppose that these ^[2]/$ 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 ^[2]/s 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 [VIII-351] by its own producers. Minus this part of the ^[2]/3 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 natura. 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 Vs 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 Vs 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 Va 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 mutually enter to the same amount of value, they replace themselves in natura, 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, money appears here 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 Is of his coal for his own reproduction, just as he deducted from the product a part of the ^[2]/s 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 labour (on the contrary it is the product of the year's labour+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. 6 Let us assume that the whole 7s of the coal is thus exchanged in natura 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 ^[2]lz of his product in coal [VIII-352] which he exchanged for articles of consumption, exchanged as revenue, would, from the standpoint of value, consist of 2 parts, as the total product does, '/a of a hundredweight would be equal to the value of the means of production used up in the hundredweight, and ^[2]I$ of the hundredweight would be equal to the labour newly added to this Vs by the producers of the coal. But if the total product for example = 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 natura 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 ^[2]/s 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+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 objectified 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 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 Vs 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 Vs or 10,000 hundredweight represented would nevertheless bring about a change of value in the other ^[2]/% 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 Vs 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.

[VIII-353] As previously, the product would be = 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; i.e. the labour time contained in them has increased by ^[6]/w, or 60%.

The value of the total product now=£36,000; it was £30,000 before; it has therefore risen by VB, or 20%. So also every aliquot part of the product costs Vs, or 20%, more than before. If a hundredweight cost £1 previously, then now it costs £1 + Vs of £1=£1 4s. Previously, /s or ^[3]/^[9] of the total product=constant capital, ^[2]/3=labour added. Now the proportion of the constant capital to the value of the total product= 16,000:36,000=^[16]/^[36]=^[4]/^[9]. It amounts therefore to l/g more than before. The part of the product which is = to the value of the labour added was formerly /s or ^[6]/g of the product, now it is ^[5]/g. So we get:

Constant capital Labour added

Value=£36,000 £16,000 (^[4]/^[9] of the £20,000 (the same value as product) before=^[5]/^[9] of the product) Product=30,000 cwt 13,333 V^[3] cwt 16,666 ^[2]/^[3] cwt

The coal miners' labour would not have become less productive; but the product of their labour+the pre-existing labour would have become less productive; i.e. V9 more of the total product would be required to replace the component part of the value [VIII-354] formed by the constant capital. V9 less of the product would be = 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, i.e. 3,333 Vs cwt of COAL. He must therefore, as before, supply 16,666 ^[2]/^[3] cwt + 3,333 Vs cwt=20,000 cwt of coal=^[2]/^[3] 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 Vs more for it and so must spend Vs 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'/^[3] cwt, = to this £4,000, to the consumers of coal, and has received in exchange commodities of all kinds. But these

7-176 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 '/s cwt. It will be said: it's quite a simple matter. All consumers of coal have to consume V5 less of all other commodities, or each of them has to give '/s more of his commodities for coal. The producers of timber, iron, etc., consume exactly this V5 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 ^[3]/^[5], by 60%. There are only 2 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 ^[3]/s more labour than before. The rate of labour^[3] 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 Vs 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 [VIII-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 natura) 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 natura, the position is the same as it was. The same quantity of iron, timber and coal as before will be exchanged in natura 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 matière instrumentale*), 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.^[3]' Three yards of linen consist of: ^[2]/ä constant capital and Vs labour added. One yard of linen therefore represents labour added. If the surplus value=25%, then Vs of the 1 yard represents the profit, the other ^[4]/s represent the reproduction of the wages. The manufacturer himself consumes the Vs, 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 ^[4]/s 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 /s of the 2 yards or ^[8]/5 yards, and for the machinery with A of a yard. The spinner and machine builder in turn can each consume Vs of what they get, that is, the former, out of ^[8]/s yards, ^[8]/is of a yard, the latter ^[2]/i^[5] out of the ^[2]/^[5] of a [yard]. Added together, ^[10]/^[15] or ^[2]/^[3] of a yard. But ^[2]%5 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 as such do not enter, 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, [VIII-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 natura or by the exchange of constant capital for constant capital.

In the example given above^[3] 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 = 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; i.e. we suppose that its value has neither fallen nor risen; for the case we are considering, therefore, its value is=to 0). [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. = ls. 8d. is the newly added labour. Of the total product, therefore, constant capital amounts to 3 +Va lbs of yarn (3s. 4d.) and labour to 1^[2]/3 lbs of yarn. Hence ^[2]/s of the 5 lbs of yarn replace constant capital and '/a of the 5 lbs of yarn, or 1 ^[2]/s 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%, from 8d. to 12d., or Is. Then we have for 5 lbs of yarn, first, 5s.

for 5 lbs of cotton, and Is. 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. + ls. 8d.=6s. 8d. Of this 6s. 8d., however, raw material is now 5s. and labour Is. 8d.

6s. 8d. = 80d., 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 74=25%; previously, 33 7s%- On the other hand the raw material is 60d.=^[3]/^[4] = 75%, previously it was only 66^[2]/^[3]%. As the 5 lbs of yarn now costs 80d., 1 lb. costs ^[80]/^[5]d. = 16d. For his 20d.— the value of labour—[the spinner] will therefore get 1 ⁽⁸⁾U lbs of the 5 lbs of yarn, and [the other] 3 % lbs [go for] raw material. Previously, 1^[2]/s lbs were for labour (profit and wages) and 3 7s 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 Gamier 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^[3] that the part of capital which does not circulate (in the sense that it is not replaced by consumer's revenue) "would not yield any 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.

[VIII-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 capital which yields profit to intermediaries, while to employ non-productive people the revenue which pays them is most often sufficient" (I.e., p. 175).

This one sentence is such a bundle of nonsense that it makes it clear that Gamier, 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:

"In order to employ productive people, what is required is not only the revenue of the person who enjoys their labour, but also a capital which yields profit to intermediaries. ' '

(How unproductive then must agricultural labour be for Mr. Gamier, 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.^[3])

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 jobbing tailor whom I pay directly from revenue does not make the coat as cheaply as if I bought it from the intermediary.

Gamier 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:

"Do not many unproductive workers, such as actors, musicians, etc., as a rule only receive their wages through the channel of a manager who draws profits from the capital placed in this kind of enterprise?" (I.e., pp. 175-76).

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.

"It follows therefore that in a society in which the productive class is very numerous, it must be supposed that a large accumulation of capitals exists in the hands of the intermediaries or entrepreneurs of labour" (I.e., p. 176).

In fact, wage labour on a mass scale is only another expression for capital on a mass scale.

"It is therefore not, as Smith maintains, the proportion existing between the mass of capitals and that of revenues which will determine the proportion between the productive class and the non-productive class. This latter proportion seems to depend much more on the customs and habits of the people; on the more or less advanced degree of its industry" (p. 177).

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 labour, [VIII-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.^[38] What a convenient arrangement it is that makes a factory girl sweat 12 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, Gamier 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. Gamier 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", etc. (I.e., p.[p. 182-]83).

He himself says in this sentence that he [the intermediary] 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, Gamier, 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" (I.e., 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 which did not exist in society, even as an equivalent, at the moment when this labour began to be performed".

Ch. Ganilh. A very inferior and superficial compilation is Charles Ganilh's Des systèmes d'économie politique. First edition Paris 1809, second 1821. (Quotations from the latter.) His twaddle is directly linked with Gamier, against whom he polemises.

11 Canard in Principes d'économie politique defines Had he said that it is the labour which is superfluous for keeping the labourer alive as a labourer, the definition would be correct.//

Mr. 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.

"In the present state of civilisation, labour is only known to us through exchange" (I.e., Vol. I, p. 79).a "Labour without exchange can produce no wealth" (I.e., p. 81).

From this Mr. Ganilh JUMPS straight into the Mercantile system.

Because labour without exchange creates no bourgeois wealth, "wealth comes exclusively from trade" (I.e., p. 84).

Or, as he says later:

"Exchange or trade alone gives value to things" (I.e., p. 98). On this "principle of the identity of values and wealth ... rests the doctrine of the fruitfulness of general labour" (I.e., [p.] 93).

Ganilh himself declares that

[VIII-359] the "commercial system" which he calls a mere "modification" of the monetary system "derives private and public wealth from the exchangeable values of labour, whether these values are or are not fixed in durable, and permanent material objects" (I.e., [p.] 95).

