2) James Mill, Elements of Political Economy, London 1821
Mill was the first to present Ricardo's theory in systematic form, even though he did it only in rather abstract outlines. What he tries to achieve is formal logical consistency. The disintegration of the Ricardian school therefore begins with him. With the master what is new and significant develops vigorously amid the "manure" of contradictions out of the contradictory phenomena. The underlying contradictions themselves testify to the richness of the living foundation from which the theory itself developed. It is different with the disciple. His raw material is no longer reality, but the new theoretical form in which the master had sublimated it. It is in part the theoretical disagreement of opponents of the new theory and in part the often paradoxical relationship of this theory to reality which drive him to seek to refute his opponents and explain away reality. In doing so, he entangles himself in contradictions and with his attempt to solve these he demonstrates the beginning disintegration of the theory which he dogmatically espouses. On the one hand, Mill wants to present bourgeois production as the absolute form of production and seeks therefore to prove that its real contradictions are only apparent ones. On the other hand, [he seeks] to present the Ricardian theory as the absolute theoretical form of this mode of production and ditto to disprove the theoretical contradictions, both the ones pointed out by others and the ones he himself cannot help seeing. Nevertheless in a way Mill advances the Ricardian view beyond the bounds reached by Ricardo. He supports the same historical interests as Ricardo — those of industrial capital against landed property — and he draws the practical conclusions from the theory — that of rent for example — more ruthlessly, against the institution of landed property which he would like to see more or less directly transformed into state property.(1) This conclusion and this side of Mill do not concern us here.
Ricardo's disciples, just as Ricardo himself, fail to make a distinction between surplus value and profit. Ricardo only becomes aware of the problem as a result of the different influence which the variation of wages can exercise on capitals of different organic composition (and [he considers] different organic composition only with regard to the circulation process). It does not occur to them that, even if one considers not capitals in DIFFERENT OCCUPATIONS but each capital separately, in so far as it does not consist exclusively of variable capital, of capital laid out in wages only, rate of profit and rate of surplus value are different things, that therefore profit must be a more developed, specifically modified form of surplus value. They perceive the difference only in so far as it concerns equal profits — AVERAGE RATE OF PROFIT — for capitals in DIFFERENT SPHERES
OF PRODUCTION AND DIFFERENTLY COMPOSED OF FIXED AND CIRCULATING INGREDIENCES. In this connection Mill only repeats in a vulgarised form what Ricardo says in CHAPTER I, "On Value". The only new consideration which occurs to him in relation to this question is this:
Mill remarks that " TIME AS SUCH" (i.e. not labour time, but simply time) produces nothing, consequently it does not produce "VALUE". How does this fit in with the law of value according to which capital, because it requires a longer time for its RETURNS, yields, as Ricardo says, the same profit as capital which employs more immediate labour but returns more rapidly? One perceives that Mill deals here only with a quite individual case which, expressed in general terms, would read as follows: How does the cost price, and the [XIV-792] AVERAGE RATE OF PROFIT which it presupposes (HENCE equal value of commodities containing very UNEQUAL quantities of labour), fit in with the fact that profit is nothing but a part of the labour time contained in the commodity, the part which is appropriated by the capitalist without an equivalent? On the other hand, in the case of the AVERAGE RATE OF PROFIT and cost price, criteria which are quite extrinsic and external to the determination of value are advanced, for example, that the capitalist whose capital takes longer to bring in a RETURN because, as in the case of WINE, it must remain longer in the production process (or, in other cases, longer in the circulation process) must be compensated for the time in which he cannot valorise his capital. But how can the time in which no valorisation takes place create value?
Mill's passage concerning "time" reads:
* "Time can do nothing ... how then can it add to value? Time is a mere abstract term. It is a word, a sound. And it is the very same logical absurdity to talk of an abstract unit measuring value, and of time creating it" * (Elements etc, 2ND ED., p. 99).a?8
In reality, what is involved in the grounds for compensation between CAPITALS IN DIFFERENT SPHERES OF PRODUCTION is not the production of surplus value, but its division between different categories of capitalists. Viewpoints are here advanced which have nothing whatever to do with the determination of value as such. Everything which compels capital in A particular SPHERE OF PRODUCTION to renounce conditions which would produce a greater amount of surplus value in other spheres, is regarded here as grounds for compensation. Thus, if more fixed and less circulating capital is employed, if more constant than variable capital is employed, if it must remain longer in the circulation process, and finally, if it must remain longer in the production process without being subjected to the labour process — a thing which always happens when breaks of a technological character occur in the production process in order to expose the developing product to the working of natural forces, for example, wine in the cellar. Compensation ensues in all these cases and the last mentioned is the one which Mill seizes on, thus tackling the difficulty in a very circumscribed and isolated way. A part of the surplus value produced in other spheres is transferred to the capitals more unfavourably placed with regard to the direct exploitation of labour, simply in accordance with their size (competition brings about this equalisation so that each separate capital appears only as an aliquot part of social capital).[3] The phenomenon is very simple as soon as the relationship of surplus value and profit as well as the equalisation of profits in a general rate of profit is understood. If, however, it is to be explained directly from the law of value without any intermediate link, that is, if the profit which a particular capital yields in a particular TRADE is to be explained on the basis of the surplus value contained in the commodities it produces, [in other words on the basis of] the unpaid labour (consequently also on the basis of the LABOUR directly WORKED UP in the commodities themselves), this is a much more difficult problem to solve than that of squaring the circle, which can be solved algebraically.'(2) It is simply an attempt to present that which does not exist as in fact existing. But it is in this direct form that Mill seeks to solve the problem. Thus no solution of the matter is possible here, only a sophistic explaining away of the difficulty, that is, only scholasticism. Mill begins this process. In the case of an unscrupulous blockhead like McCulloch, this manner assumes a swaggering shamelessness.(3)
Mill's solution cannot be better summed up than it is in the words of Bailey:
* "Mr Mill has made a curious attempt to resolve the effects of time into expenditure of labour. 'If,' says he,"* (p. 97 of the Elements, 2ND ED., 1824) *'"the wine which is put in the cellar is increased in value Vio by being kept a year, Vio more of labour may be correctly considered as having been expended upon it.' ...a fact can be correctly considered as having taken [XIV-793] place only when it really has taken place. In the instance adduced, no human being, by the terms of the supposition, has approached the wine, or spent upon it a moment or a single motion of his muscles" * (A Critical Dissertation on the Nature, Measures, and Causes of Value etc., London, 1825, [pp.] 219-20).
