Mercantile Capital [Continued]
O n t h e DISTRIBUTION OF CAPITAL AMONG THE DIFFERENT EMPLOYMENTS 1S :
"CAPITAL IS DIRECTED TO DIFFERENT EMPLOYMENTS BY THE RATE OF PROFITS. This GENERAL PRINCIPLE is modified by: * 1) the difficulties connected with a change of investment; 2) the risk which attends different investments. Risk of losses* determined by the INSURANCE SOCIETIES. But there is also *the risk of success. Should we take into account the many losses sustained by the community of merchants, the number of failures, as well as the instances of uncommon success, it would be found, that the average rate of profit in commerce, does not differ from that of capital, when vested in other branches of production" (S. P. Newman, Elements of Political Economy, Andover and New York, 1835, [pp.] 83-85).
"In the existing economical arrangements of society, the very act, which is performed by the merchant, of standing between the producer and consumer, advancing to the former capital and receiving products in return, and then handing over these products to the latter, receiving back capital in return, is a transaction, which both facilitates the economical processes of the community, and adds value to the products in relation to which it is performed"* (I.e., [p.] 174).
"Time is saved for the MANUFACTURER and the CONSUMER by his intervention and money. This * service requires an outlay of capital and labour * and must, * since it adds value to products, for the same products in the hands of consumers are worth more than in the hands of producers*" [p. 175],
// this is absolutely wrong. The use value of a commodity is greater IN THE HAND OF THE CONSUMER THAN IN THAT OF THE PRODUCER, because it is only then that it is REALISED at all. * The value in use of the commodity only becomes realised by passing into the sphere of consumption. In the hand of the producer it exists in a latent form only. But I do not pay a commodity twice over, first its value in exchange, and secondly its value in use. By paying its value in exchange, I appropriate its value in use. Its value in exchange is not augmented by passing from the producer to the consumer*//,
"STRICTLY BE CONSIDERED AN ACT OF PRODUCTION.'1'' //This is wrong.// (I.e., [p.] 175.)
"Let us say that trade is useful, but let us not say: trade is productive" (F. Vidal, De la répartition des richesses etc., Paris, 1846, [p.] 198).a
A very good work on mercantile capital is: Corbet (Thomas), An Inquiry into the Causes and Modes of the Wealth of Individuals; or the Principles of Trade and Speculation Explained, London, 1841. Corbet does not pretend to give the GENERAL PRINCIPLES OF POLITICAL ECONOMY here. H e conceives mercantile capital as something specific, and he describes its specific mode of operation. T h e connection between mercantile capital and the GENERAL PRINCIPLES IS RATHER LOOSELY more hinted at than developed. Yet, this is not the task Corbet sets himself. H e leaves it to the GENERAL ECONOMIST. We shall now go through some of Corbet's main points.
* "All trade consists in the exchange of things of different kinds; and the advantage arises out of this difference. To exchange a pound of bread against a pound of bread ... would be attended with no advantage ... hence trade is advantageously contrasted with gambling, which consists in the mere exchange of money for money"* (I.e., [p.] 5).
With C—M—C the ADVANTAGE arises from the difference between C and C", i.e. the use values exchanged. T h e commodities are only realised as use values through this exchange, by passing out of the hand in which they are merely repositories of exchange value into the hand in which they are really use values. Exchange value appears as a mere form for the mediation of this process, and no alteration in the exchange value is IMPLIED IN IT. T h e whole movement of [XVIII-1076] capital M—C—AT, on the other hand, IMPLIES THE QUALITATIVE IDENTITY OF THE EXTREMES M and M'. * If no alteration were implied in the quantity of the extremes, the operation would be tautological, silly and useless. And in fact, suppose a merchant has bought commodities for £ 1 0 0 and the state of the market forces him to again sell them for £100. It is the same as if he had kept the original £100 in his hands, as far as he is concerned or his £ 1 0 0 are concerned. If h e were forced to sell them for less, [which] may happen, the operation implies a positive loss, which can never be its purpose or its aim.* This is the general formula for capital, whether INDUSTRIAL OR MERCANTILE. And whether the trade is in commodities or money. It is always buying in order to sell; hence, if we leave aside the CHANGE IN THE QUANTITY o? M', AS COMPARED WITH M, * it is the exchange of money for money, of value in exchange for value in exchange. There is no difference in the kinds of the commodities exchanged. Hence no advantage arising out of that difference.* Thus according to Corbet
a Marx quotes from Vidal in French.— Ed.
every MOVEMENT of capital would be * gambling, and the difference between gambling properly so called and other kinds of capitalistic gambling would amount to this: In the one case //but this is also the case with all the operations of the monied capital properly so called// the exchange of money for money is concealed by intermediate movements; in the other case it is not. The gambler directly (and he shares this with the capital-lending capitalist, the banker, etc.) puts out money to gain more money or to lose the money put out. The productive capitalist, whether industrial or commercial, first exchanges his money for the commodity, to afterwards exchange the commodity for money. In the one instance the exchange of money for money is undisguised, direct, sans phrase. In the other instances it is concealed by intermediate movements, but does always appear as the result of the complex movements.(1) If Corbet therefore calls GAMBLING GAMBLING because it
i s EXCHANGE OF MONEY FOR MONEY, EVERY MOVEMENT OF CAPITAL RESOLVES INTO GAMBLING. This is why e.g. Pinto regards trade as "un jeu"." But
since this jeu would soon have to come to an end if this operation were to continue, if only one side gained, an alternation would have to take place: now one side, now the other, would have to be THE LOSING OR THE WINNING PARTY. This only expresses the contradiction that profit UPON ALIENATION (2) implies loss on one side, and therefore cannot be a continuous, general relation of production. Pinto says:
"Trade is a game; and nothing can be won from beggars. If one won everything from everybody for a long time, it would be necessary to give back the greater part of the profit voluntarily, in order to begin the game again. This devouring trade would destroy itself" ( Traité de la circulation et du crédit, edit. Pinto, Amsterdam, 1771, p. 231).(3)
A n d o u r f r i e n d M ' Culloch in fact finds himself u n a b l e to distinguish in a n y way at all t h e p r i n c i p l e of s p e c u l a t i o n , i.e. OF
GAMBLING, f r o m that of t r a d e a n d t h e m o v e m e n t of capitalism — buying in o r d e r t o sell. H e says:
real movement of capital.[153] The principle is the equalisation of the prices of commodities, WITHIN A LONGER PERIOD OF YEARS, TO THEIR PRICE OF PRODUCTION. In industry proper it is already the peculiar circulation of fixed capital WHICH FASTENS THE PRODUCER NOT ONLY TO A PECULIAR SPHERE OF PRODUCTION, BUT TO A GIVEN SUBDIVISION OF THAT SPHERE. In trade (WHOLESALE) the same SUBSUMPTION TO A SPECIAL KIND OF TRADE, AND TO A PARTICULAR SUBDIVISION OF THAT KIND, is PRODUCED by the cycle of equalisation of commodity prices [XVIII-1077], i.e. market prices, which stretches out over a number of years. In general Corbet emphasises very well how the AVERAGE PRICE, which appears AT FIRST VIEW as an abstraction,
1) appears as a principle regulating the division of labour; 2) how in turn particular TRADES — SPHERES OF EMPLOYMENT OF CAPITAL— are formed, which are only founded on AVERAGES.[15]*
* "The third principle of trade is, to deal always in the same commodity, or set of commodities" (p. 12).* "This is in part founded on and * aided by the necessity of equalising the fluctuation of trade" (I.e.). "Hence when trade has made its greatest advances, and comes the next to perfection, such divisions of the professions, as the Russian merchant, the American, the Dutch merchant, the timber merchant, the fruit merchant, etc." ([p.] 14).
"Profit, on the general principle, is always the same, whatever be [the] price; keeping its place like an incumbent body on the swelling or sinking tide. As, therefore, prices rise, a tradesman raises prices; as prices fall, a tradesman lowers price, i.e. as they are raised or lowered to him, he raises or lowers them to his customers"* (I.e., [p.] 20).
In this superficial and upside down form it appears to the TRADESMAN THAT PROFIT DOES NOT RESULT FROM A SURCHARGE OF PRICE, BUT THAT IT FORMS PART AND PARCEL OF THE VALUE OF THE COMMODITY. It appears to him rather in the inverted form that "PROFIT" is always A SURCHARGE OVER AND ABOVE THE REAL VALUE OR PRICE OF THE PRODUCE.
The equalisation of profits (along with the AVERAGE story we have just noted) is well presented in the following:
* "Every necessary trade must or does yield profit, and when trade ceases to do so it ceases to be necessary" (I.e., [p.] 22). "One business not more profitable than another" (I.e.). "One business not more hazardous than another"* ([p.] 24). "E.g. shipping: With regard to the trade in general, * the freight must compensate or pay for all hazards, and so far as the individual is concerned, they are covered or reduced to nothing by insurance; a device by which the loss is spread over all," *
//it would be just as foolish to say *that this loss ceases to exist, because it is s p r e a d over all, as it would be to say that the diminution of profits resulting from the diminishing proportion of variable to constant capital, or from the longer revolutions of fixed capital or the later returns of some sorts of circulating capital, or of any of the circumstances, regulating the equalisation of profits between different spheres of production — and the hazard, the risk of loss, greater or smaller in different spheres, fully enters into those regulating circumstances — does take away the diminution of the general profit of capital caused by those circumstances//,
"or the whole trade is made to contribute to the loss of each individual member, with a fair remuneration for those who take the charge and run the risk of equalising the business, i.e. the underwriters" * (I.e.). "It can be assumed THAT ALL THE SHIPS BELONGING TO GREAT BRITAIN are lost (by force or through DECAY) in 17 years" ([p.] 26). "INSURANCE against loss by fire would seem a very hazardous TRADE, if one compares the SMALLNESS of the PREMIUM RECEIVED with the GREAT SUMS the INSURERS are called upon to pay.... But owing to THE GREAT EXTENT OF THE BUSINESS and to the AVERAGE which that * extent establishes, it is reduced to a business of very equal tenor, yielding always a fair profit or percentage on capital, and no more; wonderfully exact and uniform indeed considering the extremes to which it is subjected" * ([p.] 27). "When we say that one business is not more profitable than another, *this is to be understood of business in general; and taken along with the fact that each individual business is at one time more or less profitable, or pays better or worse than at another. That, indeed, a variation of profit as well as of price, to a certain extent, perpetually takes place or is in constant operation in each and all businesses, is beyond question.* It arises out of * adjusting the supply to the demand" ([p.] 33). "Fluctuations compensate each other" ([p.] 35). "Fluctuations, ebbs and flows, or oscillations continually happen or are constantly taking place, to a greater or [XVIII-1078] less extent, in each and all businesses"* ([p.] 36).
With regard to competition:
"FOR COMPETITION the following general principles apply: THE MINIMUM OF PRICE OF ANY COMMODITY REGULATES THE MARKET PRICE OF THAT COMMODITY. Secondly: IT IS NOT THE MAJORITY, BUT THE MINORITY OF PERSONS, who regulate competition. Thirdly: * it is capitalists, i.e. the greater or chief capitalists, who fix price. In this manner there is only one company in England for the manufacture of plate glass of any size, viz. the British Plate Glass Company at Ravenhead in Lancashire, all others having been found unable to compete with it; and the great thread manufacturers at Shrewsbury, oblige all other thread manufacturers in the kingdom to do as they do, as all the Ironfounders in Scotland are regulated by and follow steadily in the rear of the great Carron company*" (I.e., pp. 42-44). "LETTING e.g. of LANDS AND HOUSES is A CONDITIONAL SALE, OR SALE OF THE USE OF A THING FOR A LIMITED TIME' (I.e., p . 81).
Businesses ON AVERAGE.-
* "The great principle on which all insurance proceeds, whether sea, life, or fire, is a v e r a g e , the spreading of the general loss over the whole insured; or the uncertainty of individual events, and the certainty of general or cumulative.* E.g. * the duration of the life of any one person is very uncertain, but the average duration or term of human life is very certain or well established. So also in sea or fire insurance, the destruction of any individual or particular property is a matter of uncertainty, but the average amount or value of the property destroyed, or that will be destroyed, within a given time, is a thing pretty well ascertained or settled. It follows, therefore, that the less the risks (i.e. each individual risk) in amount, and the greater the number of them undertaken, the more nearly is the business reduced to a perfect average, and the better conducted" (I.e., [pp.] 100-01).
"Business is at all times overdone" (p. 115 sqq.). "However great the appetite or desire of the public for any thing, the food administered, the supply furnished, talent in society is always in advance, redundant, superabundant * (e.g. in the writing of newspapers). ...Nowhere is this more conspicuous than in towns. A town is always OVERBUILT, THERE BEING ALWAYS MORE HOUSES THAN ARE WANTED, particularly in the OUTSKIRTS OR SUBURBS, where they * never pay, but seem as if built for the public good or the dignity or honsur of the place — with but a far distant or prospective view to profit*" ([pp.] 115-17).
An important circumstance in the circulation and reproduction of capital is this: Time passes between the outlay and the RETURN of the capital, EVEN IF IT RETURNS. This interval, in proportion to its size, has a dual impact. Firstly on the use value. Time destroys use value absolutely; i.e. * every thing, in a certain period, deteriorates, and is at last corrupted, spoilt and bereft of the qualities which constitute its value in use; some articles sooner, some later. Some must be sold very quickly, not to deteriorate or to be altogether spoiled; some may stand a longer time. All are ruined, more or less, if, beyond a certain time, they do not enter into consumption, or, what is the same, prolong their existence as vendible commodities, instead of being used as values in use. This, then, is the first risk a commodity runs, in fact capital runs, by being converted from money into the shape of commodities, whether destined for individual or industrial consumption. Besides, the conservation of [XVIII-1079] commodities, so far as they are values in use or articles, requests spending upon them of capital and labour, in some instances less, in others more. Into their mercantile price, there can only enter the average cost which the conservation of a given article, during the interval that it finds itself upon the market, necessitates. That average cost, for a given article, is determined by the average time it is fixed in this interval between production and consumption, or its average stay as a commodity upon the market. For different articles this cost of conservation is evidently determined, not only by the average time they stay upon the market, but also by the average deterioration or cost of preventing that deterioration, according to the nature of different articles, during the same time. If the average time is given, the cost of conservation depends for different articles upon their specific qualities as values in use. If the cost, resulting from the different nature of the articles, is given, it exclusively depends upon their different averages of return, or the different averages during which they encumber the market, find themselves upon the market in the state of commodities (vendible commodities is only a tautology). This then constitutes one item of the costs of circulation. But it is evident, that this item, instead of adding to the value of the general production, can in no case be anything but a deduction from it. Suppose, that the average time, during which all articles stay upon the market, be the same; suppose in the second instance, that their deterioration and the costs to counteract it be the same; that, therefore, the unavoidable déchet* during the identical time of circulation and, moreover, the cost to prevent extra-déchet or deterioration, be the same for every sort of produce; then it is clear, that this unavoidable déchet on the one part, and the cost of limiting it to its minimum, is a deduction from the value of exchange of the article (at least its surplus value), firstly because in a given time so much percentage of the whole production is simply lost, and, secondly, because so much faux frais de production* are incurred, incurred not in creating surplus value, but in the task of realising it. It would never do to say that the consumer must pay this. But, from what source is he to pay it? His source for paying is his product, or the co-property in the product of another person. It is then clear, that his produce has been diminished, and that his costs of production have been augmented. Out of a diminished fund of production and of increased costs of production, he is positively unable to compensate another producer for the same loss incurred by that other producer. It is, therefore, clear, that as far as this item enters into price, it does not change the relation of prices of commodities, so far as the ratio of those costs of circulation is identical for them, and that, so far as it changes the relation of prices, and even of profits, this can only constitute a compensation for the greater loss incurred by particular branches of business, which exceptional loss, inherent to the nature of the business, is spread, by the equalisation of profits, over the whole sphere of employment of capital.*
[XVIII-1080] The second effect of time (disregarding the general effect of the RETURN, TO ENABLE THE PRODUCER TO ENTER UPON REPRODUCTION) within the circulation process * affects not the value in use (and the value in exchange only secondarily, so far as it exists only in the value of use), but the value of exchange directly, without any regard to the changes the article itself, or the value in use of a commodity, may incur during its intermediate stay between production and consumption, or during its sojourn on the market. We shall not speak here of the changes in the market price of commodities, since we always are reasoning here upon the supposition that commodities are selling at a price corresponding to their real values.
But the real value of commodities changes during a certain interval of time, and the greater the time, the larger the field, the opportunity for such changes of value. We do not take into consideration the mercantile capital. Although it has bought the article beneath its value, the value of the article may fall before it sells it, and in this case the difference between buying and selling price may either diminish, altogether vanish, or even the selling price may fall beneath the buying price according to an intermediate change having taken place in the value of the article.
But, as said, it is not worth while to consider here the mercantile capital in particular.
The process of circulation of the capital dissolves into two parts, epochs or phases — first, the conversion of commodity into money, and, secondly, the reconversion of money into commodities, viz. those commodities which constitute the ingredients entering into the production or formation of the first commodity; productive ingredients, as we shall call them for abbreviation's sake. Now we shall inquire how far any variation or change in value may affect price and profit; any variation taking place in one or the other of these two phases. We shall commence with the latter, the reconversion of money into the productive ingredience.
Be the commodity produced cotton twist. The twist has been sold, converted into money, the surplus value contained in its price has been realised, and it is now about being reconverted into its productive ingredients.
It must be converted into cotton, and matières instrumentales, such as coal, soap, tallow, etc. It must, furthermore, be converted into labour, by paying anew wages out of the funds realised. The value of cotton, like all other raw produce, depends, independently of the will of man, or the capital expended, on the seasons. The same quantity of labour may, according to the favour of the season, as far as the old cotton fields are concerned, or to the fertility of the soil, as far as new fields for the production of cotton have been broken up, yield very different quantities of cotton. Consequently, the same quantity of cotton, say a cwt or a lb, may represent very different values. Suppose now that the value of cotton had risen, either because of bad weather, or because the additional demand for cotton was supplied from less fertile soils. In this case, to replace that part of his capital, which must replace cotton, the spinner has to make a greater outlay of the money realised. [XVIII-1081] This enhancement in the value of cotton may absorb or surpass the whole profit made in the first revolution of his capital. Then the price of labour may rise, because the value of necessary. He must again pay [the] greater part of his return, to replace that part of his capital which resolves into wages. If both these circumstances occur at the same time, it is probable that, even if he employs the whole money return— capital and profit — he will be unable //without recurrence to loan, not falling under our consideration now// to recommence his operations on the same scale of production. At all events, he will be unable to do so with the same amount of capital originally advanced. His operation may be a losing one, if we contemplate not one, but both consecutive revolutions of his capital. Suppose that, during the first turn, he advanced £100 and had returned to him 120. Suppose that in the second turn, the outlay for a less quantity of constant capital having augmented, and ditto the variable capital having risen in value, but diminished in quantity (the quantity of labour employed), so that his profits were only 5 p.c. He has won 5 p.c. or 5[15]/[2]i in the second revolution. But he has advanced £120, not only the capital but the profit of the first revolution. Thus he has lost £14[6]/2i; because this part of his profit realised in the first turn has vanished. In both cases he has realised surplus value; but part of the surplus value realised in the first turn has been lost in the second. In the second turn, considered for itself, he has lost, because he had £100 capital and 20 profit, and has now 120 capital and only 5[15]/[2]i profit. It is evident that his average profit must be determined by the equalisation of these fluctuations during the different turns. Hence he must stay to the same business, to get the average rate of profit.
There may also take place a change of value in the ingredients of his fixed capital. If coal, or iron, would have risen in value, the
déchet may be impossible to be replaced at the same price, at which it originally entered into the process of production. The cost of its replacement may be higher than its original cost value amounted to. Besides, apart from this part of the fixed capital — the déchet of the last year to be replaced — the value of the whole machinery, instruments, etc., may have sunk by a fall in its cost of reproduction, or by a fall in its new value. In fact, if the déchet costs more to replace, the unconsumed part of the machinery will also rise in value; if the value of the whole machinery sinks, the cost of replacing its déchet will also sink.
We come now to* C—M, *the phasis during which the produce circulates, waiting to be changed into money. We do not speak of any fall or rise of market price originating from changes in the
17* relative forces of demand and supply. Because we suppose prices=values. If in the preceding example the price of x lbs twist=£120 (including cost=£100, of which say £ 8 0 for raw material, i.e. cotton + £ 2 0 surplus value), and if the value of cotton fell suddenly, from an extraordinary harvest, by 60 p.c., then the cotton worked u p in the twist floating upon the market would sink as well as the cotton in its raw state. Hence the price of the x lbs would be reduced from £ 1 2 0 to £ 8 8 (the cotton contained in it sinking from £ 8 0 to 48). The spinner would have incurred a positive loss of £12, although he had realised a profit of £20, or a profit of [XVIII-1082] 20 p.c. which, in fact, may be a surplus value of 50 p.c. and more. But it would for him be the same as if he had bought x lbs [of] cotton for £ 8 0 in order to sell them for 48. If there was not the surplus value sold in his twist, his return would be only=48 + 20—£68. Consequently of £ 2 0 more than it is now in consequence of the surplus value realised. In fact, if cotton continued on the same low scale of price, the manufacturer, in the new turn of reproduction, might lay out only £ 4 8 in cotton, £ 2 0 for the other expenses, and continue on the same scale of production. And he might act with the £ 2 0 profit as before. (In regard to the capital laid out, the rate of profit would even have risen.) But on a full or an approximate return of the former cotton prices, he would not possess sufficient capital for a reproduction on the old scale. If he had debts to pay (interest for instance for £ 1 0 0 borrowed or bills of exchange on the suppliers of the old cotton, coal, etc.) he might be bankrupt. And, at all events, the monetary value of his capital would have depreciated, although no depreciation would have taken place in the value of money—£88 would at all events represent a smaller capital than would 100 (120 with the profit) before. T h e effect would be, of course, the reverse, if the price of cotton, etc., had risen instead of having fallen.*
Such a CHANGE OF VALUE directly depreciates the capital (productive), IF THE CHANGE HAPPENS DURING THE FIRST phasis C — M\ IT CRIPPLES
REPRODUCTION AND DIMINISHES PROFIT, IF IT OCCURS DURING THE SECOND PHASE : M — C.
But since the capital is always in both phases simultaneously— (newly invested capital, OR ADDITIONAL CAPITAL, IS, OF COURSE, ONLY AFFECTED the market will be depreciated, but the capital of the spinner, etc., reconverted into cotton will yield higher profits than before and may enable him to enlarge his scale of production. (It will of course damage him, if he possesses great provisions of raw cotton, before the change of value took place. This will be depreciated like the cotton already worked up in twist, etc., and still more immediately.) On the other hand, if the value of cotton rises, the price (hence the profit, since the cost remains the same) of the circulating twist, etc., in short of all goods into which cotton has entered, will rise, and so the capital returned far exceed the capital advanced (the same will be the case with productive capital already invested in cotton=provisions) while the capital to be reconverted into cotton* (M—C) *will yield lower profit and may necessitate either a contraction of production (should wages not have fallen simultaneously) or the employment of additional capital, to yield the same quantity of produce and to absorb the same quantity, as before, of surplus labour. It is only with overstocked markets (be it that the markets are overstocked with yarns, goods, etc., be it that large accumulations of cotton of the former harvest still encumber the warehouses of the merchant or fill those of the manufacturer) that a fall in the price of cotton (or any other productive ingredient) can harm the productive capitalist to any degree. But an enhancement in the value of cotton, etc., will always check reproduction to a high degree, while only with markets overstocked can it bring him any profit.*
AT ALL EVENTS, these RISKS, arising out of the * change of value in the productive ingredients of commodities, and, therefore, affecting commodities in the interval between production and sale, or between their monetary form and their reconversion into the productive elements,* can never enter into the costs of circulation
[ X V I I I - 1 0 8 3 ] , THAT IS TO SAY, SUCH COSTS OF CIRCULATION AS ARE COMPENSATED FOR IN THE PRICE OF THE PRODUCE. It is clear so far that the AVERAGE RISKS FROM SUCH CHANGES OF VALUE as are common to all spheres of production CAN GIVE NO TITLE OF COMPENSATION FOR ANY PECULIAR SPHERE OF PRODUCTION. SECONDLY, the commodities which ARE EXCEPTIONALLY EXPOSED TO SUCH SUDDEN FLUCTUATIONS OF VALUE (e.g. all those into which the annual produce of the earth enters, as opposed to those into which a specific mining product enters) *if they incur the risk of extraordinary losses, run the chance of extraordinary gains. And thus this becomes equalised.*
The contemporary COTTON crisis resulting from the American Civil War[155] has demonstrated both of these things. On the one hand, the greatest misery in the MANUFACTURING DISTRICTS and a standstill OF THE MILLS ON THE LARGEST SCALE. On the other hand, since the markets have since 1860 been oversupplied, an increase in the prices of the YARNS and GOODS available on the market, and therefore a rise in profits for the manufacturers to whom these GOODS belong. But particularly for those who possessed a STOCK OF COTTON, and are speculating with it in Liverpool.
Now back to Corbet.
* "Time produces a difference of price. Now the principles of trade suppose a constant selling with one hand as a buying takes place with the other, so as that a person shall never have any stock on hand on which time can operate or produce an effect * This is never literally the case, even with a GROCER, much less with a CLOTHIER. THE EFFECT OF A RISE OR FALL OF PRICE HERE APPLIES especially TO THE MANUFACTURER, with whom, in many cases, a considerable time often elapses between the time when he buys the raw material and that at which he is * able to bring it to market worked up and finished ... while all must be affected to the extent of their stock on hand when they come out of business, according to the difference of price at that period as compared with what it was when they went in" ([p.] 121). "With regard to the profit of the shopkeeper, or the value of the labour laid out on a raw material by a manufacturer, if in either case a person can replace his stock at a price by as much less as the amount of that profit or the value of such labour, he is secure and safe whatever other difference may exist between the price of the commodity when purchased and when sold. * E.g. * shall he produce £100 worth of goods, if he sell them for £85 and replace his stock or raw material at £80, or sell them only for £80 and replace his stock or raw materials at £75, in either case he comes out of the transaction with a clear gain, profit or return on capital or stock of 5%; and he can never be placed in any better situation by an advance of price, because if in that case he has much to receive, he has as much to pay when he returns to the market. It will thus be seen that the profit on stock has nothing to do with, and is altogether distinct from the rise or fall of price"* ([p.] 121).
But in any case his capital is depreciated. Incidentally, it is only correct to say that he then always makes a profit of £ 5 , but it is wrong to say that he always makes a profit of 5%. 5 on 100=5%; 5 on 80=6'/4% and 5 on 75 = 6[2]/3%. If in consequence of the VARIATION OF VALUE there is a fall in THE VALUE OF CAPITAL, the rate of profit will rise, provided that the AMOUNT OF PROFIT remains the same; if the VALUE OF CAPITAL rises in the given manner, the rate of profit will fall, provided that THE AMOUNT OF PROFIT REMAINS THE SAME. This point is purely formal with the MERCHANT, who always adds e.g. 5%, * whatever the price of the commodity. T h e same does not hold true with the producing capitalist. T h e rate of profit must rise with him in the one case, and fall in the other, in as much as he sells the same surplus labour as before. *
It is clear from the above that it is necessary to * distinguish between one revolution of capital, and the set of revolutions or repeated number of revolutions which a capital describes in an economic cycle of reproduction. * If we consider ONE SINGLE REVOLUTION, the profit=the * ratio of the surplus to the capital advanced. And if he sells his commodity under cost price, it is a clear loss. Here we have in fact only the difference between the buying price (or what is the same to the producing capitalist, the cost price) and the selling price (or production price): the difference between the value of the capital originally advanced, and the value to which the capital worked up into the commodity is sold. However, the thing is different, if we consider not only one productive [XVIII-1084] revolution, but the process of continual reproduction during an economic cycle encompassing several years. * Just as important here, * not only for the profit realised, but for the value of the original capital to be [re]placed, [is] the concatenation of, or the ratio between, the different single revolutions; in one word the difference between the original value of the capital at the beginning of a turn and its replacing value at the second turn and so forth. For instance, if the capital=100, and profit=10 at the end of the first turn, and the replacing value at the beginning of the second turn=110, profit=0. And the reproduction would be commenced under worse circumstances; since only the same mass of surplus labour would be absorbed, although the capital advanced would have been augmented. The cost price would have increased, and the rate of profit decreased. These fluctuations are equalised in the whole cycle (even if the capital be depreciated finally, it will be made up by profit) which comprises a set of turns. *
* "The fall of prices, however, acts as a great discouragement to trade; because although the capitalist does not in effect, at least considered as a merchant, lose by it, he seems to do so, and the noncapitalist is ruined. Thus, supposing a person without capital to have purchased £100 worth of goods, and to have given his bill for that amount, if he is obliged to sell them for £80, or can sell them for no more, he is minus £20, and so cannot meet the demands on him, and is obliged to stop. As is commonly the case, the first bill of a person in such circumstances will be paid by selling below prime cost, and so may the second; but it is obvious that such an expedient must soon tell, and bring matters to a crisis. * The NON-CAPITALIST is always EXPOSED to this * fatality, and his situation very much resembles a time bargain between gamblers in the stocks; with this distinction that he wants the funds necessary to pay his differences when the day of settlement arrives, if the same shall be against him" ([p.] 122).
"Should we admit that the value of manufactured goods is affected by an alteration in the value of the raw material, some, particularly woollen goods, vary considerably, and consequently a person may gain or lose by having a stock of such on hand* ... for the essence of speculation lies after all in the * raw material, without seeming to do so, and would be properly carried into effect only in the coarser or plainer sorts, standing clear of fashion and the expense of manufacture as much as possible" ([p.] 128 sqq).
"Accumulation of stocks or non-exchange ... overproduction" ([p.] 104). "A bushel of grain or a yard of cloth has, properly considered, no progressive value; is fixed and unalterable in its nature; and can be affected only by an alteration in other things, which may be either for or against according to circumstances" ([p.] 204).
"... time bargains in the funds ... this is branded with the name of gambling; because the one seems to lose exactly what the other gains... And gambling it certainly is" ([pp.] 207-08).
"With regard to the latter" * (the morality of this gambling with FUNDS) * "indeed, we can see nothing in them different from what takes place in all speculation, which, so far as it goes upon the difference of price between one time and another, futurity and contingency, may equally come under the denomination of gambling; and in point of fact, there are bargains for commodities which proceed upon the stipulation of delivery at a future period or the payment of a difference in lieu of it" * ([p.] 209).
5) Theories of Surplus Value[156]
1) Proletarian Opposition on the Basis of Ricardo
4) Thomas Hodgskin, Popular Political Economy, London, 1827
* "Easy labour is only transmitted skill " * ([p.] 48). "As all the advantages derived from the division of labour * naturally centre in and belong to the labourers, if they are deprived of them, * and in the * progress of society* those only are enriched *by their improved skill who never labour — this must arise from unjust appropriation; from usurpation and plunder in the party enriched,* and from * consenting submission in the party im-poverished"* ([pp.] 108-09).
[XVIII-1085] "The labourers, to be sure, multiply too rapidly when *that multiplication is only compared with the want of the capitalist for their services" (I.e. [p.] 120). "Malthus points out the effects which an increase in the number of labourers has in lessening the share which each one receives of the annual produce — the portion of that distributed amongst them being a definite and determinate quantity not regulated in any degree by what they annually create" (I.e.).
"Labour, the exclusive standard of value, * but * labour, the creator of all wealth [is] no commodity"* (I.e., [p.] 186).
Regarding the influence of money on the expansion of wealth, Hodgskin remarks correctly:
* "As a man can dispose of small portions of produce that is corruptible, for what is incorruptible, he is under no temptation to throw it away; and thus the use of money adds to wealth, by preventing waste" * ([p.] 197).
The chief advantage of RETAIL TRADE derives from the fact that the QUANTITY in which commodities are best produced is not that in which they are best distributed (I.e. [p. 146]).
"If one considers for example fixed capital, the most favourable position for the IDEA OF CAPITAL AIDING PRODUCTION, 3 CLASSES of circumstances are to be distinguished under which [the results of] accumulation of capital are very DIFFERENT. 1) W h e n MADE AND USED BY THE SAME PERSONS. I t is o b v i o u s t h a t EVERY ACCUMULATION IN HIS POSSESSION OF THE INSTRUMENTS HE MAKES AND USES, FACILITATES HIS LABOUR. The limit to such an ACCUMULATION is the POWER of the LABOURER TO MAKE AND USE THE INSTRUMENTS IN QUESTION. 2) WHEN MADE AND USED BY DIFFERENT PERSONS, WHO SHARE BETWEEN THEM IN JUST PROPORTION THE PRODUCE OF THEIR COMBINED LABOUR. Capital may be made by one labourer and used by another; *they divide the commodity in proportion as each has contributed by his labour to produce it... I should rather express this fact, however, by saying that a part of the society employed in making instruments, while another part uses them, is a branch of division of labour which aids productive power and adds to the general wealth. As long as the produce of the two classes of labourers is divided between them, the accumulation and increase of such instruments as they can make and use, is as beneficial as if they were made and used by one person" * ([Labour Defended..., London, 1825, pp.] 243-44). "3) When *owned by a class of persons who neither make nor use it" [p. 243]. "The capitalist being the mere owner of the instruments, is not, as such, a labourer. He in no manner assists production" * [pp. 244-45].
// I n o t h e r w o r d s , production * is assisted b y t h e instrument, b u t n o t b y t h e title A h o l d s t o t h e i n s t r u m e n t ; n o t b y t h e c i r c u m s t a n c e t h a t t h e i n s t r u m e n t is o w n e d b y a n o n - labourer . * / /
* "He a c q u i r e s p o s s e s s i o n of the produce of one labourer, which he makes over to another, either for a time * as is the case with * most kinds of fixed capital, or for ever, as is the case with wages, whenever he thinks it can be used or consumed for his advantage. He never does allow the produce of one labourer, when it comes into his possession, to be either used or consumed by another, unless it is for his benefit. He employs or lends his property to share the produce, or natural revenue, of labourers; and every accumulation of such property in his hands is a mere extension of his power over the produce of labour, and retards the progress of national wealth. This [is] at present the case... When the capitalist, being the owner of all the produce, will allow labourers neither to make nor use instruments, unless he obtains a profit over and above the subsistence of the labourer, it is plain that bounds are set to productive labour much within what nature prescribes. In proportion as capital in the hands of a third party is accumulated, so the whole amount of profits required by the capitalist increases, and so there arises an artificial check to production and population... In the present state of society, the labourers being in no case the owners of capital, every accumulation of it adds to the amounts of profit demanded from them, and extinguishes all that labour which would only procure the labourer his comfortable subsistence. ... when it is admitted that labour produces all things, even capital, it is nonsense to attribute productive power to the instruments labour makes and uses. ...wages facilitate not production, like instruments. Labour, not capital, pays all wages...* [XVIII-1086] The greater part of the ADVANCES of CAPITALISTS consists of * promises to pay... The master manufacturer has either money or paper with which he pays wages; those wages his labourers exchange for the produce of other labourers, who will not keep the wages, whether money or paper, and it is returned to the manufacturer, who gives in exchange for it the cloth which his own labourers have made. With it he again pays wages, and the money or paper again goes the same round... *
"The invention and employment of paper money has revealed that CAPITAL is by no means SOMETHING SAVED. AS long as the capitalist, to realise his WEALTH, or command over OTHER PEOPLES LABOUR, was obliged to have in his possession AN ACTUAL ACCUMULATION OF the PRECIOUS METALS OR COMMODITIES, We m i g h t h a v e SUPPOSED that ACCUMULATION OF CAPITAL w a s t h e r e s u l t OF AN ACTUAL SAVING, a n d that on it depended the progress of society. But when paper money and parchment SECURITIES were invented, when the possessor of nothing but SUCH A PIECE OF PARCHMENT RECEIVED AN ANNUAL REVENUE IN PIECES OF PAPER w i t h w h i c h h e o b t a i n e d whatever was necessary for his own use and consumption, *and not giving away all the pieces of paper, was richer at the end of the year than at the beginning, or was entitled next year to receive a still greater number of pieces of paper, obtaining a still greater command over the produce of labour,* it became evident that capital was not any thing saved; and that the INDIVIDUAL CAPITALIST did not grow rich by AN ACTUAL AND MATERIAL SAVING, but BY DOING SOMETHING WHICH ENABLED HIM ... TO OBTAIN MORE OF THE PRODUCE OF OTHER PEOPLE'S LABOUR...