H e thus falls into the Mercantile system, as Gamier fell into the Physiocratic. His trash, IF GOOD FOR NOTHING ELSE, is consequently not bad 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.b T h e only word in which Ganilh shows himself a more profound Mercantilist, is the word general labour. T h e 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. H e says:

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 of the 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 4 different branches of production in existence, each of the 4 producers would produce a great part of his product for himself. If there are thousands, then he can produce his total product as commodity. 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 products receive through exchange.

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.

"The most useful products may have no value if exchange does not give any to them",

(d'abord, 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 [VIII-360] the assumption that they are produced for exchange; therefore the whole proposition is nonsense)

"and the most useless products may have very great value, if exchange is favourable for them" (p. 104).

For Mr. 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 "exchangeable 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 [exchange 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.

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 Mr. 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.

"It is therefore neither the real utility of things, nor their intrinsic value, which makes them wealth; it is exchange which fixes and determines their value, and it is this value which identifies them with wealth" (I.e., [p.] 105).

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.

"There is in truth no wealth for individuals and for peoples, except when each labours for all"

(that is to say, when his labour takes the form of general social labour, for in any other meaning this would be nonsense; since, except in the form of general social labour, an iron manufacturer does not work for all, but only for consumers of iron)

"and all for each" (which again is nonsense, if we are dealing with use value, for the products of all are without exception special products, and each person needs only special products; what this means is therefore only that each special product takes on a form in which it exists for everyone; and it only exists in this form, not because as a special product it is distinct from the product of each other person, but because it is identical with it; that is, once more the form of social labour as it exists on the basis of commodity production) (I.e., p. 108).

[VIII-361] From this definition — exchange value=the expression of the labour of the isolated individual as general social labour — Ganilh falls once more into the crudest conception: that exchange value=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 exchangeable 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.

"If the abundance of wheat makes its value fall, the farmers will be less rich, because they have less exchange values to obtain for themselves things that are necessary, useful or pleasant for life; but the consumers of wheat will profit from all that the farmers have lost: the loss of some will be compensated by the gain of others, and the general wealth will undergo no change" (pp. 108-09).

Pardon 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.

"Hence it is that it is difficult, and perhaps impossible, for a country to enrich itself by internal commerce. It is not at all the same for peoples who engage in foreign trade" (I.e., p. 109).

This is the old Mercantile system. Value consists in my getting not an equivalent, but more than the equivalent. At the same time, however, if there is no equivalent, then 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 = more iron, I now lose just as much because more iron=less gold.

"All labour, whatever be its nature, is productive of wealth provided that it has an exchange value" (I.e., p. 119). "Exchange pays no regard either to the quantity or to the material nature or to the durability of the products" (I.e., p. 121). "AH" (kinds of labour) "are equally productive of the sum for which they have been exchanged" (pp. 121-22).

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.

[VIII-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; but how many labours reputed productive are in the same case!.. It is not 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" (I.e., pp. 122-23).

"Adam Smith would like to reduce the number of labourers who are not usefully occupied, in order to multiply that of the labourers who are usefully occupied; but no consideration has been given to the fact that if this desire could be realised all wealth would be impossible, because consumers would be lacking for the producers, and the excess that was not consumed would not be reproduced. The productive classes do not give the products of their labours gratuitously to the classes whose labours do not yield any material products"

(here he nevertheless himself distinguishes between labours which yield material products and labours which do not);

"they give them to them in exchange for the convenience, the pleasures and the enjoyments that they receive from them, and, in order to give them to them, they are obliged to produce them. If the material products of labour were not employed to pay for the labours which do not yield material products, they would not have consumers and their reproduction would cease. The labours productive of enjoyment thus contribute to production as efficaciously as the labour which is considered to be the most productive" (I.e., [pp.] 123, 124).

"Almost always the convenience, the pleasures or the enjoyments which they" (the peoples) "seek follow and do not precede the products which are to pay for them" (I.e., [p.] 125).

(They seem therefore to be much more effect than cause of the products which are to pay for them.)

"The position is different when the labours devoted to pleasure, luxury and ostentation are not wanted by the productive classes,"

(thus he himself makes the distinction here)

"and they are nevertheless forced to pay for them and to cut down their own requirements by this amount. Then it may come about that this forced payment does not bring about an increase in production" (I.e., p. 125). "Apart from this case ... all labour is necessarily productive, and contributes more or less efficaciously to the formation and growth of the public wealth, because it necessarily calls forth the products which pay for it" (I.e., [p.] 126).

//So according to this the "unproductive labours" are productive neither because of their cost, i.e., their exchange value, nor because of the special enjoyment that they produce, i.e., 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 capacity; 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:

"If exchange gives to the servant's labour a value of 1,000 frs, while it gives to that of the husbandman or factory worker only a value of 500 frs, one must conclude from this that the servant's labour contributes to the production of wealth twice as much as that of the husbandman and the factory worker; and it cannot be otherwise, as long as the labour of servants receives in payment twice as much in material products as the labour of husbandmen and factory workers. How can it be imagined that wealth results from labour which has less exchange value and which is consequently paid less!" (1. c, pp. 293-94).

[VI11-363] If the wages of the factory or agricultural labourer=500, and the surplus value (profit and rent) created by him=40%, his net product would = 200, and 5 such labourers would be required to produce the wages of 1,000 frs for the servant. If instead of the servant Lord Exchange cared to buy a mistress for 10,000 frs annually, the net product of 50 such productive labourers would be required. And because her unproductive labour brings in for the mistress 20 times as much exchange value, wages, as the wages of the productive labourer, this person adds 20 times as much to "the production of wealth", and a country produces the more wealth the higher it pays its servants and mistresses. Mr. 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 paying the unproductive labourers. But he reckons like this: 1,000 frs wage, and the labour of servant or mistress as equivalent for the wage, make together 2,000 frs. The value of servants and mistresses, i.e., 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 production costs) 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.

"In vain is the objection raised that if the labour of servants is as productive as that of husbandmen and factory workers, there is no reason why the public economy of a country should not be used to maintain them, not only without being squandered but with a constant increase of value. This objection is only specious because it assumes that the fruitfulness of each labour results from its co-operation in the production of material objects, that material production is constitutive of wealth and that production and wealth are completely identical. It is forgotten that all production only becomes wealth concurrently with its consumption" //and so the same fellow says one page later "that all labour is productive of wealth, in proportion to its exchange

8-176 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, i.e., 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 nonconsumption of the products that this value is entitled to take out of total production"// "and that exchange determines up to what point it contributes to the formation of wealth. If it is remembered that all labours contribute directly or indirectly to the total production of each country, that exchange, in fixing the value of each labour, determines the part that it has had in this production, that consumption of the production realises the value that exchange has given it, and that the surplus or deficit of production over consumption determines the state of wealth or poverty of peoples, it will be realised how inconsistent it is to isolate each labour, to fix its fertility and its fruitfulness by its contribution to material production and without any regard to its [VIII-364] consumption, which alone gives it a value, a value without which wealth cannot exist" (I.e., pp. 294-95 [296]).

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 frs consequently contributes twice as much to the giving of value as a peasant who consumes 500 frs.

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 gens oisifs.*^[40]

11 Adam Smith. Value and Its Component Parts. Smith's erroneous conception, see above, which he [develops] in spite of his originally correct view,^[41] is shown also in the following passage:

"Rent ... enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit are the causes of high or low price of corn; high or low rent is the effect of it' {Wealth of Nations, B. I, Ch. XI).«// IIPetty. 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 Pettya:

"Suppose a man could with his own hands plant a certain scope of land with corn, that is, could plough, sow, harrow, reap, carry home, and winnow so much as the husbandry of this land required. I say, that when this man hath subducted his seed out of the proceed of his harvest, and also what himself hath both eaten and given to others in exchange for clothes, and other natural necessaries; that the remainder of corn is the natural and true rent of the land for that year; and the medium of seven years, or rather of so many years as makes up the cycle, within which dearths and plenties make their revolution, doth give the ordinary rent of the land in corn. But a further, though collateral question may be, how much money this corn or rent is worth; I answer so much as the money, which another single man can save, ... if he employed himself wholly to produce and make it; viz. let another man go travel into a countrey where is silver, there dig it, refine it, bring it to the same place where the other man planted his corn: coyne it, etc. the same person, all the while of his working for silver, gathering also food for his necessary livelihood, and procuring himself covering, etc. I say, the silver of the one must be esteemed of equal value with the corn of the other" (Traité des

taxes,** pp. 23 [-24]).//

Ganilh claims to have put forward a theory in his Théorie de l'économie politique (a book I don't know) which Ricardo later copied from him.^[44] 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 the 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.

multiplied by the number of simultaneous days' labour or the

• s • number of employed labourers, that is, by n. So S= — Xn. This surplus value can therefore be increased or reduced in two ways.