Here the contradiction between the general law and further developments in the concrete circumstances is to be resolved not by the discovery of the connecting links but by directly subordinat-ing and immediately adapting the concrete to the abstract. This moreover is to be brought about by a verbal fiction, BY CHANGING vera rerum vocabula.* (These are indeed "VERBAL DISPUTES", they are "VERBAL", however, because real contradictions which are not resolved in a real way, are to be solved by phrases.) When we come to deal with McCulloch, it will be seen that this manner, which appears in Mill only in embryo, did more to undermine the whole foundation of the Ricardian theory than all the attacks of its opponents.0
Mill resorts to this type of argument only when he is quite unable to find any other expedient. But as a rule his method is quite different. Where the economic relation — and therefore also the categories expressing it — includes opposites, contradictions, and even the unity of the opposites, he emphasises the aspect of the unity of the contradictions and denies the contradictions. He transforms the unity of opposites into the direct identity of opposites.
For example, a commodity conceals the contradiction of use value and exchange value. This contradiction develops further, presents itself and manifests itself in the duplication of the commodity into commodity and money. This duplication appears as a process in the metamorphosis of commodities in which selling and buying are different aspects of a single process and each act of this process simultaneously includes its opposite. In the first part of this work, I mentioned that Mill disposes of the contradiction by concentrating only on the unity of buying and selling; consequently he reduces circulation to barter, then, however, smuggles categories borrowed from circulation into barter.d See also what I wrote there about Mill's theory of money, in which he employs similar methods."
In James Mill we find the unsatisfactory divisions— "Production", "Distribution", "Interchange", "Consumption"/80
Wages:
"Instead, however, of waiting till the commodity is produced, and the value of it is realised, it has been found to suit much better the convenience of the labourers to receive their share in advance. The shape under which it has been found most convenient [for all parties] that they should receive it, is that of wages. When the share of the commodity which belongs to the labourer has been all received in the shape of wages, the commodity itself belongs to the capitalist, he having, in reality, bought the share of the labourer and paid for it in advance" (Élémens d'économie politique, French translation by [J. T.] Parisot, Paris, 1823, p[p. 33-]34).
It is highly characteristic of Mill that, just as money for him is an expedient invented for convenience's sake, capitalist relations are likewise invented for the same reason. These specific social relations of production are invented for "convenience's " sake. Commodities and money are transformed into capital because the worker has ceased to engage in exchange as a commodity producer and commodity owner; instead of selling commodities he is compelled to sell his labour itself ([to sell] directly his labour capacity) as a commodity to the owner of the objective conditions of labour. This separation is the prerequisite for the relationship of capital and wage labour in the same way as it is the prerequisite for the transformation of money (or of the commodities by which it is represented) into capital. Mill presupposes the separation, the division; he presupposes the relationship of capitalist and wage worker, in order to present as a matter of convenience the situation in which the worker sells no product, no commodity, but his share of the product (in the production of which he has no say whatsoever and which proceeds independently of him) before he has produced it. [XIV-794] Or, more precisely, the worker's share of the product is paid for — transformed into money — by the capitalist before the capitalist HAS DISPOSED OF, or realised, the product in which the worker has a share.
This view is aimed at circumventing the specific difficulty, along with the specific form of the relationship. Namely, the difficulty of the Ricardian system according to which the worker sells his labour directly (not his labour capacity). For: the value of a commodity is determined by the labour time required for its production; how does it happen that this law of value does not hold good in the greatest of all exchanges, which forms the foundation of capitalist production, the exchange between capitalist and wage worker? Why is the quantity OF REALISED LABOUR received by the worker as WAGES not equal to the quantity of IMMEDIATE LABOUR which he gives in exchange for his WAGES? TO SHIFT THIS DIFFICULTY, Mill transforms the wage worker into a commodity owner who sells the capitalist his product, his commodity—since his share of the product, of the commodity, is Ais product, his commodity, a value produced by him in the form of a particular commodity. He resolves the difficulty by transforming the transaction between capitalist and wage worker, which includes the contradiction between REALISED and IMMEDIATE LABOUR, into a COMMON transaction between commodity owners, owners of REALISED LABOUR. Although by resorting to this artifice Mill has indeed made it impossible for himself to grasp the specific nature, the differentia specifica of the proceedings which take place between capitalist and wage worker, he has not reduced the difficulty in any way, but has increased it, because the peculiarity of the result is now no longer comprehensible in terms of the peculiarity of the commodity which the worker sells (and the specific feature of this commodity is that its use value is itself a factor of exchange value, its use therefore creates a greater exchange value then it itself contained).
According to Mill, the worker is a seller of commodities like any other. For example, he produces 6 yards of linen. Of these 6, 2 yards are assumed to be equal to the value of the labour which he has added. He thus sells 2 yards of linen to the capitalist. Why then should he not receive the full value of the 2 yards, like any other seller of 2 yards of linen, since he is now a seller of linen like any other? Rather the contradiction with the law of value now expresses itself much more crassly than before. He does not sell a particular commodity differing from all other commodities. He sells labour embodied in a product, that is, a commodity which as such is not specifically different from any other commodity. If now the price of a yard [of linen]—that is, the quantity of money containing the same amount of labour time as the yard [of linen]—is 2s., why then does the worker receive Is. instead of 2? But if the worker received 2s., the capitalist would not secure any SURPLUS VALUE and the whole Ricardian system would collapse. We would have to return to PROFIT UPON EXPROPRIATION.[75] The 6 yards would cost the capitalist 12s., i.e. their value, but he would sell them for 13s.