"It ascribes TO His" (the capitalist's) * "property merely, whether he employ it to pay wages, or whether it consist in useful instruments, all that vast assistance which knowledge and skill, when realised in machinery, give to labour... The united labours of the miner, the smelter, the smith, the engineer, the stoker, and of numberless other persons, and not the lifeless machines, perform whatever is done by steam engines... By the common mode of speaking, the productive power of this skill is attributed to its visible products, the instruments, the mere owners of which, who neither make nor use them, imagine themselves to be very productive persons" (p. 245 sqq.).*
With regard to his polemic against " THE DANGER OF FORCING CAPITAL OUT OF THE COUNTRY" [p. 253], and against the INTEREST OF CAPITAL AS [a] NECESSARY STIMULUS FOR INDUSTRY, or concerning the SAVINGS THEORY, see IX, 47.[159] T o be included in the CHAPTER on the vulgar economists. [3]
"As the population increases *both increased production and consumption take place, which is all that is ever meant by the terms accumulation or increase of national wealth*" (I.e., [p.] 257).
m) Ramsay ( George), An Essay on the Distribution of Wealth, Edinburgh, 1836
With Ramsay we return again to the political economists. In order to find a place for commercial capital, he calls it "THE TRANSPORT OF COMMODITIES FROM ONE PLACE TO ANOTHER" ([p.] 19). H e thus confuses trade with the CARRYING INDUSTRY.
Ramsay's chief contribution:
First: That he does in fact make the distinction between constant and variable capital. True , this occurs in such a m a n n e r that the distinction between fixed and circulating capital which he takes from the circulation process is the only one which he nominally retains, but he defines fixed capital in such a way that it includes all the elements of constant capital. H e therefore regards as fixed capital, not only machinery and instruments, buildings in which labour is carried on or in which the result of labour is STORED, draught and breeding animals, but also all raw materials (semi-manufactures, etc.), "THE SEED OF THE AGRICULTURIST AND THE RAW MATERIAL OF THE MANUFACTURER" ([p]p. 22-23). Moreover "MANURE OF ALL KINDS,
FENCES FOR AGRICULTURE AND THE FUEL CONSUMED IN MANUFACTURES" (l.C. [ p . 2 3 ] ) are fixed capital.
*" Circulating capital* consists only *of subsistence* and * other necessaries advanced to the workmen, previous to the completion of the produce of their labour*" (I.e.).
It can be seen therefore that by "CIRCULATING CAPITAL" he understands nothing but [XVIII-1087] the part of capital that can be resolved into wages, and by FIXED CAPITAL, the part that can be resolved into the objective conditions — means and materials of labour. The mistake here, however, is the identification of this division of capital, which is directly derived from the production process, with the distinction which arises from the circulation process. This is due to his adherence to the tradition of political economy.
On the other hand, Ramsay again confuses the purely material element of the fixed capital thus defined with its existence as "capital". Circulating capital (i.e. variable capital) does not enter into the real labour process, but what does enter, is living labour, which is bought with circulating capital, and which replaces it. What enters in addition into the labour process is constant capital, that is, labour objectified in the objective conditions of labour, in the materials and means of labour. Ramsay therefore writes:
* "Fixed capital alone, not circulating, is properly speaking a source of national wealth" ([p.] 23). "Labour and fixed capital are the only elements of expense of production" * ([p.] 28).
What is really expended in the production of a commodity are raw materials, machinery, etc., and the living labour which sets them in motion.
"CIRCULATING" CAPITAL is superfluous, EXTRANEOUS TO THE PROCESS OF
PRODUCTION.160 labour and living labour, are necessary conditions of production, elements of the national wealth. On the other hand, it is a mere "convenience" due to the "deplorable poverty of the mass of the people" that the means of subsistence of the workers at all assume the form of "CIRCULATING capital". Labour is a condition of production, but wage labour is not, and neither, therefore, is it necessary that the workers' means of subsistence confront them as "capital", as an "advance by the capitalist". What Ramsay overlooks is that if the means of subsistence of the workers did not confront them as "capital" (as "circulating capital", as he calls it), neither would the objective conditions of labour confront them as "capital", as "fixed capital", as he calls it. Ramsay attempts in earnest, and not merely in words as the other economists do, to reduce capital to "A PORTION OF THE NATIONAL WEALTH, EMPLOYED, OR MEANT TO BE EMPLOYED, IN FAVOURING REPRODUCTION" [p. 21]; he therefore declares wage labour and consequently capital — that is the social form which the means of reproduction assume on the basis of wage labour — to be unimportant and due merely to the poverty of the mass of the people.
Thus we have arrived at the point where political economy itself — on the basis of its analysis — declares the capitalist form of production, and consequently capital, to be not an absolute, but merely an "accidental", historical condition of production.
Ramsay, however, does not go far enough to draw the correct conclusions from his premisses, from the new definition which he has given to capital in the immediate production process.
Ramsay comes indeed close to the correct definition of surplus value.
* "A circulating capital will always maintain more labour than that formerly bestowed upon itself. Because, could it employ no more than had been previously bestowed upon itself, what advantage could arise to the owner from the use of it as such?" * ([p.] 49). Or will people assert that the * quantity of labour which any circulating capital will employ is no more than equal to that previously bestowed upon it? * This would mean that * the value of the capital expended was equal to that of the product" * ([p.] 52).
This means, therefore, that the capitalist exchanges less objectified labour for more living labour and that this surplus of unpaid living labour constitutes the excess of the value of the product over the value of the capital consumed in its production, in other words, the surplus VALVE (profit, etc.). If the amount of labour for which the capitalist pays wAGES=the amount which he receives back from the worker in the product, then the value of the product would be no greater than that of the capital and there would be no profit. Although Ramsay is very close here to the real origin of surplus value, he is nevertheless too bound up in the tradition of the economists not to begin immediately straying again along false paths. First of all, the way he explains this exchange between variable capital [XVIII-1088] and labour is ambiguous. If he had been quite clear about this, then further misunderstanding would have been impossible. He says:
"Circulating capital, for instance, RAISED BY THE LABOUR OF 100 MEN, will set in motion 150 men. THEREFORE THE PRODUCT AT THE END OF THE YEAR will, in this case, be the result of the labour of 150 men" ([p.] 50).
Under what circumstances can the product of 100 men buy [the labour of] 150 men?
If the wages received by a worker for 12 hours' labour=the value of 12 hours' labour, then only one working day could be bought back with the product of his labour and only 100 [working days] with the product of 100 working days. But if the value of the daily product of his labour=12 labour hours and the value of the daily wage he receives=8 labour hours, then IV2 working days or [the labour of] IV2 men can be paid for, bought back, for the value of his daily product. And 100 (I + V2 men or working days)= 100+50= 150 men can be employed with the product of 100 working days. Thus, the condition in which the product of 100 men sets 150 in motion is that each of the 100 men and, in general, every worker, spends half as much time working gratis for the capitalist as he works for himself, or that he spends /s of the working day working gratis. Ramsay does not make this clear. The ambiguity appears in the conclusion: "THEREFORE THE PRODUCT AT
THE END OF THE YEAR WILL, IN THIS CASE, BE THE RESULT OF THE LABOUR OF [150] MEN." It will indeed be the result OF THE LABOUR OF 150 men in the same way as the product of 100 men was THE RESULT OF THE LABOUR OF 100 men. The ambiguity (and certainly the lack of clarity, plus ou moins* derived from Malthus) is to be found in this: It appears as if the profit arises merely from the fact that 150 men are now employed instead of 100. Just as if the profit derived from the 150 workers arose from the fact that 225 workers can now be set in motion by the product of the 150 (100:150=150:225) (4:6=6:9). But that is not the point.
The labour which the 100 men supply =x, if x is their total working day. The wages they receive [will then equal] [2]/[3]x Hence the value of their product=x, the value of their wages = x — (1)/$x, and the surplus value made on them='/3X.
If the entire product of the labour of 100 men is again laid out in wages, then 150 men can be employed with it and their product will b e = t o the wages of 225 men. T h e labour time of 100 men is the labour time of 100 men. But the labour they are paid for is the product of 66[2]/ä men, that is, only [2]/ä of the value embodied in their product. T h e ambiguity [arises] because it appears as if the 100 men or the 100 working days (it makes no difference whether they are days calculated over a year or separate days) produce 150 working days — a product embodying the value of 150 working days; while, conversely, the value of 100 working days suffices to pay for 150 working days. If the capitalist continues to employ 100 men as he did previously, then his profit remains the same. H e will continue to pay the 100 men a product=the labour time of. 66[2]/s men and pocket the rest as he did before. If, on the other hand, he lays out the whole product of the 100 men in wages once again, then he accumulates and appropriates a new amount of SURPLUS LABOUR equal to 50 working days instead of only 33'/3 as he did previously.
It is immediately apparent that Ramsay is not clear on the point, since he once again advances against the determination of value by labour time the otherwise "inexplicable" phenomenon that the rates of profit are equal for capitals which exploit different masses of labour.[43]
* "The use of fixed capital modifies to a considerable extent the principle that value depends upon quantity of labour. For some commodities on which the same quantity of labour has been expended, require very different periods before they are fit for consumption. But as during this time the capital brings no return, in order that the employment in question should not be less lucrative than others in which the product is sooner ready for use, it is necessary that the commodity, when at last brought to market, should be increased in value by all the amount of [the] profit withheld* This shows how * capital may regulate value independently of labour" * ([p.] 43).
It shows rather that CAPITAL REGULATES AVERAGE PRICES [161] INDEPENDENTLY OF THE VALUE OF THE particular PRODUCT and that it exchanges commodities not according to their value, but in such a way that ONE EMPLOYMENT OF CAPITAL ... should not be less [XVIII-1089] PRODUCTIVE THAN OTHERS. Since empty tradition is more powerful in political economy than in any other science, Ramsay does not fail either to reproduce the "wine in the cellar" [162] argument which has been notorious since the time of [James] Mill. And he therefore concludes that "CAPITAL [is] A SOURCE OF VALUE INDEPENDENT OF LABOUR" ([p.] 55), whereas the most he would have been justified in concluding was that THE SURPLUS VALUE REALISED BY CAPITAL IN A PARTICULAR
EMPLOYMENT DOES NOT DEPEND UPON THE QUANTITY OF LABOUR EMPLOYED BY THAT PARTICULAR CAPITAL. [XVIII-1090] This false conception of Ramsay's in this case is all the m o r e s u r p r i s i n g since, o n t h e o n e h a n d , h e g r a s p s t h e natural basis, so t o s p e a k , of SURPLUS VALUE, a n d , o n t h e o t h e r h a n d , h e affirms with regard t o o n e i n s t a n c e t h a t t h e DISTRIBUTION of SURPLUS VALUE—its e q u a l i s a t i o n t o t h e g e n e r a l r a t e of p r o f i t — does n o t i n c r e a s e t h e SURPLUS VALUE itself.
"The source of profit is the LAW of the MATERIAL WORLD, whereby the * beneficence of nature, when aided and directed by the labour and skill of men, gives so ample a return to national industry as to leave a surplus of products over and above what is absolutely necessary for replacing in kind the fixed capital consumed, and for perpetuating the race of labourers employed.."* [p. 205].
("PERPETUATING THE RACE OF LABOURERS" [ X V I I I - 1 0 9 1 ] is a fine r e s u l t of capitalist p r o d u c t i o n . O f c o u r s e , if l a b o u r only sufficed t o r e p r o d u c e t h e c o n d i t i o n s of l a b o u r a n d t o k e e p t h e w o r k e r s alive, n o SURPLUS w o u l d b e p o s s i b l e , HENCE NO PROFIT a n d NO CAPITAL. B u t t h a t n a t u r e h a s n o t h i n g w h a t e v e r t o d o with it and t h a t t h e RACE OF
LABOURERS PERPETUATES itself despite this SURPLUS a n d t h a t t h e SURPLUS a s s u m e s t h e f o r m of p r o f i t a n d o n this BASIS t h e RACE OF CAPITALISTS
"PERPETUATES" itself, h a s b e e n a d m i t t e d b y Ramsay himself since h e d e c l a r e s t h a t "CIRCULATING CAPITAL", b y w h i c h h e m e a n s w a g e s , wage l a b o u r , is n o t a n ESSENTIAL c o n d i t i o n of p r o d u c t i o n , but is d u e m e r e l y t o t h e "DEPLORABLE POVERTY OF THE MASS OF THE POPULATION" [p. 2 4 ] . H e d o e s n o t d r a w t h e c o n c l u s i o n t h a t it is capitalist p r o d u c t i o n w h i c h "PERPETUATES" this "DEPLORABLE POVERTY", a l t h o u g h h e a d m i t s it w h e n h e says that it "PERPETUATES THE PACE OF LABOURERS" AND LEAVES THEM
ONLY AS MUCH AS is NECESSARY FOR THAT PERPETUATION. I n t h e s e n s e i n d i c a t e d a b o v e it c a n b e said that SURPLUS VALUE, etc., rests o n a natural law, t h a t is, o n THE PRODUCTIVITY OF HUMAN LABOUR in its e x c h a n g e with n a t u r e . B u t Ramsay himself states t h a t a s o u r c e of SURPLUS VALUE is t h e absolute lengthening of labour time (p. 102) as well as the i n c r e a s e d p r o d u c t i v i t y of l a b o u r b r o u g h t a b o u t b y i n d u s t r y . )
* "... Let the gross produce be ever so little more than is strictly essential for the above purposes, and the separation of a distinct revenue from the general mass, under the appellation of profit, and belonging to another class of men, becomes possible" ([p.] 205). " The very existence of the master-capitalists as a distinct class is dependent on the productiveness of industry"* ([p.] 206).
Secondly, with regard t o t h e e q u a l i s a t i o n of the r a t e of p r o f i t as a result of the rise in prices IN SOME BRANCHES c a u s e d b y increases in w a g e s , Ramsay o b s e r v e s :
The rise in prices in some branches of industry resulting from increases in wages * "by no means exempted the master-capitalists from suffering in their profits, nor even at all diminished their total loss, but only served to distribute it more generally[3] among the different orders composing that body"* ([p.] 163).
a Ramsay has "equally".— Ed.
And if the capitalist whose wine is the product of 100 men (Ramsay's example) sells it for the same price as a capitalist whose commodity is the product of 150 men, in order that "THE
EMPLOYMENT [ o f Capital] IN QUESTION BE NO LESS LUCRATIVE THAN OTHERS" [p. 43], then it is clear that thereby the SURPLUS VALUE embodied in the wine and in the other commodity is not increased, but only
DISTRIBUTED EQUALLY b e t w e e n DIFFERENT ORDERS OF CAPITALISTS [ X V I I I -1091].
[XVIII-1089] He also brings up again Ricardo's EXCEPTIONS.[163] These latter will have to be discussed in that part of our text where we speak of the conversion of VALUE into PRICE OF PRODUCTION.[164] That is, very briefly, as follows. Provided that in the different TRADES the length of the working day (in so far as this is not compensated by the INTENSITY OF LABOUR, the unpleasantness of the work, etc.) is the same, or rather the SURPLUS LABOUR is the same [as well as] the rate of exploitation, the rate of surplus value can change only if wages rise or fall. Such variations in the rate of surplus value=the rise or fall in wages, will affect the production prices of commodities in different ways according to the organic composition of capital. Capital in which the variable part is large compared to the constant part, would acquire more surplus labour as a result of a fall in wages and would appropriate less surplus labour as a result of a rise in wages than capital with a larger proportion of the constant part to the variable part. A rise or fall in wages would therefore have opposite effects on the rate of profit in the two branches or on THE GENERAL RATE OF PROFIT. In order to maintain the general rate of profit, if wages rise, the prices of the first kind of commodities will rise, and those of the second kind will fall. (Either type of capital will of course be directly affected by variations in wages only in proportion to the greater or less quantity of living labour it employs in comparison with the total capital expended.) Conversely, if wages fall, the prices of the first kind of commodities will fall and those of the second kind will rise.
Strictly speaking, all this hardly belongs to the discussion of the original conversion of VALUES into production prices and the original establishment of the general rate of profit, since it is much more a question of how a general rise or fall in wages will affect production prices regulated by the general rate of profit.
Still less has this problem ANYTHING TO DO WITH THE DIFFERENCE between FIXED AND CIRCULATING CAPITAL. Bankers and merchants employ almost exclusively circulating capital and hardly any variable capital; that is, they lay out relatively small amounts of capital on
18-613 living labour. Contrariwise, a mine-owner employs incomparably more fixed capital than a capitalist engaged in tailoring. But it is very questionable whether he employs relatively as much living labour. It is merely because Ricardo advanced this special, relatively insignificant case as the only instance of a divergence between production price and VALUE (or, as he incorrectly put it, as an exception to the determination of VALUE by labour time) and presented it in the form of a difference between fixed and circulating capital, that this BLUNDER — and in an incorrect form at that — has survived as an important dogma in all subsequent political economy. (The mine-owner should be counterposed not to the tailor but to the banker and the merchant.)
* "The rise of wages is limited by the productiveness of industry. In other words, ... a man can never receive more for the labour of a day or year than with the aid of all the other sources of wealth, he can produce in the same time... His pay must be less than this, for a portion of the gross produce always goes to replace fixed capital" * (i.e. constant capital, raw materials and machinery, etc., according to Ramsay) * "with its profit"(2) ([p.] 119).
Here Ramsay confuses two things. The amount of "fixed capital" embodied in the daily product is not the product of the day's labour of the worker; in other words, this portion of the value of the product represented by a portion of the product in natura is not the product of this day's labour. On the other hand, profit is indeed a deduction from the daily product of the worker or from the value of this daily product.
Although Ramsay has not clearly elaborated the nature of surplus value and although in particular he remains firmly rooted in the old prejudices with regard to the relation of VALUE and production price and the conversion of surplus value into AVERAGE PROFIT, he has on the other hand drawn another, correct [XVIII-1090] conclusion from his conception of fixed and circulating capital.
Before coming to this [here is another passage about "value"]:
lated. In manufacture, the "evils" which the development of the productive power generate for the workers are temporary, but reappear constantly. In agriculture, they are continuous, especially in connection with the conversion of arable land into pasture. The general result is: With the advance of society, i.e. with the development of capital, here with that of national wealth, the condition of the workers is affected less and less by this development, alias, it worsens relatively in the same ratio as the general wealth increases, i.e. as capital is accumulated, or, what amounts to the same thing, as the scale of reproduction increases. One can see that it is a far cry from this conclusion to the naive conceptions of Adam Smith or the apologetics of vulgar political economy. For Adam Smith, the accumulation of capital is identical with growing demand for labour, CONTINUAL RISE OF WAGES, and consequently with a FALL OF PROFITS. In his time, the demand for labour did in fact grow at least in the same proportion in which capital was accumulated, because manufacture still predominated at that time and large-scale industry was only in its infancy.
"The DEMAND FOR LABOUR depends only" (DIRECTLY, IMMEDIATELY) "upon the AMOUNT OF CIRCULATING CAPITAL" ([pp.] 86-87). (This is tautology on Ramsay's part, since he equates CIRCULATING CAPITAL with capital laid out in wages.) "With the progress of civilisation THE FIXED CAPITAL OF THE COUNTRY IS INCREASED AT THE EXPENSE OF THE CIRCULATING" ([pp.] 88-89). "The DEMAND FOR LABOUR will not therefore GENERALLY increase as CAPITAL AUGMENTS, at least not IN THE SAME PROPORTION" ([p.] 88). "It is not, until, favoured by the NEW INVENTIONS, CIRCULATING CAPITAL SHALL HAVE BECOME INCREASED beyond what it formerly was,"
//here again the wrong assumption creeps in that an INCREASE of necessaries in general and INCREASE of that portion of necessaries intended for the workers are the same thing//
* "that a greater demand for labour will spring up. Demand will then rise, but not in proportion to the accumulation of the general capital. In countries where industry has much advanced, fixed capital comes gradually to bear a greater and greater proportion to circulating. Every augmentation, therefore, in the national stock destined for reproduction, comes, in the progress of society, to have a less and less influence upon the condition of the labourer" ([pp.] 90-91). "Every addition to fixed capital is made at the expense of the circulating",* i.e. at the expense of the demand for labour ([p.] 91). *"The evils resulting from the invention of machinery, to the labouring population employed in manufactures, will probably be but temporary, liable to be perpetually renewed however, as fresh improvements are constantly making for economising labour"* [p. 91].
And for the following reasons. [Firstly:] The CAPITALISTS who USE THE NEW MACHINERY obtain EXTRAORDINARY PROFITS; consequently their capacity to save and to increase their capital grows. A portion of this is also used as CIRCULATING CAPITAL. Secondly: The price of the manufactured commodities falls in proportion to the DIMINISHED COST OF PRODUCTION; thus the CONSUMERS save, and this facilitates the ACCUMULATION OF CAPITAL, a portion of which may find ITS WAY TO THE MANUFACTURING INDUSTRY IN QUESTION. Thirdly: The fall in the price of these products increases the demand for them ([pp.] 92-93).
"Thus though the machinery MAY THROW OUT OF EMPLOYMENT A CONSIDERABLE BODY OF PERSONS, this will yet probably be followed, AFTER A LONGER OR SHORTER PERIOD, by THE RE-ENGAGEMENT OF THE SAME, OR EVEN A GREATER NUMBER OF LABOURERS" ([pp.] 92-93). "In agriculture the case is widely different. The DEMAND FOR RAW PRODUCE cannot increase in that rapid way in which it may for MANUFACTURED GOODS... The most fatal to the COUNTRY PEOPLE is *the conversion of arable land into pasture... Almost all the funds which formerly supported men, are now vested in cattle, sheep, and other elements of fixed capital*" ([p.] 93). [XVIII-1091] Ramsay remarks correctly:
"* Wages as well as profits are to be considered each of them as really a portion of the finished product, totally distinct in a national point of view from the cost of raising it" ([p.] 142). "Fixed capital ... independent of its results ... is a pure loss...* But, besides this, LABOUR, not WAGES, not WHAT IS PAID FOR IT, is an element of cost of production. LABOUR is a SACRIFICE. *The more of it is expended in one employment, the less for another, and, therefore, when applied to unprofitable undertakings, the nation suffers from the waste of the principal source of wealth...* The REWARD OF LABOUR does not constitute an element OF COST" ([pp.] 141-43).
(This is quite right: labour, and not paid labour or wages, must be considered as an element of value.)
Ramsay describes the real reproduction process correctly:
"In what manner is a comparison to be instituted between the product and the * stock expended upon it?... With regard to a whole nation ... it is evident that all the various elements of the stock expended must be reproduced in some employment or another, otherwise the industry of the country could not go on as formerly. The raw material of manufactures, the implements used in them, as also in agriculture, the extensive machinery engaged in the former, the buildings necessary for fabricating or storing the produce, must all be parts of the total return of a country, as well as of the advances of all its master-capitalists. Therefore, the quantity of the former may be compared with that of the latter, each article being supposed placed as it were beside that of a similiar kind*" ([pp.] 137-39).
"Now as regards the individual capitalist
//this is a false abstraction. The nation does not exist, or exists only as the capitalist class, and the whole class operates in exactly the same way as the individual capitalist. The two methods of approach differ from one another only in that one clings to and isolates use value, the other exchange value//, value with value, not quantity with quantity.* This is the first difference TO BE
REMARKED IN THE MODE OF RECKONING PROFITS BETWEEN NATIONS AND INDIVIDUALS."
/ / T h e nation too — SUPPOSING IT TO BE SOMETHING ELSE THAN THE SUM OF CAPITALISTS — can so FAR compare value with value: it can calculate the total labour time which it has to expend * to replace the used-up part of its constant capital and the part of the product consumed individually, and the time of labour spent in producing a surplus destined to enlarge the scale of reproduction.*//
"The second is, that, since the MASTER-CAPITALIST always makes an ADVANCE OF WAGES t o t h e LABOURERS, INSTEAD OF PAYING THEM OUT OF THE FINISHED COMMODITY, HE CONSIDERS THIS AS WELL AS THE FIXED CAPITAL CONSUMED, A PART OF HIS EXPENSES, THOUGH THEY, NATIONALLY SPEAKING, a r e n o t AN ELEMENT OF COST."
//This difference too disappears in fact in the process of reproduction as a whole. * The capitalist always pays out of the finished commodity, that is to say, out of the commodity finished by the labourer yesterday he pays his wages tomorrow, or in point of fact, he gives him, in the form of wages, only an assignation of products to be finished in future or almost produced (i.e. finally produced) by the time they are bought.* T h e ADVANCE disappears as a mere illusion in reproduction, i.e. in the CONTINUITY OF THE
PROCESS OF PRODUCTION.//
"Hence his RATE OF PROFIT will depend *upon the excess in the value of his product over and above the value of the capital, both fixed and circulating*" ([p.] 146).
//This is likewise true IN A "NATIONAL POINT OF VIEW". His profit always depends on what he himself pays for the product, WHETHER FINISHED OR NOT, WHEN HE PAYS WAGES.//
Ramsay has the merit, firstly, that he CONTRADICTS the false NOTION — CURRENT since Adam Smith — OF THE VALUE OF THE WHOLE PRODUCE DISSOLVING INTO REVENUE UNDER DIFFERENT NAMES; secondly, that he determines the rate of profit in two ways, [once] by the RATE of wages, i.e. the rate of surplus value, and a second time, by the value of the constant capital. But he transgresses in the opposite direction to Ricardo. Ricardo arbitrarily seeks to equalise the rate of profit and the rate of surplus value. O n the other hand, the twofold determination of the rate of profit — 1) by the rate of surplus value (HENCE by THE RATE OF WAGES) and 2) by the ratio of this surplus value to the total capital advanced, that is, IN FACT determined by the ratio of the constant capital to the total capital — is irrationally presented by Ramsay as two parallel circumstances which determine the rate of profit. H e does not grasp the transformation which surplus value undergoes before it becomes profit. Whereas therefore Ricardo arbitrarily seeks to reduce the rate of profit to the rate of surplus value in order to work, out the theory of value consistently, Ramsay seeks to reduce surplus value to profit. We shall see later that the way he describes the influence of the VALUE of constant capital on the rate of profit is very inadequate, and even incorrect.
* "Profit must rise or fall exactly as the proportion of the gross produce, or of its value, required to replace necessary advances, falls or rises...* The rate OF PROFIT, therefore, depends *upon two circumstances: 1) the proportion of the whole produce which goes to the labourers; secondly, the proportion which must be set apart for replacing, either in kind or by exchange, the fixed capital"* ([pp.] 147-48).
In other words, therefore, [the rate of profit depends] on the excess of the VALUE of the product over THE SUM OF CIRCULATING AND FIXED CAPITAL; HENCE on the proportion WHICH, FIRSTLY, THE CIRCULATING CAPITAL,
AND, SECONDLY, THE FIXED CAPITAL, BEAR TO THE VALUE OF THE WHOLE PRODUCE. I f we know where this SURPLUS comes from, then the whole matter is very simple. But if we only know that the profit depends on the ratio of the SURPLUS to these outlays, then we can acquire the most inaccurate NOTIONS about the ORIGIN of this surplus, for example we can, like Ramsay, imagine that it originates in part in fixed (constant) capital.
[XVIII-1093] "It is certain *that an increased facility of raising the various objects which enter into the composition of fixed capital, tends, by diminishing this proportion, to raise the rate of profit, just as in the former case of an augmented return of the elements of circulating capital, which serves to maintain labour" * ([p.] 164).
With regard to the tenant farmer, for example:
* "... be the [amount of gross] return small or great, the quantity of it required for replacing what has been consumed in these different forms, can undergo no alteration whatsoever. This quantity must be considered as constant, so long as production is carried on on the same scale. Consequently, the larger the total return, the less must be the proportion of the whole which the farmer must set aside for the above purposes"* (I.e., [p.] 166).
"The more easily the FARMER who produces FOOD and RAW MATERIALS such as FLAX, HEMP, WOOD, etc., can reproduce them, [the more] his profit will increase. The FARMER'S PROFIT [increases] as a result of the INCREASE IN THE QUANTITY OF HIS PRODUCE, the TOTAL VALUE of which REMAINS THE SAME, b u t A SMALLER PROPORTION OF THIS SUM TOTAL, a n d CONSEQUENTLY OF ITS VALUE, is r e q u i r e d FOR RESTORING THE VARIOUS ELEMENTS OF FIXED CAPITAL, WITH WHICH THE FARMER CAN SUPPLY HIMSELF; WHILE THE MANUFACTURER WOULD BENEFIT because His product would have a GREATER PURCHASING POWER"([pp.] 1 6 6 - 6 7 ) .
Let us assume that the harvest=100 qrs and the seed corn = 20 qrs, that is, '/s of the harvest. Let us assume further that the harvest is doubled the following year (with the expenditure of the same amount of labour) and now=200 qrs. If the scale of production remains the same, then the seed corn=20 qrs as previously, but this is now only Vio of the harvest. One has to take into account however that the value of the 100 qrs [previously harvested]=that of the 200 qrs [now obtained], therefore 1 qr of the first harvest=2 of the second. 80 qrs remain over in the first case, 180 in the 2nd. Since wages are irrelevant to the present problem, which concerns the influence that a change in the value of constant capital exerts on the rate of profit, let us assume that the value of wages remains unchanged. Then, if [wages were] 20 qrs in the first case, [they are] 40 in the second. Finally, let us assume that the value of the other ingredients of constant capital which the farmer does not reproduce in natura = 20 qrs in the first case and therefore 40 in the second. We now have the following calculation:
1) The product =100 qrs. The seed corn = 20 qrs. The other elements of constant capital = 20 qrs, wages = 20 qrs, profit =40 qrs.
2) The product=200 qrs. The seed corn = 20 qrs. The other elements of constant capital=40 qrs, wages=40 qrs and profit = 100 qrs, [i.e. its value] = 50 qrs in the first case. There would therefore be a SURPLUS PROFIT of 10 qrs [in the second case].
Thus not [only] the rate of profit, but also the profit itself would have increased here, as a result of a change in the value of constant capital. Although wages remained the same in both 1) and 2), the ratio of profit to wages, that is, the rate of surplus value, would have risen. But this is only an illusion. The profit would consist firstly of 80 qrs, equal to 40 qrs in case 1), and the ratio to wages would remain the same; secondly, [in case] 2), of 20 qrs, equal only to 10 qrs in case 1), which would have been converted into revenue from constant capital.
But is this calculation correct? We must assume that the result [in case] 2) was due to a harvest which came about although work was carried on in the same conditions as prevailed in [case] 1). In order to clarify the matter, let us assume that 1 qr=£2 in [case] 1).
This means that for the harvest which has yielded him 200 qrs, the farmer has laid out: 20 qrs for seed corn (=£40), 20 qrs for other elements of constant capital (=£40), 20 qrs for wages (=£40). A total of £120, and the product=200 qrs. In the first case he likewise laid out only £120 (60 qrs) and the product=100 qrs=£200. The profit remaining was £80, or 40 qrs. Since the 200 qrs [in case 2)] are the product of the same amount of labour [as the 100 qrs in case 1)], then once again they are likewise=only £200. Thus, only £80 profit remains, which is now, however,= 140 qrs.[165] Consequently, a qr now [costs the farmer] only £*h and not £1. In other words, the value of a qr has fallen from [£]2 to [£][4]/7, that is, by ls/7, and not from 2 to 1, that is, by a half as we assumed above in [case] 2) as opposed to [case] 1).
His total product [in case 2)]=200 qrs=£200. But £i20 out of this £200 replaces the 60 qrs which he has expended, each one of which cost him £2. There thus remains a profit of £80 which=the remaining 140 qrs. How does this happen? The qr is now=£l, but each of the 60 qrs expended in production cost £2. They cost the farmer as much as if he had expended 120 of the new qrs. The remaining 140 qrs therefore =£80, or no more than the remaining 40 were worth previously. It is true that he sells each of the 200 qrs for £1 (if he sells his total product) and receives £200 for them. But of the 200 qrs, 120 have cost him £2 each, the remaining qrs therefore only yield him £*h each.
If he now again lays out 20 qrs [for seed] (=£10 [if one reckons 10s. for a qr]), 40 qrs for wages (=£20), and 40 qrs for the other elements of constant capital (=£20), that is, a total of 100 qrs instead of 60 as previously and he harvests 180 qrs, then these 180 have not the same value as did the 100 previously [if one reckons £1 for a qr]. True, he has employed as much living labour as he did previously, and consequently the [XVIII-1094] value of the variable capital has remained the same and so [has the value] of the SURPLUS PRODUCE. But he has laid out less objectified labour, since the 20 qrs, which were=£20 previously, are now worth only 10.
The account will therefore work out as follows:
Constant capital Variable capital Surplus value
1) 20 qrs seed corn =£20 20 qrs (£20) 40 qrs (£40) 20 qrs instruments of labour,
etc. =£20
2) 20 qrs [seed corn] =£10 40 qrs [instruments of labour,
etc.] =£20 40 qrs (£20) 80 qrs (£40)
In the first case the product comes to 100 qrs=£100. In the second case the product comes to 180 qrs=£90. Nevertheless the rate of profit would have risen [despite the fall in the value of the product], for in the first case the return on an outlay of [£] 60 was £40 and in the 2nd it was 40 for an outlay of 50. In the first case it amounted to 66[2]/[3]%, in the second to 80%.
Anyhow, the rise in the rate of profit is not due to the value remaining unchanged, as Ramsay supposes. Since one part of the labour expended, i.e. the part contained in the constant capital (in seeds in this case), has diminished, the value of the product falls if production continues on the same scale, just as the value of 100 lbs of twist falls if the cotton it is made of becomes cheaper. But the ratio of variable to constant capital increases (without the value of the variable capital increasing). In other words, the ratio of the total capital outlay declines in relation to the SURPLUS. HENCE the rate of profit rises.