5 2s For example, _ X n is equal to X n = 2 S . Here S [VIII-365]

2 5 . 25 has doubled, because the rate has doubled, since is .is twice v V 2 as much as —• On the other hand, however — x 2 n would also be

V V

2sn equal to • that is, also = 2S. V, the variable capital, is equal to

the price of the single day's labour multiplied by the number of labourers employed. If 800 labourers are employed, each costing £ 1 , then V = £ 8 0 0 = £ l x800, where n = 800. Then if the surplus

i • i c « • u i I 6 0 160 16 1 „ _ „ value is 160, its rate would be = = =—=20%. But £1X800 800 80 5 160 £S the surplus value itself is x800, that is, Xn. K £1x800 £ l x n With a given length of labour time, this surplus value ^[3] can only be doubled by a double growth of productivity, or at a given level of productivity, by a lengthening of the labour time.

But what concerns us here is:2S=— Xti; and 2S=— x2n.

V V 2~ The surplus value (CROSS 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. O n 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 ditto 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 = £ 3 0 0 (£1 per labourer), it would now = £ 1 5 0 . If that expended in raw materials=£310, it would now = £ 3 1 0 . If the value of the machinery=4 times as much as the rest of the capital, it would now = 1,600.^[45] Therefore if the machinery is worn out in 10 years, the machinery entering annually into the product would=£160. We will assume that the capital previously expended annually on instruments=£40, thus only ^[45]U. Then the account would stand:

Total Surplus value Rale of Total profit product Ma-Raw Wages chin-mate-ery rial Old capital 40 310 300 New capital 160 310 150

650 150 or 50% 23 V^[13]% 800 620 150 or 100% 246/^[31]% 770

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 £ 3 0 less than before is expended.

But if the £ 3 0 left over is again employed in the same way, ^[31]/62 (or V2) in raw material, ^[16]/62 in machinery and '7 ^{[6 2]} in wages, the result would be:

Machinery Raw material Wages Surplus value

£7.14.6 £15 £7.5.6 £7.5.6

and taking both together:

Machinery Raw Wages Surplus [Rate of] material value profit New capital £167.14.6 £325 £157.5.6 £157.5.6 246/^[31]%

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.

[V1II-366] "When a country is deprived of the aid of machines, and its labour is carried out by hand, the labouring classes consume almost the whole of their production. To the degree that industry makes progress, is improved by the division of labour, the skill of the workmen, and the invention of machines, the costs of production diminish, or in other words, a smaller number of labourers is required to obtain a greater production" ([Ch. Ganilh, Des systèmes d'économie politique, Paris, 1821,] Vol. I, pp. 211-12).

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 ^[1]/^[6] of the total product of the 12 hours. In the first case 10 labourers will produce a product for 10 labourers (=100 hours) and 20 for the capitalist. Of the value of 120, the capitalist gets 76 = 20. In the second case, 5 labourers will produce a product for 5 labourers ( = 30 hours), and for the capitalist 30 hours. Of the 60 hours the capitalist now gets 30, that is, V2 — 3 times as much as before. The total surplus value too would have risen, namely from 20 to 30, by '/3- When I appropriate V2 of 60 days, this is V3 more than when I appropriate Vß of 120 days.

Moreover, the V2 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 as much as ^[10]/^[6], or 1 as much [as] l ^[4]/ ^[6]=l ^[2]/3 [before]. So the 30 surplus hours contain as much product [as did previously] 30 (l+^[2]/^[3]) = 30+^[60]/^[3]=50. 6 hours produce as much product as 10 did previously, that is, 30 — or 5x6 — produce as much as 5x10 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 natura). 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 = 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 5 displaced labourers? It will be said that capital has also been released, namely, that which paid the 5 dismissed workers, who each received 10 hours (for which they worked 12), that is, 50 hours in all, which could previously have paid the wages of 5 labourers and which [now] that wages have fallen to 6 hours can pay for ^[50]/6=8^[1]/3 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 productive power 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 is smaller than the number of labourers discharged; nor are they the same individuals [VIII-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 10 years. The constant demand which it creates is therefore equal annually to /io of the wages contained in it. To this Vio must be added labour for repairs during the 10 years, and the daily consumption of coal, oil and other matériaux instrumentaux in general; which in all amounts perhaps to another ^[2]/i0.

//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 5.11

//The shifting of labour and capital which increased productive power in a particular branch of industry brings about by means of machinery, etc., is always only prospective. That is to say, the increase, the number of new labourers flowing into 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, according to Mr. Ganilh, is a representative of exchangeable value. Ditto, 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 ^[2]/3 of the population were directly engaged in material production, now it is only Vs- Previously ^[2]h produced means of subsistence for ik; now Vs produce for ^[3]/ä- Previously 7s was net revenue (as distinct from the revenue of the labourers), now Is. Leaving contradictions out of account, the nation would now use 7s of its time for direct production, where previously it needed ^[2]/^[3]. Equally distributed, all ^[3]/s would have 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]/s grow, so also does the 7s; thus, measured in quantity, a larger number of people could be employed in productive labour. But relatively, in proportion to the total population, it would always be 50% less than before. Those ^[2]/^[3] 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 01 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 directly producing means of subsistence, although its number declines, [VI11-368] 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 matières instrumentales (coal, etc., 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 proper: the part of the total product that belongs to production and enters into the production costs 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 natura. If it grows more productive, it replaces the product, but not its value, reducing this value post festum? 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 bad 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.b26 An example of the first: the linking together of spinning and weaving. An example of the second: the mineowners 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:

"So long as the division of labour is not established in all branches, so long as all classes of the labouring and industrious population have not attained their full development, the invention of machines, and their employment in certain industries, only cause the capitals and labourers displaced by the machines to flow into other employments which can usefully emloy them. But it is evident that when all branches of employment have the capital and the labourers they require, every further improvement and every new machine that cuts down labour, necessarily reduces the labouring population; and as this reduction does not diminish production, the part which it leaves available accrues either to the profit of capitals or to the rent of land; and in consequence the natural and necessary effect of machines is to diminish the population of the wage-earning classes who live on the gross product, and to increase the population of the classes which live on the net product" (I.e., p. 212).

[VIII-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" (I.e., p. 213).

//Say makes the total value of the product resolvable into revenue in the following way: in the Constancio translation of Ricardo's [Principles], Ch. 26, he says in a note:

"The net revenue of an individual consists of the value of the product to which he has contributed ... less his disbursements; but as the disbursements that he has made are portions of revenue which he has paid to others, the totality of the value of the product has served to pay revenues. The total revenue of a nation is composed of its gross product, that is to say, of the gross value of all its products which are distributed among the producers."^[46]

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.^[3] But so expressed, the sentence would negate itself.

Say continues:

"This value, after many exchanges, would be entirely consumed in the year which saw its birth, but it would nonetheless be still the revenue of the nation; just as an individual who has 20,000 frs annual revenue has nonetheless 20,000 frs annual revenue, although he consumes it entirely each year. His revenue does not consist only of his savings."

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 frs 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, resolved into revenues, Say would be right. The individual consumes his 20,000 frs revenue. His 200,000 frs 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 frs, because he has not consumed his capital of 200,000 frs. The others have consumed this capital. Then they have no capital with which to reproduce revenue.//^[3]

"Only the net product," says Ganiih, "and those who consume it form its" (the State's) "wealth and its power, and contribute to its prosperity, its glory and its grandeur" (I.e., p. 218).