Or linen, and any other commodity, is sold at its value when the capitalist sells it, but below its value when the worker sells it. Thus the law of value would be destroyed by the transaction between worker and capitalist. And it is precisely in order to avoid this that Mill resorts to his fictitious argument. He wants to transform the relationship between worker and capitalist into the ordinary one between sellers and buyers of commodities. But why should not the ordinary law of value of commodities apply to this transaction? [It may be said however that] the worker is paid "in advance". Consequently this is not after all the ordinary relationship of buying and selling commodities. What does this "payment in advance" mean in this context? The worker who, for example, is paid weekly, "advances" his labour and produces the share of the weekly product which belongs to him — his weekly labour embodied in a product—(both according to Mill's assumption and in practice) before he receives "payment" for this share from the capitalist. The capitalist "advances" raw materials and instruments, the worker the "labour", and as soon as the wages are paid at the end of the week, he sells a commodity, his commodity, his share of the total commodity, to the capitalist. But, Mill will say, the capitalist pays the 2 [XIV-795] yards of linen due to the worker, i.e. turns them into cash, transforms them into money, before he himself sells the 6 yards of linen and transforms them into money. But what if the capitalist is working on orders, if he sells the goods before he produces them? Or to express it more generally, what difference does it make to the worker — in this case the seller of 2 yards of linen — if the capitalist buys these 2 yards from him in order to sell them again, and not to consume them? Of what concern are the buyer's motives to the seller? And how can motives, moreover, modify the law of value? To be consistent, each seller would have to dispose of his commodities below their value, for he is disposing of his products to the buyer in the form of a use value, whereas the buyer hands over value in the form of money, the cash form of the product. In this case, the linen manufacturer would also have to underpay the yarn merchant and the machine manufacturer and the colliery owner and so on. For they sell him commodities which he only intends to transform into money, whereas he pays them "in advance" the value of the component parts entering into his commodity not only before the commodity is sold, but before it is even produced. The worker provides him with linen, a commodity in a marketable form, in contrast to other sellers whose commodities, machinery, raw materials, etc., have to go through a process before they acquire a saleable form. It is a pretty kettle of fish for such an inveterate Ricardian as Mill, according to whom purchase and sale, supply and DEMAND are identical terms, and money a mere formality, if the transformation of the commodity into money — and nothing else takes place when the 2 yards of linen are sold to the capitalist— includes the fact that the seller has to sell the commodity below its value, and the buyer, with his money, has to buy it above its value. [Mill's argument] therefore amounts to the absurdity that, in this transaction, the buyer buys the commodity in order to resell it at a profit and that, consequently, the seller must sell the commodity below its value — and with this the whole theory of value falls to the ground. This second attempt by Mill to resolve a Ricardian
19* contradiction, in fact destroys the whole basis of the system, especially its great merit that it defines the relationship between capital and wage labour as a direct exchange between HOARDED and IMMEDIATE LABOUR, that is, that it grasps its specific features.
In order to extricate himself, Mill would have to go further and to say that it is not merely a question of the simple transaction of the purchase and sale of commodities; that, on the contrary, in so far as it involves payment or the turning into money of the worker's product, which is equal to his share of the total product, the relationship between worker and capitalist is similar to that prevailing between the LENDING CAPITALIST OR DISCOUNTING CAPITALIST (the MONiED CAPITALIST) and the INDUSTRIAL CAPITALIST. It would be a pretty state of affairs to presuppose interest-bearing capital — a special form of capital — in order to deduce the general form of capital, capital which produces profit; that is, to present a derived form of surplus value (which already presupposes capital) as the cause of the appearance of surplus value. In that case, moreover, Mill would have to be consistent and in place of all the definite laws concerning wages and the RATE OF WAGES elaborated by Ricardo, he would have to derive them from the RATE OF INTEREST, and if he did that it would indeed be impossible to explain what determines the RATE OF INTEREST, since, according to the RICARDIANS AND ALL OTHER ECONOMISTS WORTH NAMING, the rate of interest is DETERMINED BY THE RATE OF PROFIT.
The proposition concerning the "share" of the worker in his own product is in fact based on this: If one considers not simply the isolated transaction between capitalist and worker, but the EXCHANGE which takes place between both in the COURSE OF REPRODUCTION, and if one considers the real content of this process instead of the form in which it appears, then it is in fact evident that what the capitalist pays the worker (as well as the part of capital which confronts the worker as constant capital) is nothing but a part of the worker's product itself and, indeed, a part which does not have to be transformed into money, but which has already been sold, has already been transformed into money, since WAGES are paid in money, not in naturalibus. Under slavery, etc., the false appearance brought about by the previous transformation of the product into money — in so far as it is expended on WAGES — does not arise; it is therefore obvious that what the slave receives as wages is not, in fact, something that the SLAVE-OWNER "ADVANCES" him, but simply the portion of the realised labour of the SLAVE that returns to him in the form of means of subsistence. The same applies to the capitalist. He "advances" something only in appearance. Since he pays for the work only after it has been done, he advances or rather [XIV-796] pays the worker as WAGES a part of the product produced by the worker and already transformed into money. A part of the worker's product which the capitalist appropriates, which is deducted beforehand, returns to the worker in the form of WAGES — as an advance on the new product, if you like. It is quite unworthy of Mill to cling to this appearance of the transaction in order to explain the transaction itself (this sort of thing might suit McCulloch, Say or Bastiat). The capitalist can ADVANCE the worker NOTHING EXCEPT WHAT HE HAS TAKEN previously FROM THE worker, i.e. what HAS BEEN ADVANCED TO HIM BY OTHER PEOPLE'S LABOUR. Malthus himself says that what the capitalist advances CONSISTS not "OF CLOTH" and "OTHER COMMODITIES", but " OF LABOUR" ,a that is, precisely of that which he himself does not perform. He advances the worker's own labour to the worker.
However, the whole paraphrase is of no use to Mill, for it does not help him to avoid resolving the question: how can the exchange between HOARDED and IMMEDIATE LABOUR (and this is the way the exchange process between capital and labour is perceived by Ricardo and by Mill and others after him) correspond to the law of value, which it contradicts directly? One can see from the following passage that it is of no help to Mill:
"In what proportion are the products divided between the labourer and the capitalist, or what share [of the labourer] determines the rate of wages? ([Mill, Elemens d'économie politique,] ED. by Parisot, p. 34). The determination of the shares of the labourer and the CAPITALIST is the subject of a bargain between them. All bargains, when left in freedom, are determined by competition, and the terms alter according to the state of supply and demand" (I.e., [pp.] 34-35).
The worker is paid for his "share" of the product. This is said in order to transform him into an ordinary seller of a commodity (a product) vis-à-vis capital and to eliminate the specific feature of this relationship. The worker's share of the product is his product, that is, the share of the product in which his newly added labour is realised. Quod non.c On the contrary, we now ask which is his "share" of the product, that is, which is his product? For the part of the product which belongs to him is his product, which he sells. We are now told that his product and his product are two quite different things. We must establish, first of all, what his product (in other words, his share of the product, that is, the part of the product that belongs to him) is. His product is thus a mere phrase, since the [quantity of] value which he receives from the capitalist is not determined by his own production. Mill has thus merely removed the difficulty one step. He has got no farther than he was at the beginning.