If what Ramsay says were correct, if the value remained the same, then the profit, the amount of profit, and consequently also the rate of profit, would rise. There can be no question of a rise merely in the rate [of profit].
The question is not however disposed of for the special case. In agriculture this special case takes the following form: A certain amount of seed corn at the old price of the product figures in the harvest, this part is incorporated in the harvest in natura. The other expenses are defrayed by the sale of the corn at its old price. The old outlay yields a product which is twice as big as before. Thus, in the above-mentioned case, for example, where 20 qrs are used as seed corn (=£40) and the other outlays=40 qrs (=£80), the harvest yields 200 qrs and not, as the previous harvest, 100 qrs (=£200), of which 40 qrs=£80 were profit on a total outlay of 60 qrs=£120. The outlay in connection with this [second] harvest is absolutely the same as it was in the first — 60 qrs, the value of which is £120, but instead of a SURPLUS of 40 qrs, the SURPLUS is now 140 qrs. The SURPLUS in natura has in this case increased considerably. But because the labour expended is the same in both CASES, the 200 qrs have no greater value than did the 100, that is, £200. In other words [the value of] the qr has fallen from £2 to £1. But since there was a SURPLUS of 140 qrs, it seemed that it had to come to £140, for one qr is worth just as much as any other.
The matter would be simplified if we considered it d'abord without regard to the reproduction process, that is, if we assumed that the tenant farmer was withdrawing from the business and selling his whole product. Then he would indeed have to sell 120 qrs to recover his outlay of £120 (to reimburse himself). In this way he would recover the capital advanced. Thus a SURPLUS of 80 qrs would remain, and not of 140, and since these 80 qrs=£40, they are worth in absolute terms as much as the SURPLUS in the first case.
In the course of the reproduction process, however, the matter is altered to a certain extent. For the farmer replaces the 20 qrs of seed corn in natura out of his own product. [As far as their value is concerned] they are replaced by 40 qrs in the product. But in the reproduction process he only needs to replace them with 20 qrs in natura, as was the case previously. The rest of his expenditure [expressed in quarters] increases in the same ratio as the qr is devalued (provided wages do not fall). To replace the remaining portion of constant capital, he now needs 40 qrs and not 20 as previously, and to replace wages he also needs 40 qrs instead of 20. Altogether he must now lay out 100 qrs, compared to 60 previously; but he need not lay out 120, the amount corresponding to the depreciation of the corn, because the 20 qrs [used as seed] which were worth £40, are replaced by 20 [quarters] (since in this context only their use value matters) which are worth [£]20. So evidently he has made a gain [XVIII-1095] of these 20 qrs, now worth £20. His SURPLUS is therefore not £80 but £100, not 80 qrs, but 100. (Expressed in qrs of the old value, not 40 but 50.) This is an unquestionable FACT, and if the market price does not fall as a result of ABUNDANCE, the farmer can sell 20 qrs more at the new value, thus gaining £20. In the course of reproduction, moreover, the farmer obtains this SURPLUS of £20 on the same outlay, because labour has become more productive, without the rate of surplus value having risen or the workers having performed more SURPLUS labour than previously or having received a smaller portion of the reproduced part of the product (which represents living labour). On the contrary, it is assumed that in the reproduction process the worker receives 40 qrs, whereas he received only 20 previously. This then is a rather peculiar phenomenon. It does not occur without reproduction, but it takes place in connection with it and it takes place [moreover] because the farmer replaces a PART OF HIS ADVANCES in natura. Not only the rate of profit could increase in this case, but the amount of profit as well. (With regard to the reproduction process itself, the farmer can either carry on on the old scale, in which case the price of the product will fall if he again obtains as good a harvest, because a portion of the constant capital has cost less, but the rate of profit will rise; or the farmer can increase the scale of production, sow more with the same outlay, and then both the rate of profit and the amount of profit will rise.)
Let us consider the manufacturer. Let us assume that he has laid out £100 in cotton twist and made a profit of [£]20. The product therefore=[£]120. It is assumed that [£]80 out of the outlay of £100 has been paid for cotton. If the price of cotton falls by half, he will now need to spend only 40 on the cotton and £20 on the rest, that is £60 in all (instead of £100); the profit will be [£]20 as previously and the total product will amount to £80 (if he does not increase the scale of his production). £40 thus remains in his pocket. He can either spend it or invest it as additional capital. If he invests it, he will lay out [an additional] [£]26[2]/ä on cotton and 13'/3 on labour, etc., on the new scale. The profit [will amount to] £13Vs. The total product will now be 60+40 + 337s, or £133V[3].
Thus it is not the fact that the farmer replaces his seed corn in natura which is the key, for the manufacturer buys his cotton and does not replace it out of his own product. What this phenomenon amounts to is this: release of a portion of the capital previously tied up in constant capital, or the conversion of a portion of the capital into revenue. If exactly the same amount of capital is laid out in the reproduction process as previously, then it is the same
aS if ADDITIONAL CAPITAL HAD BEEN EMPLOYED Oil t h e o l d SCale o f production. This is therefore a kind of accumulation which arises from the increased productivity of those branches of industry which supply the productive ingredients of capital. However, such a fall in the [price of] raw materials, IF DUE TO THE SEASONS, IS COUNTERACTED BY UNFAVOURABLE SEASONS, IN WHICH THE RAW MATERIALS ap-preciate. The capital released in this way IN ONE or several SEASONS is, therefore, to a certain extent, reserve capital for the other seasons. For instance, the MANUFACTURER whose [fixed capital] turns over once every 12 years, must arrange things in such a way that he can continue to produce — at least on the same scale—throughout the 12 years. One has therefore to take into account that the PRICES [of the raw materials] he has to REPLACE fluctuate and even themselves out MORE OR LESS over a long period of years.
A rise in prices of the ingredients [of constant capital] has the opposite effect to a fall of the prices. (We are leaving variable capital out of account here, although if wages fall, less variable capital — in terms of value — will need to be laid out, and if they rise, more.) If production is to be continued on the old scale, then a greater outlay of capital is necessary. Therefore, apart from a fall in the rate of profit, extra CAPITAL MUST BE EMPLOYED OR A PART OF the REVENUE MUST BE CONVERTED INTO CAPITAL, although it will not have the effect of ADDITIONAL CAPITAL.
ACCUMULATION has taken place in the one case although the value of the capital advanced has remained the same (but its physical elements have been increased). The rate of valorisation increases, and the absolute magnitude of profit increases, because the effect is the same AS IF ADDITIONAL CAPITAL had been advanced on the old scale. Accumulation has taken place in the other case in so FAR AS the value of the capital advanced, i.e. that part of the value of the total output which functions as capital, has increased. But the physical elements have not been increased. The rate of profit falls. (The amount of profit only falls if either a different number of workers is employed or if their wages rise as well.)
This phenomenon of the conversion of capital into revenue should be noted, because it creates the illusion that the amount of profit grows (or in the opposite case decreases) independently of the amount of surplus value. We have seen that, under [XVIII-1096] certain circumstances, a PART OF RENT can be explained by this phenomenon. [1 6 6]
In the way mentioned above (that is, if the remaining 20 q r s = £ 2 0 are not used immediately to extend the scale of production, i.e. if they are not accumulated), a money capital of £ 2 0 is set free. This is an example of how redundant money capital can be extracted from the reproduction process although the aggregate value of commodities remains the same, namely, by a portion of the capital which existed previously in the form of fixed (constant) capital being converted into money capital.
How little the above phenomenon has to d o with the determination of the rate of profit, becomes clear if one considers the case of A FARMER (or * manufacturer) who enters business under the new conditions of production. Formerly h e wanted a capital of £ 1 2 0 to enter the business, £ 4 0 to buy 20 qrs [of] seeds, £ 4 0 for other ingredients of constant capital, and £ 4 0 to pay wages. A n d his profit was £80.* 80 on 120 = 8 on 12 = 2 on 3,=66[2]/[3]%-
H E now HAS TO ADVANCE £ 2 0 TO BUY 20 qrs OF SEED, £ 4 0 AS previously [to buy the other elements of constant capital], £ 4 0 FOR WAGES, SO
THAT HIS OUTLAY OF CAPITAL=[£] 100. AND profit is 80, that is 80%. T H E AMOUNT OF PROFIT HAS REMAINED THE SAME, BUT ITS RATE HAS INCREASED b y 2 0 % . Thus one can see that the fall in the value of SEED (or of the PRICE which has to be paid to replace the seed) has in itself nothing to do with the increase in the amount of profit, but implies merely an INCREASE in THE RATE OF PROFIT.
Moreover, the FARMER in the one case — or the MANUFACTURER in the other — will not consider that he has obtained a larger profit, but that a portion of the capital previously tied u p in production has been freed. A n d his view will be based on the following simple calculation. Previously, the capital advanced in production was = [£]120; now it=100, while 20 is now in the hands of the FARMER as free capital, money which can be invested in ANY way he likes. But in either CASE the capital=120 ONLY, its size has therefore not been increased. T h e fact, however, that l/[6] of the capital has been divested of the form in which it is inseparable from the reproduction process does indeed have the same effect as an ADDITIONAL CAPITAL.
Ramsay has not got to the bottom of this matter because he has not at all clearly worked out the relationship between value, surplus value and profit.
Ramsay correctly expounds to what extent machinery, etc., in so FAR AS IT AFFECTS VARIABLE CAPITAL, influences profit and the rate of profit.[167] That is to say, he shows that this influence results from the depreciation of labour capacity, the increase of relative SURPLUS labour or, if the reproduction process is considered as a whole, also the reduction of the PART OF THE GROSS RETURN WHICH GOES TO REPLACE WAGES.
* "An increased or diminished productiveness * of the industry * employed in raising commodities which do not enter into the composition of fixed capital,* can have no influence on the rate of profit, * except by affecting the proportion of the gross amount which goes to maintain labour"* ([p.] 168).
"If the manufacturer has doubled his output as a result of improvements in machinery, the value of his GOODS MUST, in the end, FALL in the same proportion as their quantity has increased."
//It is assumed that in fact, taking the wear and tear of the machinery into account, twice the quantity costs no more than half did previously. Otherwise the VALUE [of the single commodity] falls, *but not in proportion to its quantity. Its quantity may double, while its value, the value of the single commodity, like that of the aggregate product, may sink only, instead of from 2:1, from 2:IV4, etc.*//
"...and the MANUFACTURER benefits only in so far as he is able to clothe the worker more cheaply so that A SMALLER PROPORTION of the gross RETURN goes to the worker... The farmer too benefits //as a result of the increased industrial productivity// only in so far as a portion of his outlay is expended on CLOTHING for THE LABOURER and he can buy this more cheaply now; that is, in the same way as the MANUFACTURER" ([pp.] 168-69).
A fall [or rise] in the value of the INGREDIENTS of constant capital affects the rate of profit by altering the ratio of surplus value to the total capital outlay. A fall (or rise) in wages, on the other hand, [affects the rate of profit] by influencing the rate of surplus value directly.
SUPPOSE for example, that, in the above-mentioned case, the price of the seed (assuming the FARMER grows FLAX) remains the same, that is, £40 (20 qrs) and the rest of the constant capital costs £40 (20 qrs), but that wages — that is, wages for the same number of workers — fall from £40 to 20 (from 20 qrs to 10). In this case, the total [newly created] value, which=the wages+surplus value, remains unchanged. Since the number of workers remains the same, their labour is embodied in a value of 40 + 80=£120, as it was previously. But from this £120, 20 now goes to the workers and the surplus value now amounts to 100. //It is assumed that no improvements have taken place which affect THE NUMBER OF LABOURERS EMPLOYED in this BRANCH.// The capital advanced is now 100 instead of 120 just as in the case where the value of the seed fell by half. But the profit is now [£]100, i.e. 100%, whereas in the other case, where the capital advanced was likewise reduced from 120 to 100, it was 80%. And as in that other case [£]20, or '/Ô of the capital, [XVIII-1097] is set free. But in the former case, the surplus value remained unchanged — [£]80 — (and since 40 was paid as wages, [the rate of surplus value] was 200%). In the latter case, the surplus value rises to 100 (and, since wages now come to [£]20, [the rate of surplus value increases] to 500%).
In this case, not only has the rate of profit risen but the profit itself, because the rate of surplus value has risen and consequently the surplus value itself. This differentiates this CASE from the other, something which Ramsay does not grasp. This always takes place when the increase in profit is not nullified by a corresponding reduction in the rate of profit resulting from a simultaneous CHANGE in the VALUE of constant capital. In the above-mentioned case, for example, the capital laid out is [£]120 and the profit 80, that is, 66[2]/[3]%. In the present case, the capital outlay is 100 and the profit 100=100%. If, however, the capital outlay had risen from 100 to 150 as a result of a CHANGE in the price of constant capital, then the profit — which has increased from 80 to 100 — would only give a rate of 66[2]A%.
[ B e c a u s e ] "SUCH COMMODITIES HELP TO MAKE UP NEITHER FIXED CAPITAL NOR CIRCULATING, [it follows that] profit can in no way be affected by any ALTERATION in their PRODUCTIVENESS. »Such are luxuries of all kinds" ([pp.] 169-70).
"Master-capitalists gain by the abundance of luxuries because their profits will command a greater quantity for their private consumption; but the rate of this profit is in no degree affected either by their plenty or scarcity*" ([p.] 171).
D'abord, a portion of the LUXURIES can be used as one of the ingredients OF CONSTANT CAPITAL. Grapes, for example, in [the production of] wine, gold in luxury articles, diamonds in glass cutting, etc. But Ramsay excludes this CASE in so FAR as he says: COMMODITIES which do not ENTER into FIXED CAPITAL. In that case, however, the concluding sentence—"SUCH ARE LUXURIES OF ALL KINDS", is incorrect.
However, productivity in the luxury industries can only increase in the same way as it does in all others — either because natural resources such as the land, mines, etc., from which the RAW MATERIALS for LUXURIES are procured, become more productive, or new, more productive sources are discovered; or again by application of the division of labour, or, especially, by the use of machinery (or of better tools) and of natural forces. //The improvement of tools and their increasing differentiation belongs to the division of labour.// (One should not forget chemical processes.)
Let us now assume that the production time for LUXURIES is reduced due to machinery (or chemical processes), that less labour is required to produce them. This cannot have the slightest influence on wages, on the value of labour capacity, since these articles do not enter into the consumption of the workers (at least never into that part of their consumption which determines the value of their labour capacity). //It can influence the market price of labour, if workers are thrown onto the streets as a result of these developments and the influx onto the labour market is thereby increased.// Increased productivity in the luxury industries, therefore, has no influence on the rate of surplus value nor, consequently, on the rate of profit in so far as this is determined by the rate of surplus value. Nevertheless, it can indeed influence the rate of profit in so far as it affects either the amount of surplus value or the ratio of variable capital to constant capital and to the total capital. If, for example, machinery makes it possible to employ 10 workers where 20 were previously employed, then, indeed, the rate of surplus value is not modified in any way. The cheapening of luxury articles does not enable the worker to live more cheaply. He requires the same amount of labour time to reproduce his labour capacity as he did previously.
//In practice, therefore, the manufacturer of luxury articles seeks to depress the wages of labour below its value, [below] its minimum. This he is able to do because of the relative surplus POPULATION engendered by increasing productivity in other branches of industry, for example among knitters. Or — as likewise happens in these branches — he seeks to extend the absolute labour time, thus, in fact, producing absolute surplus value. It is correct, however, that productivity in the luxury industries cannot reduce the value of labour capacity, it cannot produce any relative SURPLUS value and, in general, cannot produce that form of surplus value which results from the growing productivity of industry as such.//
The amount of surplus value is determined in two ways: by the rate of surplus value, that is, the surplus labour (absolute or relative) of the individual workers; secondly, by the number of workers simultaneously employed. In so far therefore as increasing productivity in the luxury industry reduces the number of workers which a certain quantity of capital employs, it reduced the amount of surplus value. HENCE ALL OTHER CIRCUMSTANCES REMAINING THE SAME, [it reduces also] the rate of profit. The same thing occurs if the number of workers is reduced, or remains the same, but the capital laid out on machinery and raw materials is increased; in other words, [it occurs] wherever there is any DIMINUTION in the ratio of variable capital to the total capital which is not balanced or partially offset by a reduction in wages. But since the rate of profit in this sphere [XVIII-1098] enters into the equalisation process of the general rate of profit just as much as that in any other sphere, increased productivity in the luxury industry would, in the case under consideration, bring about a fall in the general rate of profit.
Conversely: If the increased productivity in the luxury industry was [due to improvements carried out] not in that industry itself, but in those branches of industry which provide it with constant capital, then the rate of profit would rise in the luxury industry.
//Surplus value (that is, its size, its quantity, ITS TOTAL AMOUNT) is determined by the rate of surplus value multiplied by the number of workers employed. Certain circumstances may affect both factors simultaneously either in the same direction or in opposite directions, or they may affect only one of the factors. Apart from the absolute lengthening of the working day, increased productivity in the luxury industry can affect only the number [of workers employed]. The inevitable consequence therefore is a reduction in the amount of surplus value and hence in the rate of profit, even if no increase in constant capital takes place. If the constant capital does increase, however, a reduced amount of surplus value is calculated on an increased total capital.//
Ramsay comes closer to a correct understanding of the rate of profit than the others. The SHORTCOMINGS too are therefore more conspicuous in his exposition. He brings out all the factors involved, but he does it one-sidedly and therefore incorrectly.
Ramsay sums up his view of profit in the following passage:
" T h e rate of profit IN INDIVIDUAL CASES is therefore determined by the following causes: 1) T h e productiveness of the industry ENGAGED IN RAISING the ARTICLES OF FIRST NECESSITY which are required by the labourer for FOOD, CLOTHING, etc.; 2) the productiveness of the industry employed IN RAISING THE OBJECTS WHICH ENTER INTO THE COMPOSITION OF FIXED CAPITAL; 3) THE RATE OF REAL WAGES."
//Here this must mean the quantity of NECESSARIES, etc., which the worker receives, WHATEVER BE THE price OF THE ARTICLES COMPOSING IT.//
"A VARIATION IN the 1st and 3rd of these * causes acts upon profit by altering the proportion of the gross produce which goes to the labourer: a change in the second affects the same, by modifying the proportion necessary for replacing, either directly or by means of exchange, the fixed capital consumed in production; for profit is essentially a question of proportion*" ([p.] 172).
He rightly reproaches Ricardo (although Ramsay's own presentation is also inadequate):
"Ricardo overlooks the fact that the whole product is not only divided up between WAGES and PROFITS, but that a part of it is also NECESSARY FOR REPLACING FIXED CAPITAL" ([p.] 174, note).
//It can already be noted in the first description of accumulation, i.e. of the conversion OF SURPLUS VALUE INTO CAPITAL, that the entire SURPLUS LABOUR takes the form of capital (constant and variable) and of SURPLUS LABOUR (profit, interest, rent). For this CONVERSION reveals that SURPLUS LABOUR itself assumes the form of capital and that the unpaid labour of the worker confronts him as the totality of the objective conditions of labour. In this form it confronts him as alien property with the result that the capital which is antecedent to his labour, appears to be independent of it. [It appears] as a ready-made value of a given magnitude, whose value the worker merely has to augment. It is never the product of his past labour (nor ANY CIRCUMSTANCES which, independently of the particular labour process into which the past labour of his enters, affect or increase its value) which, or the replacement of which, appears as exploitation, but it is always merely the manner and the rate in which his present labour is exploited. As long as the individual capitalist continues to operate on the same scale of production (or on an expanding one), the replacement of capital appears as an operation which does not affect the worker, since, if the conditions of production belonged to the worker, he would likewise have to replace them out of the GROSS PRODUCE in order to continue reproduction on the same scale or on an expanded scale (and the latter too is necessary because of the NATURAL INCREASE OF POPULATION). But this affects the worker in three respects: 1) The perpetuation of the conditions of production as property alien to him, as capital, perpetuates his condition as wage worker and hence his fate of always having to work part of his labour time for a third person for nothing; 2) the extension of these conditions of production, alias accumulation of capital, increases the extent and the size of the classes WHO LIVE UPON HIS SURPLUS LABOUR; it worsens HIS
POSITION RELATIVELY BY AUGMENTING THE RELATIVE WEALTH OF t h e C a p i t a l i s t AND HIS COPARTNERS, by further increasing his RELATIVE SURPLUS labour through the division of labour, etc., and reduces that part of the GROSS PRODUCE which is used to pay wages; [3] finally, since the conditions of labour confront the individual worker in an ever
19-613 more gigantic form and increasingly as social forces, the chance of his taking possession of them himself as is the case in small-scale industry, disappears.//
[XVIII-1099] Ramsay uses the term GROSS PROFIT for what I call simply profit. H e divides this GROSS PROFIT into NET PROFIT (interest) and PROFIT OF ENTERPRISE (industrial profit).
Ramsay, like Ricardo, takes issue with Adam Smith on the question of the fall in the GENERAL RATE OF PROFIT.
Refuting Smith, he writes:
"COMPETITION of the MASTER-CAPITALISTS can indeed LEVEL the profits rising especially high above the level" //this LEVELLING is by no means a sufficient explanation for the formation of a GENERAL RATE OF PROFIT// "but it is wrong to say THAT THIS ORDINARY LEVEL ITSELF IS LOWERED" ([pp.] 179-80).a
"Were it possible that the price *of every commodity, both raw and fabricated, should fall in consequence of the competition among the producers, yet this could not in any way affect profit. Each master-capitalist would sell his produce for less money, but,* on the other hand, * every article of his expenses, whether belonging to fixed capital or to circulating, would cost him a proportionally smaller sum" ([pp.] 180-81).
Ditto against Malthus:
* "The idea of profits being paid by the consumers, is, assuredly, very absurd. Who are the consumers? They must be either landlords, capitalists, masters, labourers, or else people who receive a salary, etc." ([p.] 183).
"The only competition which can affect the general rate of gross profits, is that between master-capitalists and labourers" * ([p.] 206).
The last sentence expresses the true gist of Ricardo's proposition. The rate of profit can fall independently of the COMPETITION BETWEEN CAPITAL and LABOUR, but this is the only kind of COMPETITION which can bring about its decrease. Ramsay himself, however, does not advance any reasons why the general rate of profit has a tendency to fall. The only thing he says — and which is correct — is that the rate of interest can fall quite independently of the RATE OF GROSS PROFITS in a given country, namely:
"But were we even to suppose, that CAPITAL WAS NEVER BORROWED WITH ANY VIEW BUT TO PRODUCTIVE EMPLOYMENT, it is possible that interest might vary without ANY CHANGE IN THE RATE OF GROSS PROFITS. For, as A NATION ADVANCES IN THE CAREER OF WEALTH, A CLASS OF MEN SPRINGS UP AND INCREASES more and more, who by the labours" //EXPLOITATION, ROBBERY// "of their ANCESTORS find themselves in the possession of FUNDS sufficiently ample to afford a handsome maintenance from the interest alone. Very many also who during youth and middle age were actively engaged in business, retire in their latter days to live quietly on the interest of the sums they have themselves accumulated. These two classes have a tendency to INCREASE with the increasing riches of the country, FOR THOSE WHO BEGIN WITH A
a This is not a quotation but Marx's rendering of the ideas developed by Ramsay.— Ed.
TOLERABLE STOCK ARE LIKELY TO MAKE AN INDEPENDENCE SOONER THAN THEY WHO COMMENCE WITH LITTLE. Therefore, in old and rich countries, the AMOUNT of NATIONAL CAPITAL belonging to those who are unwilling to take the trouble of employing it themselves, BEARS A LARGER PROPORTION TO THE WHOLE PRODUCTIVE STOCK OF THE SOCIETY, than IN NEWLY SETTLED AND POOR COUNTRIES. H o w n u m e r o u s [is] t h e CLASS OF RENTIERS IN ENGLAND! AS THE CLASS OF RENTIERS INCREASES, SO ALSO DOES THAT OF LENDERS OF CAPITAL, FOR THEY ARE ONE AND THE SAME. F o r t h i s r e a s o n alone, interest must have had a tendency to fall in old countries" ([p.] 201 sqq.).
Ramsay says a b o u t t h e RATE OF NET PROFIT (interest) that it
"depends partly upon the RATE OF GROSS PROFITS, partly on the proportion in which these are separated into interest and industrial profit. This proportion depends upon the COMPETITION between the LENDERS and BORROWERS OF CAPITAL. This COMPETITION is influenced, though by no means ENTIRELY regulated, BY THE RATE OF GROSS PROFIT EXPECTED TO BE REALISED. And the COMPETITION is not exclusively regulated by this CAUSE because on the one hand many borrow without ANY VIEW TO PRODUCTIVE EMPLOYMENT, and, on the other, because the PROPORTION of the * whole national capital to be lent, varies with the riches of the country independent of any change in gross profits" ([pp.] 206-07). "The profits of enterprise depend upon the net profits of capital, not the latter upon the former"* ([p.] 214).
[XVIII-1100] Apart from the circumstance mentioned earlier, Ramsay says — rightly:
"Interest is only a measure OF INDUSTRIAL PROFITS where the level of civilisation is such that the WANT OF CERTAINTY OF REPAYMENT is not a factor which enters into the calculation...[3] In England, for instance, at the present day, WE CANNOT consider COMPENSATION FOR RISK AS AT ALL ENTERING INTO THE INTEREST RECEIVED FROM FUNDS [lent] ON WHAT WOULD BE CALLED GOOD SECURITY" ([p.] 199, note).
S p e a k i n g of the INDUSTRIAL capitalist, w h o m h e calls t h e MASTER-
CAPITALIST, R a m s a y r e m a r k s :
"The industrial capitalist is the general DISTRIBUTOR of wealth; he pays to the LABOURERS, the WAGES, to the capitalist, the interest, to the proprietor, the rent. On the one hand are MASTERS, on the other, LABOURERS, CAPITALISTS and * landlords. The interests of these two grand classes are diametrically opposed to each other. It is the master who hires labour, capital, and land, and of course tries to get the use of them on as low terms as possible; while the owners of these sources of wealth do their best to let them as high as they can*" ([pp.] 218-19).
INDUSTRIAL PROFIT. (LABOUR OF SUPERINTENDENCE.) What Ramsay writes about INDUSTRIAL profit (and especially, about the LABOUR OF SUPERINTENDENCE) is on the whole the most reasonable part of his book, although part of his DEMONSTRATION is borrowed from Storch. T h e exploitation of labour costs labour. In so far as the labour performed by the INDUSTRIAL capitalist is rendered necessary only because of the contradiction between capital and labour, it enters
a This sentence is a paraphrase of Ramsay by Marx.— Ed. b See H. Storch, Cours d'économie politique..., Vol. I, Paris, 1823, Ch. 12-13.— Ed.
19* into the cost of his OVERLOOKERS (the industrial non-commissioned officers) a n d is already included in the category of WAGES in the same way as costs caused by the slave overlooker and his whip are included in the production costs of the slave-owner. These costs, like the greater part of the trading expenses, belong to the faux frais of capitalist production. As far as the general rate of profit is concerned, the labour of the capitalists arising from their competition with one another and their attempts to ruin one another counts just as little as the greater or lesser skill of one industrial capitalist compared to another in extracting the largest amount of SURPLUS LABOUR from his workers for the smallest expenditure and making the best use of this extracted SURPLUS LABOUR in the process of circulation. These matters should be dealt with in the analysis of the competition of capitals.[67] Such an analysis deals in general with the struggle of the capitalists and their effort to acquire THE GREATEST POSSIBLE AMOUNT OF SURPLUS LABOUR and it is concerned only with the division of the surplus labour amongst the different individual capitalists, and not with -the origin of surplus labour or its GENERAL EXTENT.
All that remains for the LABOUR OF SUPERINTENDENCE is the general function of organising the division of labour and the cooperation of certain individuals. This labour is fully taken into account in the WAGES of the GENERAL MANAGER in the larger capitalist enterprises. It has already been deducted from the general rate of profit. T h e best practical proof of this is provided by the cooperative factories set u p by the English workers,[168] for these, despite the higher rate of interest they have to pay, yield profits higher than AVERAGE, although the WAGES of the GENERAL MANAGER, which are naturally determined by the market price for this kind of labour, are deducted. T h e industrial capitalists who are their own GENERAL MANAGERS save one ITEM of the production costs, pay WAGES to themselves, and consequently receive a rate of profit above the average. If this assertion of the apologists were taken literally tomorrow, and the profit of the INDUSTRIAL capitalist limited to the WAGES OF MANAGEMENT AND DIRECTION, then capitalist production, the appropriation of the SURPLUS labour of others and its transformation into capital would come to an end the day after tomorrow.
However, if we consider this [payment of the] LABOUR OF
SUPERINTENDENCE as WAGES concealed in the GENERAL RATE OF PROFIT, then the law established by Ramsay [3] and others applies, namely, that
[3] See G. Ramsay, An Essay on the Distribution of Wealth, Edinburgh, London, 1836, pp. 227-31.— Ed.
while profit (industrial profit as well as GROSS profit) is proportional to the amount of capital advanced, this portion of the profit stands in inverse ratio to the size of the capital, it is infinitesimally small in the case of large capital and enormously large where the capital is small, i.e. where the capitalist production is purely nominal. Whereas the small capitalist, who does almost all the work himself, seems to obtain a very high rate of profit in proportion to his capital, what happens in fact is that, if he does not employ a few workers whose surplus labour he appropriates, he actually makes no profit at all and his enterprise is only nominally a capitalist one (whether he is engaged in industry or in commerce). What distinguishes him from the wages worker is that, because of his nominal capital, he is indeed the master and owner of his own conditions of labour and consequently has no MASTER over him; [XVIII-1101] and hence he appropriates his whole labour time himself instead of it being appropriated by someone else. What appears to be profit here, is merely the excess over ordinary WAGES, an excess which results from the fact that he appropriates his own SURPLUS LABOUR. However, this phenomenon belongs exclusively to those spheres which have not as yet been really conquered by the capitalist mode of production.
"The profits OF ENTERPRISE may be considered as made up of 3 parts: 1) the salary of the MASTER; 2) [an insurance for] his RISK; 3) his SURPLUS GAINS" ([p.] 226).
As regards point 2) it is quite irrelevant here. Corbet[3] (and Ramsay himselfb) has stated that the INSURANCE which covers the risk only distributes the LOSSES of the capitalists uniformly or distributes them more generally amongst the whole class. The profits of the INSURANCE COMPANIES — that is, of the capitals which are EMPLOYED IN THE BUSINESS OF INSURANCE, and take over this distribution— must be deducted from these uniformly distributed losses. These COMPANIES receive a part of the surplus value in the same way as MERCANTILE or MONIED CAPITALISTS do, without participating in its direct production. This is a question of the distribution of the SURPLUS VALUE amongst the different sorts of capitalists and of the deductions which are consequently made from [the surplus value accruing to] the individual capitalists. It has nothing to do either with the nature or with the extent of the SURPLUS. The worker obviously cannot provide any more than his SURPLUS labour. He cannot make an additional payment to the capitalist so that the
a See this volume, p. 243.— Ed.
b See G. Ramsay, An Essay on the Distribution of Wealth, pp. 222-25.— Ed.
latter may insure the fruits of this SURPLUS labour against loss. At most one could say that, even APART FROM capitalist production, the producers themselves might have certain expenses, that is, they would have to spend a part of their labour, or of the products of their labour in order to insure their products, their wealth, or the elements of their wealth, against accidents, etc. Instead of each capitalist insuring himself, it is safer as well as cheaper for him if one section of capital is entrusted with this job. INSURANCE is paid out of a portion of SURPLUS VALUE, its protection and distribution between the capitalists has nothing to do with its origin and extent.
What is left is 1) the SALARY and 2) the SURPLUS GAINS, as Ramsay calls that part of SURPLUS VALUE which falls to the industrial capitalist as opposed to the interest-grabber and which, consequently, is determined absolutely by the ratio of interest to industrial profitai.e. the ratio between] the two parts into which the SURPLUS VALUE accruing to capital (in contrast to landed property) is divided.
As far as 1), the SALARY, is concerned, it is d'abord self-evident that in capitalist production, the function of capital as lord over labour falls to the capitalist, or a clerk or a representative paid by him. Even this function would disappear together with the capitalist production, in so far as it does not arise from the nature of cooperative labour but from the domination of the conditions of labour over labour itself. Ramsay himself however sweeps away this element or reduces it to such an extent that it is not WORTH
SPEAKING OF.
"The SALARY [of the employer], like the labour [of superintendence], remains roughly the same, be the CONCERN large or small" ([pp.] 227, 229). "A worker will never be able to say that he can do the same amount of work as 2, 3 or more of his workmates. But one industrial CAPITALIST or FARMER can take the place of 10 or 15" ([p.] 255).
The 3rd part, the SURPLUS GAINS, includes [compensation for] risks — which are only possible risks, nothing but the possibility of losing the GAINS and the capital — it in fact however takes the form of INSURANCE and therefore of a share which certain capitals in a particular branch receive in the total SURPLUS VALUE.
the scale on which the capital operates, the more capitalist the mode of production, the more negligible is the element of industrial PROFIT which is reducible to SALARY, and the more clearly appears the real character of industrial profit, namely, that it is a part of the SURPLUS GAINS, i.e. of SURPLUS VALUE, i.e. of unpaid SURPLUS
LABOUR.
The whole contradiction between INDUSTRIAL PROFIT and INTEREST only has meaning as a contradiction between the RENTIER and the INDUSTRIAL CAPITALIST, but it has not the slightest bearing on the relationship of the worker to capital, the nature of capital, or the origin of the profit capital yields, etc.
With regard to rent not derived from corn, Ramsay says:
* "In this manner the rent paid for one species of produce becomes the cause of the high value of others" * ([p.] 279).
"REVENUE," says Ramsay in the final chapter, * "differs from the annual gross produce, simply by the absence of all those objects which go to keep up fixed capital" * (by which he means constant capital, RAW MATERIALS in all stages of production, matières instrumentales and machinery, etc.) ([p.] 471).
[XVIII-1102] Ramsay has already said(3) and repeats in the final chapter that
"CIRCULATING CAPITAL" (that is, his term for capital laid out in wages) is superfluous, it is * "neither an immediate agent in production, nor even essential to it at all"* ([p.] 468).
But he does not draw the obvious conclusion that by denying that wage labour and capital laid out in wages are essential, the necessity for capitalist production in general is denied and the conditions of labour consequently cease to confront the workers as "capital" or, to use Ramsay's term, as "fixed capital". One part of the conditions of labour appears as fixed capital only because the other part appears as CIRCULATING capital. But once capitalist production is presupposed as a fact, Ramsay declares that WAGES and GROSS PROFITS OF CAPITAL (INDUSTRIAL PROFIT or, as he calls it, PROFIT OF ENTERPRISE, INCLUDED) are necessary forms of revenue ([pp.] 478, 475).
These are naturally the two forms of revenue which, in their simplicity and generality, indeed epitomise the essence of the capitalist production and of the two classes on which it is based. On the other hand, Ramsay declares that RENT, in other words landed property, is a superfluous form of capitalist production ([p.] 472), but forgets that it is a necessary product of this mode of production. The same applies to his statement that the "NET PROFIT
OF CAPITAL", that is, interest, is not a necessary form.