Ganiih further cites Say's notes to Constancio's translation of Ricardo's [Principles], Ch. 26, where Ricardo says that if a country has 12 million [inhabitants], it would be more advantageous for its wealth 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:

"This is quite like the doctrine of the Economists of the eighteenth century,^[6]

who maintained that manufactures in no way helped towards the wealth of the State, because the wage-earning class, consuming a [VIII-370] value equal to that which they produce, contribute nothing to their famous net product" [p. 219].

On this, Ganiih observes (pp. 219-20):

"It is not easy to see any connection between the Economists' assertion that the industrial class consumes a value equal to that which it produces and the doctrine of Mr. Ricardo, that the wages of labourers cannot be counted in the revenue of a State."

Here too Ganiih 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 wageb; that is, that they receive a share of their 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 (maîtres et ouvriersc) 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 excess 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:

"From seven million fully employed labourers there would be more savings than from five million."^[47]

Ganilh rightly observes, refuting this:

"That is to suppose that economies from wages are preferable to the economy which results from the reduction of wages.... It would be too absurd to pay 400 millions in wages to labourers who give no net product, in order to provide them with the opportunity and the means for making economies on their wages" (I.e., [p.] 221).^[48]

"With every step made by civilisation, labour becomes less burdensome and more productive; the classes condemned to produce and to consume diminish; and the classes which direct labour, which relieve (!), console (!) and enlighten the whole population, multiply, become more numerous and appropriate to t h e m s e l v e s all t h e b e n e f i t s w h i c h r e s u l t f r o m t h e d i m i n u t i o n of t h e c o s t s of labour , from the abundance of products and the cheapness of consumer goods. In this way, the human race lifts itself up.... Because of this progressive tendency to the diminution of the lower classes of society and the increase of the upper classes ... civil society becomes more prosperous, more powerful," etc. (I.e., p. 224). "If ... the number of labourers employed is 7 millions, the wages will be 1,400 millions; but if the 1,400 millions do not yield a larger net product than the thousand millions paid to the five million labourers, the real economy would be in abolishing the 400 millions in wages paid to two million labourers who yield no net product, and not in the savings that these 2 million labourers could make from the 400 millions of wages" (I.e., p. 221).

In Chapter 26 Ricardo observes^[3]:

"Adam Smith constantly magnifies the advantages which a country derives from a large gross, rather than a large net income.... What would be the advantage resulting to a country from the employment of a great quantity of productive labour, if, whether it employed that quantity or a smaller, its net rent and profits together would be the same?... Whether a nation employs 5 or 7 million productive labourers [VIII-371] to produce the net revenue on which 5 million others live, ... the food and clothing of these 5 millions would be still the net revenue. The employing of 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" (I.e., p. 215).b49

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 7s, 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 productive power 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, 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, =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 production costs — 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] 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.^[50]

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 '/s=100. If the labourers consume 100 and their SURPLUS is 100 as before, the total product=200 and the surplus=^[1]/2=100. The total product would have fallen by V3 — by the quantity of products consumed by the 100 workers, and the net [VIII-372] product [would have] remained the same, because aoo/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.^[3]

So he says^[51]:

"To an individual with a capital of 20,000 I, whose profits were 2,000 L per annum, it would be a matter quite indifferent whether his capital would employ a 100 or a 1,000 men, whether the commodity produced, sold for 10,000 /., or for 20,000 L, provided, in all cases, his profits were not diminished below 2,000 L Is not the real interest of the nation similar?b"

First of all,^[52] if capital=£20,000 and the annually sold products=£20,000 (whether capital uses 100 OR 1,000 MEN), it is not clear where the annual profit of £2,000 can come from; for this profit=the excess of the value of the total product over the value of the capital advanced, and the excess of 20,000 over 20,000=0. We must therefore change the assumption, first of all, and let the man who advances 20,000 capital sell the annual product for £22,000, if he is to make an annual profit of £2,000. Second, as far as the second hypothesis is concerned, that the capital =£20,000, the annually sold commodities=£10,000, and nevertheless a profit of £2,000 is made, that is only possible if the £10,000 worth of commodities represent (1) depreciated machinery, (2) used-up raw materials, (3) wages, (4) a profit of 10% over and above the total sum of capital advanced (and thus not only over and above the wages advanced). In this case, we can no longer assume, as in the first one, that the magnitude of capital advanced and the magnitude of capital consumed in production are identical. As the £10,000 worth of commodities constitute the total annual product, it is clear that £10,000, or half of the capital, was fixed capital, which entered into the labour process but not into the valorisation process. This £10,000 cannot however constitute the whole of the fixed capital advanced, since part of it, say V12 of the fixed capital, goes into the product as wear and tear, or the reproduction time of the fixed capital=12 years. To work with round figures, assume that the reproduction time=ll years. The total fixed capital advanced then=£l 1,000, of which Vu,=£1,000, goes into the commodities. Of the £10,000 worth of commodities, 1,000 represent the wear and tear of fixed capital, and 9,000 raw materials and newly added labour (wages and profit). Of these 9,000, let 2,000=profit. 7,000 would thus be left for raw material and wages. Assume that, out of this 7,000, 5,000 are for raw materials and 2,000 for wages. The total sum of added labour then=£4,000, and since 100 workers must be engaged, from whose labour a profit of 100% is made, the workers will receive £20 each (£20x100=2,000). Each worker worked 6 hours for himself and 6 hours for the capitalist. The part of the capital that would equal added labour= 100 working days (each working day of the length of a year), of which one half would consist of paid labour and the other of unpaid labour. The calculation would now be as follows:

Total Fixed Wear and Raw Wages Surplus Total Profit capi-capi-tear of mate-value pro-tal lal fixed rial duct capital Assuming that the working day=£40 (paid and unpaid labour), the total product (10,000) would then consist of 250 working days (of which 100 would represent newly added labour).

Now, to stay with the first example, Ricardo tells us here that the product=£20,000, and thus=500 working days. We learn further that the capitalist employs 1,000 men instead of 100, hence ten times as many. That would yield £20,000, assuming that the wages for one man=£20. With this, the whole capital would be exhausted, without a centime for raw material and fixed capital. The trick cannot be turned in this way.

[VIII-373] One of the main difficulties here is that Ricardo indicates the values only in the amounts of labour employed and not in proportion to the gross product that is produced in each case. The one sells his product for £20,000, the other for £10,000. If this example is to have general validity, the product in one case must, according to the law of values, contain twice as much labour time as in the other, so that 2 times as many working days are concealed in £20,000 as in £10,000. Now, the one employs 10 times as many workers as the other. Variable capital is in one case 10 times as great as in the other. So in the total product of 20,000 is concealed 10 times as much living labour time as in the total product of 10,000. If the first capital contained, in the same proportion, more constant capital (past working days) as it contains more living labour, it would be 10 times, not 2 times, greater than the second.

The presuppositions in the illustrations must not be self-contradictory. They must therefore be formulated in such a way as to be real presuppositions, real hypotheses, and not assumed absurdities or hypothetical unrealities and impossibilities.

P ^[1]=£20,000=2P ^[2]=£10,000. P ^[1] contains 1,000 days of living labour time+a certain amount of past labour time. P ^[2] contains 100 days of living labour time+a certain amount of past labour time.

The whole example, as presented by Ricardo, contradicts itself, it is absurd and impossible (especially if we assume, as we must in any general example, that neither of the two sells his commodities above their value, so that the product sold for 20,000, will contain precisely twice as much labour time as the product sold for 10,000. If we assume that Capital No. II computes the profit from its advanced capital independently from the value of its product, we lose our footing entirely).

[VIII-374] According to one of Ricardo's assumptions, 100 workers produce £2,000 of surplus value. Assuming that the whole of the working day (12 hours)=£20, the value of the total labour of these 100 workers would only=£2,000. But since their wages are paid from this value, while surplus value consists only of the unpaid part of the working day, the value of a working day must therefore be reckoned higher than £20, if surplus value alone = 2,000. Let us therefore set it at £30. Assume something entirely fantastic, that the wages only=£10 a year, Vs of the total labour time. In this case the value of 100 working days = 30x 100=3,000, the value of the wages= lOx 100= 1,000, and surplus value (the value of the unpaid labour) = 2,000.