There is a quid pro quo here. Supposing that the exchange between capital and wage labour is a continuous activity — as it is if one does not isolate and consider one individual act or element of capitalist production — then the worker receives a part of the value of his product which he has replaced + that part of the value which he has given the capitalist for nothing. This is repeated continuously. Thus he receives in fact continuously a portion of the value of his own product, a part of, or a share in, the value he has produced. Whether his WAGES are high or low is not determined by his share of the product but, on the contrary, his share of the product is determined by the amount of his WAGES. He actually receives a share of the value of the product. But the share he receives is determined by the VALUE OF LABOUR, not conversely, the VALUE OF LABOUR — by his share in the product. The VALUE OF LABOUR is determined by the labour time required by the worker for his own reproduction; it is determined by the sale of his labour capacity to the capitalist. This virtually determines his share of the product as well. It does not happen the other way round, that his share of the product is determined first, and as a result, the amount or VALUE of his WAGES. This is precisely one of Ricardo's most important and most emphasised propositions, for otherwise the price of labour would be determined by the price of the commodity it produces, whereas, according to Ricardo, the price of labour determines nothing but the rate of profit.
And how does Mill determine the "share" of the product which the worker receives? By demand and supply, competition between workers and capitalists. What Mill says applies to all commodities:
"The determination of the shares" (read: in the value of commodities) "of the labourer and the capitalist" (seller and buyer) "is the subject of a bargain between [XIV-797] them. All bargains, when left in freedom, are determined by competition, and the terms alter according to the state of supply and demand." (4)
Here we have the gist of the matter.(5) [This is said by] Mill who, as a zealous Ricardian, proves that although demand and supply can, to be sure, determine the vacillations of the market price either above or below the value of the commodity, they cannot determine that value itself, that these are meaningless words when applied to the determination of value, for the determination of demand and supply presupposes the determination of value! In order to determine the VALUE OF LABOUR, the value of a commodity, Mill now resorts to something for which Say had already reproached Ricardo[14]: determination by demand and supply.(6)
But even more. Mill does not say which of the two parties represents supply and which DEMAND — which is of no importance to the matter here. Still, since the capitalist offers money and the worker offers something for the money, we will assume that DEMAND is on the side of the capitalist and supply on that of the worker. But what then does the worker "sell"? What does he supply? His "share" of the product which does not [yet] exist? But it is just his share in the future product which has to be determined by competition between him and the capitalist, by the "demand and supply" relationship. One of the sides of this relationship — supply— cannot be something which is itself the result of the struggle between demand and supply. What then does the worker offer for sale? His labour? If this is so, then Mill is back again at the original difficulty he sought to evade, the EXCHANGE between HOARDED and IMMEDIATE LABOUR. And when he says that what is happening here is not the exchange of equivalents, or that the value of LABOUR, the commodity sold, is not measured by "the labour time" itself, but by competition, by demand and supply, then he admits that Ricardo's theory breaks down, that his opponents are right, that the determination of the value of commodities by labour time is false, because the value of the most important commodity, labour itself, contradicts this law of value of commodities. As we shall see later, Wakefield says this quite explicitly.(7) Mill can turn and twist as he will, he cannot extricate himself from the dilemma. At best, to use his own mode of expression, competition causes the workers to offer a definite quantity of labour for a price which, according to the relation of demand and supply, is equal to a larger or smaller part of the product which they will produce with this quantity of labour. That this price, this sum of money, which they receive in this way, is equal to a larger or smaller part of the value of the product to be manufactured, does not, however, de prime abord,(8) in any way prevent a definite amount of living labour (IMMEDIATE LABOUR) from being exchanged for a greater or lesser amount of money (ACCUMULATED LABOUR, existing moreover in the form of exchange value). It does not therefore prevent the exchange of unequal quantities of labour, that is, of less HOARDED LABOUR for more IMMEDIATE LABOUR. This was precisely the phenomenon that Mill had to explain and he wished to clear the problem up without violating the law of value. The phenomenon is not changed in the slightest, much less explained, by declaring that the proportion in which the worker exchanges his IMMEDIATE LABOUR for money is expressed at the end of the production process in the ratio of the value paid him to the value of the product he has produced. The original unequal exchange between capital and LABOUR thus only appears in a different form.
How Mill boggles at direct EXCHANGE between LABOUR and capital — which Ricardo takes as his point of departure without any embarrassment at all — is also shown by the way he proceeds. Thus he says:
[XIV-798] "Let us begin by supposing that there is a certain number of capitalists and a certain number of labourers. The proportion, in which the commodities produced are divided between them, has fixed itself at some particular point Let us next suppose that the labourers have increased in number without any increase in the quantity of capital The additional labourers must endeavour to supplant those who have forestalled the employment. They must offer to work for a smaller reward. Wages, therefore, decline ... and vice versa... If the ratio which capital and population bear to one another remains the same, the wage rate will remain the same" (I.e., p. 35 et seq. passim).
What has to be determined is "the proportion in which they" (capitalists and workers) "divide the product". In order to establish this by competition, Mill assumes that this proportion "has fixed itself at some particular point". In order to establish the "share" of the worker by means of competition, he assumes that it is determined before competition "at some particular point". Moreover, in order to demonstrate how competition alters the division of the product which is determined "at some particular point", he assumes that workers "offer to work for a smaller reward' when their number grows more rapidly than the quantity of capital. Thus he says here outright that what the workers supply consists of " labour " and that they offer this labour for a "reward', i.e. money, a definite quantity of "HOARDED LABOUR". In order to avoid direct exchange between labour and capital, direct sale of labour, he has recourse to the theory of the "division of the product". And in order to explain the proportion in which the product is divided, he presupposes direct sale of labour for money, so that this original between and is later expressed in the proportion of [the share] the worker receives of his product, and not that the original EXCHANGE is determined by his share of the product. And finally, if the number of workers and the amount of capital remain the same, then the "wage rate" will remain the same. But what is the wage rate when demand and supply balance? That is the point which has to be explained. It is not explained by declaring that this rate is altered when the equilibrium between demand and supply is upset. Mill's tautological circumlocutions only demonstrate that he feels there is a snag here in the Ricardian theory which he can only overcome by abandoning the theory altogether.
Against Malthus, Torrens, and others. Against the determination of the value of commodities by the value of capital, Mill remarks correctly:
*"Capital is commodities. If the value of commodities, then, depends upon the value of capital, it depends upon the value of commodities; the value of commodities depends upon itself"* (Elements etc., 1ST ED. London, 1821, [p.] 74).
Demand, supply, overproduction.[81] // Mill does not gloss over the contradiction between capital and labour. The rate of profit must be high so that the social class which is free from immediate labour may be important; and for that purpose wages must be relatively low. It is necessary that the mass of the labourers should not be masters of their own time and should be slaves of their own needs, so that human (social) capacities can develop freely in the classes for which the working class serves merely as a basis. The working class represents lack of development in order that other classes can represent human development. This IN FACT is the contradiction in which bourgeois [XIV-799] society develops, as has every hitherto existing society, and this is declared to be a necessary law, i.e. the existing state of affairs is declared to be absolutely reasonable.