"It would only be necessary for the rentiers to become industrial capitalists. As regards NATIONAL WEALTH this makes no difference... The NET 3 PROFIT need certainly not be so high AS TO AFFORD SEPARATE INCOMES TO THE OWNER AND THE EMPLOYER" ([pp.] 476-77).
Here he again forgets what he has said himself, namely that, as a necessary consequence of the development of capital, a constantly growing class of rentiers comes into being.b
"GROSS PROFITS OF CAPITAL AND ENTERPRISE [are] ... essential in order that production should go on" ([p.] 475).
Naturally. Without profit, no capital and without capital, no capitalist production.
Thus, the conclusion at which Ramsay arrives is, on the one hand, that the capitalist mode of production based on wage labour is not really a necessary, i.e. not an absolute form of social production (which Ramsay himself expresses only in a rather limited form by stating that "CIRCULATING CAPITAL" and "WAGES" [would be] superfluous if the mass of the people were not so poor that they had to receive their share of the product IN ADVANCE, before it was completed); on the other hand, [he concludes] that interest (in contrast to industrial profit) and rent (that is, the form of landed property created by capitalist production itself) are SUPERFETATIONS which are not essential to capitalist production and of which it can rid itself. If this bourgeois ideal were actually realisable, the only result would be that the whole of the SURPLUS VALUE would go to the industrial capitalist directly, and society would be reduced (economically) to the simple contradiction between capital and wage labour, a simplification which would indeed accelerate the dissolution of this mode of production.
//In The Morning Star (December 1, 1862), a manufacturer moans:
* "Deduct from the gross produce the wages of labour, the rent of land, the interest on capital, the cost of raw material, and the gains of the agent, merchant, or dealer, and what remained was the profit of the manufacturer, the Lancashire resident, the occupier, on whom the burden of maintaining the workmen for so many partakers in the distribution of the gross produce is thrown."*0
//If one disregards the value and considers the GROSS PRODUCE in natura, it is clear that after the replacement of the constant capital
a Ramsay has "gross".— Ed. b See this volume, pp. 278-79.— Ed. c "Lancashire Profits and Lancashire Rates", The Morning Star, No. 2101, December 1, 1862, p. 5.— Ed.
and the capital laid out in wages, that portion of the product which remains constitutes the SURPLUS VALUE. From this however has to be deducted a portion for rent and the GAINS of the AGENTS,
MERCHANTS OR DEALERS, a l l o f w h o m , WHETHER THEY USe CAPITAL OF THEIR OWN OR NOT, also share in that part of the GROSS PRODUCE which constitutes SURPLUS VALUE. All these therefore are DEDUCTIONS for the MANUFACTURER. His profit itself is subdivided into industrial profit and interest — if he has borrowed capital.//
11 With regard to differential rent: The work of the labourer working on more fertile soil is more productive than that of a man working on less fertile soil. If, therefore, he were to be paid in
natura, he would receive a smaller share of the GROSS PRODUCE than the labourer working on less fertile soil. Or, what amounts to the same thing, his relative surplus labour would be greater than that of the other labourer, although he worked the same number of hours per day. But the value of the wage of the one is equal to that of the other. Hence the profit of his EMPLOYER is no greater [than that of the other employer]. The surplus value contained in the additional amount of his product, the greater relative productivity of his labour, or the differential surplus labour performed by him, is POCKETED BY THE LANDLORD.//
n) Cherbuliez , Richesse ou pauvreté, Paris, 1841
(It is questionable whether we should specially include this fellow in this group [of economists] since most of what he writes is based on Sismondi, or whether we should on occasion insert his pertinent remarks in the form of quotations.[169])
[XVIII-1103] "Capital," says Cherbuliez, consists of "the raw materials, the tools, the means of subsistence [approvisionnement]" (p. 16). "There is no difference between a capital and any other part of wealth. A thing only becomes capital by the use that is made of it, that is to say, when it is employed in a productive operation, as raw material, as instrument, or as means of subsistence" ([p.] 18).(1)
This is the standard way of reducing capital to the material elements in which it presents itself in the labour process, i.e. means of labour and means of subsistence. The latter category, moreover, is not accurate since, though means of subsistence are indeed a condition for the producer, a prerequisite enabling him to exist during production, they themselves do not enter into the labour process, into which nothing enters but the object of labour, the means of labour and labour itself. Thus the objective factors of the labour process — which are common to all forms of production — are here called capital, although the approvisionnement (in which wages are already included) tacitly implies the capitalist form of these conditions of labour.
Cherbuliez, like Ramsay, [assumes] that the approvisionnement—which Ramsay calls CIRCULATING CAPITAL — diminishes (relatively, at any rate, to the total amount of capital and absolutely in so far as machinery continually throws workers out of employment). But both he and Ramsay appear to think that there is an inevitable reduction in the amount of means of subsistence, of NECESSARIES, which can be employed as productive capital. But this is by no means the case. In this context, people always confuse that part of the GROSS PRODUCT which replaces capital and is employed as capital, with that part which represents the SURPLUS PRODUCE. The
approvisionnement decreases because a large portion of capital, that is, the part of the GROSS PRODUCE employed as capital, is reproduced as constant capital instead of as variable capital. A large portion of the SURPLUS PRODUCE, consisting of means of subsistence, is consumed by unproductive workers or idlers or exchanged for LUXURIES. Voilà tout.(2)
True, the fact that a constantly smaller part of the total capital is converted into variable capital can also be expressed in other ways. The part of capital which consists of variable capital = that part of the total product which the worker himself appropriates, produces for himself. Therefore, the smaller this part is the smaller accordingly is the portion of the total number of workers which is required to reproduce it (just as in the case of the individual worker, who works correspondingly less labour time for himself). The total product, like the total labour, of the workers falls into 2 parts. One part the workers produce for themselves; the other part they produce for the capitalist. Just as the [labour] time of the individual worker can be divided into 2 parts, so can the [labour] time of the whole working class. If the surplus labour='/2 day, it is the same as if half the working class produces means of subsistence for the working class and the other half produces raw materials, machinery and finished products for the capitalists, partly as producers and partly as consumers.
It is ridiculous that Cherbuliez and Ramsay believe that the part of the GROSS PRODUCE which can be consumed by the workers and can enter into their consumption in natura has been reduced of necessity OR reduced AT ALL. Only that part has been reduced which is consumed in this form and therefore as variable capital On the other hand, a larger portion is eaten up by servants, soldiers, etc., or exported and exchanged for more sumptuous means of subsistence.
The only important thing in both Ramsay and Cherbuliez is that they actually counterpose variable and constant capital and do not confine themselves to the distinction between fixed and circulating capital derived from circulation. For Cherbuliez counterposes that part of capital which goes on approvisionnement to that which consists of matières brutes, matières instrumentales(3) and means of labour, i.e. INSTRUMENTS, MACHINES. Although two constituent elements of constant capital—matières brutes and instrumentales—belong to circulating capital as far as the mode of circulation is concerned.
The important thing in variations in the constituent elements of capital is not that relatively more workers are occupied in the production of raw materials and machinery than in that of direct means of subsistence — this concerns only the division of labour— but the proportion of the product which has to be used to replace past labour (i.e. to replace constant capital) to that which has to be used to pay living labour. The larger the scale of capitalist production, and hence the greater the accumulation of capital— the greater is the share in the value of the product falling to the machinery and raw material into which the CAPITAL EMPLOYED in the production of machinery and raw material can be resolved. A correspondingly larger portion of the product must therefore be returned to production either in natura or by the producers of constant capital exchanging some of their products amongst themselves. The part of the product which belongs to production becomes larger, and the part which represents living, newly added labour becomes relatively smaller. Of course, this part grows in terms of commodities — use values, since the development described is synonymous with increased productivity of labour. But the portion of this part which the worker receives falls relatively all the more. And the same process gives rise to a continuous relative REDUNDANCY of the WORKING POPULATION. [XVIII-1104] //It is an incontrovertible FACT that, as capitalist production develops, the portion of capital invested in machinery and raw materials grows, and the portion laid out in wages declines. This is the only question with which both Ramsay and Cherbuliez are concerned. For us, however, the main thing is: does this FACT explain the decline in the rate of profit? (A decline, incidentally, which is far smaller than it is said to be.) Here it is not simply a question of the quantitative ratio but of the value ratio.
If 1 worker can spin as much cotton as 100 [workers spun previously], then the [supply of] raw material must be increased a hundredfold, and this is moreover brought about only by the spinning machine which enables one worker to control 100 spindles. But if simultaneously one worker produces as much cotton as 100 workers did previously and 1 worker produces a spinning machine whereas previously he produced only a spindle, then the ratio of value remains the same, that is, the labour expended in the spinning, [in the production of] the cotton and the spinning machine remains the same as that expended previously in spinning, the cotton and the spindle.
As far as the machinery is concerned, its cost is not as great as that of the labour it displaces, although the spinning machine is much more expensive than the spindle. The individual capitalist who owns a spinning machine must possess a greater amount of capital than the individual spinner who buys a spinning wheel. But the spinning machine is cheaper than the spinning wheel in relation to the number of workers it employs. Otherwise it would not have displaced the spinning wheel. The place of the spinner is taken by a capitalist. But the capital which the former laid out on the spinning wheel was larger relative to the size of the product, than that which the capitalist lays out on the spinning machine.//(4)
The increasing productivity of labour (in so FAR AS [it is] CONNECTED WITH MACHINERY) is identical with the decreasing number of workers * relatively to the number and extent of the machinery employed. Instead of a simple and cheap instrument a collection of those instruments * (albeit MODIFIED) IS put in place, and * besides that collection the whole part of the machinery consisting of the moving and conducting parts; besides the materials used (like coal, etc.) to produce the moving agent (as steam).* Finally, the buildings. If one worker is in charge of 1,800 spindles instead of driving a spinning wheel, it would be quite ridiculous to ask why these 1,800 spindles are not as cheap as the single spinning wheel. The productivity in this case is brought about precisely by the amount of capital employed as machinery. The ratio of the wear and tear of the machinery affects only the commodity; the worker confronts the total amount of machinery and similarly the value of the capital laid out in labour confronts the value of the capital laid out in machinery.
There can be no doubt that machinery becomes cheaper, and this for two reasons: [1] The application of machinery to the production of raw materials from which the machinery is made. [2] The application of machinery in the transformation of these materials into machinery. In saying this, we already say two things. Firstly, that in both these branches, compared with the instruments required in the manufacturing industry, the value of the capital laid out in machinery also grows as compared with that laid out in wages. Secondly, what becomes cheaper is the individual machine and its component parts, but a system of machinery develops; the tool is not simply replaced by a single machine, but by a whole system, and the tools which perhaps played the major part previously, the needle for example (in the case of a stocking loom or a similar machine), are now assembled in thousands. Each individual machine confronting the worker is in itself a colossal assembly of instruments which he formerly used singly, e.g. 1,800 spindles instead of one. But in addition, the machine contains elements which the old instrument did not have, etc. Despite the cheapening of individual elements, the price of the WHOLE aggregate increases enormously and the [increase in] productivity consists in the continuous expansion of the machinery. Further, one factor in the cheapening of machinery apart from that of its elements, is the cheapening of the source of the motive power (the steam-boiler, for example) and of the transmission mechanism. ECONOMY OF POWER. But this results precisely from the fact that to an increasing extent the same motor can drive a larger system of machines. The motor becomes relatively cheaper (or its cost does not grow in the same ratio as the increase in the size of the system in which it is employed; the motor becomes more expensive as its power grows, but not in the same proportion); even when its cost increases absolutely, it declines relatively. This is therefore a new motive, quite apart from the price of the individual machine, for increasing the capital that is laid out in machinery and confronts labour. One element — the increasing speed of machinery— increases productive power enormously but it does not affect the value of the machinery itself in any way.
It is therefore self-evident or a tautological proposition that the increasing productivity of labour caused by machinery corresponds to increased value of the machinery relative to the amount of labour employed (consequently to the value of labour, the variable capital).
[XVIII-1105] All circumstances which result in the use of machinery leading to a reduction in the price of commodities can be attributed, firstly, to a decrease in the amount of labour embodied in each individual commodity, secondly, however, to a decrease in the wear and tear of the machinery whose value enters into the individual commodity. The less rapid the wear and tear of the machinery, the less labour is required for its reproduction. This therefore increases the amount and the value of the capital existing as machinery as compared with that existing in labour.
Only the question of raw material therefore remains to be dealt with. It is obvious that the quantity of raw material must increase proportionally with the productivity of labour; that is, the amount of raw material must be proportionate to that of labour. This relationship is closer than it appears. Let us assume, for example, that 10,000 lbs of cotton are consumed weekly. Calculating 50 weeks to the year, this would amount to 10,000x50, that is, 500,000 lbs. Let us also assume that the amount paid out in wages=£5,000 over the year. And if a pound of cotton is assumed to cost 6d. this comes to 250,000s. =£12,500. Let us assume that the capital turns over 5 times during the year. This means that in the course of a fifth of a year, 100,000 lbs of cotton is used=£2,500. And £1,000 goes on wages in the same fifth of a year. This is more than V3 of the value of the capital laid out on the cotton.[170] This does not alter the ratio. If the value of the cotton = [£] 10,000 every Vs of a year and that of the labour =1,000, then it will be Vio- (If one considers the product of the whole year, 50,000 on one side and 5,000 on the other — it is also V10-)
//The value of a commodity, quoad machinery,(5) is determined by the wear and tear of the machinery, that is, solely by the value of the machinery in so far as it enters into the valorisation process, in other words, in so far as it is used up in the labour process. Profit, on the contrary, is determined (leaving raw materials out of account) by the value of the whole of the machinery which enters into the labour process irrespective of the degree to which it is used up. Profit must therefore decline as the total amount of [living] labour employed declines compared with the part of capital laid out in machinery. It does not decline in the same proportion because surplus labour increases.//
One may ask with regard to raw material: If, for example, productive power in spinning increases tenfold, that is, 1 worker spins as much as ten did previously, why should not 1 NIGGER(6) produce as much cotton as 10 did previously, that is, why should the value ratio not remain the same? The spinner uses 10 times as much cotton in the same time, but the NIGGER produces 10 times as much cotton in the same time. The 10 times larger amount of cotton therefore costs no more than a tenth of this amount cost previously. This means that despite the increase in the amount of the raw material, its value ratio to variable capital remains the same. In fact it was only the large fall in the price of cotton which enabled the cotton industry to develop in the way it did. The dearer the material (gold and silver, for example) the less are machinery and the division of labour applied in transforming it into articles of luxury. This is because too much capital has been advanced for the raw materials and the demand for these products is limited owing to the expensive raw materials.
To this it is quite easy to answer that some kinds of raw materials, such as wool, silk, leather, are produced by animal organic processes, while cotton, linen, etc., are produced by vegetable organic processes; capitalist production has not yet succeeded, and never will succeed in mastering these processes in the same way as it has mastered purely mechanical or inorganic chemical processes. Raw materials such as skins, etc., and other animal products become dearer partly because the insipid law of rent increases the value of these products as civilisation advances. As far as coal and metal (wood) are concerned, they become much cheaper with the advance of production; this will however become more difficult as mines are exhausted, etc.
//While it can be said with regard to corn rent and mine rent that they do not increase the value of the product (only its market price) but are rather the expression of the value of the product (the excess of its value over the production price), there is, on the other hand, no doubt that animal rent, house rent, etc., are not consequences but causes of the increasing values of these things.
The cheapening of raw materials, and of matières instrumentales, e t c . , CHECKS BUT DOES NOT CANCEL THE GROWING VALUE OF THIS PART OF CAPITAL. I t checks it TO THE DEGREE TO WHICH IT brings about THE FALL in PROFIT.// //This rubbish is herewith disposed of.// (If tomorrow the price of cotton were to drop by 90 per cent, the spinning industry would develop even more rapidly the day after tomorrow, etc.)
//In considering profit, surplus value is assumed as given. And only the variations in constant capital and their influence on the rate of profit are considered. There is only one way in which surplus value directly affects constant capital, namely through absolute surplus labour, lengthening of the working day, as a result of which the relative value of constant capital is reduced. Relative SURPLUS LABOUR — where the working day remains unaltered (apart from the greater intensification of labour)—increases the value ratio of profit to total capital by increasing the SURPLUS itself. Absolute surplus labour time reduces the cost of constant capital
RELATIVELY.//
[XVIII-1106] Let us return to Cherbuliez. The formulas he uses for the rate of profit are either mathematical expressions for profit as it is COMMONLY understood, without involving any kind of law, or they are quite wrong, although he has an inkling of the matter, approaches close to it.
"Commercial profit is determined by the value of the products compared with the different elements of productive capital."
//In point of fact, profit is the relationship of the SURPLUS VALUE of the product to the value of the total capital advanced regardless of the differences in its elements. But the SURPLUS VALUE is itself determined by the size of the variable capital and the rate of its valorisation, and the ratio of this SURPLUS VALUE to the total capital is again determined by the ratio of the variable to the constant capital and also by changes in the value of constant capital.//
"Evidently the two chief elements in this determination are the price of the raw materials and amount of approvisionnement required to work them up. The economic progress of society affects these two elements in an opposite way and it tends to make raw materials dearer by increasing the value of all the products of the extractive industries,[172] which are carried out on land that is privately owned and limited in extent" (p. 70).a On the other hand, the approvisionnement decreases (relatively), a matter to which we shall return presently.
"The total amount of products, less the total amount of capital expended in producing them, provides us with the total amount of profit gained during a definite period of time. The growth in the total amount of products is proportionate to the capital advanced and not to the capital consumed. The rate of profit, or the ratio of profit to capital, is therefore the result of the combination of two other ratios, namely, the ratio between the capital advanced and that consumed, and the ratio between the capital consumed and the product" (I.e., [p.] 70).
Cherbuliez first states correctly that profit is determined by the value of the product in relation to the "different elements" of productive capital. Then he flies off suddenly to the product itself, to the total amount of products. But the amount of products may increase without its value increasing. Secondly, a comparison between the amount of the product and the quantity of products of which the capital — used up and not used up — consisted, can at best only be made in the way Ramsay does, by comparing the aggregate natural product with the ingredients expended in natura.* But as regards capital, the form taken by the product is different from its ingredients in every particular sphere of production (even in those branches of industry in which, as in agriculture, etc., one part of the product is used in natura as a production element of the product). Why does Cherbuliez stray on to this faux fuyant ? Because, despite his vague idea that the organic composition of capital is decisive for the rate of profit, he in no way uses the contradiction between variable capital and the other part of capital in order to explain SURPLUS VALUE — which, like value itself, he does not explain at all. He has not shown how SURPLUS VALUE arises and therefore has recourse to SURPLUS PRODUCE, i.e. to use value.
Although all SURPLUS VALUE takes the form of SURPLUS PRODUCE, SURPLUS PRODUCE as such does not represent SURPLUS VALUE. //A product may contain no SURPLUS VALUE, as, for example, in the case of a peasant who owns his own implements (as well as his own land) and only works exactly the same amount of time as any wage worker does to reproduce his own wages, say 6 hours. In a good year, he might produce twice as much [as usual]. But the value would remain the same. THERE WOULD BE NO SURPLUS VALUE, although [there would be]
SURPLUS PRODUCE.//
In itself it was already a mistake on the part of Cherbuliez to represent variable capital in the "passive" and purely material form of approvisionnement, that is, as use value, a form which it obtains in the hands of the workers. If, on the other hand, he had considered it in the form in which it actually appears, namely, as money (as the form in which exchange value, i.e. a certain amount of social labour time as such, exists), then for the capitalist it would resolve in the labour which he exchanges for it (and, as a result of this exchange of objectified labour for living labour, the variable capital would be set in motion and would grow); variable capital in the shape of labour — but not if it is regarded as approvisionnement—becomes an element of productive capital. Approvisionnement, on the other hand, is the use value, the material existence of the variable capital when it becomes the revenue of the worker. Variable capital regarded as approvisionnement is, therefore, just as "passive" an element as both the other parts of capital which Cherbuliez describes as "passive".
The same distortion of views prevents him from elaborating the rate of profit out of the relationship of this active element to the passive element, and from showing that it declines as society advances. Cherbuliez in fact reaches no other conclusion but that the approvisionnement [XVIII-1107] declines as a consequence of the development of the productive power while the working population grows, and so, as a result of the REDUNDANT POPULATION, wages are consequently pushed down below their value. None of his explanations are based on the exchange of [equal] values — or the payment of labour capacity at its value — and profit thus actually appears to be a deduction from wages (although he doesn't say so). This deduction may indeed occasionally constitute a part of real profits, but it can never serve as the foundation for the elaboration of the category of profit.
Let us d'abord reduce the first proposition to its correct formulation.
"The value of the total amount of products, less the value of the total amount of capital expended in producing them, provides us with the total amount of profit gained during a definite period of time." [1 7 3]
This is the primary (usual) form in which profit appears and it is likewise the form in which it appears in the consciousness of capitalists. Alias [profit is] the excess of the value of the product gained during a definite period of time over the value of the capital expended. Or the excess of the value of the product over the cost price of the product. Even "the definite period of time" in Cherbuliez's statement appears like a bolt from the blue, since he has not dealt with the circulation process of capital. The first proposition, therefore, is nothing but the usual DEFINITION OF PROFIT, of the immediate form in which it appears.
The second proposition:
"The growth in the total amount of products is proportionate to the capital employed and not to the capital used up."
Paraphrased again, it would read thus:
rate of profit) that the amount of profit depends on the amount of capital employed. But an apparent causal nexus is to be introduced because "the growth in the total amount of products is proportionate to the capital employed and not to the capital used UP"-
Let us take this sentence in both its formulations — that in which it is written and that in which it ought to have been written. In this context — and in accordance with the conclusion which it is intended to serve as médius terminus*—it should be written as follows:
"The growth in the value of the total amount of products is proportionate to the capital employed and not to the capital used up."
Here, evidently, SURPLUS value is to be evolved on the basis of the fact that the excess of the capital employed over that used up creates the excess value of the products. But the capital which is not used up (machinery, etc.) retains its value (for the fact that it is not used up means precisely that its value has not been used up); it retains the same value after the conclusion of the production process as it had before this process started. If any change in value has taken place, it can only have happened in that part of the capital which has been used up, and which therefore entered into the valorisation process. In point of fact it is also wrong to say that, for example, a capital of which Vs is not used up and [2]/[3] are used up in production, would inevitably yield a higher profit than one in which [2]/s are not used up and /(7) is used up, provided the rate of the exploitation of labour is the same (and disregarding the equalisation of the rate of profit). For obviously, the second capital contains more machinery, etc., and other elements of constant capital, while the first capital contains less of these elements and sets more living labour in motion, and therefore produces more surplus labour as well.
If we take the proposition as formulated by Cherbuliez himself, then it must be said d'abord that it is of no use to him, because the amount of products or the amount of use values as such by no means determines either the value or the surplus value or the profit. But what is behind all this? A part of constant capital consisting of machinery, etc., enters into the labour process without entering into the valorisation process, and thereby helps to increase the amount of products without adding anything to their value. (For in so far as its wear and tear adds value to the product, it belongs to the capital used up and not to the capital employed as opposed to that used up.) But, by itself, this unconsumed part of constant capital does not bring about a growth in the amount of products. It helps to produce a greater output in a given labour time. Therefore, if only the same amount of labour time were expended as is contained in the approvisionnement, the same amount of products would be produced. The excess of products is therefore due to a CHANGE which takes place in this part of the capital used up and not to the excess of the capital employed over that used up (assuming that it is not a matter of branches of industry in which — as in agriculture — the amount of products is, or can be, independent of the amount of capital laid out, [because] the productivity of labour is, in part, dependent on uncontrollable natural conditions).
If however he considers constant capital — used up or otherwise— as independent of the labour time, independent of the CHANGE in the variable capital which takes place in the valorisation process, then he might just as well say:
"The growth in the total amount [XVIII-1108] of products" (at least in the manufacturing industry) "is proportionate to the growth of the part of capital consisting of raw materials which is used up."
For the increase of products is physically identical with the growth of this part of capital. In agriculture on the other hand (and likewise in the extractive industries), where only a small proportion of the capital laid out is not used up (i.e. constant capital) and a relatively large proportion of capital is used up (as wages for example), the amount of products, provided the land is fairly fertile, can be much larger than in the advanced countries where the ratio of capital laid out to capital used up is infinitely greater. The second proposition thus amounts to an attempt to bring in surreptitiously SURPLUS VALUE (the indispensable basis of profit).
"The rate of profit, or the ratio of the profit to capital, is therefore the result of the combination of two other ratios, namely, the ratio between the capital advanced and that used up, and the ratio between the capital used up and the product" (p. 70).
Previously profit ought to have been explained. But nothing emerged except a DEFINITION of it which merely states the form in which it appears, i.e. the fact that profit=the excess of the value of the total product over the cost price of the product or over the value of the capital used up, which is the VULGAR DEFINITION OF PROFIT.
Now the rate of profit ought to be explained. But once again nothing emerges except the VULGAR DEFINITION. The rate of profit=the ratio of profit to the total capital, or, what amounts to the same thing, it=the ratio of the excess of the value of the product over its cost price to the total capital advanced for production. The distorted conception and bungling application of the approximately correct distinction between the elements of capital, and the vague idea that profit and rate of profit are directly connected with the ratio of these elements to one another, only lead to a repetition of the generally known phrases in a rather doctrinaire fashion, in fact merely to a statement that profit and rate of profit exist, without, however, anything being said about their nature. The matter is not improved by the fact that Cherbuliez expresses his doctrinaire formulae in algebraic language:
"Let P be the aggregate product of a given period of time, C the capital invested, IT the profit, r the ratio of profit to capital (rate), c the capital used up,
it then P — C=IT, r = —, therefore CT=TT. Therefore P — c = Cr; therefore
P-c r = - ^ - " ([p.] 70, Note 1).
Which means nothing more than that the rate of profit=the ratio of profit to capital and that profit=the excess of the value of the product over its cost price.
In general, when Cherbuliez speaks about consumed and unconsumed capital he has at the back of his mind the difference between fixed and circulating capital, and not the distinction which he himself has drawn, namely, that between the different types of capital based on the production process. Surplus value is antecedent to circulation and no matter how much the differences arising out of circulation affect the rate of profit, they have nothing to do with the origin of profit.
"Productive capital is composed of a consumable part and a non-consumable part. The more wealth and population increase, the more the consumable part tends to increase, because the extractive INDUSTRIES demand an ever greater supply of labour. On the other hand, this same progress causes the amount of capital advanced to increase at a much faster rate than the amount of capital consumed. Thus although the total mass of capital consumed tends to increase, the effect is neutralised, because the mass of products grows in more rapid progression and the total amount of profit must be considered as growing at a rate at least as high as that at which the total amount of capital advanced grows" ([p.] 71).(8) "The amount of profit grows, not the rate, which is the ratio of this amount to the capital advanced,
! • ' -< • ' r = . It is clear that P — c or the profit, since P — c=it, can grow although r
declines, if C grows more rapidly than P — c" ([p.] 71, Note 1).
Here the reason for the decline in the rate of profit is touched on, but in view of the preceding distortions, it can only lead to confusion and contradictions which cancel each other out. First the amount of capital consumed grows but the amount of products grows even more rapidly (i.e. the excess of the value of the products over their cost price in this case), for it grows in proportion to the capital advanced and this grows more rapidly than the capital consumed. Why the fixed capital grows more rapidly than the mass of raw materials, for example, is not explained anywhere. BUT NEVER MIND. The amount of profit grows in proportion to the capital advanced, to the total capital, but [XVIII-1109] the rate of profit is nevertheless supposed to fall, because the total capital grows more rapidly than the mass of products or rather than the amount of profit. First the amount of profit grows at a rate at least as great as that at which "the total amount of capital advanced" grows, and then the rate of profit falls, because the total amount of capital advanced grows more rapidly than the amount of profit. First P — c grows "at least"
P — c proportionally to C, and then falls, because C increases
even more rapidly than P — c, which "increases at least as rapidly as
C". If we throw aside all this confusion, then all that remains is the
?-c tautology that can fall although P — c increases, that is,
that the rate of profit can fall although profit increases when the rate falls. The rate of profit simply signifies the ratio of P — c to C, [and this ratio declines] when capital increases more rapidly than the amount of profit.
Thus the final pearl of wisdom is that the rate of profit can fall, that is, the ratio of an increasing amount of profit to capital can fall when the capital increases more rapidly than the amount of profit, or if the amount of profit, despite the absolute growth, declines relatively in comparison with the capital. This is nothing but a different expression for the decline in the rate of profit. But that this phenomenon is within the bounds of possibility, and even its existence, has never been called to question. The sole point at issue was precisely to explain the cause of this phenomenon, and Cherbuliez explains the decline in the rate of profit, the decline in the amount of profit in relation to the total capital, by the relative increase in the amount of profit which is at least proportionate to the growth of the capital. He obviously surmises that the mass of living labour employed declines relatively to past labour, although it increases absolutely, and that therefore the rate of profit must decline. But he never arrives at a clear understanding. The closer one comes to the threshold of understanding, the more distorted the statements become, unless the threshold is actually crossed, and [the greater is] the illusion of having crossed it.
On the other hand, what he says about the equalisation of the general rate of profit is very much to the point.
//In the second chapter of Part III, on "Capital and Profit", where the formation of the general rate of profit is dealt with, the following must be considered:
1) Different organic composition of capitals, partly conditioned by the difference between variable and constant capital in so far as this arises from the stage of production—the absolute quantitative relations between machinery, raw materials and the quantity of labour which sets them in motion. These differences relate to the labour process. The differences between fixed and circulating capital arising from the circulation process have also to be considered — differences which lead to valorisation variations, in a given period of time, in different spheres.
2) Differences in the relative value of the parts of different capitals which do not arise from their organic composition. These arise from the difference of VALUE particularly of the raw materials, even assuming that the raw materials absorb an equal quantity of labour in two different spheres.
3) The result of those differences is diversity of the rates of profit in different spheres of capitalist production. It is true only for capitals of equal composition, etc., that the rate of profit is the same and the amount of profit is in proportion to the size of the capital employed.
4) For the total capital, however, what has been explained in CHAPTER I holds good. In capitalist production each capital is assumed to be a unit, an aliquot part of the total capital. Formation of the general rate of profit. (Competition.)
5) Transformation of values into prices of production. Difference between value, cost price, and production price.//
//6) To take up also the Ricardian point: The influence of general variations in wages on the general rate of profit and HENCE on prices of production.//
"After the deduction of rent, what remains of the amount of profit, that is, of the excess of products over the capital consumed, is divided between the capitalist producers in proportion to the capital each has advanced, whereas the portion of the product which corresponds to the capital consumed and is intended to replace it, is divided in proportion with the capital actually used up. This dual law of division comes about as a result of competition, which tends to equalise the advantages of all investments of capital. Finally, this dual law of division determines the respective values and prices of the different kinds of products" ([pp.] 71-72).
This is very good. Only the concluding words are wrong, namely, that the formation of the general rate of profit determines the values and prices (it should be prices of production) of commodities. On the contrary, the determination of the value is the prius,* antecedent to the rate of profit and to the establishment of production prices. How can any division at all of the "amount of profit", i.e. of the surplus value [XVIII-1110]—which is itself only a part of the total value of commodities — determine the "amount of profit", that is, the surplus value, that is, the value of the commodities? This is only correct if, by relative values of commodities, one means their production prices. The whole lopsidedness of Cherbuliez's presentation arises from the fact that he does not examine the origin and the laws of value and surplus value independently. In other respects, he describes the relation between wage labour and capital more or less correctly.
"People who neither receive anything by devolution" (legal transfer, inher-itance, etc.), "nor have any possessions they can exchange, can obtain what they need only by offering their labour to the capitalist. They only acquire the right to the things which are allocated to them as the price of labour, but they have no right to the product of their labour, nor to the value which they have added" ([pp.] 55-56). "By exchanging his labour for a certain volume of approvisionnement, the worker completely renounces all right to the other portions of capital. The attribution of these products remains the same as it was previously; it is not modified in any way by the above-mentioned convention. The products continue to belong exclusively to the capitalist who has provided the raw materials and the
approvisionnement. This is an inescapable sequence of the law of appropriation, the fundamental principle of which was, conversely, the exclusive right of every worker to the product of this labour" (p. 58).
This fundamental principle, according to Cherbuliez, is as follows:
"The worker has an exclusive right to the value resulting from his labour" (p. 48)>
Cherbuliez does not understand nor does he explain how the law of commodities, according to which commodities are equivalents and exchange with one another in proportion to their value, i.e. to the labour time embodied in them, unexpectedly leads to the result that on the contrary capitalist production — and only on the basis of capitalist production is it essential for the product to be produced as a commodity — depends on the fact that one portion of labour is appropriated without exchange. He only senses that a transformation has suddenly taken place.
This fundamental principle is a pure fiction. It arises from the surface appearance of commodity circulation. Commodities are exchanged with one another according to their value, that is, according to the labour embodied in them. Individuals confront one another only as commodity owners and can therefore only acquire other individuals' commodities by alienating their own. It therefore appears as if they exchanged only their own labour since the exchange of commodities which contain other people's labour, in so far as they themselves were not acquired by the individuals in exchange for their own commodities, presupposes different relations between people than those of [simple] commodity owners, of buyers and of sellers. In capitalist production this appearance, which its surface displays, disappears. What does not disappear, however, is the illusion that originally men confront one another only as commodity owners and that, consequently, a person is only a property owner in so far as he is a worker. As has been stated, this "originally" is a delusion arising from the surface appearance of capitalist production and has never existed historically. In general, man (isolated or social) always comes on to the stage as a property owner before he appears as a worker, even if the property is only what he procures for himself from inorganic nature (or what he as a member of the family, tribe, communal organisation, procures partly from nature, partly from the means of production which have already been produced in common). And as soon as the first animal state is left behind, man's property in nature is mediated by his existence as a member of a communal body, family, tribe, etc., by his relationship to other men, which determines his relationship to nature. The "propertyless labourer" as a "fundamental principle" is rather a creature of civilisation and, on the historical scale, of "capitalist production". This is a law of "expropriation" not of "appropriation", at least not simply of appropriation in the way Cherbuliez imagines it, but a kind of appropriation which corresponds to a definite, specific mode of production.
"Every accumulation of wealth provides the means for accelerating further accumulation" ([p.] 29).(9)
On page 59, Cherbuliez calls matières brutes and machinery, etc., "the two passive elements of capital " in contrast to the approvisionnement.
//Ricardo's view (derived from Smith) that all accumulation can be reduced to expenditure on wages, would be incorrect even if no accumulation in natura took place—[which is the case,] for example, when the FARMER SOWS more seed, the stock-breeder increases his stock of cattle for breeding or for fattening, the owner of engineering works uses part of his surplus value in the form of machine tools — and even if all producers who produce the elements of some part of capital did not overproduce regularly, counting on the fact of annual accumulation, i.e. the expansion of the general scale of production. Moreover, the farmer can exchange part of his SURPLUS corn with the stock-breeder, who may convert this corn into variable capital while the farmer converts his corn into constant capital [by means of this exchange]. The flax-grower [XVIII-1111] sells part of his surplus product to the spinner, who converts it into constant capital. With this money the flax-grower can buy tools and the tool-maker can buy iron, etc., so that all these elements are turned directly into constant capital.