In the other CASE, Ricardo assumes 1,000 workers. Setting the value of a whole working day at £30, as in the first example, the objectified labour alone of these 1,000 workers would=£30,000. But Ricardo now assumes that the value of the total product only=£20,000. Under all circumstances his illustration [is] therefore absurd. To make the 2nd CASE possible, the value of the total working day must be more than £20. But if it is 1 centime more than £20, the product of 1,000 workers (excluding constant capital contained in it) cannot=£20,000 — it must be more.

We must therefore either increase the value of the capital (which is unacceptable, as the illustration rests on the fact that in both cases capitals of equal value, i.e., £20,000, are employed) or change the number of workers. Consider the latter operation (otherwise we should even have to increase the capital in CASE II). Assume, for instance, that capital I employs 500 workers instead of 1,000. The value of 500 workers at £30 per working day= 15,000. This represents, however, a surplus value of only 2,000=^[2]/is of 15,000 or 13'/s%-Or, if the wages= 11,000, surplus value would = 2,000=^[2]/„ or 18^[2]/„%.

Or, to operate with round figures and direct relations, assume that capital I employs 400 workers. So, if a working day =£30, 400 working days=400x30=£12,000, of which surplus value= =£2,000. The wages thus= 10,000. And surplus value is now Vs in relation to wages or ^[1]/^[6] of the total working day; wages [make up] ^[5]/^[6] of the whole. In the above, surplus value [was assumed to be] 2 times greater than wages, or ^[2]/s of the total working day and the total product, whereas the wages [were set at] V3 of the total. The latter [was] ^[2]/e of the whole, surplus value, ^[4]/6 of the whole. A difference in wages conditioned by the difference in the productivity of workers is here assumed arbitrarily, for otherwise the surplus value could not have been 2,000 for £1,000 in the first case, and in the second it could not have been 2,000 for 4 times more workers with the wages of 10,000. It is assumed here that workers are paid in their own product.

The worker of II thus processes as much raw material in 4 hours as the other in 10 (as much in V3 or ^[2]/^[6] of a day as the other in 76 of a day). Thus he processes in 2 hours (or in ^[2]/^[12] of a day) as much as the other in 5 hours (^[5]/i2), or as much in 1 hour as the other in 2V2- Assuming that worker II processes 1 lb. of cotton in 4 hours he will process 'A lb. in 1 hour and ^[12]/^[4] lb. or 3 lbs in 12 hours.

Then, if worker I processes 1 lb. of cotton in 10 hours, he will process V10 lb. in 1 hour and ^[12]/i0 lb. in 12 hours,or l^[2]/io=l75 lbs. Worker II produces 3 lbs in 1 working day, and 100 working days of II produce 300 lbs.

Worker I produces l'/s lbs in 1 working day, and 400 workers produce (400+400/^[5] lbs)=480 lbs.

The raw material which one (I) processes in one working day is in a proportion of l:2'/2 to what the other (II) processes in 1 day. But there are 4 working days in I where there is 1 working day in II. 100 workers in II produce 300 lbs, while 100 in I produce only 120. 120:300=l:2/^[2]- However, although the product in I is 2V2 less, in relation to labour time, than in II, the GROSS AMOUNT is greater, for in I 4 times as many workers are employed as in II. We must therefore distinguish between proportional products (comparable products of a single working day) in both classes and absolute quantities (i.e., the amount of products as determined by the products of a single working day X by the number of working days or the number of workers employed). The proportional product in I is to [the proportional product in] II as 1:2'/2- But since there are four times as many working days in I or four times as many [VIII-375] workers employed as in II, the proportion of absolute magnitudes=4:2^[1]/2, or=^[8]/^[2]:^[5]/2=8:5. The capital employed in I and II for raw materials (in both cases the same raw material and of the same value) must therefore be in the relation = 8:5. So if I processes £7,000 worth of raw material, II [processes] 4,375 worth of it. Now I expends 10,000 on wages, and 7,000 on raw material; of the capital of 20,000 there now remains only 3,000. But since Ricardo assumes that I sells for £20,000, the capital which he consumes in production must not exceed 18,000, or he would not gain a FARTHING. But his product=his production costs. Or else his product should have been 22,000. But Ricardo states distinctly that it=£20,000. £2,000 of fixed capital must therefore enter into the labour process and not the valorisation process, and out of the total fixed capital of 3,000 ^[1]/s,=£ 1,000, must enter into the valorisation process.

We now have the following calculation for I:

Capital Fixed Raw Wages Sur-Capital Product Profit capital material plus consumed value

£20,000 £3,000 £7,000 £10,000 £2,000 £18,000 £20,000 £2,000=

10%

2,000 1,000 not con-consumed sumed Assume that the raw material is cotton, and that 1 lb. of cotton is processed into 1 lb. of yarn; 1 lb. of cotton costs 6d., so that 2 lbs cost Is. and 40 lbs, £ 1 ; 280,000 lbs cost £7,000. The product would thus be 280,000 lbs of yarn, which cost £20,000. 1 lb. yarn would cost l^[3]VfS. Thus, as raw material=6d., the product would cost ll'/yd. more, and nearly 12d. or 200% would be added to the value of the raw material.

Now let us consider CASE II. Wages=£l,000, raw material=£4,375, the total=£5,375. Commodities are sold for £10,000, of which £2,000 is surplus value; so, of the £8,000, yarn (8,000 — 5,375) = 2,625. There therefore remain £2,625 for the wear and tear of fixed capital that is contained in £10,000. As Ricardo further assumes that advanced capital=20,000, it consists of £12,625 fixed capital, of which 10,000 enters into the labour process but not in the valorisation process, while 2,625 enters the product as wear and tear. The machinery is therefore assumed to be damned expensive, as nearly 'A goes in wear and tear, so that it must be reproduced nearly every 4 years. Under all these unpleasant circumstances, we have the following calculation:

Capital Fixed Raw Wages Sur-Capital Product Profit capital material plus consumed value £20,000 £12,625 £4,375 £1,000 2,000 8,000 10,000 2,000 or

10,000 2,625 not con-consumed sumed

Counting 1 lb. [of cotton] at 6d., 2 lbs cost Is. and 40 lbs=£l. Therefore, the £4,375=40x£4,375 = 175,000 lbs. The product is therefore 175,000 lbs of yarn, whose value=£10,000. So, 175 lbs cost £10, and 175/io lbs=£l = l7V2 lbs. A pound of yarn costs l'As. or is ^[2]/7S. cheaper than the yarn spun by the other, by No. I.

Now, as far as, first, the déplacement of capital and labour is concerned, I expended £10,000 in wages, II only £1,000. That means £9,000 less in spinning labour. Variable capital is ^[9]/io smaller in II than in I. But II expended £12,625 in fixed capital and I only 3,000, thus £9,625 less; I spent £7,000 on raw materials, II only 4,375, and thus £2,625 less. The whole

déplacement was to begin with merely another division of capital [VIII-376] between the production elements of which the yarn consists. But the matter should not rest there. Since the [capital advanced as fixed] capital will be reproduced in approximately 5 years, only Vs is annually required for the reproduction of this part of the capital. The capital which has flown back into machine building can only be employed annually in producing 5 such machines in 5 years, or 1 machine per year; this would therefore depend on the growth of the mode of production in II.⁽⁹⁾

II employed only 100 workers where I employed 400, and he paid them £10 where I paid 25, thus ^[2]/^[5] of the old wages. If he had not decreased wages in proportion to productivity of labour, the saving of 300 workers would not have gained him a single FARTHING, if he had sold the commodities at their value. The 100 workers would have cost him £2,500, and his total surplus value would only=£500; i.e., his profit would only represent ^[1]U of I in proportion to the labour time he employed. A mere reduction in the number of workers and in wages does not work if the wage rate does not fall. In the above example, the number [of workers] fell by lU=^[5]ho', wages fell by ^[2]/^[5] or ^[8]/^[20]. But since I produces a pound of yarn at 1^[3]/7S., which costs II only IV7, he could undercut the other if he sold the yarn at l^[2]/7+^[1]/35S.= ln/35S. The other sells it precisely at l^[3]/7, or 1^[15]/35S. In this case, II could pay the same wages as I, since V7S. times 175,000 lbs equals 25,000s. or £1,250, and V35S. times 175,000 equals 5,000s. or £250. These price rises would make a total of £1,500. We have seen that, when II pays workers £25, like I, his surplus value=£500. This surplus value+1,500 for raising the price over the value (since he produces under the conditions of social production costs)=£2,000. If II had to compete with I, he could pay the same wages, if he sold yarn at lu/s5S. a pound instead of IV7S. I would sell at Is. 5^[1]hd. a pound, or Is. 5d. Ah

FARTHING.