"Man's perfectibilité, or the power of advancing continually from one degree of knowledge, and of happiness, to another, seem, in a great measure, to depend upon the existence of a class of men which have their time at their command; that is, who are rich enough to be freed from all solicitude with respect to the means of living in a certain state of enjoyment. It is by this class of men that knowledge is cultivated and enlarged; it is also by this class that it is diffused; it is this class of men whose children receive the best education, and are prepared for all the higher and more delicate functions of society, as legislators, judges, administrators, teachers, inventors in all the arts, and superintendents in all the more important works, by which the dominion of the human species is extended over the powers of nature" (I.e., [Elémens d'économie politique, tr. by Parisot, Paris, 1823, p.] 65).
"To enable a considerable proportion of the community to enjoy the advantages of leisure, the return to capital must evidently be large" (I.e., [p.] 67).
CAPITAL simply as different forms of labour.
* "Labour and Capital — the one, immediate labour... the other, hoarded labour"* ([Elements of Political Economy,] 1ST ENGL, ED., London, 1821, p. 75).
I n a n o t h e r p a s s a g e h e says:
"Of these two species of labour, [two things] are to be observed. They are not always paid according to the same rate" ([Élémens d'économie politique,] ED. by Parisot, [p.] 100).
Here he comes to the point. Since what pays for IMMEDIATE labour is always HOARDED LABOUR, CAPITAL, the fact that it is not paid at the same rate means nothing more than that more IMMEDIATE LABOUR is exchanged for less HOARDED LABOUR, and that this is "always" the case, since otherwise HOARDED LABOUR would not be exchanged as "capital" for IMMEDIATE LABOUR and would not only fail to yield the very high return desired by Mill, but would yield none at all. The passage quoted thus contains the admission (since Mill along with Ricardo regards the exchange between CAPITAL and LABOUR as a direct exchange of HOARDED and IMMEDIATE LABOUR), that they are exchanged in unequal proportions, and that in respect of them the law of value — according to which equal quantities of labour are exchanged for one another — breaks down.
Mill advances as a basic law what Ricardo actually assumes in order to develop his theory of rent a:
"The rate of agricultural profits determines the rate of all other profits" ([Elements of Political Economy,] 2ND ED., London, 1824, [p.] 78).b
This is fundamentally wrong, since capitalist production develops first of all in industry, not in agriculture, and only embraces the latter by degrees, so that it is only as a result of the advance of capitalist production that THE AGRICULTURAL PROFITS BECOME EQUALISED TO THE INDUSTRIAL profits and only as a result of this equalisation do the former [influence] the latter. Hence it is in the first place wrong historically. But secondly, once this EQUALISATION is an accomplished fact — that is, presupposing a level of development of agriculture in which capital, in accordance with the rate of profit, flows from industry to agriculture and vice versa — it is equally wrong to state that from this point on AGRICULTURAL PROFITS become the determining force, instead of the influence being reciprocal. Incidentally, in order to develop the concept of rent, Ricardo himself assumes the opposite. T h e price of corn rises; as a
a See this volume, pp. 99-101.— Ed. b Marx quotes Mill with some alterations.— Ed.
result agricultural profits do not fall (as long as there are no new supplies either from inferior lands or from additional, less productive investments of capital)—for the rise in the price of corn more than compensates the farmer for the loss he incurs by the rise in wages following on the rise in the price of c o r n — but profits fall in industry, where no such compensation or over-compensation takes place. Consequently the industrial profit rate falls and HENCE capital which yields this lower rate of profit can therefore BE EMPLOYED on inferior lands. This would not be the case if the old profit rate prevailed. Only because the decline of industrial profits thus reacts on the agricultural profit yielded by
THE WORSE LANDS, doeS AGRICULTURAL PROFIT GENERALLY fall, [ X I V - 8 0 0 ] a n d a part of it is detached in the form of rent from the profit THE BETTER SOILS yield. This is the way Ricardo describes the process, according to which, therefore, INDUSTRIAL PROFIT determines AGRICULTURAL profit. If AGRICULTURAL PROFIT were to rise again as a result of improvements in agriculture, then industrial profit would also rise. But this does not by any means exclude the fact that — as originally the decline in industrial profit causes a decline in AGRICULTURAL profit—a rise in industrial profit may bring about a rise in AGRICULTURAL PROFIT. This is always the case when INDUSTRIAL PROFIT rises independently of the price of corn and of other AGRICULTURAL NECESSARIES which enter into the wages of the workers, that is, [when it rises] as a result of the fall in the value of commodities which constitute constant capital, etc. Rent moreover cannot possibly be explained if industrial profit does not regulate AGRICULTURAL profit. THE AVERAGE RATE OF PROFIT in industry is established as a result of equalisation of the profits of capitals and the consequent transformation of the values into cost prices.[6] These cost prices— the value of the capital advanced-(-AVERAGE PROFIT — are the prerequisite received by agriculture from industry, since the equalisation of profits cannot take place in agriculture owing to landowner ship. If then the value of AGRICULTURAL PRODUCE is higher than the cost price determined by the INDUSTRIAL AVERAGE PROFIT would be, the excess of this value over the cost price constitutes the absolute rent. But in order that this excess of value over cost price can be measured, the cost price must be the prius; it must therefore be imposed on agriculture as a law by industry.
A passage from Mill must be noted:
"That which is productively consumed is always capital. This is a particularly strange property of productive consumption. Whatever is consumed productively is capital, and it becomes capital because of the consumption" (I.e., [Elémens d'économie politique,] ED. by Parisot, [pp. 241-]242).
"A demand means the will to purchase and means of purchasing... The equivalent object" (means of purchasing) "which a man brings is the instrument of demand. The extent of his demand is measured by the value of this object. The demand and the equivalent are convertible terms, and one may be substituted for the other... His" (a man's) "will, therefore, to purchase, and his means of purchasing, in other words, his demand, is exactly equal to the [value] of what he has produced, and does not mean to consume" (I.e., ED. by Parisot, [pp.] 252-53).(9)
One sees here how the direct identity of demand and supply (HENCE the impossibility of a GENERAL GLUT) is proved. The product constitutes demand and the extent of this demand, moreover, is measured by the value of the product. The same abstract "reasoning" with which Mill demonstrates that buying and selling are but identical and do not differ; the same tautological phrases with which he shows that prices depend on the amount of money in circulation; the same methods used to prove that supply and demand (which are only more developed forms of buyer and seller) must balance each other. The logic is always the same. If a relationship includes opposites, it comprises not only opposites but also the unity of opposites. It is therefore a unity without opposites. This is Mill's logic, by which he eliminates the "contradictions".