But disregarding all this, let us assume that a manufacturer of machines wants to convert AN ADDITIONAL CAPITAL OF £1,000 into elements of production. He will of course lay out part of it on wages, say £200. But he buys iron, coal, etc., with the remaining 800. Let us assume that this iron, coal, etc., has first to be produced. Then, if the iron or coal producers either have no excess (accumulated) stocks of their commodities, and likewise have no ADDITIONAL MACHINERY and are unable to buy it immediately (for in this case too constant capital would be exchanged for constant capital), they can only [produce the required iron and coal] if they work their old MACHINERY longer. As a result, they would have to replace it more rapidly, but a part of its value would enter into the new product. Irrespective of this, however, the iron manufacturer needs more coal in any case and must therefore transform at least part of his share in the £800 directly into constant capital. Both coal and iron producers sell their wares in such a way that they contain unpaid surplus labour. And if this amounts to a YU, then this alone means that 200 out of the £800 is not converted into wages, not to mention the part which has to make good the wear and tear of the old machinery.
The SURPLUS consists always of the articles produced by the particular capital, i.e. coal, iron, etc. Part of the SURPLUS is converted directly into constant capital when the producers whose commodities serve as elements of production for other producers exchange these commodities with one another. That part [of the surplus value], however, which is exchanged against the products of those who produce means of subsistence and replaces their constant capital, provides the necessary variable capital. The producers of means of subsistence that can no longer enter as elements into their production (except as variable capital) acquire additional constant capital through the same process which provides the other [producers] with additional variable capital.
The following features distinguish reproduction — in so far as it constitutes accumulation — from simple reproduction.
Firstly: Both the constant and variable elements of production which are accumulated consist of newly added labour. They do not amount to revenue, although they arise from profit. They amount to profit or surplus labour, whereas in the case of simple reproduction part of the product represents past labour (i.e. in this context, labour which has not been performed in the current year).
Secondly: If the labour time in certain branches is lengthened, that is, if no ADDITIONAL INSTRUMENTS or machines are employed, the new product must indeed, to a certain extent, pay for the more rapid wear and tear of the old [tools or machines], and this accelerated consumption of the old constant capital is likewise an aspect of accumulation.
As a result of the ADDITIONAL money capital which arises in the process of reproduction — partly through the freeing of capital, partly through the conversion of part of the product into money, partly because, as a result of the money collected by the producer, the demand for other [commodities], e.g., [those offered by the] sellers of luxury goods, is reduced — the systematic replacement of the elements [of production] is by no means a necessity, as it is in the case of simple reproduction. With the ADDITIONAL money anyone can buy or command products, although the producer from whom the purchase is made may neither expend his revenue on the product of the purchaser nor replace his capital with it.// //ADDITIONAL CAPITAL (constant or variable) must appear in the form of money capital on one side, even if this only exists in the form of outstanding claims, whenever it is not balanced by a corresponding addition on the other side.//
For the rest, Cherbuliez presents a remarkable amalgam of Sismondian and Ricardian contradictory views.
Cherbuliez says:
"The products are appropriated before they are converted into capital; and this conversion does not eliminate such appropriation" ([p.] 54).(10) But this applies not only to the products, but also to labour. Raw materials, etc., and means of labour belong to the capitalist. They are the converted form of his money. On the other hand, when he has bought labour capacity or the daily (say 12 hours) USE of labour capacity, with a sum of money=the product of 6 hours of labour, then the labour of 12 hours belongs to him; it is appropriated by him before it is carried out. The process of production itself turns labour into capital. But this transformation is an act which takes place later than its appropriation. The "products" are converted into capital, physically converted in so far as in the labour process they function as conditions of labour, conditions of production, objects and means of labour, and formally converted in so far as not only their value COMES TO BE PERPETUATED but as they become means for absorbing labour and surplus labour, in so far as they IN FACT function as ABSORBERS or LABOUR. [XVIII-1112] On the other hand: the labour capacity appropriated before the [production] process is turned directly into capital in the course of the process by being converted into the conditions of labour and into SURPLUS VALUE; as a result of its embodiment in the product, it not only preserves the constant capital but replaces the variable capital and adds SURPLUS VALUE.
Sismondian:
"The hypothesis that an invariable ratio exists between the different elements of capital is not substantiated at any stage of the economic development of society. The relationship is essentially variable and for two reasons: a) the division of labour, and b) the replacement of human labour by natural agents" ([p.] 61). "These two factors tend to reduce the ratio of the approvisionnement to the other two elements of capital" ([pp.] 61-62).
"In this situation, the increase in productive capital does not necessarily lead to an increase in the amount of approvisionnement intended to constitute the price of labour; it can be accompanied — at least TEMPORARILY — by an absolute diminution of this element of capital, and consequently by a reduction in the price of labour" ([p.] 63).»
//This is Sismondian; the effect on the wage level is the only aspect considered by Cherbuliez. This problem does not arise at all in an investigation where the * value of labour is always supposed to be paid, and the fluctuations of the market price of labour beyond or below that point (the value) are not taken into consideration.*//
"The producer who wishes to introduce a new division of labour in his enterprise or to exploit some natural force, will not wait until he has accumulated sufficient capital to be able to employ in this new way all the workers he needed previously. In the case of division of labour, he will perhaps be satisfied to produce with 5 workers what he previously produced with 10. In the case of the exploitation of a natural force, he will perhaps use only 1 machine and 2 workers. The approvisionnement will, in consequence, be reduced to 1,500 in the first case and to 600 in the second. But since the number of workers remains the same, their competition will soon force the price of labour below its original level" ([pp.] 63-64).(11) "This is one of the most astonishing results of the law of appropriation. The absolute increase in wealth, that is, in the products of labour, does not give rise to a proportional increase and may lead to a diminution in the
approvisionnement for the workers, in the portion they receive of all kinds of products" ([p.] 64). "The factors determining the price of labour" //in this context it is always a question only of the MARKET PRICE OF LABOUR// "are the absolute amount of productive capital and the ratio between the different elements of capital, two social facts on which the will of the workers can exercise no influence" ([p.] 64). "Nearly all the odds are against the worker" (I.e.).
The ratio between the different elements of productive capital is determined in two ways. First: By the organic composition of productive capital. By this we mean the technological composition. With a given productive power of labour, which can be taken as constant so long as no CHANGE occurs, the amount of raw material and means of labour, that is, the amount of constant capital — in terms of its material elements—which corresponds to a definite quantity of living labour (paid or unpaid), that is, to the material e l e m e n t s of variable capital, is determined in every sphere of production.
If the proportion of the objectified labour to the living labour employed is small, then the portion of the product that represents living labour will be large regardless of how this portion is divided between capitalist and worker. If the reverse is the case, the contrary result will occur. With a given rate of exploitation of labour, the surplus labour too will be large in the former case and small in the latter. This can only CHANGE as a result of a CHANGE in the mode of production which alters the technological relationship between the two parts of capital. Even in this case, the absolute amount of living labour employed by the capital which uses a greater proportion of constant capital may be equal or even larger if capitals of different size are compared. But it must be smaller relatively. For capitals of the same size, or calculated in proportion to the total capital — 100 for example — it must be smaller both relatively and absolutely. All CHANGES arising from the development (not the decline) of the productive power of labour, reduce that part of the product which represents living labour, that is, they reduce variable capital. Regarding capitals [XVIII-1113] invested in different branches of production, one can say [that these changes] reduce the variable capital absolutely in those branches which have reached a higher level of production, since wages are assumed to be equal.
So much with regard TO THE CHANGES arising from changes in the mode of production.
Secondly, however, if one assumes that the organic composition of capitals is given and likewise the differences which arise from the differences in their organic composition, then the value ratio can change although the technological composition remains the same. What can happen is: a) a CHANGE in the value of the constant capital; b) a CHANGE in the value of the variable capital; c) a CHANCE in both, in equal or unequal proportions.
a) If the technological composition remains the same and a CHANGE in the value of constant capital takes place, its value will either fall or rise. If it falls, and only the same amount of living labour is employed as previously, i.e. if the scale or level of production remains the same, if, for example, 100 men are employed as previously, the same physical amount of raw material and means of labour continues to be required. But the SURPLUS LABOUR BEARS A GREATER PROPORTION TO THE WHOLE CAPITAL ADVANCED. The rate of profit rises. In the opposite case it declines. In the former case, * for the capitals already employed in that sphere (not those newly invested in * it * after the change of value in the elements of constant capital has taken place), the total sum of the capital employed diminishes or some portion of that capital is set free, although production continues to be carried on on the same scale; or the capital so liberated is added to the production and then works like an accumulation of capital. The scale of production is enlarged, and the absolute amount of surplus labour is increased proportionally.* With a given mode of production, every accumulation of capital results in an INCREASE in the TOTAL AMOUNT OF surplus value WHATEVER THE RATE OF SURPLUS VALUE may BE.
Conversely, if the VALUE OF THE ELEMENTS OF CONSTANT capital increases, then * either the scale of production (hence the mass of the total capital advanced) must increase to employ the same quantity of labour (the same variable capital — unchanged in its value) as before; and then, although the absolute amount of surplus value, and the rate of surplus value, remains the same, its proportion to the whole capital advanced sinks, and, hence, the rate of profit falls.* Or the scale of production and the TOTAL SUM OF CAPITAL ADVANCED is not enlarged. In the latter case the variable capital must decrease whatever the circumstances. If the same sum as previously is laid out in constant capital, it now represents a smaller amount of material elements and since the technological conditions remain the same, * less labour is to be employed. The whole capital advanced is then diminished by the labour dismissed; the total value of the capital advanced is diminished, but of that diminished capital the constant capital bears (value considered) a greater proportion. The surplus value is diminished absolutely, because less labour is employed; and the proportion of the remaining surplus value to the total capital advanced is diminished, because variable capital bears a less proportion to constant capital.
On the other hand, if the whole capital is employed as before — the less value of the variable capital (representing a less quantity of the whole of labour (living labour) employed) being absorbed by the greater value of the constant capital; the one being diminished in the same proportion as the other is augmented — then the absolute quantity of surplus value sinks, because less labour is employed, and, at the same time, the proportion of this surplus value to the whole capital advanced falls. Thus the rate of profit sinks from two causes, the diminution in the amount of surplus labour, and the decreasing proportion borne by that surplus labour to the total capital advanced.*
In the first case (with SINKING VALUE OF THE ELEMENTS OF CONSTANT CAPITAL) where the rate of profit rises in all circumstances the scale of production must be extended if the amount of profit is to increase. Let us assume that the capital is 600 — half constant, half variable. If the constant capital were to lose V2 its value, it would only amount to 150, although the variable capital would remain 300. The total capital employed would be only 450, 150 being freed. If the 150 are added to the capital again, then 128[4]/7 of the 150 will now be laid out in variable [XVIII-1114] capital. Thus the scale of production is expanded and more labour employed, if the same capital continues to be used in the production process.
In the opposite case, where with RISING VALUE OF THE ELEMENTS OF CONSTANT CAPITAL the rate of profit falls in all circumstances, the scale of production, and therefore THE CAPITAL ADVANCED, must be INCREASED if the amount of profit is not to decrease and the amount of labour employed (and therefore SURPLUS VALUE) is to remain the same. If this is not done, if only THE OLD OR LESS THAN THE OLD CAPITAL is ADVANCED, then not only does the rate of profit decline, but also the amount of profit.
The rate of surplus value remains unchanged in both cases; it changes, however, if any change in the technological composition of capital takes place: it increases if the constant capital increases (because labour is then more productive) and declines when it falls (because labour is then less productive).
b) If there is any CHANGE in the value of variable capital independent of the organic composition, it can only occur because of a fall or a rise in the price of means of subsistence that are not produced in the sphere of production under consideration but enter into it as commodities from outside.
If the value of variable capital falls, it nevertheless represents the same amount of living labour as before. T h e same quantity of labour merely costs less. If therefore the scale of production remains the same (since the value of constant capital is unchanged), then the part of the total capital used for the purchase of labour is diminished. Less capital needs to be laid out in order to pay the same number of workers. Thus, in this case, if the scale of production remains the same, the amount of capital laid out diminishes. T h e rate of profit increases, and this for two reasons. T h e SURPLUS VALUE has increased; the ratio of living labour to objectified labour has remained the same, but the increased SURPLUS VALUE correlates with a smaller total capital. If, on the other hand, the capital freed is again invested, then this = accumulation. If the value of the variable capital increases, then a greater total capital must be laid out in order to employ the same number of workers as before, because the value of the constant capital remains the same and that of the variable capital has risen. T h e amount of labour remains the same, but a smaller part of it is SURPLUS LABOUR, and this smaller part corresponds to a larger capital. This takes place when the scale of production remains the same, while the value of the total capital increases. If the value of the total capital does not increase, the scale of production must be reduced. T h e amount of L,ABOUR declines and a smaller portion of this reduced amount constitutes SURPLUS LABOUR, WHICH, TOO, BEARS A SMALLER
PROPORTION TO THE WHOLE CAPITAL ADVANCED.
T h e ORGANIC CHANGES and those brought about by CHANGES OF VALUE can have a similar effect on the rate of profit in certain CIRCUMSTANCES. They differ however in the following way. If the latter are not due simply to FLUCTUATIONS OF MARKET PRICES and are therefore not temporary, they are invariably caused by an ORGANIC CHANGE in the spheres that provide the elements of constant or of variable capital.
It is not necessary here to examine CASE 3 in detail. In the case of capitals of equal size — or if the calculation is based on equal amounts of the total capital, 100, for example— the organic composition may be the same in different spheres of production, but the value ratio of the primary component parts of constant and variable capital may be different according to the different values of the amount of instruments and raw materials used. For example, copper instead of iron, iron instead of lead, wool instead of cotton, etc.
On the other hand, is it possible for the organic composition to be different if the value ratio remains the same? If the organic composition is the same, the relative amounts which constitute constant capital and living labour are the same per 100. The quantitative proportions are the same. The value of the constant capital may be the same, although the relative amounts of labour set in motion are different. If the machinery or raw materials are dearer (or cheaper), less labour, for example, may be required, but in this case the value of the variable capital is also relatively smaller or vice versa.
[XVIII-1115] Let us take A and B. c' and v' are the component parts (in terms of value) of A, and c and v those of B (in terms of
value). If c':v' = c:v, then c'v = v'c. Consequently likewise —= —.
C V Since the value ratios [of constant to variable capital] are equal, only the following variations are possible. If in one sphere more surplus labour is carried out [than in another sphere] (for example, night-work is impossible in agriculture, and although the individual agricultural labourer can be overworked, nevertheless the total amount of labour which can be expended on a given area of land, etc., is limited by the object being produced (corn), whereas in a factory of a given size the amount produced depends (8vva(jLei(12)) on the hours of labour worked) (that is to say, it is due to the different modes of production that more surplus labour can be employed in one sphere at a given level of production than in another), then, even if the value ratio of constant and variable capital is the same, the amount of labour employed in proportion to the total capital will nevertheless be different.
Or, let us assume that the [raw] material is dearer and labour (of greater skill) is dearer, in the same proportion. In this case A employs 5 workers, where B employs 25, and they cost him £100 — as much as the 25 workers, because their labour is dearer (their surplus labour is therefore also worth more). These 5 workers work up 10 lbs of raw material, ;y,=500 and B's workers work up 1,000 lbs of raw material, x, worth 500, because the raw material is dearer and the productive power of labour is less highly developed in the case of A. The value ratio here—£100 v to 500 c—is the same in both cases, but the organic composition is different.
The value ratio is the same: the value of constant capital in A is the same as in B, and proportionately A lays out the same amount of capital in wages as B. But the quantity of his products will be smaller. Although he employs the same absolute quantity of labour as B, he uses more relatively, because his constant capital is dearer. He processes less raw material, etc., in the same time, but this smaller quantity costs him as much as the larger quantity processed by B. The value ratio in this case is the same, the organic composition is different. In the other case the value ratio being assumed to be the same, this can occur only if the amounts of the surplus labour are different or if the values of the different kinds of labour are different.
The organic composition can be taken to mean the following: Different ratios in which it is necessary to expend constant capital in the different spheres of production in order to absorb the same amount of labour. The combination of the same amount of labour with the object of labour requires either that both more raw material and more MACHINERY are used in one case than in the other, or that more if only one of these is used.
//Where the ratios between fixed and circulating capital are very different, those between constant and variable capital can be the same, consequently the SURPLUS VALUE can be the same although the values produced annually must be different. Let us assume that in the coal industry — where no raw materials are used (apart from
matières instrumentales), the fixed capital constitutes half the total capital and variable capital the other half. Let us assume that in tailoring the fixed capital=0 (as in the previous case we disregard
matières instrumentales), that the raw materials=1/2 and the variable capital='/2- Given the same degree of exploitation of labour, both will realise the same amount of SURPLUS VALUE, since both employ the same amount of labour in proportion to capital, i.e. per 100. But let us assume that fixed capital in the coal industry turns over once every 10 years while there is no difference in the rate of turnover of circulating capital in both cases. At the end of the year (we will assume that the variable capital turns over once a year in both cases) the tailor's capital will have produced values amounting to 150 if the surplus VALUE=50. The coal producer, on the other hand, will have produced values amounting to 105 at the end of the first year (consisting of 5 for fixed capital, 50 for variable and 50 for surplus labour). As in the case of the tailor (the total value of his product+the fixed capital=150, that is, the product= 105+45 for the remaining fixed capital). The production of different magnitudes of value therefore does not preclude the production of the same amount of SURPLUS VALUE.
In the 2nd year, the fixed capital of the coal producer would=45, variable capital=50 and surplus value=50, that is, the capital advanced would=95 and the profit would = 50. The rate of profit would have risen, because the value of the fixed [XVIII-1116] capital would have declined by Vio as a result of wear and tear during the first year. Thus there can be no doubt that in the case of all capitals employing a great deal of fixed capital— provided the scale of production remains unchanged — the rate of profit must rise in proportion as the value of the machinery, the fixed capital, declines annually, because wear and tear has already been taken into account. If the coal producer sells his coal at the same price throughout the 10 years, then his rate of profit must be higher in the 2nd year than it was in the 1st AND so FORTH. Or one would have to assume that the maintenance work, etc., stands in direct proportion to the depreciation, so that the total sum advanced annually under the heading of fixed capital remains the same. This extra profit may be equalised also as a result of the fact that — apart from wear and tear — the value of fixed capital falls in the course of time, because it has to compete with new, more recently invented, better machinery. On the other hand, this falling(13) rate of profit, which results naturally from wear and tear, makes it possible for the declining value of the fixed capital to compete with newer, better machinery, the full value of which has still to be taken into account. Finally, the coal producer sold his coal more cheaply [at the end of the second year] on the basis of the following calculation: 50 on 100 means 50% profit, 50% on 95 comes to 47 /V, if therefore he sold the same quantity of coal [not for 105 but] for 4772 — then he would have sold it more cheaply than the man whose machinery, for example, began to operate only in the current year. Large installations of fixed capital presuppose possession of large amounts of capital. And since these big owners of capital dominate the market, it appears that only for this reason their enterprises yield SURPLUS PROFIT (rent). In the case of agriculture, this rent derives from working relatively fertile land, but here we are dealing with a case where relatively cheaper machinery is utilised.//
//A large number of instances which are adduced in connection with the relation of fixed to circulating capital, refer to the difference between variable and constant capital. First of all, the proportion of constant to variable capital can be the same although the proportion of fixed to circulating capital is different. Secondly, in the case of constant a n d variable capital it is a question of the primary division of capital between living and objectified labour, not of the modification of this relationship by the circulation process or the influence of this latter on reproduction.
It is clear d'abord that the difference between fixed and circulating capital can affect surplus value (apart from the differences in the mass of living labour employed, i.e. differences which are related to the ratio of variable to constant capital) only in so far as it affects the turnover of the total capital. It is therefore necessary to investigate how the turnover affects surplus value. Two factors are obviously closely connected with it: 1) SURPLUS VALUE cannot be accumulated, reconverted into capital, so rapidly (so often); 2) the capital advanced must increase both to continue to employ the same number of workers, etc., and because the advances [of money] which the capitalist makes to himself to cover his own consumption costs must extend over a longer period. These factors are important in connection with profit. Here however it is, to begin with, only necessary to examine how they affect SURPLUS VALUE. O n e must moreover always clearly distinguish between these two factors.//
//Everything which increases the advances without proportionally increasing the surplus value, reduces the rate of profit EVEN IF THE SURPLUS VALUE REMAINS THE SAME; the opposite is the case with everything which reduces them. In so far, therefore, as a large amount of fixed capital in proportion to circulating capital — or different turnover periods of capital — affects the size of the advances, it affects the rate of profit EVEN IF NOT AT ALL AFFECTING THE SURPLUS
VALUE.//
/ / T h e rate of profit is not SIMPLY the SURPLUS VALUE calculated on the capital advanced, but THE MASS OF SURPLUS VALUE REALISED WITHIN A GIVEN PERIOD, that is, in a definite period of circulation. In so far as the difference between fixed and circulating capital affects the MASS OF SURPLUS VALUE which a particular capital yields WITHIN A GIVEN PERIOD, it affects the rate of profit. T w o aspects must be taken into consideration: [firstly,] the difference in the size of the advances (RELATIVE TO THE SURPLUS VALUE REALISED) and SECONDLY, THE DIFFERENCE IN THE reproductions taking place in a definite period of time, is substantially affected by 2 circumstances:
1) The product remains longer in the sphere of production proper. It is possible firstly that, in order to be produced, one product requires a longer period of time than another; it may require a larger part of a year, a whole year or even more than a year. (The latter is the case for example with buildings, in stock-breeding and the production of certain luxuries.) In this case, the product continually absorbs labour — often a great deal of labour is absorbed (for instance by luxury articles and buildings) in relation to the constant capital — the amount depending on the composition of the productive capital, its division into constant and variable capital. Thus in the measure as the time required for the production of the commodity increases and the labour process continues uniformly, a continuous absorption of labour and of surplus labour takes place. This happens for example with cattle or buildings if the latter require say more than a year's work. The product can enter the sphere of circulation, that is, it can be sold, be thrown on the market, only when the work is completed. The surplus labour expended in the first year is embodied with the rest of the labour in the unfinished product of the first year. It is neither greater nor smaller than in other branches of production where the ratio between constant and variable capital is the same. But the value of the product cannot be realised, that is, in the sense that it cannot be converted into money, and neither can the SURPLUS VALUE. The latter cannot therefore be accumulated as capital nor used for consumption. The capital advanced, and also the SURPLUS VALUE, serve, so to speak, as foundations for further production. They are a precondition for it and enter, to some extent, as semi-finished products, or, d'une manière ou d'une autre,* as raw material into the production process of the 2nd year.
Let us assume that the capital is [£]500, labour=100 and surplus value=50, so that the capital advanced in production=550+500 which is advanced in the 2nd year. The surplus value again=50. The value of the product is therefore=£l,100, of which 100 is surplus value. In this case, the surplus value is the same as if the capital had been reproduced in the first year and £500 had been invested again in the 2nd year. In each year the variable capital employed is 100 and the surplus value 50. But the rate of profit is different. In the first year it is 50, or 10%. But in the second year the capital advanced amounts to 550+500=1,050, and Vio of this=105. If one assumes the same rate of profit, then the value of the product comes to: 550 in the 1st year; 550+500+55 + 50=1,155 in the 2nd year. At the end of the 2nd year, the value of the product= 1,155. Otherwise it would have been only 1,100. In this case, the profit is greater than the surplus value produced, for this only amounts to 100. If one includes the consumption costs which the capitalist has to advance over 2 years, then the capital laid out is even greater in proportion to the surplus value. On the other hand, it is true that the entire surplus value gained in the first year has been converted into capital in the 2nd. Furthermore, the capital laid out in wages is greater, because the 100 is not reproduced at the end of the first year, so that in the 2nd year 200 must be advanced for the same labour for which 100 would have been sufficient if it had been reproduced in the 1st year.
Secondly. After the labour process has been completed, the product must continue to remain in the production sphere in order to undergo natural processes which require either no labour or relatively quite insignificant amounts of it, like wine in the cellar. Only when this period has elapsed can the capital be reproduced. It is obvious that in this case, quite irrespective of what the ratio of variable to constant capital may have been, the effect is the same as if more constant and less variable capital had been laid out. The SURPLUS LABOUR, as well as the total amount of LABOUR employed during a definite period of time, is smaller. If the rate of profit is the same, this is due to equalisation, not to the amount of SURPLUS VALUE produced in this sphere. More capital must be advanced beforehand to maintain the reproduction process— the continuity of production. And for this very reason the SURPLUS VALUE declines in proportion to the capital advanced.
Thirdly. Interruptions in the labour process while the product is in the production process, as in agriculture or in processes such as tanning, etc., where chemical processes involve intervals before the product can proceed from one stage to the next, higher one. If in such cases the interval is reduced by chemical discoveries, the productivity of labour rises, the SURPLUS VALUE [is increased] and objectified labour has to be advanced for a shorter period of time. In all these cases, the SURPLUS VALUE is smaller and the advanced capital larger.
2) The same thing happens if the rate of turnover of the circulating capital is lower than the AVERAGE because of distant markets. In this case, too, the advanced capital is greater, the SURPLUS VALUE smaller and its proportion to the advanced capital is also smaller.// //In the latter case [the capital] is retained longer in the circulation sphere, in the former case, in the production sphere.//
[XVIII-1118] //Let us assume that the capital advanced in some branch or other of the transport industry =1,000, fixed capital=500, which will be worn out in 5 years. The variable capital, which=500, turns over 4 times during the year. The annual value of the product will thus be 100 + 500+100, if the [annual] rate of surplus value=20%, a total of 700. On the other hand, let us assume that in a branch of tailoring the constant capital, which consists only of circulating capital, = 500 (the fixed capital=0) and the variable capital=500. Surplus value=100. [The capital] turns over 4 times a year. Then the (annual) value of the product will be 4 (500+500)+100=4,100. The surplus value is the same in both cases. In the last-mentioned case, the entire capital turns over 4 times a year or once a quarter. Of the other capital
600 turn over in the course of a year, therefore — = 150 in a
quarter of a year. That is, 50 in a month, 100 in 2 months, and 400 in 8 months. The whole capital requires 1 year and 8 months or 20 months, in order to turn over. In a year, only [6]/io of it turns over.
Now it will be said that in order to make a profit of 10%, less is added per quarter on a value of 1,000 in the case of the first capital than in that of the other. But here it is not a question of addition. One makes more surplus value on the capital used up but not on the capital employed. The difference here arises from the surplus value, not from the addition of profit. The difference here lies in the value, not in the surplus value. In both cases the variable capital amounting to 500 turns over 4 times in a year. Both capitals yield a surplus value of 100 in a year, the [annual] rate of surplus value=20%. But £25 in a quarter, therefore a higher percentage? 25 on 500 each quarter=5% a quarter, that is, 20% per annum.
The first [capitalist] turns over V2 his capital 4 times a year and only V5 of the remaining V2 once during the year. A half of four times is twice. Thus he turns his capital over 2 /10 times during the year. The entire capital of the second capitalist turns over 4 times a year. But this makes absolutely no difference to the SURPLUS VALUE. If the second capitalist continues the reproduction process uninterruptedly, then he must constantly convert 500 into raw materials, etc., and must always use 500 for labour, while the other capitalist likewise uses 500 for labour and has invested the remaining 500 once and for all (that is, for 5 years) in such a form that he does not need to reconvert it again. This applies however when the ratio of variable to constant capital is the same [in both capitals] despite the difference between fixed and circulating capital. If in both cases, [1]/[2] consists of constant and V2 of variable capital, then it is only possible for V2 [in one case] to consist of fixed capital if the circulating constant capital=0, and [in the other case], V2 can consist of circulating constant capital only if the fixed capital=0. Although the circulating constant capital can=0, as in the extractive and transport industries where, however, the matières instrumentales rather than the raw materials constitute the circulating constant capital, the fixed capital can never=0 (except in banking, etc.). This is however immaterial so long as the ratio of constant capital to variable capital is the same in both cases, even though in one case there may be more fixed and less circulating constant capital than in the other, or vice versa. The only difference here is the time of reproduction required by one half of the capital and by the total capital. One capitalist must invest a capital of £500 for 5 years before it is returned to him, the other, for a quarter of a year or a whole year. The ability to dispose of the capital is different. The amount advanced is the same but the time for which it is advanced is different. This difference does not concern us here. When one considers the total capital advanced, surplus value and profit are the same—£100 in the first year on the 1,000 advanced. In the second year, it is rather the fixed capital that has a higher rate of profit, since the variable capital has remained the same, whereas the value of the fixed capital has declined. The capitalist only advances 400 fixed and 500 variable capital in the 2nd year and receives a profit of 100 as he did before. But 100 on 900=ll'/9%, while the other capitalist, if he continues to reproduce his capital, advances 1,000 as he did previously and makes a profit of 100=10%.
The position is different, of course, if, along with the fixed capital, the constant capital as a whole increases as compared with the variable, or if altogether more capital must be advanced in order to set the same amount of labour in motion. In the case discussed above, the question is not how often the total capital is returned or how large the advance is, but how often that portion is returned which is sufficient to set the same amount of productive labour in motion as that used in the other instance, in order to renew the process of production. However, if in the case cited above, the fixed capital were [not 500 but] 1,000 and the circulating capital only 500 [as previously], then matters would be different. This, however, would not be due to the fact that it is fixed capital. For if the circulating part of the constant capital in the second case were to amount to 1,000 [instead of 500] (because of the dearness of [raw] materials, for example), then the result would be the same. Since in the first examples [of the two cases] the larger the fixed capital, the greater the relative size of the capital advanced as a whole to the variable capital, these two factors are often confused. Moreover, the whole business of the turnover was in fact originally derived from mercantile capital, where it is determined by different laws. In the case of mercantile capital, as I have demonstrated, [1 7 4] the rate of profit is indeed determined by the AVERAGE number of turnovers, regardless of the composition of this type of capital which, incidentally, consists mainly of circulating capital. For in the case of mercantile capital, profit is determined by the GENERAL RATE OF PROFIT.//
[XVIII-1119] // T h e point is this. If the fixed capital=x, and it turns over only once every 15 years, then V15 of it is turned over in a single year, but likewise only V15 needs to be replaced each year. It would make no difference at all if it were replaced 15 times in a year. Its mass would still be the same as before. T h e product would only become dearer as a result. But it is more difficult to dispose of it and the risk of depreciation is greater than if the same amount of capital were advanced in the form of circulating capital. But this does not affect the surplus in any way, although it does enter into the capitalists' calculation of the rate of profit since this risk is included in the calculation of the depreciation. As far as the other part of capital is concerned, let us assume that the circulating part of constant capital—matières brutes and matières instrumentales—amounts to 25,000 a year and wages to 5,000. If it were returned only once during the year 30,000 would have to be advanced during the whole year, and if the surplus value were at the rate of 100% it would amount to 5,000, and profit at the end of the year would be 5,000 on 30,000,= 16[2]/s% (Ve)- If. on the other hand, the capital turns over five times during the year, then a capital advance of only 5,000 for constant circulating capital and 1,000 for wages will be sufficient. Surplus value will be 1,000, and for [5]/[5] of a year 5,000. But this surplus value is made on a capital of £6,000, because more than this amount is never advanced. Profit would therefore be 5,000 on 6,000, or [5]/[6], five times as much [as previously], that is, 83'/3%-(Disregarding fixed capital.) There is thus a very considerable difference in the rate of profit because, in fact, labour worth 5,000 is bought with a capital of 1,000 and raw materials, etc., worth 25,000 with a capital of 5,000. If the amounts of capital were equal in these cases of different rates of turnover, then only 6,000 need have been advanced in the first case, that is, only 500 a month, [5]/[6] of which would have consisted of constant capital and VÔ of variable capital. This [1]/[6] would=8373, on which surplus value at 100% would be 83V3, and this would amount in a year to (83 + 7s) 12 = '7 [3] (or 4) + 966= 1,000. But 1,000 on 6,000= 16[2]/[3]%.//
To return to Cherbuliez. Sismondian:
"In so far as the economic progress of society is characterised by an absolute growth of productive capital and by a change in the proportions between the different elements of this capital, it offers the workers some advantages: 1) The greater productivity of labour, resulting especially from the use of machinery, brings about such a rapid growth of productive capital that despite the change that takes place in the proportion of the approvisionnement to the other elements of capital, this element nevertheless increases absolutely, which makes it possible not only to employ the same number of workers as before, but also an additional number, so that for the workers the result of progress apart from some i n t e r r u p t i o n s means an increase in productive capital and in the demand for labour. 2) The greater productivity of capital tends to diminish the value of the whole mass of products considerably, thus placing them within reach of the workers, thereby increasing the range of enjoyments they are able to obtain" (I.e., [p.] 65).(14)
On the other hand:
"1) However impermanent, however partial the temporary diminution of the approvisionnement which constitutes the price of labour may be, it produces harmful effects nevertheless. 2) The factors tending to promote the economic advance of society are for the most part accidental, independent of the will of the producing capitalist. The effects of these causes are therefore not permanent, etc." ([p.] 66). "3) It is not so much the absolute as the relative amount consumed by the worker which makes his lot happy or unhappy. What does it matter to the worker if he is able to obtain a few more products which formerly were inaccessible to him if the number of products inaccessible to him has grown in even greater proportion, if the distance which separates him from the capitalist has only increased, if his social position has deteriorated and become more disadvantageous? Apart from the consumption strictly necessary for the maintenance of our strength, the value of our enjoyments is essentially relative" ([p.] 67).
"People frequently forget that the wage labourer is a thinking man, endowed with the same capacities, impelled by the same motives as the working capitalist" ([p.] 67).
[XVIII-1120] "Whatever advantages a rapid growth in social wealth may bring to the wage workers, it does not cure the causes of their poverty ... they continue to be deprived of all rights to capital and are consequently obliged to sell their labour and to renounce all claims to the products of that labour" ([p.] 68). "This is the principal error of the law of appropriation ... the evil lies in this absolute lack of any bond between the wage worker and the capital which is set in motion by his industry" ([pp.] 68-69).
This last phrase about "bond' is written in the typical Sismondian manner and is quite silly to boot.
About the normal man [who is] equated with capitalist, etc., see ibid., pp. 74-76.
About the concentration of capitals and the elimination of the smaller capitalists (I.e., pp. 85-88).
"If in present circumstances real profit derives from the thrift of the capitalists, it could derive just as well from that of the wage earners" ([pp.] 88-89).