II would sell at Is. 3^[27]/^[35]d. a pound, or Is. 3d. 33/35f. So if II sold at Is. 4d., he would make a greater profit than I, and still sell l'Ad. cheaper.

I would produce 280,000 lbs of yarn, II only 175,000 lbs, i.e., 105,000 lbs less. Assuming, though, that the workers consume the product, I supplies them with 140,000; thus only 140,000 enter into circulation; with II, the workers use up only Vio of £10,000=175,000 lbs, hence 17,500. There is obviously an error here, as 140,000 divided by 400 gives us 350 per person, or 35,000 for 100 men, and thus ^[2]/io and not Vio — and we have assumed that the workers of II receive as much product as those of I.

This calculation must be abandoned. I don't see why time should be wasted on working out Ricardo's nonsense.

[IX-377] The passage in Ricardo (3rd ed., pp. 415, 416, 4l7)a

runs: (Ch. XXVI)b

* "Adam Smith constantly magnifies the advantages which a country derives from a large gross, rather than a large net income" * (because, says Adam, * "the greater will be the quantity of productive labour which it puts into motion") ... "what would be the advantage resulting to a country from the employment of a great quantity of productive labour, if, whether it employed that quantity or a smaller, its net rent and profits together would be the same?" *

//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. nx'/ ^[2] is just as much as 2nx'/^[4], where n represents the number [of labourers] and '/a and lU 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.//

* "To an individual with a capital of 20,000 I, whose profits were 2,000 /. per annum, it would be a matter quite indifferent whether his capital would employ a 100 or a 1,000 men, whether the commodity produced, sold for 10,000 i, or for 20,000 L, provided, in all cases, his profits were not diminished below 2,000 L"*c

//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% profit. 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 10 or of 12 millions of inhabitants. Its power of supporting 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 10 millions, food and clothing for 5 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 12 millions? The food and clothing of 5 millions would be still the net revenue. The employing [of] 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."* a53

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, tant

mieuxb 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 rate of necessary labour, but to employ the greatest possible quantity of productive labour at the given rate.c The proportion of the products to the population makes no difference in this. Corn and cotton can be exchanged for wine, diamonds, etc., [IX-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% 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 antinomy 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 unproductive 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 circuit 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, [the accumulation of] 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 pari passu with 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.

Mr. Ganilh is not altogether consistent in his admiration for the net product. He quotes from Say:

"I do not doubt at all that in slave labour the excess of the products over consumption is larger than in the labour of a free man.... The labour of the slave has no limit but his capacity.... The slave" (and the free worker too) "labours for an unlimited need: his master's cupidity" (Ganilh, 2nd ed., [Vol. I,] pp. 231[-32]).^[54]

[IX-379] On this Ganilh observes:

"The free labourer cannot consume more and produce less than the slave.... All consumption presumes an equivalent produced to pay for it. If the free labourer consumes more than the slave, the products of his labour must be more considerable than those of the slave's labour" (Ganilh, Vol. I, p. 234).

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.

"I know," he continues, "that it can be said with some reason that the economies made by the master at the expense of the labourer^[3] " (according to this there are after all economies made on the wages of the slave) "serve to augment his personal expenses," etc.... "But it is more advantageous to the general wealth that there should be well-being in all classes of society rather than an excessive opulence among a small number of individuals" (pp. 234-35).

How does that tally with the net product? And for that matter Mr. Ganilh at once retracts his liberal tirades (I.e., pp. 236-37). He wants NiGGER-slaveryb 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.

"He" (Quesnay) "definitely denies that economies made by the wage-earning classes have the faculty to increase capital; and the reason he gives for this is that these classes should not have any means on which to make economies, and that if they had a surplus, an excess, this could only be due to an error or to some disorder in the society's economy" (I.e., p. 274).

Ganilh cites in evidence the following passage from Quesnay:

"If the sterile class saves in order to augment its cash ... its labours and its gains will diminish in the same proportion, and it will fall into decay" (Physiocratie, p. 321).55

The ass! He does not understand Quesnay. Mr. Ganilh puts on the keystone in the following paragraph:

"The larger they" (wages) "are, the less is the revenue of the society" (society stands on them, but they do not stand in society), "and all the skill of governments should be applied to reducing the amount [of the wages].... A task ... worthy of the enlightened century in which we live" (Vol. II, p. 24).

Then there are still Lauderdale (Brougham's insipid jests are not worth examining after him), (Ferrier?), Tocqueville, Storch, Senior, and Rossi to be considered briefly on productive and unproductive labour.^[56]

---

Endnotes

a J. B. Say, Traité d'économie politique..., 3rd ed., Paris, 1817. Marx quotes in French.— Ed.

a K. Marx, A Contribution to the Critique of Political Economy. Part One (see present edition, Vol. 29, pp. 303-14).— Ed.

2-176

*"If the quantity of food and clothing which were ... consumed by unproductive, had been distributed among productive hands, they would have reproduced, together with a profit, the full value of their consumption"* (I.e., B. II, Ch. Ill, p. 109). Here the PRODUCTIVE LABOURER is quite explicitly one who not only reproduces for the capitalist the FULL VALUE of the means of

(1) A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations. By J. R. McCulloch. In four volumes, Vol. II, Edinburgh, London, 1828.— Ed.

(2) Pre-eminently.— Ed. 2»

[11] 1861-63 (see present edition, Vol. 30, pp. 348-52). See also this volume, pp. 33-35.—10, 38 1 ' The reference is to Factories. Return to an Address of the Honourable the House of Commons, dated 24 April 1861. Ordered by the House of Commons, to be printed, 11 February 1862. Marx analyses the facts contained in this document on pp. XIX — 1187-1198, 1215-1218 of the manuscript of 1861-63 (present edition, Vol. 33).—12, 96

a In one way or another.— Ed.

a Either ... or.— Ed.

a Marx repeats this word in German after the English word.— Ed.

a Clerk.— Ed. h See this volume, p. 17.— Ed.

a See this volume, p. 17.— Ed.

a Ibid., p. 19.—Ed. b Overhead costs of production.— Ed.

a Workers and employers.— Ed.

a Vicious circle.— Ed. b Raw material.— Ed. 3-176

a See this volume, p. 17.— Ed.

a Ibid.— Ed. 3*

"the wealth of nations as consisting not in the unconsumable gold and silver, but in the consumable goods annually reproduced by the labour of the society" ([Garnier,] t. Ill, I. IV, ch. IX, p. 538) [Vol. Ill, p. 146]. 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

[18] In 1839 and 1843, the Société typographique Belge, Adolphe Wahlen et compagnie published two collections of economic works under the general title Cours d'économie politique. Both collections opened with J. A. Blanqui's Histoire de l'économie politique en Europe... Marx used the 1843 edition, which he had in his library and from which he quoted Rossi.— 29

11 More or less.— Ed.

(3) K. Marx, Zur Kritik der politischen Oeconomie, Erstes Heft, Berlin, 1809 (see present edition, Vol. 29, p. 363).— F.d. ' Marx quotes Blanqui in French.— Ed. ^ Gods of the lesser tribes.— F.d.

a See B. Mandeville, The Fable of the Bees.—Ed. b "Born to consume the fruits" (Horace, Epistolae, Liber primus, Epistola II, 27).— Ed.

a Marx quotes Sismondi in German using French words.— Ed. b G. King, Natural and Political Observations and Conclusions upon the State and the Condition of England, London, 1696.— Ed.

a In the manuscript the G e r m a n word is followed by this English equivalent in the parenthesis.— Ed. b T h e expression " common people" means the same as très état (the third estate) prior to the French Revolution, the entire population as distinct from the clergy and nobility.— Ed. c Cf. this volume, p . 9-10.— Ed. d Marx quotes Petty with some additions and changes.— Ed.