Let us begin with supply. What I supply is commodities, a unity of use value and exchange value, for example, a definite quantity of iron =£3 (which = a definite quantity of labour time). According to the assumption I am a manufacturer of iron. I supply a use value — iron — and I supply a value, namely, the value expressed in the price of the iron, that is, in £3. But there is the following little difference. A definite quantity of iron is in reality placed on the market by me. The value of the iron, on the other hand, exists only as its price which must first be realised by the buyer of the iron, who represents, as far as I am concerned, the demand for iron. The demand of the seller of iron consists in the demand for the exchange value of the iron, which, although it is embodied in the iron, is not realised. It is possible for the same exchange value to be represented by very different quantities of iron. The supply of use value and the supply of value to be realised are thus by no means identical, since quite different quantities of use value [XIV-801] can represent the same quantity of exchange value.
The same value — £3 — can be represented by 1, 3 or 10 tons [of iron]. The quantity of iron (use value) which I supply and the quantity of value I supply, are by no means proportionate to one another, since the latter quantity can remain unchanged no matter how much the former changes. No matter how large or small the quantity of iron I supply may be, it is assumed that I always want to realise the value of the iron, which is independent of the actual quantity of iron and in general of its existence as a use value. The value supplied (but not yet realised) and the quantity of iron which is realised, do not correspond to each other. No grounds exist therefore for assuming that the possibility of selling a commodity at its value corresponds in any way to the quantity of the commodity I bring to market. For the buyer, my commodity exists, above all, as use value. He buys it as such. But what he needs is a definite quantity of iron. His need for iron is just as little determined by the quantity produced by me as the value of my iron is commensurate with this quantity.
It is true that the man who buys has in his possession merely the converted form of a commodity — money — the commodity in the form of exchange value, and he can act as a buyer only because he or others have earlier acted as sellers of commodities which now exist in the form of money. This, however, is no reason why he should reconvert his money into my commodity or why his need for my commodity should be determined by the quantity of it that I have produced. In so far as he demands my commodity, he may want either a smaller quantity than I supply, or the entire quantity, but below its value. His DEMAND does not have to correspond to my supply any more than the quantity I supply and the value at which I supply it are identical.
However, the inquiry into demand and supply does not belong here.
In so far as I supply iron, I do not demand iron, but money. I supply a particular use value and demand its value. My supply and demand are therefore as different as use value and exchange value. In so far as I supply a value in the iron itself, I demand the realisation of this value. My supply and demand are thus as different as something conceptual is from something real. Further, the quantity I supply and its value stand in no proportion to each other. The demand for the quantity of use value I supply is however measured not by the value I wish to realise, but by the quantity which the buyer requires at a definite price.
Yet another passage from Mill:
In other words, this means nothing else but that all commodities placed on the market constitute supply.
"As every man's demand, therefore,=that part of the annual produce, or, in other words,=that part of the wealth, which he has to dispose of"(10)
// Halte là!(11) His demand is equal to the value (when it is realised) of the portion of products which he wants to dispose of. What he wants to dispose of is a certain quantity of use value; what he wishes to have is the value of this use value. Both things
a r e ANYTHING BUT IDENTICAL / / "and each man's supply is exactly the same thing", //by no means; his demand does not consist in what he wishes to dispose of, i.e. the product, but in the demand for the value of this product; on the other hand, his supply really consists of this product, whereas the value is only conceptually supplied//
"the supply and demand of every individual are of necessity equal" [pp. 253-54].
(That is, the value of the commodity supplied by him and the value which he asks for it but does not possess are equal; provided he sells the commodity at its value, the value supplied (in the form of commodity) and the value received (in the form of money) are equal. But it does not follow that, because he wants to sell the commodity at its value, he actually does so. A quantity of commodities is supplied by him, and is on the market. He tries to get the value for it.)
"Demand and supply are terms [XIV-802] related in a peculiar manner. A commodity which is supplied, is always, at the same time, a commodity which is the instrument of demand. A commodity which is the instrument of demand, is always, at the same time, a commodity added to the stock of supply. Every commodity is always at one and the same time matter of demand and matter of supply. Of two men who perform an exchange, the one does not come with only a supply, the other with only a demand; the supply which he brings is the instrument of his demand; and his demand and supply are of course exactly equal to one another. But if the demand and supply of every individual are always equal to one another, then the demand and supply of all the individuals in the nation, taken aggregately, must be equal. Whatever, therefore, be the amount of the annual produce, it never can exceed the amount of the annual demand. The whole of the annual produce is divided into a number of shares equal to that of the people to whom it is distributed. The whole of the demand is equal to as much of the whole of the shares as the owners do not keep for their own consumption. But the whole of the shares is equal to the whole of the annual produce" (I.e., [pp.] 254-55).
Once Mill has assumed that supply and demand are equal for each individual, then the whole long-winded excursus to the effect that supply and demand are also equal for all individuals, is quite superfluous.
How Mill was regarded by contemporary RICARDIANS can be seen, for instance, from the following:
"There is thus at least one case" //they say with regard to Mill's definition of the value of labour// "in which the price" (the price of labour) "is permanendy determined by supply and demand relations" (Prévost, Reflexions [du traducteur] sur le système de Ricardo, appended to Discours sur [l'origine, les progrès, les objets particuliers, et l'importance de] l'économie politique, by McCulloch, translated by G-me Prévost, Geneva, [Paris,] 1825, [p.] 187).(12)
In the work cited, McCulloch says that Mill's object is
"to give a strictly logical deduction of the principles of political economy" (p. 88). Mill "touches on almost every topic of discussion. He has disentangled and simplified the most complex and difficult questions, has placed the various principles which compose the science in their natural order" (I.e.).
One can conclude from his logic that he takes over the quite illogical Ricardian structure, which we analysed earlier,[13] and naively regards it on the whole as a "natural order".
As far as the above-mentioned Prévost is concerned, who made Mill's EXPOSITION of the Ricardian system the basis of his Réflexions etc., a number of his objections are founded on sheer, callow misunderstanding of Ricardo.
But the following remark about rent is noteworthy:
"One may entertain a doubt about the influence of inferior land on the determination of prices, if one bears in mind, as one should, its relative area" (Prévost, I.e., p. 177).