Cherbuliez 1) shares [James] Mill's view that all taxes should be imposed [only] on rent[175] ([p.] 128) but since it is impossible
"to impose a tax which is levied only on rent and affects nothing but rent" [pp. 128-29],*
since it is difficult to separate profit from rent and impossible when the landowner is himself the cultivator, Cherbuliez proceeds to
2) the real conclusion of the Ricardian theory:
"Why do people not take a step further and abolish private ownership of land?" ([p.] 129).a "The landowners are idlers who are maintained at the public expense without any kind of benefit to industry or to the general welfare of society". "What makes land productive is the capital employed in agriculture; the landowner contributes nothing to it; he only exists to pocket rent, which does not constitute a part of the profit on his capital, neither is it the product of labour nor that of the productive power of the soil, but the effect of the price of the agricultural products, which is increased by the competition of the consumers", etc. ([p.] 129).a
"Since the elimination of the private ownership of land would in no way change the causes responsible for rent, rent would continue to exist, but the state would receive it, for all the land would belong to it and it would lease out arable sections of the land to private persons owning sufficient capital to exploit them" ([p.] 130).a Rent would replace all state revenues. "Finally industry, liberated, released from all fetters, would take an unprecedented leap forward, etc." ([p.] 130).a
But how does this Ricardian conclusion agree with the pious Sismondian wish to place "bonds" on capital and capitalist production? How does it agree with the lamentation:
"Capital will ultimately rule the world if an upheaval does not halt the course which the development of our society is taking under the domination of the law of appropriation" ([p.] 152).a "Capital will eliminate the old social distinctions everywhere in order to replace them by this simple classification of men into rich and poor, the rich, who enjoy themselves and rule, and the poor, who work and obey" ([p.] 153).b "The general appropriation of productive wealth and of the products has always reduced the numerous class of proletarians to a position of subjugation and political impotence, but this appropriation was once combined with a system of restrictive laws which, by impeding the development of industry and the accumulation of capital, [XVIII-1121] placed limits on the growth of the class of the disinherited, restricted their civil rights within narrow bounds and thus in different ways rendered this class harmless. Today, capital has broken part of these fetters; it is preparing to break all of them" ([pp.] 155-56).a "The demoralisation of the proletarians is the second result of the distribution of wealth" [176] ([p.] 156).
o) Richard Jones
1) Reverend Richard Jones, An Essay on the Distribution of Wealth, and on the Sources of Taxation, London, 1831
1831, PART I, RENT
Even this first work ON RENT is distinguished by what has been lacking in all English economists since Sir James Steuart, namely, a sense of the historical differences in modes of production. (Such a correct DISTINCTION of historical forms generally speaking is not contradicted by the very important archaeological, philological and historical BLUNDERS attributed to Jones. See, for example, The Edinburgh Review, VOL. LIV, Article IV.[177]) He found that the modern economists after Ricardo define rent as SURPLUS PROFIT, a definition which presupposes that the FARMER is a capitalist (or a FARMING CAPITALIST who exploits the land), who expects AVERAGE PROFIT on the capital which he invests in this particular sphere, and that agriculture itself has been subordinated to the capitalist mode of production. In short, landed property is conceived only in its modern bourgeois form, that is, in the modified form which it has been given by capital, the dominant relation of production in society. Jones by no means shares the illusion that capital has been in existence since the beginning of the world.
His views on the origin of rent in general are summarised in the following passages:
"The POWER of the earth TO YIELD, even TO THE RUDEST LABOURS OF MANKIND, more than is necessary for the subsistence of the CULTIVATOR himself, enables him to pay a tribute: hence the origin of rent" ([p.] 4).
"RENT has usually originated in the * appropriation of [the] soil, at a time when the bulk of the people must cultivate it on such terms as they can obtain, or starve, and when their scanty capital of implements, seeds, etc., being utterly insufficient to secure their maintenance in any other occupation than that of agriculture, is chained with them to the land by an overpowering necessity*" [p. 11].
Jones traces rent throughout all its changes, from its crudest form, performance of labour services, to modern FARMER'S RENT. He finds that everywhere a specific form of rent, i.e. of landed property, corresponds to a definite form of labour and of the
a Marx quotes partly in German and partly in French.— Ed.
conditions of labour. Thus, LABOUR RENTS OR SERF RENTS, the CHANGE FROM
[178] LABOUR RENTS TO PRODUCE RENTS, METAYER RENTS, RYOT RENTS, e t C , a r e examined in turn, a development the details of which do not concern us here. In all previous forms, it is the landed proprietor, not the capitalist, who directly appropriates the SURPLUS LABOUR of other people. Rent (as the Physiocrats conceive it by reminiscence) appears historically (and still on the largest scale among the Asiatic peoples) as the general form of surplus LABOUR, of LABOUR performed without payment in return. The appropriation of this SURPLUS LABOUR is here not mediated by exchange, as is the case in capitalist society, but its basis is the forcible domination of one section of society over the other. (There is, accordingly, direct slavery, serfdom or political dependence.)
Since we are only considering landed property here in so far as an understanding of it contributes to an understanding of capital, we shall leave Jones' analysis and proceed directly to his result — which distinguishes him from, and shows his superiority over, all his predecessors.
But first a few INCIDENTAL REMARKS. In discussing forced labour and the forms of serfdom (or slavery) which correspond to it more or less, [XVIII-1122] Jones uncon-sciously emphasises the two forms to which all SURPLUS VALUE (SURPLUS LABOUR) can be reduced. It is characteristic that, in general, real forced labour displays in the most brutal form, most clearly, the essential features of wage labour.
"Under these conditions" (where there is serf labour) "rent can only be increased either by the more skilful and effective utilisation of the labour of the TENANTRY" //RELATIVE SURPLUS LABOUR//, "this however is hampered by the inability of the PROPRIETORS as A BODY TO ADVANCE THE SCIENCE OF AGRICULTURE, or
by an increase in the QUANTITY of the LABOUR EXACTED, and in this case, while the LANDS of the PROPRIETORS will be better TILLED, those of the SERFS, from which labour has been withdrawn, all the worse" (I.e., CH. II, [p. 61]).
What distinguishes this book on RENT by Jones from his SYLLABUS to be mentioned in 2 — is this: In the first work he proceeds from the various forms of landed property as a given fact; in the second, from the various forms of labour to which they correspond.
Jones also shows how different stages in the development of the productive power of social labour correspond to these different production relations.
Serf labour (just as slave labour) has this in common with wage labour, quoad* rent, that the latter is paid in labour, not in products, still less in money.
a In respect of.— Ed.
As far as "METAYER RENT" is concerned * "the advance of stock by the proprietor and the abandonment of the m a n a g e m e n t of cultivation to the actual labourers shows the continued absence of an intermediate class of capitalists" (I.e., [p.] 74).
"Ryot rents are produce rents paid by a labourer, raising his own wages from the soil, to the sovereign as its proprietor" (Ch. IV, [p. 109]).* (In Asia especially.) "RYOT RENTS are often mixed up with LABOUR RENTS AND METAYER RENTS" ([p.] 136 sqq.). [Under this system] the sovereign is the chief LANDLORD. * "The prosperity or rather the existence of [the] towns in Asia proceeds entirely from the local expenditure of [the] government"* (I.e. [p. 138]). * "Cottier*[79] rents ... all rents contracted to be paid in money, by peasant tenants, extracting their own maintenance from the soil" * ([p.] 143). (Ireland) "Over the greater part of the globe, no MONEY RENTS are paid" [I.e.].
" A l l t h e s e FORMS" (SERF, RYOT, METAYER, COTTIER, e t c . , i n s h o r t , PEASANTS' RENTS) "PREVENT THE FULL DEVELOPMENT OF THE PRODUCTIVE POWERS OF THE EARTH. The difference in the productiveness of the industry depends first, on the QUANTITY OF CONTRIVANCE USED IN APPLYING MANUAL LABOUR, a n d SECONDLY, o n t h e EXTENT t o w h i c h t h e MERE PHYSICAL EXERTIONS ARE ASSISTED BY THE ACCUMULATED RESULTS OF PAST LABOUR, in other words, on the different * quantities of skill, knowledge and capital brought to the task of production. Small number of the agricultural[3] classes. It is obvious that the relative numbers of persons who can be maintained without agricultural labour, must be measured wholly by the productive powers of the cultivators.." (Ch. VI [pp. 157-60]). "In England, the tenants who on the disuse of the labour of the serf tenantry took charge of the cultivation of the domains of the proprietors, were found on the land; they were yeomen"* ([p.] 166).
We now come finally to the point which is of decisive interest to us here—FARMERS'RENTS. It is here that Jones' superiority is most striking, for he shows that what Ricardo and others regard as the eternal form of landed property, is its bourgeois form, which, after all, only develops 1) when landed property has ceased to be the dominant relation in production and, consequently, in society; 2) when agriculture itself is carried on in a capitalist way, which presupposes the development of large-scale industry (AT LEAST OF MANUFACTURE) in the towns. Jones shows that rent in the Ricardian sense only exists in a [XVIII-1123] society the basis of which is the capitalist mode of production. As a consequence of the transformation of rent into surplus PROFIT, the direct influence of landed property on WAGES ceases, which, in other words, merely means that the landed proprietor ceases to be the direct APPROPRIATOR of SURPLUS LABOUR, this role being now assumed by the capitalist. The relative size of the rent affects only the division of SURPLUS VALUE BETWEEN CAPITALIST and PROPRIETOR, NOT THE EXACTION OF THAT SURPLUS LABOUR ITSELF. This conclusion in fact emerges from Jones' analysis, though it is not explicitly stated.
Jones marks a substantial advance on Ricardo, in his historical explanation as well as in the economic details. We shall follow his theory step by step. BLUNDERS, of course, occur.
a Thus in the manuscript. Should be "non-agricultural".— Ed.
In the following passages, Jones correctly explains the historical and economic conditions under which rent=suRPLus PROFIT, that is, the expression of modern landed property.
*" Farmers' rents can only exist when the most important relations of the different classes of society have ceased to originate in the ownership and occupation of the soil " * ([p.] 185).
The capitalist mode of production begins with manufacture and only later subjugates agriculture.
* "It is the artisans and the handicraftsmen who first range themselves under the management of capitalists" * ([p.] 187).
"One of the immediate consequences of this system is the POWER OF MOVING AT PLEASURE THE LABOUR AND CAPITAL EMPLOYED IN AGRICULTURE, T O OTHER OCCUPATIONS".
//And on)/ with this POWER can there be any question of equalisation of AGRICULTURAL and INDUSTRIAL PROFITS.//
"While the TENANT was himself * a labouring peasant, forced, in the absence of other funds for his maintenance, to extract it himself from the soil,* he was chained to that soil by necessity; the LITTLE STOCK he might possess, * since it was not sufficient to procure him a maintenance unless used for the single purpose of cultivation, was virtually chained to the soil with its master.* With the CAPITALIST-MASTER this * dependence on the soil is broken;* and * unless as much can be gained by employing the working class on the land, as from their exertions in various other employments, which in such a state of society abound, the business of cultivation will be abandoned. Rent, in such a case, necessarily consists merely of surplus profits" * ([p.] 188). "RENT ceases to have any influence on * wages. When the engagement* of the * labourer is with a capitalist, this dependence on the landlord is dissolved* " ([p.] 188-89).
As we shall see later, Jones does not really explain how SURPLUS PROFIT arises, or rather, he explains it only in Ricardian fashion, i.e.
BY THE DIFFERENCE IN THE DEGREES OF NATURAL FERTILITY o f DIFFERENT SOILS.
" When RENTS CONSIST OF SURPLUS PROFITS, there are 3 causes from which the rent OF A PARTICULAR SPOT OF GROUND may increase:
" 1 ) AN INCREASE OF THE PRODUCE FROM THE ACCUMULATION OF LARGER QUANTITIES OF CAPITAL IN ITS CULTIVATION;
"2) the more efficient APPLICATION of CAPITAL ALREADY EMPLOYED; "3) the capital and produce remaining the same, THE DIMINUTION of the SHARE of the PRODUCING CLASSES in that PRODUCE AND A CORRESPONDING INCREASE of the SHARE of the LANDLORD.
"These causes may COMBINE IN DIFFERENT PROPORTIONS" ([p.] 189).
We shall see what is involved by these different causes. First of all they all presuppose that rent exists as SURPLUS PROFIT; and then there is not the slightest doubt that cause 1) to which Ricardo alludes only once and then only incidentally,[180] is correct. When the capital employed in agriculture increases, the amount of rent increases as well, even though the price of corn, etc., does not rise and no other CHANGE whatever takes place. It is clear that, in this case, the price of land rises, although corn prices do not and no CHANGE whatever takes place in them.
Jones declares rent on the WORST SOIL to be monopoly price. He therefore restricts the real source of rent either to monopoly price (in the same way as Buchanan, Sismondi, Hopkins,[181] and others) if it is absolute rent (not arising from differences in the fertility of the different kinds of soil) or to differential rent (in the Ricardian sense).
IIAd vocem* absolute rent, let us take a gold mine. We assume that the capital employed=£100, the AVERAGE profit £10, rent £10, and that half the capital consists of constant capital (in this case, machinery and matière instrumentale) and half of variable capital. The £50 of constant capital means nothing more than that it contains the same amount of labour time as [XVIII-1124] is embodied in £50 worth of gold. That part of the product which=£50 therefore replaces this constant capital. If the rest of the product=£100 and if 50 workers are set to work with the £50 of variable capital then [the labour of] 50 workers (assuming a working day of 12 hours) must be expressed in £100 worth of gold, of which £50 goes to pay wages and £50 represents unpaid labour. The value of the products of all capitals of the same composition will then be 120; the product will then consist of 50 c and 100, [the 100] corresponding to 50 working days, that is, 50t/ plus 50 c. A capital of 100, utilising more constant capital and a smaller number of workers, would produce a product of less value. However, all ordinary industrial capitals, although the value of their products would, in these circumstances, amount to 120, would only sell them at their production price of 110. But in the case of the gold mine, this is impossible quite apart from the OWNERSHIP OF LAND, because in this case the value is expressed in the product in kind. A rent of £10 would therefore of necessity arise.// //This applies to ABSOLUTE RENT AS WELL AS to DIFFERENTIAL RENT.//
"In small COMMUNITIES CORN may be constantly at a monopoly price... This is possible in LARGER COUNTRIES too, provided the increase of population keeps steadily ahead of the INCREASE OF TILLAGE. However monopoly price of corn is unusual in COUNTRIES of CONSIDERABLE EXTENT AND GREAT VARIETY OF SOIL. When prices rise steeply more lands are cultivated or more capital is laid out on the old lands, till the price hardly yields the ORDINARY PROFIT on the OUTLAY any longer. Then TILLAGE will STOP, and in such countries CORN is usually sold at a price * not more than sufficient to replace the capital employed under the least favourable circumstances and the ordinary rate of profit on it,* and the * rent paid on the better soils is then measured by the excess of their produce over that of the poorest soil cultivated by similar capitals*" ([pp.] 191-92). "All that is necessary to effect A RISE OF RENT OVER THE SURFACE of a country possessing SOILS of unequal goodness, is this: that the * better soils should yield to the additional capital employed upon them in the progress of cultivation, something more than the soils confessedly inferior to them; for then while [the] means can be found of employing fresh capital on any soil between the extremes A and Z, at the ordinary rate of profit, rents will rise on all the soils superior to that particular soil*" ([p.] 195). "Let A have been cultivated with [£]100 yielding annually 110, £10 being the ordinary profits, and B with 100 yielding £115 and C with 100 yielding £120 and so on to Z; the rent of B would be 5, and that of C 10. Let each of these qualities of soil be cultivated with [a capital of] £200. A will produce 220, B 230, C 240, etc., the rent of B, therefore, will have become 10, that of C 20, etc." ([p.] 193).
"The GENERAL ACCUMULATION of the capital employed in cultivation, * while it augments the produce of all gradations of soils, somewhat in proportion to their original goodness, must of itself raise rents* without * reference to any progressive diminution in the return to the labour and capital employed, and, indeed, quite independently of any other cause whatever*" ([p.] 195).
It is one of J o n e s ' merits t h a t h e is the first w h o clearly brings o u t t h e fact that * o n c e r e n t [is] s u p p o s e d , its g r o w t h will o n t h e w h o l e //always s u p p o s i n g n o r e v o l u t i o n s i n t h e m o d e of p r o -duction / / r e s u l t f r o m t h e a u g m e n t a t i o n of a g r i c u l t u r a l capital, of capital e m p l o y e d o n l a n d . " T h i s m a y b e t h e case n o t only if prices remain t h e s a m e b u t e v e n w h e n t h e y fall b e l o w t h e i r f o r m e r * level".
[ X V I I I - 1 1 2 5 ] R e j e c t i n g t h e GRADUAL DIMINUTION of productivity [in a g r i c u l t u r e ] , J o n e s r e m a r k s :
successive doses of capital employed, or any alteration whatever in the price of agricultural produce.* Jones' next point is this:
* "It is not essential to the rise, that the proportion between the fertility of the soils should be exactly stationary" * ([p.] 205).
(Here Jones overlooks the fact that, conversely, an increasing * disproportion, even when the whole agricultural capital is more productively employed, must and will increase the amount of the differential rent. A diminution, on the contrary, in the differences of the fertility of the various soils must diminish the differential rent, i.e. rent flowing from those differences. [By] taking away the cause you take away the effect. Still rent (apart from absolute rent) may increase, but * in that case *only in consequence of an increase of the agricultural capital employed.*)
"Ricardo had overlooked the NECESSARILY UNEQUAL EFFECTS OF ADDITIONAL CAPITAL ON SOILS OF UNEQUAL FERTILITY" (I.e.).
(This means nothing more than *that the employment of additional capital adds to the differences of relative fertility, and, in that way, to differential rent.*)
"If numbers, BEARING A CERTAIN PROPORTION TO EACH OTHER, are multiplied by the same number, the proportion will be the same as that of the original numbers, yet THE DIFFERENCES between THE AMOUNTS OF THE SEVERAL PRODUCTS WILL INCREASE AT EACH STEP OF THE PROCESS. If 10, 15, 20, be multiplied by 2 or 4, and become 20, 30, 40, or 40, 60, 80, THEIR RELATIVE PROPORTIONS will NOT be DISTURBED: 80 and 60 bear the same proportion to 40, as 20 and 15 do to 10, but the difference BETWEEN THE AMOUNTS OF THEIR PRODUCTS WILL HAVE INCREASED AT EACH OPERATION, AND FROM BEING 5 AND 10, BECOME 10 AND 20, AND THEN 20 AND 40" ([pp.] 206-07).
This law works out simply as follows:
1) 10,[5] 15,1° 20. The difference 5 [and 10]. Sum of the differences 15.
2) 20,1° 3) 40,20
4) 80,t40l
30,20 40.
60,40 80. 120,[8°1 160.
10 [ and 20]. " " 30. 20 [and 40]. " " 60. [" " 40 and 80. " " 120.]
T h e difference between the terms is doubled in 2 and quadrupled in 3. T h e sum of the differences is likewise doubled in 2 and quadrupled in 3.
This therefore is the 2nd law. T h e first law (applied by Jones only to DIFFERENTIAL RENT) is that the amount of rent increases with the increase of the amount of capital employed. If rent is 5 for 100, then it is 10 for 200.
fXVIII-1126] T h e second law. *A11 other circumstances remaining the same, the proportional difference between the capitals employed on different soils remaining the same, the amount of that difference, and hence the amount of the aggregate rent or the sum of those differences, increases with the absolute quantity of that difference resulting from the increase of the capitals employed.* Hence the second law is: The amount of differential rent increases in proportion as the differences of the products increase when the relative FERTILITY remains the same, but CAPITAL EMPLOYED ON THE DIFFERENT SOILS is increased uniformly.
Further: "If [£]100 BE EMPLOYED ON CLASSES A, B AND C, with a PRODUCE of 110, 115, and 120, and SUBSEQUENTLY 200, with RETURNS of 220, 228 and 235, *the relative differences of the products will have diminished, and the soils will have approximated in fertility, still the difference * of the AMOUNTS of their PRODUCTS WILL BE INCREASED FROM 5 AND 10 to 8 and 15, and RENTS will have risen accordingly. * Improvements, therefore, which tend to approximate the degrees of fertility of the cultivated soils, may very well raise rents,* and that without the cooperation of any other cause" ([p.] 208). "The * turnip and sheep husbandry and the fresh capital employed to carry it on, produced a greater alteration in the fertility of the poor soils than in that of the better; still it increased the absolute produce of each, and,* therefore, RAISED RENTS, while it diminished the DIFFERENCES in the FERTILITY of the SOILS CULTIVATED" (I.e.). "With regard to Ricardo's view that improvements may cause rents to fall, [it is only necessary] *to remember the slowly progressive manner in which agricultural improvements are practically discovered, completed and spread*" ([p.] 211).
//This last passage is only of practical interest and does not affect the problem as such, but refers only to the fact that these IMPROVEMENTS do not proceed so rapidly AS TO CONSIDERABLY AUGMENT
SUPPLY IN REGARD TO DEMAND AND THUS TO REDUCE MARKET PRICES.//
Originally we have: a) b) c) 1) 10, 15, 20. The CAPITAL EMPLOYED IN EACH CLASS=100. The PRODUCT=110, 115, 120. The difference = 5 + 1 0 = 15. O N ACCOUNT of improvements made, twice as much capital is employed, [£]200 instead of 100 IN EACH CLASS a), b) and c); but this CAPITAL has a different effect in the DIFFERENT CLASSES and the products yielded = 220 (that is, double that of a)), 228 and 235. Thus:
a) b) c) 2) 20, 28, 35. T h e CAPITAL EMPLOYED IN EACH CLASS=200. The PRODUCT=220, 228 and 235. The difference = 8 + 1 5 = 23. But the rate OF DIFFERENCE has been reduced. 5:10 (i.e. [the ratio of the differences] b — a [to a] in l) = '/2 and 10:10=1, whereas 8:20=only [8]/2o=[4]/io=[2]/[6] and 15:20 = [15]/[2]o=[3]/4. The rate of difference has declined but its AMOUNT has increased. This does not, however, constitute a new law, but only shows that the INCREASE OF CAPITAL EMPLOYED leads to an INCREASE in RENT as in the first law, although the INCREASE in a, b, c is not proportional to their ORIGINAL DIFFERENCES OF
22* FERTILITY. If prices were to fall as a consequence of this increased fertility (which is however [relatively] diminished fertility for b and c, for otherwise their product would have to be 230 and 240 respectively), it would by no means be necessary for the rent to rise or even to remain stationary.
[XVIII-1127] As a consequence, a SEQUEL, of the 2nd law, a further APPLICATION of it can be considered:
T h e third law:
If * "improvements in the efficiency of the capital employed in cultivation increase the surplus profits realised on particular spots of land, they increase rent" (1) [p. 244].
The following passages by Jones (TOGETHER with the earlier ones) refer to this:
"Thus the first source of a rise OF FARMERS' RENTS are *the progressive accumulation and the unequal effects of capital on all gradations of soil(2)" ([p.] 234).
/ / T h i s , h o w e v e r , c a n only r e f e r to IMPROVEMENTS w h i c h RELATE DIRECTLY TO THE FERTILITY OF THE SOIL AS, FOR INSTANCE, MANURES, rotation OF
CROPS, etc.//
* "Improvements in the efficiency of the capital employed in cultivation, raise rents by increasing the surplus profits realised on particular spots of land. They invariably produce this increase of surplus profit, unless they augment the mass of raw produce so rapidly as to outstrip the progress of demand. Such improvements in the efficiency of the capital employed, do usually occur in the progress of agricultural skill, and of the accumulation of greater masses of auxiliary capital" * (constant capital). * "A rise of rents from this cause, is generally followed by the spread of tillage to inferior soils, without any decrease in the returns to agricultural capital on the worst spots reclaimed" * ([p.] 244).
//Jones very correctly declares that A FALL in PROFITS does not prove [the decreasing efficiency of] AGRICULTURAL INDUSTRY (alias the FALL in the price of AGRICULTURAL PRODUCE). But h e himself explains most inadequately how such a fall can come about. [According to him] either the amount produced or ITS DIVISION BETWEEN LABOURERS and CAPITALISTS may CHANGE. Jones has as yet no idea of the real law of declining rate of profit.
PROFITS, NOT COMPENSATED BY A RISE OF WAGES, and vice versa," //that is precisely what Ricardo's law says, and it is wrong// "THERE HAS BEEN, it may be argued, SOME DECREASE IN THE PRODUCTIVE POWER OF LABOUR AND CAPITAL" ([p.] 273).
Jones correctly grasps that a relative increase [in the value] of * industrial produce as compared to [that of] agricultural producea
may take place in the progress of society, although, in point of fact, agriculture is progressing absolutely.*
*"In the progress of nations, an increase of manufacturing power and skill usually occurs, greater than that which can be expected in the agriculture of an increasing people. This is an unquestionable truth. A rise in the relative value of raw produce may, therefore, be expected in the advance of nations, without any positive decrease in the efficiency of agriculture" * ([p.] 265).
But this does not explain the positive rise in the money prices of
RAW PRODUCE, UnleSS A FALL IN THE VALUE OF GOLD TAKES PLACE which * i n manufacture is balanced and overbalanced by the still greater fall in [the value of] the commodities produced, while it is not so balanced in agriculture. This may happen, even [XVIII-1128] if no general fall in the value of gold (money) takes place, but when a particular nation, for instance, buys more money* with a DAYS
WORK t h a n THE COMPETING NATIONS DO. Jones explains his reasons for not believing that in England the Ricardian law operates, the abstract possibility of which he does admit HOWEVER.
"If rents should ever rise from the cause stated by Mr. Ricardo,[11] *'the employment of an additional quantity of labour with a proportionally less return', and a consequent transfer to the landlords of a part of the produce obtained on the better soils, then the average proportion of the gross produce taken by the landlords as rent, will necessarily increase.* Secondly,c the * industry of a larger proportion of the population must be devoted to agriculture*" ([pp.] 280-81).
(This last statement is not quite correct. * It is possible that [a] greater portion of secondary labour is employed — more commodities procured by industry and commerce enter the agricultural process, without the gross produce being augmented proportionally, and without more immediate labour being employed. There may be even less employed.*)
"The statistical history of England presents to us 3 facts: *A spread of tillage* accompanied *by a rise in the general rental of the country. A diminution of the proportion of people employed in agriculture. A decrease in the landlord's proportion of the produce*" ([p.] 282).
a Thus in the manuscript. The passage should presumably read: "a relative increase [in the value] of agricultural produce as compared to [that] of industrial produce".— Ed.
b See D. Ricardo, On the Principles of Political Economy, and Taxation, p. 60.— Ed. c Jones has "Firstly".— Ed.
(This last development, just as the decline in the rate of profit, is due to the increase in that part of the product which replaces constant capital. At the same time, rent can increase in both AMOUNT and value.)
"Adam Smith says: * 'In the progress of improvement, rent, though it increases in [proportion to the] extent, diminishes in proportion to the produce of the land'*" ([p.] 284).a
Jones calls c o n s t a n t capital "AUXILIARY CAPITAL".
"It appears from various RETURNS made AT DIFFERENT TIMES to the BOARD OF AGRICULTURE, that the whole capital AGRICULTURALLY EMPLOYED in England, is TO THAT APPLIED TO THE SUPPORT OF LABOURERS, as 5 to [1] ; that is, there are 4 times as much AUXILIARY CAPITAL USED, AS THERE IS OF CAPITAL APPLIED TO THE MAINTENANCE OF THE LABOUR USED DIRECTLY IN TILLAGE. In FRANCE, this ratio = 2 : l " ([p.] 223). * "When a given quantity of additional capital is applied in the shape of the results of past labour, to assist the labourers actually employed, a less annual return will suffice to make the employment of such capital profitable,* and, therefore, * permanently practicable, than if the same quantity of fresh capital were expended in the support of additional labourers" * ([p.] 224). "Let us suppose £100 EMPLOYED upon the Soil IN THE MAINTENANCE OF 3 MEN, PRODUCING THEIR OWN WAGES, and 10% profit on them, OR £110. Let the capital employed be doubled. And first let the fresh capital support 3 additional LABOURERS. The INCREASED PRODUCE must equal £110 = the WAGES of 3 ADDITIONAL M E N + £ 1 0 profit. Next let the same ADDITIONAL £100 be EMPLOYED IN THE SHAPE OF IMPLEMENTS, MANURES, OR ANY RESULTS OF PAST LABOUR, while the NUMBER of ACTUAL LABOURERS remains the same. Let this AUXILIARY CAPITAL last on the average 5 years: the ANNUAL RETURN to repay the capitalist must be 10% PROFIT, and £20 the ANNUAL WEAR AND TEAR OF HIS CAPITAL: or £30 will be the annual RETURN, necessary TO MAKE THE CONTINUOUS EMPLOYMENT of the second £100 PROFITABLE, instead of £110, THE AMOUNT NECESSARY WHEN DIRECT LABOUR WAS EMPLOYED by IT. It will be obvious, therefore, that the ACCUMULATION OF AUXILIARY CAPITAL IN CULTIVATION, WILL BE PRACTICABLE WHEN THE EMPLOYMENT of the same * amount of capital in the support of additional labour has ceased to be so, and that the accumulation of such capital may go on for an indefinite period*" ([pp.] 224-25). "Thus the * increase of auxiliary capital both increases the command of man over the powers of [the] soil, relatively to the amount of [XVIII-1129] labour directly or indirectly employed upon it; and diminishes the annual return necessary to make the progressive employment of given quantities of fresh capital profitable*" ([p.] 227). "If we suppose any capital, £100 for instance, EMPLOYED UPON THE SOIL, wholly in paying the wages of labour, and YIELDING 10% PROFIT, the revenue of the FARMER wiIl='/io that of the LABOURERS. If the capital be trebled, etc., then the REVENUE of the FARMER WILL CONTINUE TO BEAR THE SAME PROPORTION TO THAT OF THE LABOURERS. But if the number of labourers remaining the same, the AMOUNT OF CAPITAL IS DOUBLED, PROFITS become £20, or [1]/[5] of the revenue. If the capital be quadrupled, profits become £40, or [2]/[5] of the revenue of the LABOURERS; if the CAPITAL be increased to £500, PROFITS would become £50, OR HALF THE REVENUE of the LABOURERS. And the WEALTH, the INFLUENCE, and probably to some extent, the numbers of the CAPITALISTS IN THE COMMUNITY, WOULD BE PROPORTIONALLY INCREASED... A great
a A. Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. 1, London, 1835, p. 406.— Ed.
increase of capital usually makes the EMPLOYMENT OF SOME ADDITIONAL DIRECT LABOUR necessary. THIS CIRCUMSTANCE, HOWEVER, WILL NOT PREVENT THE STEADY
PROGRESS OF THE RELATIVE [ i n c r e a s e ] OF THE AUXILIARY CAPITAL" ( [ p p . ] 2 3 1 - 3 2 ) . The first important point in this passage is that, with the increase in capital, the AUXILIARY CAPITAL increases in comparison to the variable capital, in other words, that the latter declines relatively in comparison with the constant capital.
The fact that the ANNUAL RETURNS decline in proportion to the capital advanced if there is an increase in that part of the AUXILIARY CAPITAL which consists of fixed capital, that is, if its turnover period extends over several years — its value only entering into the product annually in the form of depreciation — is not a phenomenon peculiar to agriculture, but a general one. Although, in industry, the raw material worked up during the year increases even more rapidly than the size of the fixed capital. Compare, for example, the amount of raw cotton which A MULE JENNY consumes weekly or annually with that used up by a spinning wheel. But suppose, for example, that in (large-scale) tailoring the same amount of raw material in terms of value.is worked up (although not the same physical amount, the raw material being dearer than that used in spinning), then the annual RETURN in tailoring will be considerably larger than in spinning, because a large part of the (fixed) capital laid out in the latter only enters into the product as annual depreciation.
The value of the annual RETURN in agriculture (where what one can regard as the raw material, the seed, does not increase in the same proportion as the other elements of constant capital, especially fixed capital) is naturally smaller if the capital increases as a result of an increase in the constant capital only and not in the variable. For the variable capital must be entirely replaced in the product, the other [constant capital] only as an annuity in so far as it is consumed annually. If it is assumed that the price of grain is given, when a qr=£2, (3) 220 qrs are required to replace a variable capital of 100 at a profit of 10%, whereas only 60 qrs (=£30) are required to replace a wear and tear amounting to £20 and a profit of £10. A smaller absolute RETURN yields the same profit (as is the case in industry in similar circumstances). Jones' reasoning, however, contains several FALLACIES.
D'abord, it cannot be asserted (on the assumptions made) that the PRODUCTIVE POWERS OF THE SOIL have increased. They have increased in comparison with THE LABOUR EMPLOYED DIRECTLY, BUT NOT compared with THE GENERAL CAPITAL EMPLOYED. All that can be said is that less GROSS PRODUCE is necessary in order to yield the same NET PRODUCE, i.e. the same profit as before.
[XVIII-1130] Further, the increase in the FARMERS revenue in comparison to that of the LABOURERS is important in this special sphere in so far as here the part of the total product WHICH GOES TO PROFIT INCREASES AND GOES ON INCREASING RELATIVELY TO THAT PART WHICH GOES TO THE LABOURERS. As a result, the WEALTH a n d INFLUENCE of the FARMING CAPITALIST AS COMPARED TO HIS LABOURERS undoubtedly grow and expand. But Jones seems to make the following calculation: [£] 10 on 100 is Vio- £ 2 0 on £ 1 2 0 (i.e. 100 expended in labour and 20 depreciation) = 1/6 and the £ 2 0 is Vs of the sum paid out to the workers, etc. But nothing is more fallacious than that, GENERALLY SPEAKING, the rate of profit can increase while the amount of capital laid out on labour declines. Exactly the opposite takes place. Proportionally less SURPLUS VALUE is produced and the rate of profit therefore falls. As regards the FARMER specifically (and also each particular enterprise taken in isolation) the rate of profit may remain the same whether he employs 3 o r 6 workers with a capital of 200.
The fact that rent=suRPLUs PROFIT, i.e. the excess over and above the AVERAGE PROFIT, presupposes not only that agriculture is formally subordinated to capitalist production, but also that equalisation of rates of profit takes place in the various spheres of production, specifically between agriculture and industry. Otherwise rent may be equal to a SURPLUS over WAGES (which is also profit). It may even represent a PART OF PROFIT or be a DEDUCTION FROM WAGES.
2) Richard Jones, An Introductory Lecture on Political Economy, delivered at King's College, London, 27th February, 1833. To which is added a Syllabus of a Course of Lectures on the Wages of Labour, London, 1833
and into "NET PROFITS OF CAPITAL OR INTEREST" (CH. IV) is dealt with at length — is supposed to have discovered this division, which was already known in 1821 and 1822, can be explained only by the fact that Senior — a mere apologist of the existing order and consequently a vulgar economist — is very congenial to Mr. Roscher. // By "LABOUR fund" Jones understands
* "the aggregate amount of the revenues consumed by the labourers, whatever be the source of those revenues"* ([Syllabus, p.] 44).
The main point (the term LABOUR fund probably comes from Malthus? [183]) in Jones' work is that the whole economic structure of society revolves around the form of labour, in other words, the form in which the worker appropriates his means of subsistence, or that part of his pv oduct UPON WHICH HE LIVES. This LABOUR fund has various forms and capital is merely one of them, it is a form which arises rather late in the historical development. It is only in Jones' work that the important differentiation — between labour that is paid out of capital and labour paid directly out of revenue — made by Adam Smith receives the full elaboration of which it is capable and becomes a major key for understanding the various economic structures of society. And with it disappears the absurd notion that, because in capital the worker's revenue first takes the form of something appropriated, alias saved, by the capitalist, this signifies more than a formal difference.