[21] It follows from the table of contents compiled by Marx for Notebook XIV of the manuscript of 1861-63 that John Stuart Mill's views were to be examined after those of Stirling (present edition, Vol. 32).—35

[22] Further on Marx analyses the views of John Stuart Mill, a disciple of Ricardo. Cf. present edition, Vol. 32, p. XIV — 851, where Marx writes that Mill in his work, Essays on Some Unsettled Questions of Political Economy, tried to derive "Ricardo's law of the rate of profit (in inverse proportion to wages) directly from the law of value without distinguishing between surplus value and profit".—36

a Marx quotes Petty with some additions a n d changes.— Ed. b Marx quotes Mill with some changes.— Ed.

a J. St. Mill, Principles of Political Economy.... In two volumes, London, 1848.— Ed.

a From a particular point of view.— Ed. b This sentence and the one preceding it are a summary by Marx of Mill's arguments on this page.— Ed.

[23] Marx formulated this distinction in Notebook II of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 162-63). He took up this question again on pp. XIV — 787-789 and XV — 928 of the manuscript of 1861-63 (present edition, Vol. 32).— 38

a First of all — Ed. b Let us proceed.— Ed.

a See this volume, p. 38.— Ed.

a See this volume, p. 38.— Ed. b J. St. Mill, A System of Logic, Ratiocinative and Inductive.... In two volumes, London, 1843.— Ed. c Here and below Marx quotes Mill with slight changes.— Ed.

a It is proved.— Ed. 4-176

Constant Variable Total Profit capital capital product 20 qrs 20 qrs (wages 60 qrs 20 qrs for 20 workers)

(4) See this volume, p. 40.— Ed. 4*

a From the outset.— Ed.

[72] On Adam Smith's hatred of the clergy, see Capital, Vol. I, Ch. XXV (see present edition, Vol. 35).—196

(5) In the manuscript "profit" is changed in Marx's hand to "rate of profit".— Ed.

[90] See present edition, Vol. 30, p. 353, and Capital, Vol. II, Ch. X (present edition, Vol. 36).—240

(6) See this volume, pp. 40-41.— Ed.

a But let us proceed.— Ed.

[25] Marx analyses the impact of various factors on the dynamics of the rate of surplus value in Volume I of Capital, parts III and IV (present edition, Vol. 35), and the rate of profit, in Volume III of Capital, Part I (present edition, Vol. 37).—55

a See this volume, p. 41.— Ed b Additions to the price.— Ed.

5-176

a From the outset.— Ed.

a See this volume, pp. 40-41.— Ed.

[2 8] Marx is referring tc the material contained in notebooks I-V of the manuscript of 1861-63 (present edition, Vol. 30).—69

[29] Marx is referring to part three of his work, "Third Chapter. Capital in General". In the Draft Plan of the Chapter on Capital drawn up in 1860, this part is entitled "III. Capital and Profit" (see present edition, Vol. 29, p. 516). The beginning of this work is to be found on pp. XVI —973-1021 and XVII — 1022-1028 of the manuscript (see present edition, Vol. 33).—70, 162, 282, 397

[30] Here Marx formulates for the first time the basic idea of his theory of the transformation of surplus value into average profit, which turns the value of commodities into the price of production differing from it. This passage was written in the spring of 1862 (see this volume, p. 64). See also present edition, Vol. 30, p. 400, where the term average price appears for the first time to denote the price of production, which differs from value. Marx elaborated the theory of average profit and the price of production in notebooks X and XI of the manuscript of 1861-63 (see this volume, pp. 260-64, 301-05, 400-39).—75

(7) See this volume, pp. 60-67.— Ed. 6*

a Marx quotes Malthus in French.— Ed.

[32] See present edition, Vol. 32, pp. XIII —763, 767-769 of the manuscript of 1861-63.—78

a Taste for idleness.— Ed b Taste for labour.— Ed c Marx quotes in French.— Ed d More or less.— Ed e Middle class.— Ed

[34] The passages from W. Petty's book A Treatise of Taxes and Contributions..., London, 1679, are quoted from A. Smith, An Inquiry... By J. R. MacCulloch, Edinburgh, London, 1828. Introductory discourse (p. XXX). Taken from page 213 of Notebook VII of excerpts, which Marx compiled in London in 1859-62.—79

a Other things being equal.— Ed. b See this volume, p. 35.— Ed. c Ibid., p. 35, 166-67.— Ed. d Here and below Marx quotes Gamier in French.— Ed.

a Cf. this volume, pp. 17, 19-21.— Ed b Ibid., pp. 164, 193.— Ed

a Lit.: bridges and roads — in France this designated the administration of roads and communications.— Ed.

a In spite of himself.— Ed. b Cf. this volume, pp. 11-29.— Ed

[7] Marx is referring to the vicious circle in Adam Smith's doctrine of the "natural price of wages", which he had discussed in the manuscript of 1861-63 (see present edition, Vol. 30, p. 401).—8

a I.e. the rate of wages.— Ed.

a Instrumental material.—-Ed. 7*

a See this volume, p. 88-91.— Ed.

[80] Marx is referring to A Contribution to the Critique of Political Economy, Part One (see present edition, Vol. 29).— 219

(8) See this volume, pp. 83-84.— Ed.

a In his comments Marx uses French phrases.— Ed.

[38] Marx cites this kind of data in Notebook V of the manuscript of 1861-63 (present edition, Vol. 30, p. 303).—96

* Return to an Address of the House of Commons, DATED 24 APRIL 1861 (PRINTED 11 FEBRUARY 1862).n

"wealth" [as] "an accumulation of superfluous labour".

"Commercial system, or the exchange of values of general labour" (I.e., [p.] 98). This is nonsense. T h e product is value as the form of existence, as the incarnation of general labour, but not as "the value of a Here and below Marx quotes Ganilh in French.— Ed. b In his comments on Ganilh Marx uses French words and expressions.— Ed.

"Exchange gives things a value which they would not have had without it" (p. 102). 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

"The exchanged value of things and not their exchangeable value establishes the real value, the value which is identical with wealth" (I.e., p. 104). 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

[40] Marx critically analyses Malthus' views on unproductive consumers on pp. XIV — 772-773 of the manuscript of 1861-63 (present edition, Vol. 32). Cf. this volume, p. 179.—106

[41] Marx analyses Smith's various determinations of value in notebooks VI-VII of the manuscript of 1861-63 (present edition, Vol. 30, pp. 377-78, 381-84, 402-08; cf. also Vol. 29, pp. 299-300).—106

a Idlers.— Ed.

[44] times as much as the rest of the capital, which amounts to £460 (150+310), it

s The surplus value is equal to the rate of surplus value a See this volume, pp. 78-79.— Ed. 8*

a The manuscript has "rate of surplus value".— Ed.

[62] Marx analyses this question in Notebook VI of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 402-08).—152

[60] Marx again discussed Th. Tooke's views on the issue on pp. XVII — 1061-1063 of the manuscript of 1861-63 (present edition, Vol. 33).—150

a As a result.— Ed. b See this volume, pp. 55-59.— Ed

[46] calculations. To simplify them, Marx takes £1,600 as the value of the

a Marx comments Say's quotations in French.— Ed.

a Marx comments Say's quotations in French.— Ed. b The part of the sentence, from the words "because their consumption", is written by Marx in French.— Ed c Masters and workmen.— Ed

[47] machinery.—109

[48] Marx quotes in French Say's note to Chapter 26 of Ricardo's On the Principles of

a See this volume, p. 116.— Ed. b Marx quotes Ricardo partly in French, partly in German.— F.d.

[51] Marx quotes Say in French according to Ganilh's Des systèmes d'économie politique...,

[52] Vol. 1, Paris, 1821, p. 220.—117

a The part of the sentence, from the words "provided that", is written by Marx in French.— Ed. b In the French quotation the last sentence is omitted.— Ed.

£20,000 11,000 £1,000 £5,000 £2,000/100 £2,000 £10,000 2,000 work-or ing 10% days

9-176

(9) The reference is to case II or capital II.— Ed.

a D. Ricardo, On the Principles of Political Economy, and Taxation, 3rd ed., London, 1821.— Ed. b See this volume, p. 117.— Ed. c Ibid., p. 119.— Ed.

•> Ibid., p. UT.—Ed. h So much the better.— Ed c In the manuscript the passage from the beginning of the paragraph is crossed out in pencil.— Ed

[54] Marx quotes in French Say's work Traité d'économie politique... from Ganilh's Des

a Ganilh has "slave".— Ed. h See p. VII of this volume.— Ed.