Prévost cites the following from Mill, which is also important for my argument,(13) since Mill himself here thinks of one example where differential rent arises because the NEW DEMAND, the ADDITIONAL DEMAND, is SUPPLIED BY A BETTER, NOT BY A WORSE SOIL, consequently, the
ASCENDING LINE.
"MR. Mill USES this comparison: 'Suppose that all the land cultivated in the country were of one uniform quality, and yielded the same return to every portion of the capital employed upon it, with the exception of one acre; that acre, we shall suppose, yields six times as much as any other acre'" (Mill, Elements etc., 2ND ED., p. 71). "It is certain — as MR. Mill demonstrates — that the farmer who rents this last acre, cannot increase his rent" (that is, cannot make a higher profit than the other farmers; it is very badly expressed) "and that five-sixths of the product will go to the landowner."
(Thus there is here differential rent without the lowering of the rate of profit and without any increase in the price of agricultural products.) (This must happen all the more frequently, since the situation [XIV-803] must improve continuously with the industrial development of the country, the growth of its means of communication and the increase in population, irrespective of the natural fertility, and the relatively better location has the same effect as [greater] natural fertility.)
"But had the ingenious author thought of making a similar supposition in the opposite case, he would have realised that the result would be different. Let us suppose that all the land was of equal quality with the exception of one acre of inferior land. The profit on the capital on this single acre amounted to one-sixth of the profit yielded by every other acre. Does he believe that the profit on several million acres would be reduced to one-sixth of their accustomed level? It is probable that this solitary acre would have no effect at all, because the various products (particularly corn), when they come onto the market, would not be markedly affected by such a minute amount. That is why we say that the assertions of Ricardo's supporters about the effect of inferior soil should be modified by taking the relative areas of land of different quality into account" (Prévost, I.e., [pp.] 177-78).
11 Say, in his notes to Ricardo's book translated by Constancio, makes only one correct remark about foreign trade?(14) Profit can also be made by cheating, one person gaining what the other loses. Loss and gain within a single country cancel each other out. But not so with trade between different countries. And even according to Ricardo's theory, 3 days of labour of one country can be exchanged against one of another country — a point not noted by Say. Here the law of value undergoes essential modification. The relationship between working days of different countries may be similar to that existing between SKILLED, COMPOSED LABOUR and UNSKILLED, SIMPLE [labour] within a country. In this case, the richer country exploits the poorer one, even where the latter gains by the exchange, as John Stuart Mill explains in his Some Unsettled Questions etc.ai//
"We admit that, in general, the rate of agricultural profit determines that of industrial profit. But at the same time we must point out that the latter also reacts of necessity on the former. If the price of corn rises to a certain point, industrial capitals turn to agriculture, and necessarily depress agricultural profits" (Prévost, I.e., [p.] 179).
The point is correct, but is conceived in a much too limited sense. See above.[3]
The RICARDIANS insist that profit can fall only as a result of a rise in wages, because NECESSARIES rise in price with [the growth of] population; this, however, is a consequence of the accumulation of capital, since inferior soils are cultivated as a result of this accumulation. But Ricardo himself admits that profits can also fall when capitals increase faster than population, when the competition of capitals causes wages to rise. This [corresponds to] Adam Smith's t h e o r y / Prévost says:
"When the growing demand of the capitals increases the price of the labourer, that is, wages, does it not then appear that there are no grounds for asserting that the growing supply of these selfsame capitals never causes the price of capitals, in other words, profit, to fall?" (I.e., [p.] 188).
Prévost builds on the false Ricardian foundation — which can only explain falling profits as a result of decreasing SURPLUS VALUE, a n d therefore decreasing SURPLUS LABOUR, and consequently as a result of greater value or rising cost of the NECESSARIES consumed by the labourer, that is, i n c r e a s i n g VALUE OF LABOUR, ALTHOUGH THE REAL RETRIBU-
TION OF THE LABOURER, INSTEAD OF BEING ASCENDING, DECLINES On this basis h e seeks to prove that a CONTINUAL decline in profits is not inevitable. H e says first:
"To begin with, the state of prosperity increases profits"
(namely, agricultural profits, for the population increases with the state of prosperity, HENCE the demand for AGRICULTURAL PRODUCE,
HENCE SURPLUS PROFITS o f t h e FARMER)
"and this happens long before new land is taken into cultivation. The increased area under cultivation does indeed affect rent and decreases profits. But although profit is thus directly decreased, it still remains as high as before the advance... Why is the cultivation of land of inferior quality undertaken at certain times? It is undertaken in the expectation of a profit which is at least equal to the customary profit. And what circumstance can lead to the realisation of such a profit on this kind of land? Increase [XIV-804] of population. It presses on ... the existing means of subsistence, thereby raising the prices of food (especially of corn) so that agricultural capitals obtain high profits. The other capitals pour into agriculture, but since the soil is limited in area, this competition has its limits and the point is reached when even higher profits can be made than in trade or manufacture through the cultivation of inferior soils. If there is a sufficient area of inferior land available, then agricultural profit must be adjusted to the last capitals applied to the land. If one proceeds from the rate of profit prevailing at the beginning of the increasing prosperity" (division of profit into profit and rent), "then it will be found that profit has no tendency to decline. It rises with the increase in the population until agricultural profit rises to such a degree that it can suffer a considerable reduction (as a result of the cultivation of new land) without ever sinking below its original rate, or, to be more precise, below the average rate determined by various circumstances" ([pp.] 190-92).