"Even among the West European NATIONS we still find the EFFECTS of the * social conformation which results from the peculiar mode of distributing the produce of their land and labour, established [XVIII-1131] in the early period of the existence of agricultural nations* //namely A CLASS OF AGRICULTURAL LABOURERS, secondly LANDLORDS, thirdly MENIALS, RETAINERS and ARTISANS who participate in the consumption of the REVENUE of the LANDLORDS either directly or indirectly//" ([An Introductory Lecture, p.] 16). "Capital, that is, ACCUMULATED WEALTH EMPLOYED WITH A VIEW TO PROFIT is the GREAT AGENT, the motive POWER which causes the CHANGES that take place in THIS ECONOMIC CONFORMATION". ... "Among all NATIONS, you will find THE DISTINCT DIVISION OF WEALTH HERE POINTED OUT, acting * a most important part in modifying the ties which connect the different classes of the community, and in determining their productive power...* In Asia and in part of Europe (it was formerly the case throughout Europe) the HONAGRICULTURAL CLASSES are almost wholly maintained from the INCOMES of the other CLASSES, principally from the incomes of the * landholders. If you want the labour of an artisan, you provide him with materials; he comes to your house, you feed and pay him his wages. After a time, the capitalist steps in, he provides the materials, he advances the wages of the workman, he becomes his employer, and is the owner of the article produced, which he exchanges for your money ... an intermediate class * appears between the LANDOWNERS and a portion of the NON-AGRICULTURISTS, upon which * intermediate class those non-agriculturists are dependent for employment and subsistence. The ties which formerly bound the community together are worn out and fall to pieces; other bonds, other principles of cohesion, connect its different classes: new economical relations spring into being, etc. ...* Here in England not only the * great body of non-agriculturists almost wholly depend on the pay of capitalists, but the labouring cultivators of the soil are their servants too*" ([p.] 16 sqq.).
T h e Syllabus of a Course of Lectures on the Wages of Labor differs f r o m t h e b o o k ON RENT in this: T h e b o o k e x a m i n e s t h e d i f f e r e n t f o r m s of l a n d e d p r o p e r t y t o w h i c h d i f f e r e n t SOCIAL FORMS OF LABOUR c o r r e s p o n d . I n t h e Syllabus, t h e s e DIFFERENT FORMS OF LABOUR a r e t h e p o i n t of d e p a r t u r e a n d b o t h t h e d i f f e r e n t f o r m s of l a n d e d p r o p e r t y a n d CAPITAL a r e r e g a r d e d as t h e i r OFFSPRING. T h e d e t e r m i -nate social f o r m of the worker ' s l a b o u r c o r r e s p o n d s t o t h e f o r m w h i c h t h e c o n d i t i o n s of l a b o u r — that is, in p a r t i c u l a r , t h e l a n d , n a t u r e , since this relationship e m b r a c e s all o t h e r s — assume i n r e s p e c t of the w o r k e r . B u t t h e f o r m e r is i n fact m e r e l y t h e objective expression of the latter.
W e shall see, t h e r e f o r e , that t h e d i f f e r e n t f o r m s of the LABOUR f u n d c o r r e s p o n d t o t h e d i f f e r e n t ways i n w h i c h t h e w o r k e r c o n f r o n t s his o w n c o n d i t i o n s of p r o d u c t i o n . T h e m a n n e r i n w h i c h h e a p p r o p r i a t e s his p r o d u c t (or p a r t of it) d e p e n d s o n his r e l a t i o n s t o his c o n d i t i o n s of p r o d u c t i o n .
"The LABOUR fund," says Jones, "may be divided into 3 classes: 1) REVENUES which are produced by the LABOURERS who consume them, and never belong to any other persons" //in this case, quite irrespective of the particular form, the worker must in fact be the owner of his instruments of production//; 2) "REVENUES BELONGING TO CLASSES DISTINCT FROM THE LABOURERS, AND EXPENDED BY THOSE CLASSES IN THE DIRECT MAINTENANCE OF LABOUR"; 3) "Capital in its proper sense. These DISTINCT BRANCHES of the LABOUR fund may all be observed IN OUR OWN COUNTRY; but WHEN WE LOOK ABROAD, WE SEE THOSE PARTS of that fund, which are the most limited here, CONSTITUTING ELSEWHERE THE MAIN SOURCES OF SUBSISTENCE TO THE POPULATION AND DETERMINING THE CHARACTER AND POSITION OF THE MAJORITY OF THE PEOPLE, etc." ([pp.] 45-46).
Ad a). "The WAGES OF LABOURING CULTIVATORS, OR OCCUPYING PEASANTS. These LABOURING CULTIVATORS OR PEASANTS are HEREDITARY O C C U P I E R S , PROPRIETORS, TENANTS. The TENANTS are SERFS, METAYERS, COTTIERS. The last peculiar to Ireland. Something resembling RENT or profit is often mixed up with the REVENUES of PEASANT CULTIVATORS OF ALL CLASSES, but WHEN THEIR SUBSISTENCE IS ESSENTIALLY DEPENDENT ON THE REWARD OF THEIR MANUAL LABOUR, they may be regarded as WAGE LABOURERS.
"Thus, among the LABOURING PEASANTS there are: "a) HEREDITARY OCCUPIERS, WHO ARE LABOURING [XVIII-1132] CULTIVATORS. ANCIENT GREECE. MODERN ASIA, more especially INDIA.
"ß) PROPRIETORS. FRANCE, GERMANY, AMERICA, AUSTRALIA, Ancient Palestine. "y) COTTIERS" ([Syllabus, pp.] 46-48).
T h e c h a r a c t e r i s t i c f e a t u r e [of t h e s e g r o u p s ] is t h a t t h e w o r k e r r e p r o d u c e s t h e LABOUR f u n d f o r himself. It is not transformed into capital. J u s t as the worker directly p r o d u c e s t h e l a b o u r f u n d , so h e a p p r o p r i a t e s it directly, a l t h o u g h his SURPLUS LABOUR m a y b e appropriated either wholly or in part by him himself or may be appropriated entirely by other classes, depending on the particular form which his relation to his conditions of production assumes. It is entirely due to economic prejudice that Jones describes this category as WAGE LABOURERS. Nothing which characterises WAGE LABOURERS exists amongst them. It is a pretty bourgeois economic fancy that, because that part of the product which the worker appropriates to himself under capitalism appears as WAGES, the part of his product which the worker himself consumes must be WAGES.
Ad b. "In England [the labourers are] limited to * menial servants, soldiers, sailors,* and * a few artisans working on their own account, and paid out of the incomes of their employers. Over a considerable portion of the earth this branch of the General Labour Fund maintains nearly the whole of the non-agricultural labourers. Former prevalence of this Fund in England. Warwick the king-maker.[184] The English gentry. Present prevalence in the East. Mechanics, menials. Large bodies of troops so maintained. Consequences of the concentration of this Fund throughout Asia in the hands of the sovereign. Sudden rise of cities. Sudden desertion. Samarcand; Candahar and others*" ([pp.] 48-49).
Jones overlooks two main forms: The Asiatic communal system with its unity of agriculture and industry. And secondly, the urban craft guild system of the Middle Ages, [which] also existed partially in the Ancient World.
Ad c. * " Capital should never be confounded with the General Labour Fund of the World, of which a large proportion consists of revenues. All branches of a nation's revenues ... contribute to the accumulations by which capital is formed. They contribute in different proportions in different countries and different stages of society. When wages and rents contribute the most" * ([p.] 49 sqq.).
Because SURPLUS LABOUR is converted into capital (instead of being exchanged directly as revenue for labour), capital seems to appear as something saved out of revenue. Jones considers it mainly from this point of view. And in THE PROGRESS OF SOCIETY the great mass of capital does, in fact, consist of revenue reconverted in this way. But in the capitalist production the original LABOUR FUND itself likewise appears as something saved by the capitalist. The reproduced LABOUR FUND does not remain in the possession of the worker as in case a), but appears as the property of the capitalist and confronts the worker as the property of someone else. And this POINT is not elaborated by Jones.
What Jones has to say about the RATE OF PROFITS and its influence on accumulation in the COURSE [of Lectures] is rather inadequate:
//What Jones does not understand is how, as a result of the *"may" increase, the rate of profit sinks because "the quantities of capital employed relatively to the numbers of [the] population have increased".* But he approaches close to the correct view.//
* "Inducements and facilities to accumulate may increase... A low rate of profit is ordinarily accompanied by a rapid rate of accumulation, relatively to the numbers of [the] people as in England; * and a * high rate of profit by a slower rate of accumulation, [XVIII-1133] relatively to the numbers of [the] people,* as in Poland, Russia, India, etc." ([p.] 50 sqq.).
Where the rate of profit is high (apart from cases where, as in North America, there is capitalist production on the one hand and, on the other hand, the VALUE OF ALL AGRICULTURAL PRODUCE is LOW) it is GENERALLY due to the fact that capital consists PRINCIPALLY of variable capital, that is, direct labour predominates. Assume a capital of 100, of which Vs is variable capital. And assume further that the SURPLUS LABOUR amounts to Vs of a working day. In this case, profit=10%. Assume that [4]/s [of the capital] consists of variable capital and that SURPLUS LABOUR='/6 of the working day. In this case, profit would = 1 6 % .
"ERROR of the DOCTRINE, that whenever, in the progress OF NATIONS, the * rate of profits declines, the means of providing subsistence for an increasing population must be becoming less. Foundations of this error: 1) A mistaken notion, that accumulation from profits must be slow where the rate of profits is low, and rapid where it is high. 2) A mistaken belief, that profits are the only source of accumulation. 3) A mistaken belief that all the labourers of the earth subsist on accumulations and savings from revenue, and never on revenue itself" (I.e.).
"Alterations which take place in the economical structure of nations when capital assumes the task of advancing the wages of labour... The a m o u n t of c a p i t a l d e v o t e d to the m a i n t e n a n c e of l a b o u r may vary, independently of a n y c h a n g e s in the w h o l e a m o u n t of capital . " * //This proposition is important.// * "...Great fluctuations in the amount of employment, and great suffering, may sometimes be observed to become more frequent as capital itself becomes more plentiful ... Periods of gradual transition of the labourers from dependence on one fund to dependence on another... Transfer of the labouring cultivators to the pay of capitalists... Transfer of non-agricultural classes to the employ of capitalists" * (I.e.).
What Jones calls "TRANSFER" here, is what I call "primitive accumulation". This is merely a formal difference. It is also in contradiction to the absurd notion of "SAVINGS".
3) Richard Jones, Text-book of Lectures on the Political Economy of Nations, Hertford, 1852
* "The productiveness of the industry of nations really depends on 2 circumstances: First, on the fertility or barrenness of the original sources^' //land and water// "of the wealth they produce. Secondly, on the efficiency of the labour they apply in dealing with those sources, or fashioning the commodities obtained from them" ([p.] 4).
"The efficiency of human labour will depend: 1) on the continuity with which it is exerted; 2) on the knowledge and skill with which it is applied, to effect the purpose of the producer; 3) on the mechanical power by which it is aided" ([p.] 6).
"The power exerted by human labourers in producing wealth ... may be increased: 1) by enlisting in their service, motive forces greater than their own..., 2) by employing any amount or kind of motive [XVIII-1134] forces at their command with an increased mechanical advantage.* For example, an ENGINE OF 40 HORSEPOWER on a railway has a different effect to one on a TURNPIKE ROAD" ([p.] 8). * "The best form of a plough will do as much work, and as well, with two horses, as the worst with four" ([p.] 9).
"The steam engine is not a mere tool, it gives additional motive force, not merely the means of using forces the labourer already possesses, with a greater mechanical advantage" * ([p.] 10, note).
This is, therefore, according to Jones, the difference between a TOOL and MACHINERY. The former provides the worker with means for employing the power he possesses to a greater mechanical advantage, the latter provides an increase of MOTIVE FORCE. (?)
* "Capital ... consists of wealth saved from revenue, and used with a view to profit" ([p.] 16). "The possible sources of capital ... are obviously all the revenues of all the individuals composing a community, from which revenues it is possible that any saving can be made. The particular classes of income which yield the most abundantly to the progress of national capital, change at different stages of their progress, and are therefore found entirely different in nations occupying different positions in that progress"* (I.e.). "PROFITS are therefore FAR FROM BEING THE ONLY SOURCES FROM WHICH CAPITAL IS FORMED OR INCREASED. I t is e v e n a n UNIMPORTANT SOURCE OF ACCUMULATION, compared with WAGES and * rents, in the earlier stages of society" ([p.J 20). "When a considerable advance in the powers of national industry has actually taken place, profits rise into comparative importance as a source of accumulation"* ([p.] 21).
According to this, capital is a part of the WEALTH which constitutes revenue, the part which is expended not as revenue but for the purpose of producing profit. Profit is already a form of surplus value which specifically presupposes capital. If the capitalist mode of production, i.e. capital, is postulated, then the explanation is correct; in other words, if one postulates what has to be explained. But here Jones means all revenue SPENT, NOT AS REVENUE, but with the aim of enrichment, that is, PRODUCTIVELY.
Two aspects are, however, important in this context: First: To a certain extent accumulation of wealth takes place in all stages of economic development, that is, partly an expansion of the scale of production and partly, the accumulation of treasure, etc. As long as WAGES and RENT predominate — that is, according to what was said earlier, as long as the greater part of the SURPLUS LABOUR and SURPLUS PRODUCE which does not accrue to the worker himself, goes to the landowner (the State in Asia) and, on the other hand, the worker reproduces his LABOUR fund himself, i.e. he not only produces his own WAGES himself, but pays them to himself, usually, moreover (almost always IN THAT STATE OF SOCIETY), h e is also able to appropriate
AT LEAST a part of his SURPLUS LABOUR and his SURPLUS PRODUCT — in this state of society, WAGES and RENT are the main sources of accumulation as well. (In these circumstances profit is restricted to merchants, etc.) Only when the capitalist production has become predominant, when it does not merely exist sporadically, but has subordinated to itself the mode of production of society; when IN FACT the capitalist DIRECTLY APPROPRIATES THE WHOLE SURPLUS LABOUR AND SURPLUS PRODUCE IN THE FIRST INSTANCE, ALTHOUGH HE HAS TO PAY AWAY PORTIONS OF IT TO THE LANDOWNER, etc.— only then does profit become the PRINCIPAL SOURCE OF CAPITAL, OF ACCUMULATION, OF WEALTH SAVED FROM REVENUE, AND USED WITH A VIEW TO PROFIT. This at the same time presupposes (as is implicit in the domination of the capitalist mode of production) that "A CONSIDERABLE ADVANCE IN THE POWERS OF NATIONAL INDUSTRY HAS ACTUALLY TAKEN PLACE".
Jones thus answers those asses who imagine that no accumulation can take place without the profit yielded by capital or who justify profit by saying that the capitalist makes a sacrifice in order
TO SAVE FROM his REVENUE FOR PRODUCTIVE PURPOSES,186 by pointing out that in this particular (capitalist) mode of production the function "OF ACCUMULATING" devolves principally on the capitalist whereas, in previous modes of production, it was the labourer himself and, in part, the LANDLORD who played the chief roles in this process and profit played hardly any part in it. Naturally the function [of accumulating] always devolves 1) on those who pocket the SURPLUS VALUE and, 2) a m o n g those who pocket the SURPLUS VALUE, in particular on the person who also acts as agent in the production process itself. By saying, [XVIII-1135] therefore, that profit is justified by the fact that the capitalist "SAVES" HIS CAPITAL out of PROFIT and that he fulfils the function of accumulating, one merely says that the capitalist mode of production is justified because it exists — this, however, applies equally to the modes of production which preceded it and those which will succeed it. If one says that otherwise accumulation would be impossible, then one forgets that this particular method of accumulation THROUGH THE AGENCY OF THE CAPITALIST has come into existence at a certain historical stage and is moving towards the historical date when it will cease to exist.
Secondly, once so much ACCUMULATED WEALTH has been concentrated in the hands of capitalists per fas et nefas* that they can dominate production, then the greater part OF EXISTING CAPITAL — AFTER A CERTAIN LAPSE OF TIME — can BE CONSIDERED AS MERELY ORIGINATING FROM PROFIT (REVENUE), that is, from capitalised surplus value.
A point which Jones does not sufficiently emphasise, and which he really only implies tacitly, is this: If the LABOURING PRODUCER pays himself his own WAGES and if his product does not at first assume the "SHAPE" of OTHER PEOPLE'S REVENUE FROM which "SAVINGS" are made
AND THEN PAID BACK BY THEM TO THE LABOURER, it is necessary that the labourer be in possession of his conditions of production (as property owner, or TENANT, or HEREDITARY OCCUPIER, etc.). In order that his WAGES and consequently the LABOUR FUND can confront him as alien capital, these conditions of production must have been lost to him and have assumed the SHAPE OF alien PROPERTY. Only after his conditions of production together with his LABOUR FUND have been wrested from him and when, as capital, they are rendered independent in relation to him, does the further process begin, which is not concerned with the mere reproduction of these original conditions of production, but with their further development so that both the conditions of production and the LABOUR FUND confront the labourer as something "SAVED" FROM OTHER PEOPLE'S REVENUE IN ORDER TO BE CONVERTED INTO CAPITAL. By losing possession of his conditions of production, and hence, of his LABOUR FUND, the labourer also loses the function of accumulating, and every addition he makes to wealth appears in THE SHAPE OF OTHER PEOPLE'S REVENUE which MUST FIRST BE "SAVED" BY THOSE PEOPLE, THAT IS TO SAY, NOT SPENT
AS REVENUE,[if it is] TO PERFORM THE FUNCTIONS OF CAPITAL AND LABOUR FUND for the LABOURER.
Since Jones himself describes a state of affairs in which things have not yet reached this stage and where unity prevails, he certainly should have described this "separation" as the real generation process of capital. Once this separation exists, this process does indeed take place and it is CONTINUED and extended, since the SURPLUS LABOUR of the worker always confronts him as the revenue of others, through the "SAVING" of which alone wealth can be ACCUMULATED and the scale of production extended.
The reconversion of revenue into capital. If capital //i.e. the separation of the conditions of production from the labourer// is
a By fair means or foul.— Ed.
the source of profit //i.e. of the fact that SURPLUS LABOUR appears as the revenue of capital and not of labour// then profit becomes the source of capital, of new capital formation, i.e. of the fact that the ADDITIONAL conditions of production confront the worker as capital, as a means for maintaining him as a worker and of appropriating his SURPLUS LABOUR anew. T h e original unity between the worker and the conditions of labour //abstracting from slavery, where the labourer himself belongs to the objective conditions of labour// has two main forms: the Asiatic communal system (primitive commun-ism) and small-scale agriculture based on the family (and linked with domestic industry) IN ONE OR THE OTHER FORM. Both are embryonic forms and both are equally unfitted to develop labour as social labour and the productive power of social labour. Hence the necessity for the separation, for the rupture, for the antithesis of labour a n d property (by which property in the conditions of production is to be understood). T h e most extreme form of this rupture , a n d the one in which the PRODUCTIVE FORCES OF SOCIAL LABOUR ARE also MOST POWERFULLY DEVELOPED, is capital. T h e original unity can be re-established only on the material foundation which capital creates and by means of the revolutions which, in the process of this creation, the working class and THE WHOLE SOCIETY UNDERGO.
Another point which Jones does not sufficiently emphasise is this:
Revenue which is exchanged as such against labour — if it is not the revenue of a SELF-SUSTAINING LABOURER who employs a SECONDARY WORKMAN — is the revenue of the LANDHOLDER, itself derived from the rent which the SELF-SUSTAINING LABOURER pays him, and which the landlord does not entirely consume in natura, either by himself or together with his MENIALS and RETAINERS, but a part of which he uses to buy the products or services of secondary WORKMEN and so on. This always presupposes the first relationship.
[XVIII-1136] //In the same way as part of the profit is classified as interest, EVEN IF THE INDUSTRIAL CAPITALIST EMPLOYS ONLY HIS OWN CAPITAL, because this form [of revenue] has a separate mode of existence, so, given the capitalist mode of production, EVEN IF A LABOURER OWNS HIS
MEANS OF PRODUCTION, EVEN WITHOUT EMPLOYING ANY OTHER LABOURER, IT IS CONSIDERED AS CAPITAL and the part of his own labour realised by him au delà[3] the common WAGE appears to be PROFIT yielded by his capital. H e himself is then divided u p into DIFFERENT economic categories. As HIS OWN WORKMAN, HE GETS HIS WAGES, AND AS CAPITALIST, HE GETS HIS PROFITS. This observation belongs to the chapter "REVENUE AND ITS SOURCES".187//
a Over and above.— Ed.
* "There is a difference between the influence, on the productive powers of nations, of that wealth which has been saved, and is dispensed as wages with a view to profit; and of that wealth which is advanced out of revenue for the support of labour. With a view to this distinction, I use the word capital to denote that portion of wealth exclusively which has been saved from revenue, and is used with a view to profit" ([pp.] 36-37). "We might ... comprise under the term capital, all the wealth devoted to the maintenance of labour, whether is has gone through any previous process of saving or not, ...we must, then, in tracing the position of the labouring classes, and of their paymasters in different nations and under different circumstances, distinguish between capital which has been saved, and capital which has undergone no process of accumulation; between, in short, capital which is revenue, and capital which is not revenue" ([p.] 36). "In every nation of the Old World, except England and Holland, the wages of the agriculturists are not advanced out of the funds which have been saved and accumulated from revenues, but are produced by the labourers themselves, and never exist in any other shape than that of a stock for their own immediate consumption" * ([p.] 37).
What distinguishes Jones from the other economists (except perhaps Sismondi) is that he emphasises that the essential feature of capital is its socially determined form, a n d that he reduces the whole difference between the capitalist and other modes of production to this distinct form. It is that labour is directly converted into capital and that, on the other hand, this capital buys labour not for the sake of its use value, but in order to valorise itself, to create surplus value (a larger amount of exchange value) and to use it "WITH A VIEW TO PROFIT".
This shows, however, at the same time that the "SAVING OF REVENUE" in order to convert it into capital a n d "accumulation" are distinguished from other methods only through the form in which "WEALTH IS DEVOTED TO THE MAINTENANCE OF LABOUR". T h e AGRICULTURAL LABOURERS in England and Holland who receive WAGES which are "ADVANCED" by capital PRODUCE "THEIR WAGES THEMSELVES" just like the French PEASANT OR THE SELF-SUSTAINING RUSSIAN SERF. If the production process is considered in its continuity, then the capitalist advances the LABOURER as "WAGES" today only a part of the product which the LABOURER "produced" yesterday. Thus the difference [between the capitalist and other modes of production] does not lie in the fact that, in one case,THE LABOURER DOES PRODUCE HIS OWN WAGES AND IN THE OTHER [case] DOES NOT PRODUCE THEM. The difference lies in the fact that [in one case] his product appears as WAGES; that in this case, the worker's product (the part of the product produced by the worker which makes u p the LABOUR FUND) 1) appears as the revenue of others; 2) that then, however, it is not expended as revenue, and not spent on labour by means of which revenue is directly consumed, but, 3) that it confronts the worker as capital which returns to him this portion of the product, in exchange not merely
23-613 for an equivalent but for more LABOUR than is objectified in the product. Thus his product appears 1) as revenue of others, 2) as something which is "SAVED" FROM REVENUE IN ORDER TO BE EMPLOYED IN THE PURCHASE OF LABOUR WITH A VIEW TO PROFIT, i.e. as capital. And this process in which his own product confronts him as capital, is described in the following way: the LABOUR FUND HAS CONE "THROUGH A PREVIOUS PROCESS OF SAVING", "HAS UNDERGONE A PROCESS OF ACCUMULATION", and prior TO BEING CONVERTED INTO THE LABOURERS MEANS OF SUBSISTENCE, it "EXISTS IN ANOTHER SHAPE" (here it is expressly stated that merely a change of form takes place) "THAN THAT OF A STOCK FOR THE LABOURERS IMMEDIATE CONSUMPTION". The whole difference lies in the transformation which the LABOUR FUND produced by the worker undergoes before it comes back to him in the form of WAGES. In the CASE of SELF-SUSTAINING PEASANTS or independent artisans, it therefore never assumes the form of "WAGES".
[XVIII-1137] "SAVING" and "accumulation"—AS FAR AS THE LABOUR FUND is CONCERNED — are mere names here for the transformations which the worker's product undergoes. T h e SELF-SUSTAINING LABOURER consumes his product just like the WAGE LABOURER, or rather, the latter does so just like the former. But in the case of the wage earner, his product appears to be SOMETHING SAVED OR ACCUMULATED FROM [the revenue of] OTHERS, THE CAPITALISTS REVENUE. In FACT, however, it is this process that makes it possible for the capitalist "TO SAVE" OR "ACCUMULATE" THE LABOURER'S SURPLUS LABOUR for HIS own purposes, and this is the reason why Jones places such great emphasis on the fact that, in non-capitalist modes of production, ACCUMULATION does not arise FROM PROFITS, but from WAGES, in other words, from the income of the SELF-SUSTAINING CULTIVATOR or the artisan who exchanges his labour directly for revenue (otherwise how could the MIDDLE CLASSES have arisen out of the latter?) and from the LANDLORD'S RENT. But for the LABOUR FUND to undergo these transformations, the conditions of production must confront the labourer as capital, which is not the case in other forms. The expansion of WEALTH does not appear to be due to the LABOURER in the latter case, but to the SAVING of profit, the reconversion of surplus value into capital, in the same way as the LABOUR FUND itself (before its expansion as a result of new accumulation) confronts the labourer as capital.
"SAVING", taken literally, only makes sense with regard to the capitalist who capitalises his revenue, in contrast to the capitalist who consumes his revenue, i.e. SPENDS it AS REVENUE, but makes NO SENSE WHATEVER when applied to relations BETWEEN CAPITALIST AND LABOURER.
Two cardinal FACTS about capitalist production: [First,] concentration of the means of production in a few hands so that they no longer appear as the immediate property of the individual labourer, but as factors of social production, even though in the first instance they appear as the property of the non-working capitalists, who are their TRUSTEES in bourgeois society and enjoy all the fruits of this TRusTEEship. Second: Organisation of labour itself as social labour brought about by cooperation, division of labour and the linking of labour with the results of social domination over natural forces. In both these ways, capitalist production eliminates private property and private labour, even though as yet in antagonistic forms.
The main difference between productive and unproductive labour noted by Adam Smith, is that the former is exchanged directly for capital and the latter for revenue — and the full meaning of this difference emerges first in Jones. His work shows that the first kind of labour is characteristic of the capitalist mode of production, and the second — where it is predominant — belongs to earlier modes of production, and, where it merely plays a subordinate role, is restricted (or ought to be restricted) to spheres which are not directly concerned with the production of wealth.
* " Capital is the instrument through which all the causes which augment the efficiency of human labour, and the productive power of nations, are brought into play... Capital is the stored-up results of past labour used to produce some effect in some part of the task of producing wealth" * [p. 35].
(In Note, ib., PAGE 35, he says:
* "It will be convenient, and it is reasonable, to consider the act of production as incomplete till the commodity produced has been placed in the hands of the person who is to consume it; all done previously has that point in view. The grocer's horse and cart which brings up our tea from Hertford to the College, is as essential to our possession of it for the purpose of consumption as the labour of the Chinese who picked and dried the leaves.")
"But ... this capital ... does not perform in every community all the tasks it is capable of performing. It takes them up gradually and successively in all cases; and it is a remarkable and an all-important fact, that the one special function, the performance of which is essential to the serious advance of the power of capital in all its other functions, is exactly that which, in the case of the greater portion of the labourers of mankind, capital has never yet fulfilled at all" ([pp.] 35-36). "I allude to the advance of the wages of labour" ([p.] 36). "The wages of labour are advanced by capitalists in the case of less than one-fourth of the labourers of the earth." "This fact ... of vital importance in accounting for the comparative progress of nations" (I.e.).
[XVIII-1138] "Capital, or accumulated stock, after performing various other functions in the production of wealth, only takes up late that of advancing to the labourer his wages" * ([p.] 79).
In the last sentence on PAGE 79, capital is indeed described as a "relation", not merely as "ACCUMULATED STOCK" but as a quite definite
23* relation of production. T h e "STOCK" cannot "TAKE UP THE FUNCTION OF ADVANCING WAGES". Jones, moreover, emphasises that it is the basic form of capital—the form which gives the whole process of social production its distinctive character, dominates it, leads to a quite new development of the productive powers of social labour, and revolutionises all social and political relationships — that confronts wage labour, and pays WAGES. H e emphasises that before capital performs this function, which is of decisive importance, it fulfils other functions and appears in other, subordinate and historically earlier forms, but that its POWER IN ALL ITS FUNCTIONS only develops fully when it steps forth as industrial capital. O n the other hand, in LECTURE III " O N THE GRADUAL MANNER IN WHICH CAPITAL OR CAPITALISTS" //there's the rub in this OR ; ACCUMULATED STOCK becomes capital only because of this personification// "UNDERTAKE SUCCESSIVE FUNCTIONS IN THE PRODUCTION OF WEALTH",[3] Jones does not indicate what the previous FUNCTIONS are. They can indeed only be those of capital engaged in commerce or banking. But although Jones comes so close to the correct concept and even expresses it in a certain fashion, nevertheless, being an economist, he is so enmeshed in bourgeois fetishism that not even the devil could be certain that he does not mean that "ACCUMULATED STOCK" as such can perform different
FUNCTIONS.
T h e sentence:
* "Capital, or accumulated stock, after performing various other functions in the production of wealth, only takes up late that of advancing to the labourer his wages" * ([p.] 79)
is the most complete expression of the contradiction; on the one hand, it expresses a correct historical conception of capital, but, on the other hand, a shadow is cast over it by the narrow-minded notion of the economist that "STOCK" as such is "capital". Hence
"THE ACCUMULATED STOCK" becomes a person who "TAKES UP THE FUNCTION OF ADVANCING WAGES" TO MEN. Jones is still rooted in economic prejudice when he solves [the problem], a solution becomes necessary as soon as the capitalist mode of production is regarded as a determinate historical category and no longer as an eternal natural relation of production.
O n e can see what a great leap forward there was from Ramsay to Jones. Ramsay regards precisely that FUNCTION of capital which makes it capital — THE ADVANCING OF WAGES — AS ACCIDENTAL, due only to the poverty of the people, and irrelevant to the production
a See R. Jones, Text-book of Lectures on the Political Economy of Nations..., p. 35 sqq.— Ed.
process as such. In this narrow circumscribed manner, Ramsay denies the necessity for the capitalist mode of production. Jones, on the other hand, //strange that they were both priests of the ESTABLISHED CHURCH.[188] The ministers of the English CHURCH seem to think more than their continental [brethren]// demonstrates that it is precisely this function that makes capital capital and gives rise to the most characteristic features of the capitalist mode of production. He shows how this form occurs only at a certain level of development of the productive powers and that it then creates an entirely new material basis. Consequently, however, his comprehension of the fact that this form "can be superseded" and of the merely transitory historical necessity for this form, is quite different from that of Ramsay and more profound. He by no means regards capitalist relations as eternal.
* "A state of things may hereafter exist, and parts of the world may be approaching to it, under which the labourers and the owners of accumulated stock may be identical; but in the progress of nations ... this has never yet been the case, and to trace and understand that progress, we must observe the labourers gradually transferred from the hands of a body of customers, who pay them out of their revenues, to those of a body of employers, who pay them by advances of capital out of the returns to which the owners aim at realising a distinct revenue. This may not be as desirable a state of things as that in which labourers and capitalists are identified, but we must still accept it as constituting a stage in the march of industry, which has hitherto marked the progress of advancing nations. At that stage the people of Asia have not yet arrived" * ([p.] 73).
[XVIII-1139] Here Jones states quite explicitly that capital and the capitalist mode of production are to be "accepted" merely as a transitional phase in the development of social production, a phase which, if one considers the development of the productive powers of social labour, constitutes a gigantic advance on all preceding forms, but which is by no means the end result; on the contrary, the necessity of its destruction is contained in the antagonism between "OWNERS OF ACCUMULATED WEALTH" and the "ACTUAL LABOURERS". Jones was a professor of political economy at Haileybury and the successor to Malthus. One can see here how the real science of political economy ends by regarding the bourgeois production relations as merely historical ones, leading to higher relations in which the antagonism on which they are based is resolved. By analysing them political economy breaks down the apparently mutually independent forms in which wealth appears. This analysis (even in Ricardo) goes so far that 1) The independent, material form of wealth disappears and wealth is shown to be simply the activity of men. Everything which is not the result of human activity, of labour, is nature and, as such, is not social wealth. The phantom of the world of goods fades away and it is seen to be simply a continually disappearing and continually reproduced objectivisation of human labour. All solid material wealth is only transitory materialisation of social labour, crystallisation of the production process whose measure is time, the measure of a movement itself. 2) The manifold forms in which the various component parts of wealth are distributed amongst different sections of society lose their apparent independence. Interest is merely a part of profit, rent is merely surplus profit. Both are consequently merged in profit, which itself can be resolved in surplus value, that is, to unpaid labour. The value of the commodity itself, however, can only be reduced to labour time. The Ricardian school reaches the point where it rejects one of the forms of appropriation of this surplus value — landed property (rent)—as useless, in so far as it is pocketed by private individuals. It rejects the idea that the landowner is an agent of capitalist production. The antithesis is thus reduced to that between capitalist and wage labourer. This relationship, however, is regarded by the Ricardian political economists as given, as a natural law, on which the production process itself is based. The later economists go one step further and, like Jones, admit only the historical justification for this relationship. But from the moment that the bourgeois mode of production and the conditions of production and distribution which correspond to it are recognised as historical, the delusion of regarding them as natural laws of production vanishes and the prospect opens up of a new society, [a new] economic formation of society, to which the bourgeois mode of production is only the transition.
//The third section[4] "Capital and Profit" to be divided in the following way: 1) Conversion of surplus value into profit. Rate of profit as distinguished from rate of surplus value. 2) Conversion of profit into average profit. Formation of the general rate of profit. Transformation of values into prices of production. 3) Adam Smith's and Ricardo's theories on profit and prices of production. 4) Rent. (Illustration of the difference between value and price of production.) 5) History of the so-called Ricardian law of rent. 6) Law of the fall of the rate of profit. Adam Smith, Ricardo, Carey. 7) Theories of profit. Query: whether Sismondi and Malthus should also be included in the Theories of Surplus Value. 8) Division of profit into industrial profit and interest. Mercantile capital. Money capital. 9) Revenue AND ITS SOURCES. The question of the relation between the processes of production and distribution also to be included here. 10) REFLUX movements of money in the process of capitalist production as a whole. 11) Vulgar economy. 12) Conclusion. "Capital and wage labour".//
We still [have] to consider a number of things in Jones' work: 1) In what way, in particular, the capitalist mode of production— the ADVANCING OF WAGES BY CAPITAL — alters the forms and the productive powers. 2) His observations regarding accumulation and the rate of profit.
But, first of all, another point has to be emphasised.
[XVIII-1140] *"The capitalist has been but an agent to give the labourers the benefit of the expenditure of the revenues of the surrounding customers, in a new form and under new circumstances" * ([p.] 79).