[56] Marx quotes Quesnay in French according to Ganilh's Des systèmes..., Vol. 1, Paris, 1821, pp. 274-75.—130 56 Marx examines Lauderdale's views on productive and unproductive labour on pp. 162-64, 193, 195 of this volume; Ferrier's, on pp. 151, 195; Storch's,on pp. 181-84, 194-95; Senior's, on pp. 184-89, and Rossi's, on pp. 189-95.—130

[13] By its substance the text in double oblique lines belongs not to p. VII — 300 but to p. VII — 299 of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 450-51).—13

[3] This is in fact not the conclusion but only the continuation of the section on Smith. The conclusion of this section can be found in Notebook IX.—6

[14] Here Marx quotes from Recherches sur la nature et les causes de la richesse des nations, Paris, 1802, Garnier's translation of Adam Smith's work. Marx made excerpts from it in Paris in the spring of 1844. In the present volume all quotations from Garnier's translation are given according to the English edition (A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, by J. R. MacCulloch. In four volumes. Edinburgh, London, 1828), with the pages indicated in brackets, and Marx's wording respected. Marx widely used the 1828 edition when working on the manuscript of 1861-63.—18, 152, 162, 198, 239, 439

[15] On bankers and their parasitical role in capitalist society, see K. Marx, Capital, Vol. Ill, chapters XXX-XXXIII (present edition, Vol. 37).—20

[16] Marx discussed concentration of capital as a prerequisite for raising labour productivity in Notebook IV of the manuscript of 1861-63 (present edition, Vol. 30, pp. 294-96).—26

[17] "Laissez-faire, laissez-passer" ("laissez-faire, laissez-aller")—the formula of economists who advocated Free Trade and non-interference by the state in economic relations.— 26

[10] Marx examines the Mercantilists' views in Notebook VI of the manuscript of

[2] The entries below were made by Marx on the inside covers of notebooks VIII-XII of the manuscript of 1861-63. The table of contents of Notebook \ II is published in Volume 30, p. 347, and its text in Volume 30 and in this volume. The tables of contents had been corrected several times. Marx's original plan was to analyse Adam Smith's doctrine in notebooks VII and VIII and then to pass on to Necker and Ricardo. But later he rejected this scheme. He also proposed to examine Ricardo's views in Notebook X, first after the analysis of Linguet and then of Bray. In the contents of Notebook XI, point "g) Rodbertus" was originally followed by point "h) Ricardo". Later Marx inserted several other points preceding that on Ricardo, probably after the notebooks had been filled in. In Notebook XII, next to the line "5) Theories of Surplus Value", Marx wrote in pencil without the mark of insertion, "(CIRCULATING AND FIXED CAPITAL p. 643) in Ricardo". The last two points in the contents of this notebook were later crossed out in pencil and replaced with "Theories of COST PRICE". The inside cover of Notebook IX has a note "Mercantilists (408)" made in pencil later. Written on the inside cover of Notebook XI are a number of quotations (see this volume, pp. 579-80). Alongside the contents, the inside cover of Notebook XII contains Marx's notes and quotations (see this volume, p. 580).—6

[100] In this instance, by raw materials Marx understands objects of labour provided by nature.—256

[8] See this volume, pp. 389-400 and pp. XIII — 711, XIV — 818, 821-822, 840-841 of the manuscript of 1861-63 (present edition, Vol. 32).—8

[9] Marx analyses the Physiocrats' views in Notebook VI of the manuscript of 1861-63 (see present edition, Vol. 30, pp. 354-55 and 358-61).—9

[1] Theories of Surplus Value, on which Marx began work in March 1862, constituted the fifth, concluding section of the first chapter of his research into capital, "The Production Process of Capital". The original intention was to examine absolute and relative surplus value in their combination. Theories of Surplus Value was to be an historical survey included in the chapter on surplus value, similar to the historical notes introducing the chapters on commodity and on money in A Contribution to the Critique of Political Economy. However, during the work, the character of the manuscript of Theories of Surplus Value had changed substantially. Both in its length and content, it surpassed the tasks the author had originally set himself. Marx not only considered the views of bourgeois economists but also put forward a number of major theoretical propositions. Theories of Surplus Value were published in English for the first time, in an abridged form, in: K. Marx, Theories of Surplus Value. A selection from the volumes published between 1905 and 1910 as Theorien über den Mehrwert, edited by Karl Kautsky, taken from Karl Marx's preliminary manuscript for the projected fourth volume of Capital. Translated from the German by G. A. Bonner and Emile Burns. Lawrence & Wishart, London, 1951. The work was first published in full between 1963 and 1971: K. Marx, Theories of Surplus-Value (Vol. IV of Capital), Part I, Foreign Languages Publishing House, Moscow, 1963; Part II, Progress Publishers, Moscow, 1968; Part III, Progress Publishers, Moscow, 1971. This volume contains the sequel to Marx's Theories of Surplus Value. The first five notebooks of the Economic Manuscript of 1861-63 and the beginning of Theories of Surplus Value (Notebook VI and part of Notebook VII), in which Marx critically analyses the views of James Steuart, the Physiocrats, and Adam Smith's determinations of value, are to be found in Volume 30 of the present edition.—6

[24] It follows from Mill's faulty reasoning quoted above (see pp. 40-41) that capitalist No. I who used constant capital and 60 workers, spent 6/9 qr of corn to produce one qr of corn, the wages of one worker (,20/i8o=2/s=6/9)> while capitalist No. II, who did without constant capital and used 100 workers, spent only 5/g qr (lo<)/iso=5/g) t o produce one qr. In the case of capitalist No. II the "cost of production of wages" per worker is reduced by '/g qr or, in other words, in the case of capitalist No. I, this "cost of production of wages" is one-fifth (20 per cent) higher than in that of capitalist No. II.—49

[5] Marx is referring to the section of the manuscript of 1861-63 in Notebook VII entitled in the contents "Inquiry into how it is possible for the annual profit and wages..." (see present edition, Vol. 30, pp. 347, 411 et seq.).—7, 149

[4] Marx gave an in-depth analysis of the problem of productive and unproductive labour on pp. XXI — 1317-1331 of the manuscript of 1861-63 (present edition, Vol. 34).—7

[6] The Economists was the name given to the Physiocrats in France during the second half of the 18th and first half of the 19th centuries. By the 1850s the name acquired a more general meaning and ceased to designate exponents of a particular economic doctrine.— 7, 116

[27] On Ricardo's concept of real wages, see pp. XII — 653, 655, 661 and 665 of the manuscript of 1861-63 (present edition, Vol. 32).—62

[20] This quotation is a free rendering of a passage from D'Avenant. What D'Avenant actually wrote was: "The lazy Temper (which is now grown inveterate Nature in the Spaniards) came undoubtedly upon them, with that Affluence of Money... And the Common People being the Stomach of the Body 38-176 Politick and that Stomach being thus weaken'd and not performing its due Functions, the Food, that had been plentifully thrown in, was not at all digested... Trade and Manufactures are the only Mediums by which such a digestion and distribution of Gold and Silver can be made, as will be Nutritive to the Body Politick."—34

[31] The cottagers, cottiers—a category of the rural population consisting of poor or landless peasants. In Ireland, the cottiers rented small plots of land and cottages from the landlords or real estate agents on extremely onerous terms. Their position resembled that of farmhands.—77, 453

[36] Marx uses the terms contained in a quotation from Adam Smith cited earlier in the manuscript (see present edition, Vol. 30, pp. 429-30). On the replacement of the part of constant capital which does not enter into circulation, see also Vol. 30, pp. 431-32, 444-45.-87, 147, 149

[35] Up to this point, Marx used the letter x to designate the product considered as use value, and the letter z, the value of the product. From here onwards he uses x for value, and z for use value.—85

[45] should come to £1,840. But this figure would have greatly complicated the

[50] (Vol. 1, Paris, 1821, p. 216).—115

[12] Marx is referring to Malthus' remark that the differentiation between productive and unproductive labour is the cornerstone of Adam Smith's work and the basis on which the main line of his reasoning rests (T. R. Malthus, Principles of Political Economy..., 2nd ed., London, 1836, p. 44).—12