AL PRODUCTS, HENCE AGRICULTURAL PROFITS. (Although it is not easy to see why, if this rise is constant, rents should not be increased after the leases run out and [why] these AGRICULTURAL SURPLUS PROFITS should not be collected in the form of rent even before the inferior land is cultivated.) But the same rise in [the price of] AGRICULTURAL PRODUCE which causes AGRICULTURAL PROFITS to go up, increases wages IN ALL INDUSTRIES and consequently brings about a fall in INDUSTRIAL PROFITS. Thus A NEW RATE OF PROFIT arises in industry. If at the existing market prices the inferior lands even pay only this LOWER RATE OF PROFIT, capitals can be transferred to the inferior land. They will be attracted to it by the high AGRICULTURAL PROFITS and the high market price of corn. As Prévost says, they may, before a sufficient amount of capital has been transferred, even yield higher profits than the INDUSTRIAL PROFIT, which has declined. But as soon as the ADDITIONAL SUPPLY is adequate, the market price falls, so that the inferior soils only yield THE ORDINARY INDUSTRIAL PROFIT. The additional amount yielded by the product of the better [soils] is converted into rent. This is the Ricardian conception, whose basic premisses are accepted by Prévost and from which he reasons. Corn is now dearer than it was before the rise in AGRICULTURAL PROFIT. But the SURPLUS PROFIT which it brought the farmer is transformed into rent. In this way, therefore, profit also declines on the better land to the LOWER RATE OF INDUSTRIAL PROFIT brought about by the RISE in [the price of] AGRICULTURAL PRODUCE. There is no reason for assuming that as a consequence profits do not have to fall below their "original rate" if no other modifying circumstances intervene. Other circumstances may, of course, intervene. According to the assumption, after the RISE in [the price of] NECESSARIES, AGRICULTURAL PROFIT is in any case higher than INDUSTRIAL profit. If, however, as a result of the development of productive power, the part of the workers' NECESSARIES supplied by industry has fallen to such a degree that wages (even though they are paid at their AVERAGE VALUE) do not rise as much as they would have done without the intervention of these paralysing circumstances, proportionally to the increased [price of] AGRICULTURAL PRODUCE; if, furthermore, the same development of productive power has reduced the price of the products of the extractive industries, ditto of AGRICULTURAL RAW MATERIALS which are not used as food (although the supposition is not very likely), INDUSTRIAL PROFIT need not fall, though it would be lower than AGRICULTURAL PROFIT. A decline of the latter as a result of a TRANSFER OF CAPITAL TO AGRICULTURE and the building-up of rent, [XIV-805] would only restore the old rate OF PROFIT.
Prévost tries a different approach.
"Soils of inferior quality ... are only put into cultivation if they yield profits as high as — or even higher than — the profit yielded by industrial capitals. Under these conditions, the price of corn or of other agricultural products often remains very high despite the newly cultivated land. These high prices press on the working population, since rises in wages do riot correspond exactly to rises in the prices of the goods used by wage workers. They are more or less a burden to the whole population, since nearly all commodities are affected by the rise in wages and in the prices of essential goods. This general pressure, linked with the increasing mortality brought about by too large a population, results in a decline in the number of wage workers and, consequently, in a rise in wages and a decline in agricultural profits. Further development now proceeds in the opposite direction to that taken previously. Capitals are withdrawn from the inferior soils and reinvested in industry. But the population principle soon begins to operate once again. As soon as poverty has been ended, the number of workers increases, their wages decline, and profits rise as a consequence. Such fluctuations follow one another repeatedly without bringing about a change in the average of profit. Profit may decline or rise for other reasons or as a result of these causes; it may alternately go up and down, and yet it may not be possible to attribute the average rise or fall to the necessity for cultivating new soils. The population is the regulator which establishes the natural order and keeps profit within certain limits" (I.e., [pp.] 194-96).
Although confused, this is correct according to the "population principle". It is however not in line with the assumption that agricultural profits rise until the ADDITIONAL SUPPLY required by the population has been produced. If this presupposes a constant increase in the prices of AGRICULTURAL PRODUCE, then it leads not to a decrease in population, but to a GENERAL LOWERING OF THE RATE OF PROFIT, HENCE OF ACCUMULATION, and, consequently, to a decrease OF POPULATION. According to the Ricardian-Malthusian view, the population would grow more slowly. But Prévost's basis is: that the process would depress wages below their AVERAGE level, this fall in wages and the poverty of the workers causes the price of corn to fall and HENCE profits to rise again.
This latter argument, however, does not belong here, for here it is assumed that the VALUE OF LABOUR is always paid; that is, that the workers receive the means of subsistence necessary for their reproduction.
This [exposition] of Prévost is important, because it demonstrates that the Ricardian view — along with the view he adopted from Malthus — can indeed explain fluctuations in the rate of profit, but cannot explain (constant) falls in the same without repercussions, for upon reaching a certain level the rise in corn prices and the drop in profit would force wages below their level,
Endnotes
[75] Malthus rejected the labour theory of value, reducing the value of commodities to the costs of production and regarding profit as a nominal increase in the value of a commodity and circulation as the sphere where this surplus came into being. Malthus was thus returning to the mercantilists' ideas on profit obtained as a result of the alienation of commodities. See present edition, Vol. 30, pp. 348, 351-52, 374 and this volume, pp. 214-16, 220-22, 225-28.— 267, 280
[14] Marx is referring to the book: D. Ricardo, Des principes de l'économie politique et de l'impôt. Traduit de l'anglais par F. S. Constancio, avec des notes explicatives et critiques par J. B. Say. Seconde édition, Tome II, Paris, 1835, pp. 206-07. Marx is not quite correct here. In his notes on Ricardo's text Say "gloats" over the fact that Ricardo uses supply and demand to determine the value of money and not the "value of labour". Marx quotes the relevant passage from Say's notes in The Poverty of Philosophy (see present edition, Vol. 6, p. 151).—36, 285
[81] The treatment of these problems begins on p. 290 of this volume.—287
[6] The term "cost price" (Kostpreis, Kostenpreis) was used by Marx in three different senses: 1) in the sense of the costs of production for the capitalist (c + v), 2) in the sense of the "immanent costs of production" of a commodity (c + v + s) which coincide with the value of the commodity, and 3) in the sense of the price of production (c + v+average profit). Here the term is used in the third sense. In notebooks X-XIII of the manuscript Marx used the term "cost price" to mean the price of production, or the average price. He thus treats the two terms as identical (see present edition, Vol. 31, pp. 402-03, 559). In notebooks XIV-XV of the manuscript this term is used now in the sense of the price of production, and now in that of the costs of production for the capitalist (see this volume, pp. 261, 271, 462). The use of the term "Kostenpreis" in three different senses is due to the fact that "Kosten" has three different meanings in political economy, as specifically pointed out by Marx (see this volume, pp. 269-73, 513): 1) in the sense of what is advanced by the capitalist, 2) in the sense of the price of the capital advanced plus average profit, 3) in the sense of the actual (or immanent) production costs of the commodity itself. Apart from these three meanings which we encounter in the classics of bourgeois political economy, there exists a fourth, vulgar meaning of the term "costs of production" as used by J. B. Say. He defined the "costs of production" as something paid for the "productive services" performed by labour, capital or land (J. B. Say, Traité d'économie politique. Seconde édition, Tome II, Paris, 1814, p. 453). Marx resolutely rejects this vulgar interpretation of "costs of production" (see, for example, present edition, Vol. 31, pp. 361, 439 and this volume, p. 102).—9, 102, 210
[13] Marx has 1836. It is still not known whether an 1836 edition actually existed. The quotation has been checked with the 1835 edition. Cf. this volume, p. 371.—35, 371, 388
[3] The two final points were subsequently crossed out in pencil and instead of them Marx inserted the point "Theory of Cost Price".—7