This refers to the NON-AGRICULTURAL LABOURERS, whose earnings previously came direct from the revenue of the LANDHOLDERS, etc. Whereas previously they exchanged their labour (or the product of their labour) directly for that revenue, the capitalist exchanges the product of their labour — collected and concentrated in his hands — for that revenue, in other words, revenue is transformed into, exchanged for capital, in that it constitutes the RETURNS on capital. Instead of being direct RETURNS for labour, it constitutes direct RETURNS for the capital that EMPLOYS THE LABOURERS.
//The first section "Production Process of Capital" to be divided in the following way: 1) Introduction. Commodity. Money. 2) Transformation of money into capital. 3) Absolute surplus value. (a) Labour process and valorisation process, (b) Constant capital and variable capital, (c) Absolute surplus value, (d) Struggle for the normal working day. (e) Simultaneous working days (number of simultaneously employed labourers). Amount of surplus value and rate of surplus value (magnitude and height?). 4) Relative surplus value, (a) Simple cooperation, (b) Division of labour, (c) Machinery, etc. 5) Combination of absolute and relative surplus value. Relation (proportion) between wage labour and surplus value. Formal and real subsumption of labour under capital. Productivity of capital. Productive and unproductive labour. 6) Reconversion of surplus value into capital. Primitive accumulation. Wakefield's theory of colonisation. 7) Result of the production process. Either sub 6) or sub 7) the CHANCE in the form of the LAW OF APPROPRIATION can be shown. 8) Theories of surplus value. 9) Theories of productive and unproductive labour. //
// Interest: The Economist remarks on interest:
"If A FIXED SUM OF PRECIOUS METAL falls [in value], this is no reason why A SMALLER QUALITY OF MONEY SHOULD BE TAKEN FOR ITS USE, for if the PRINCIPAL is of less value for the BORROWER, the interest is to the same extent less difficult for him to pay. In California, 3% per month, 36% per annum, because of the UNSETTLED STATE. In Hindustan, with the Indian princes borrowing for UNPRODUCTIVE EXPENSES, the lenders, to counterbalance on the average the losses of capital, [charge] very high interest, 30%, HAVING NO RELATION TO PROFIT WHICH MIGHT BE GAINED in INDUSTRIAL OPERATIONS" (The Economist, [No. 491,] January 22, 1853 [p. 89]).I89
But the interest charged by usurers who advance seeds, etc., or lend the loom, etc., to THE RYOTS bears just as little "RELATION TO PROFIT" gained by the latter. I.e. it bears no relation to the profit made by these HINDOO CULTIVATORS and WEAVERS. Just as little does the interest English workers pay at the pawnshop (100% a year on the average; see Tuckett [3]) HAVE ANY RELATION TO THE RATE OF THEIR WAGES AND STILL LESS TO "PROFITS REALISED BY THEM". The interest these usurers receive rather includes not only the entire profit (THE WHOLE SURPLUS VALUE), but constitutes in part a deduction from the wages, these being depressed even under the Indian level, which is low in itself, partly because of the HINDOOS' limited needs and partly because of the fertility of the soil, WHENCE LOW PRICE OF RICE, etc. Incidentally, this reproduces itself in England, for instance, where "HOME INDUSTRY" exists merely as a form not yet really (but only formally) subsumed u n d e r the capitalist mode of production, etc. This against the jackass Carey, who e.g. compares the interest paid by an Indian RYOT with that paid on FIRST CLASS BILLS in England, to demonstrate how much higher wages are in England than in India. b But now back to The Economist, which adds the following to the above:
"The lender here CHARGES an * interest so high as to be sufficient to replace the principal in a short time, or at least as, on the average of all his lending transactions, might serve to counterbalance his losses in particular instances, by the apparently exorbitant gains acquired in others*" (I.e.).
Concerning the rate of interest, it says:
* "The rate of interest depends: 1) upon the rate of profit; 2) upon the proportion in which the entire profit is divided between lender and borrower" * (The Economist, I.e.).
The Economist, like all English economists, of course [considers that] profit=THE WHOLE SURPLUS VALUE minus RENT; interest is merely
PART OF IT.
[XVIII-1141] Regarding the pawnshop business:
* "It is by frequent fluctuations in a month, and by pawning one article to relieve another, where a small sum is obtained, that the premium for money becomes so excessive. 240 licensed pawnbrokers in London and about 1,450 in the country. The capital employed is estimated at about 1 million.* It is turned round at least thrice in the course of a year and yields each time 33'/2% o n an average; so that the INFERIOR ORDERS OF England yearly pay 1 MILLION for the * temporary loan of a million, exclusive of what they lose by goods being forfeited" * (J. D. Tuckett, A History of the Past and Present State of the Labouring Population etc., Vol. I, London, 1846, p. 114).[19]'//
COURT OF EXCHEQUER. Homer versus Taunton. DECEMBER 21, 1859 (Reynolds's [Newspaper], DECEMBER 25, 1859 [No. 489, pp. 11, 1]).
(STOCKING WEAVERS.3)
"THIS WAS AN ACTION FOR LIBEL by Homer (HOSIER and GROCER) (his wife runs a SHOP at that place) AT EARL Shilton, NEAR Hinckley-Leicestershire, versus Taunton, EDITOR of the Midland Express, * for two libels imputing to the plaintiff oppression and tyranny over the working people in his employ, and also [charging him] with being a truckmaster.*"
(INSTEAD OF PAYING HIS WORKPEOPLE IN WAGES, that fellow MADE THEM TAKE OUT THEIR EARNINGS IN HIS WIFE'S SHOP.)
" H E EMPLOYED BETWEEN 200 and 300 WORKPEOPLE. After all the deductions the AVERAGE EARNINGS are between 3s. 6d. and 4s. A WEEK. A FRAME COSTS £2, AND THE MASTER CHARGES THE WORKMAN £2 10 A YEAR FOR THE USE OF THE FRAME. (Is. per WEEK; of the 52 weeks, 50 are WORKING WEEKS.)"
//Hence in a year he makes 50s. on 40s., or 125%. This shows Mr. Carey the size of interest (rent) where profit really appears in industrial countries like England in the exceptional form in which he generally conceives of it, namely as interest or rent which the capitalist receives from the worker for the rent of the machine. This also disposes of the twaddle about the LABOUR OF SUPERINTENDENCE. Some of these KNITTERS formerly owned FRAMES, but the emergence of improved ones made theirs valueless.
* "The workman, now, be it remarked, is not allowed to buy one for himself. Prior to certain alterations in the construction of the stocking frame, a skilled and industrious man could earn from 8-10s. a week"* [ibid., p. 1].
As regards the benefits deriving from improvements in machinery for the worker himself, the rapid series of improvements in the JENNY MULE in the 18th century made it impossible for the INDEPENDENT (notably AGRICULTURAL) WEAVERS to replace their machines, rendered valueless, by new ones, and landed them in the hands of the capitalists. (Apart from the fact that the machines, once developed and capable of being MOVED BY MECHANICAL POWER, led on to the FACTORY a
"which took place not long ago in frames for making patent-net were so great, that a machine, in good repair, which had cost £1,200, sold a few years after for £60. During the great speculations in that trade, the IMPROVEMENTS succeeded each other so rapidly, that machines which had never been finished were abandoned in the hands of their makers, who were left stranded through happier discoveries serving the same purpose.")//
* "A man, with a wife and 4 children, was enabled to earn from 6s. to 6s. 6d. a week; but after the usual deduction for frame rent, room rent, scouring, etc., had been taken, no more than 2s. remained to support himself and family. Another very able hand, having been 20 years in the trade, could earn as much as 12s. a week; but then, he would have to work 15 hours every day. One man, examined in the course of this trial, declared that all the clothes he had on, with the exception of his coat, were borrowed." "The money thus made,"* says Reynolds's Newspaper, * "is the distillation of the sweat and the strength of the starving [XVIII-1142] and squalid myriads, to whom life is a dismal penance of incessant and unrequited toil."*
The journalist who had denounced this TASKMASTER was fined £5 for LIBEL.
Where capitalist production is capitalist merely in form, the capitalist is merely a RACK-RENTING "MIDDLEMAN". This holds equally for industry carried on in this way and for Irish or Indian agriculture. TAKE the following item from The Times of March 13, 1862, HEADED
"STARVING NEEDLEWOMEN":
* "A deputation waited on Sir G. Lewis, at the War Office, on the 11th March. An association, originally established by Miss Barlee, and now powerfully supported, proposes to undertake the contracts for military clothing on the same terms now given by Government to contractors, and yet to pay the starving needlewomen an advance of 30% on their present wages. This result is simply obtained by getting rid of the 'middleman' and applying his profits to the benefit of the human material out of which they have hitherto been made. With every advantage the society can give, an ordinary needlewoman cannot earn more than Is. for 10 hours' incessant labour at soldiers' shirts (viz. 2 shirts a day), and at cloth work not more than Is. 6d. a day, for 12 hours' work. At contract work her wages now vary from 5d. to 8d. per 10 hours' work."*
//For a seven-day week this makes 35 to 56d., i.e. from 2s. lid . to 4s. 8d. a week.//
//"Admittedly there is something cruel about this robbing of the worker; but it constitutes the very basis, the surest source of profit, and commercial probity has not the least occasion to blush on account of it. The most honourable fellow may engage in it on his terrain: the master's wresting the utmost from the worker is within the rules of war, they are two contending powers" [Leduc,] Sir Richard Arkwright, I.e., [Paris, 1841, p.] 144).b t h e m IN AN EXTRAORDINARY STYLE, this is CLEAR PROFIT, w h a t e v e r t h e
AVERAGE RATE OF PROFIT. All PROFITS OF EXPROPRIATION17 a r e u n c e r t a i n . U n d e r GIVEN AVERAGE CIRCUMSTANCES OF COMMERCE, c h e a t i n g t h e w o r k e r always remains "the very basis, the surest source of profit"'."•/'/ / / The capitalist's real p r o f i t is largely PROFIT UPON EXPROPRIATION, a n d t h e r e is a p a r t i c u l a r l y w i d e s c o p e f o r t h e " i n d i v i d u a l w o r k " of t h e capitalist in this, t h e mercantile field, w h e r e it is n o t a m a t t e r OF c r e a t i n g SURPLUS VALUE b u t of d i s t r i b u t i n g t h e AGGREGATE p r o f i t of the
WHOLE CLASS OF CAPITALISTS AMONG ITS INDIVIDUAL MEMBERS. T h i s d o e s n o t c o n c e r n u s h e r e . [1 9 2] C e r t a i n k i n d s of profit, e.g. t h a t b a s e d o n speculation , o c c u r solely in this field. Therefore , e x a m i n i n g t h e m h e r e w o u l d b e totally irrelevant. It is e v i d e n c e of v u l g a r e c o n o m y ' s b r u t e s t u p i d i t y t h a t it l u m p s t h e s e — n o t a b l y in o r d e r t o r e p r e s e n t p r o f i t as "WAGES" — with profit so FAR AS IT ORIGINATES IN THE CREATION OF
SURPLUS VALUE. See, e.g., the w o r t h y Roscher. [1 9 3] It is t h e r e f o r e q u i t e n a t u r a l t h a t s u c h jackasses, in discussing t h e d i s t r i b u t i o n of the
AGGREGATE profit of the whole capitalist class, s h o u l d t h r o w t o g e t h e r t h e calculation i t e m s a n d c o m p e n s a t i o n titles of capitals in d i f f e r e n t s p h e r e s of p r o d u c t i o n with t h e c a u s e s b e h i n d t h e e x p l o i t a t i o n of the w o r k e r s by the capitalists, with t h e factors b e h i n d t h e o r i g i n of profit as s u c h , so t o speak.//
[ X V I I I - 1 1 4 3 ] //Different ratios of constant to variable capital:
* "Price of cotton cloth in the island of Java. The cotton, in the seed, is sold by the picul (about 133 lbs). Not above V4 or V5 of this weight ... is cotton; and the natives, by means of rude rollers, separate, at the expense of one day's labour, about IV4 lb. of cotton from the seed. In this stage it is worth between 4 or 5 times its original cost; and the prices of the same substance, in its different stages of manufacture, are for one picul:
"Cotton in the seed: 2 to 3 dollars; "Clean cotton 10-11; "Cotton thread 24; "Cotton thread died blue 35.
"Good ordinary cotton cloth 50. Thus ... the expense of spinning in Java is 117% on the value of the raw material ... the expense of spinning cotton into a fine thread is, in England, about 33%"* (Ch. Babbage, On the Economy of Machinery etc., London, 1832, [pp.] 165-66).
"In 1792, manual labour was performed mainly by men, without premature recourse to children; the total number of workers or operatives of all kinds could be estimated, in 1792, at a quarter of the population, which was around 15 million. The available mechanical power, at the time, was probably three times that of manual labour in value. Consequently, the manual labour was equal to that of 3,750,000 men, and the mechanical labour to that of three times this number, or roughly the labour of 11,250,000 men, the total product having the value of the labour of 15,000,000 men. As a result, the population and the total accumulated
a Marx quotes in French.— Ed.
productive power were evenly balanced. But the introduction of the improved steam engine, weaving looms, etc., multiplied Great Britain's productive power incalcula-bly. Manual labour has increased by enlisting the daily labour, carried on almost continuously, of women and children at the manufactories, and as a result it can now be assessed as that of one-third of the population, which had grown to 18 million by 1817, an increase of 3 million over 25 years. But since the introduction of the improved machines of Arkwright and Watt there has been a real rise in the powers productive of wealth equal to the labour of 200 million active, strong and well-trained workers, that is to say 10 times the population of the British Isles, or thirty times the amount of manual labour replaced today by this increase in the means of producing wealth. The following changes occurred between 1792 and 1817: the population rose from 15,000,000 to 18,000,000; manual labour rose from (1)/(2) to V3, which in relation to 18,000,000 people means 6 million.
"The newly created [productive] power=the labour of ... 200 million people. "In 1792, mechanical labour=S times the amount of manual labour ... 11,250,000. Grand total of productive power in 1817 ... 217,250,000 people, or, as a ratio to the population of 1817, 12.6 to 1. It follows from this table that over a period of 25 years Britain achieved a level of industrial development and productive power enabling it to increase its wealth at an annual rate 12 times that of the past, and that it can therefore sacrifice this surplus, whether in war expenditure or in foreign trade unprofitable to it, or employ it to improve the condition of its population" ([H. G. Macnab,] Examen impartial des nouvelles vues de M. Robert Owen etc., Paris, 1821, [pp.] 128-30).[3]//
[XVIII-1144] //Economy through reducing breaks in labour time in the production sphere.
"Bleaching ... the NATURAL OPERATION SHORTENED by the APPLICATION OF CHLORINE, IN COMBINATION WITH LIME" (Babbage, I.e., [pp.] 31-32).//
Economy IN EXPENSE and ADDITIONAL CAPITAL.
"It will be necessary occasionally to adjust or repair the machine; this is done with greater ease by a workman accustomed to machine-making than by one who merely directs its motion. Now, since the good performance of machines and their duration depend to a very great extent upon the care given to immediately correcting every irregular vibration, the tiniest imperfection in their parts as soon as they appear, it is evident that the expenditure arising from the reparation and the wear and tear of machinery is considerably reduced by installing the appropriate workman right on the spot. But in the case of a single tulle loom, this would be too expensive a plan. The conclusion immediately following is that only an establishment using a number of such looms may have recourse to it, so that the whole time of one workman can be occupied in keeping them in order and making whatever repairs happen to be necessary. If this principle of economy is applied consistently, one is bound of necessity to double and treble the number of machines, in order to employ the whole time of 2 or 3 skilful workmen" (Babbage, CH. XXII, [pp.] 280-81)>
Now back to Richard Jones. After describing capital as a specific relation of production, the essence of which is that ACCUMULATED WEALTH takes over the function OF ADVANCING WAGES, and the LABOUR FUND itself appears as "WEALTH SAVED FROM REVENUE AND EMPLOYED WITH A VIEW TO PROFIT", Jones outlines the CHANGES in the development of the productive powers characteristic of this mode of production. How the (ECONOMICAL) RELATIONS and consequently the social, moral and political STATE of NATIONS CHANGES with the CHANGE in the MATERIAL POWERS OF PRODUCTION, is very well explained.
* "As communities change their powers of production, they necessarily change their habits too" ([p.] 48). "During their progress in advance, all the different classes of the community find that they are connected with other classes by new relations, are assuming new positions, and are surrounded by new moral and social dangers, and new conditions of social and political excellence" * (I.e.).
He describes the influence of the capitalist form of production on the development of the productive powers in the following way. But before coming to this, a few passages connected with those already quoted.
* "Great political, social, moral, and intellectual changes accompany changes in the economical organisation of communities, and in the agencies and the means, affluent or scanty, by which the tasks of industry are carried on. These changes necessarily exercise a commanding influence over the different political and social elements to be found in the populations where they take place; that influence extends to the intellectual character, to the habits, manners, morals, and happiness of nations" ([p.] 45). "England is the only great country which has taken ... the first step in advance towards perfection as a producing machine; the only country in which the population, agricultural as well as non-agricultural, is ranged under the direction of capitalists, and where the effects of their means and of the peculiar functions they alone can perform, are extensively felt, not only in the enormous growth of her wealth, but also in all the economical relations and positions of her population. Now, England, I say it with regret, but without the very slightest hesitation, is not to be taken as a safe specimen of [XVIII-1145] the career of a people so developing their productive forces" ([pp.] 48-49).
"The general labour fund consists: 1) of wages which the labourers themselves produce. 2) Of the revenues of other classes expended in the maintenance of labour. 3) Of capital, or a portion of wealth saved from revenue and employed in advancing wages with a view to profit. Those maintained on the first division of the labour fund we will call unhired labourers. Those on the second, paid dependants. Those on the third, hired workmen"* (wage labourers). *"The receipt of wages from any of these 3 divisions of the labour fund determines the relations of the labourer with the other classes of society, and so determines sometimes directly, sometimes more or less indirectly, the degree of continuity, skill, and power with which the tasks of industry are carried on" ([pp.] 51-52). "The first division, self-produced wages, maintains more than half, probably more than [2]/[3], of the labouring population of the earth. These labourers consist everywhere of peasants who occupy the soil and labour on it... The second division of the labour fund, revenue expended in maintaining labour, supports by far the greater part of the productive non-agricultural labourers of the East. It is of some importance on the continent of Europe; while in England, again, it comprises only a few jobbing mechanics, the relics of a larger body. The third division of the labour fund, capital, is seen in England employing the great majority of her labourers, while it maintains but a small body of individuals in Asia and in continental Europe maintains only the non-agricultural labourers; not amounting, probably, on the whole, to a quarter of the productive population" ([p.] 52). "I have not ... made any distinction as to slave-labour... The civil rights of labourers do not affect their economical position. Slaves, as well as freemen, may be observed subsisting on each part of the general fund" * ([p.] 53).
A l t h o u g h t h e "CIVIL RIGHTS" of t h e LABOURERS DO NOT AFFECT "THEIR
ECONOMICAL POSITION", THEIR ECONOMICAL POSITION HOWEVER DOES AFFECT THEIR CIVIL RIGHTS. Wage labour on a national scale — and consequently, the capitalist mode of production as well — is only possible where the workers are personally free. It is based on the personal freedom of the workers.
Jones quite correctly reduces Smith's PRODUCTIVE and UNPRODUCTIVE labour to its essence — capitalist a n d non-capitalist labour — by correctly applying [the distinction made by] Smith between LABOURERS paid BY CAPITAL and those paid OUT OF REVENUE. Jones himself, however, apparently understands by productive and unproductive LABOUR, labour which enters into the production OF MATERIAL [wealth] and that which does not. This follows from the passage quoted, where h e speaks of the PRODUCTIVE LABOURERS WHO DEPEND ON REVENUE EXPENDED to maintain them [p. 52]- Further:
* "The portion of the community which is unproductive of material wealth may be useful, or it may be useless" * ([p.] 42). Further: * "It is reasonable, to consider the act of production as incomplete till the commodity produced has been placed in the hands of the person who is to consume it" (p. 35, note).*
The distinction made between the LABOURERS who live on CAPITAL and those who live on REVENUE is concerned with the form of labour. It expresses the whole difference between capitalist and non-capitalist modes of production. O n the other hand, the terms productive and unproductive LABOURERS in the narrow sense [are concerned with] labour which enters into the production of commodities (production here embraces all operations which the commodity has to undergo from the FIRST PRODUCER to the CONSUMER) no matter what kind of labour is applied, whether it is manual labour or not ([including] scientific labour), and labour which does not enter into, and whose aim and purpose is not, the production of commodities. This difference must be kept in mind and the fact that all other sorts of activity influence MATERIAL PRODUCTION a n d vice versa in no way affects the necessity for making this distinction.
[XVIII-1146] W e now come to the development of the productive powers by the capitalist mode of production.
workman may assist the continuity of his labour. First, by making such continuity possible; secondly, by superintending and enforcing it. Many large bodies of workmen throughout the world ply the street for customers, and depend for wages on the casual wants of persons who happen at the moment to require their services, or to want the articles they can supply. The early missionaries found this the case in China... 'The artisans run about the towns from morning to night to seek custom. The greater part of Chinese workmen work in private houses. Are clothes wanted, for example? The tailor comes to you in the morning and goes home at night. It is the same with all other artisans. They are continually running about the streets in search of work, even the smiths, who carry about their hammer and their furnace for ordinary jobs. The barbers, too ... walk about the streets with an armchair on their shoulders, and a basin and boiler for hot water in their hands.'[194] This continues to be the case very generally throughout the East, and partially in the Western World. Now these workmen cannot for any length of time work continuously. They must ply like a hackney coachman, and when no customer happens to present himself they must be idle. If in the progress of time a change takes place in their economical position, if they become the workmen of a capitalist who advances their wages beforehand, two things take place. First, they can now labour continuously; and, secondly, an agent is provided, whose office and whose interest it will be, to see that they do labour continuously ... the capitalist has reserves ... to wait for a customer... Here, then, is an increased continuity in the labour of all this class of persons. They labour daily from morning to night, and are not interrupted by waiting for or seeking the customer, who is ultimately to consume the article they work on. But the continuity of their labour, thus made possible, is secured and improved by the superintendence of the capitalist. He has advanced their wages ; he is to receive the products of their labour. It is his interest and his privilege to see that they do not labour interruptedly or dilatorily. The continuity of labour thus secured, the effect even of this change on the productive power of labour is very great... The power is doubled. Two workmen steadily employed from morning to night, and from year's end to year's end, will probably produce more than 4 desultory workmen, who consume much of their time in running after customers, and in recommencing suspended labour" * ([p.] 37 sqq.).
Firstly. The transition from LABOURERS who perform CASUAL SERVICES — making coats, trousers, etc., in the LANDOWNERS house— to workers employed by capital, is already very well described by TurgoC Second. Although CONTINUITY certainly distinguishes capitalist LABOUR from the form described by Jones, it does not distinguish [capitalist labour] from slave production carried on on a large scale. Third. It is incorrect to describe the increased amount of labour brought about by its long duration and continuity as an increase in productive power or the POWER of LABOUR. This [occurs] only in so FAR AS THE CONTINUITY AUGMENTS THE PERSONAL SKILL OF THE LABOURERS. By [increased] POWER, we understand the greater productivity Of A GIVEN QUANTITY OF LABOUR EMPLOYED, NOT ANY CHANGE IN THE QUANTITY EMPLOYED. The latter belongs rather to the formal subordination of labour to capital and it only evolves fully with the development of fixed capital. (We shall deal with this soon.)
Jones correctly emphasises the fact that the capitalist regards labour as his property, no part of which must be wasted. With regard to LABOUR which is maintained directly by REVENUE, this is a matter of the use value of labour only. [XVIII-1147] Furthermore, Jones correctly emphasises that the SEDENTARY labour of the NON-AGRICULTURAL LABOURERS lasting from morning to night is by no means something which arises spontaneously, but is itself a product of economic development. In contrast to the Asiatic form and to the Western form [of labour] (prevailing in former times, partly even today) in the countryside, the urban labour of the Middle Ages already constitutes a great advance and serves as a preparatory school for the capitalist mode of production, as regards the CONTINUITY and STEADINESS OF LABOUR.
/ / A b o u t t h i s CONTINUITY OF LABOUR : * "The capitalist, too, keeps, as it were, an echo-office for labour; he insures against the uncertainty of finding a vent for labour, which uncertainty would, but for him, prevent the labour, in many cases, from being undertaken. The trouble of looking for a purchaser, and of going to a market, is reduced, by his means, to a comparatively small compass" * (An Inquiry into Those Principles, Respecting the Nature of Demand and the Necessity of Consumption etc, London, 1821, [p.] 102).
In the same work:
* "Where the capital is in a great degree fixed, or where it is sunk on land ... the trader is obliged to continue to employ, much more nearly (than if there had been less fixed capital), the same amount of circulating capital as he did before, in order not to cease to derive any profit from the part that is fixed"* (I.e., [p.] 73).//
//•"Of the state of manners to which the dependence of the workmen on the revenues of their customers has given birth in China, you would, perhaps, get the most striking picture in the Chinese Exhibition, so long kept open by its American proprietor in London. It is thronged with figures of artisans with their small packs of tools, plying for customers, and idle when none appear — painting vividly to the eye the necessary absence, in their case, of that continuity of labour which is one of the three great elements of its productiveness, and indicating sufficiently, to any well-informed observer, the absence also of fixed capital and machinery, hardly less important elements of the fruitfulness of industry"* (Jones, I.e., [Text-book of Lectures on the Political Economy of Nations, p.] 73). *"In India, where the admixture of Europeans has not changed the scene, a like spectacle may be seen in the towns. The artisans in rural districts are, however, provided for there in a peculiar manner... Such handicraftsmen and other non-agriculturists as were actually necessary in a village were maintained by an assignment of a portion of the joint revenues of the villagers, and throughout the country bands of hereditary workmen existed on this fund, whose industry supplied the simple wants and tastes which the cultivators did not provide [for] by their own hands. The position and rights of these rural artisans soon became, like all rights in the East, hereditary. The band found its customers in the other villagers. The villagers were stationary and abiding, and so were their handicraftsmen... The artisans of the towns were and are in a very different position. They received their wages from what was substantially the same fund — the surplus revenue from land — but modified in its mode of distribution and its distributors, so as to destroy their sedentary permanence, and produce frequent, and usually disastrous migrations ... such artisans are not confined to any location by dependence on masses of fixed capital" * (as in Europe, for example, where COTTON and other MANUFACTORIES are FIXED IN DISTRICTS where there is WATERPOWER, OR ABUNDANT STEAM-PRODUCING FUEL, and CONSIDERABLE MASSES OF WEALTH have been CONVERTED INTO BUILDINGS and MACHINERY, etc.). *"...The case [is] different when the sole [XVIII-1148] dependence of the labourers is on the direct receipt of part of the revenues of the persons who consume the commodities the artisans produce. They are not confined to the neighbourhood of any fixed capital. If their customers change their location for long — nay, sometimes for very short — periods, the non-agricultural labourers must follow them, or starve" (Jones, I.e., [pp.] 73-74). "The greater part of* this FUND for the HANDICRAFTSMEN IN ASIA is * distributed by the State and its officers. The capital'[1]
was, necessarily, the principal centre of distribution" ([p.] 75). "From Samarkand, southwards to Beejapoor and Seringapatam, we can trace the ruins of vanishing capitals, of which the population left them suddenly"* (and not as in other countries [as a result of a gradual] decline) * "as soon as new centres of distribution of [the] royal revenues, i.e. of the whole of the surplus produce b of the soil, were established" * (I.e., [p.] 76).
See Dr. Bernier,c who compares the Indian towns to army camps. This is due to the form of landed property which exists in Asia.//
We now proceed from the CONTINUITY to the DIVISION OF LABOUR, [the development of] KNOWLEDGE, use of machinery, etc.
* "But the effect of the change of paymasters on the continuity of labour is by no means yet exhausted. The different tasks of industry may now be further divided... If he" (the capitalist) "employ more than one man, he can divide the task between them; he can keep each individual steadily at work at the portion of the common task, which he performs the best... If the capitalist be rich, and keep a sufficient number of workmen, then the task may be subdivided as far as it is capable of subdivision. The continuity of labour is then complete... Capital, by assuming the function of advancing the wages of labour, has now, by successive steps, perfected its continuity. It, at the same time, increases the knowledge and skill by which such labour is applied to produce any given effect. The class of capitalists are from the first partially, and then become ultimately completely, discharged from the necessity of manual labour. Their interest is that the productive powers of the labourers they employ should be the greatest possible. On promoting that power their attention is fixed, and almost exclusively fixed. More thought is brought to bear on the best means of effecting all the purposes of human industry; knowledge extends, multiplies its fields of action, and assists industry in almost every branch... But further still as to mechanical power. Capital employed not to pay, but to assist labour, we will call auxiliary capital."*
//He therefore means by this term the part of constant capital which is not made u p of RAW MATERIAL.//
a Marx adds the German term in brackets.— Ed. b Jones has "surplus revenues".— Ed. c F. Bernier, Voyages ... Contenant la description des états du Grand Mogol..., Vol. 2, Paris, 1830, p. 231 sqq.[196]— Ed.
24-613 * "The national mass of auxiliary capital may, certain conditions being fulfilled, increase indefinitely: the number of labourers remaining the same. At every step of such increase, [there is an increase] in the third element of the efficiency of human labour, namely, its mechanical power... Auxiliary capital thus increases its mass relatively to the population... What conditions, then, must be fulfilled that the mass of auxiliary capital employed to assist them" //the capitalist's workmen// "may increase? There must concur 3 things:
"1) the means of saving the additional capital; "2) the will to save it; "3) some invention by which it may be [made] possible, through the use of such capital, that the productive powers of labour may be increased, and increased to an extent which will make it, in addition to the wealth it before produced, reproduce the additional auxiliary capital used, as fast as it is destroyed, and also some profit on it... When the full amount of auxiliary capital, that in the actual state of knowledge can be used profitably, has already been supplied, ... an increased range of knowledge can alone point out the means of employing more. Further, such employment is only practicable if the means discovered increase the power of labour sufficiently to reproduce the additional capital in the time it wastes away. If this be not the case, the capitalist must lose his wealth... But the increased efficiency of the labourers must, besides this, produce some profit, or he would have no motive for employing his capital in production at all... All the while, that by employing fresh masses of auxiliary capital, these two objects can be effected, there is no definite and final limit to the progressive employment of such fresh masses of capital. They may go on increasing co-extensively with the increase of knowledge. But knowledge is never stationary; and, as it extends itself from hour to hour in all directions, from hour to hour some new implement, some new machine, some new motive force may present itself, which will enable the community profitably to add something to the mass of auxiliary capital by which it assists its industry, and so increase the difference between the productiveness of its labour and that of poorer and less skilful nations" (I.e. [pp. 38-41]).
[XVIII-1149] First, with regard to the statement that the INVENTIONS, or APPLIANCES or CONTRIVANCES must be of such a kind, * "that the productive powers of labour are increased to such an extent as to make it, in addition to the wealth it before produced, reproduce the additional auxiliary capital used, as fast as it is destroyed" *, or * "reproduce the additional capital in the time it wastes away".* This means nothing more than that the wear and tear is replaced au fur et à mesure (que)[3] IT TAKES PLACE, OR, THAT THE ADDITIONAL CAPITAL IS REPLACED IN THE AVERAGE TIME DURING WHICH IT IS CONSUMED. A portion of the value of the product, or, what amounts to the same thing, a portion of the product, must replace the CONSUMED AUXILIARY CAPITAL, and, at such a rate that if, in a given period of time, it is WHOLLY CONSUMED, IT MAY BE REPRODUCED WHOLLY, OR A NEW CAPITAL OF THE SAME KIND MAY TAKE THE PLACE OF THE CAPITAL GONE BY. But what is the condition for this? The productivity of labour must rise to such an extent through the application of the ADDITIONAL AUXILIARY
a As soon as.— Ed.
CAPITAL that a part of the product can be deducted to replace this component part either in natura or by EXCHANGE.
The reproduction of the AUXILIARY CAPITAL takes place if the productivity is so great, in other words, if the increased amount of output produced during the working day of the same length is such that a unit of a particular commodity is cheaper than a unit produced by the former method, although the aggregate price of the total output covers (for example) the annual depreciation of the machinery, that is, the amount of depreciation calculated per unit of the commodity is insignificant. If the part which replaces the depreciation, and secondly the part which replaces the value of raw material, are deducted from the total product, then there remains a part which pays for the wages and a part which covers the profit and even yields more surplus value [although the price per unit remains the same as] it was previously... An increase in the product could take place without fulfilling this condition. If, for example, the number of pounds of twist were to increase tenfold (instead of a hundredfold, etc.) and if the VALUE of the wear and tear of the machinery which has to be added to the price were to drop from [1]/(3) to Vio» then the twist spun by machinery would be dearer than that produced by spindle. If an ADDITIONAL £100 of CAPITAL in the form of guano were used in agriculture and if this guano had to be replaced in a year, and if the value of a qr (produced by the old method)=£2, then 50 ADDITIONAL qrs would have to be produced merely to replace the depreciation.[197] And without this the additional capital could not be used (profit is here disregarded).
Jones' remark that the ADDITIONAL CAPITAL MUST BE "REPRODUCED" (of course from the sale of the product or in natura) "IN THE TIME IT WASTES AWAY" simply means that the commodity must replace the wear and tear embodied in it. In order to begin reproduction anew, all the value elements contained in the commodity must be replaced by the time when its reproduction is to begin again. In agriculture, this reproduction time is given as a result of natural conditions, and the period of time in which the wear and tear must be replaced is given, ni plus ni moins[1]' as the time in which all the other value elements of grain, for example, have to be replaced. In order that the reproduction process can begin, i.e. that the renewal of the real process of production can take place, the commodity must pass through the process of circulation, that is, the commodity must be sold (in so far as it is not replaced in natura, like the seeds) and the money for which it is sold converted into elements of production again. In the case of grain and other agricultural products, there are certain specific periods for this reproduction dictated by the seasons, that is, extreme limits, definite limits are set to the duration of the process of circulation.
Second: Such definite limits to the circulation process arise in general from the nature of commodities as use values. All commodities deteriorate sooner or later, although the ultima Thule* of their existence varies. If they are not consumed by people (either in the production process or individually), then they are consumed by elemental natural forces. They decay, and finally they disintegrate. If their use value is destroyed, then their exchange value goes down the drain and that puts an end to their reproduction. The final limits of their circulation time are therefore determined by the natural terminih of reproduction proper to them as use values.
Third: In order that the production process of the commodities may be continuous, that is, so that one [XVIII-1150] part of capital may be continuously in the production process and the other continuously in the process of circulation, very varied divisions of capital must take place, in accordance with the natural limits of the periods of reproduction, or the limits [of existence] of the different use values, or the different spheres of operation of capital.
Fourth: This applies to all the value elements of the commodity simultaneously. But, in the case of commodities in the production of which a great deal of fixed capital is employed, there is, in addition to the limits which their own use values impose on the circulation process, another determining factor, namely, the use value of fixed capital. IT WASTES AWAY IN A CERTAIN TIME AND, THEREFORE, MUST BE REPRODUCED IN A GIVEN PERIOD. Let us assume, for example, that a ship lasts 10 years, or a spinning machine 12. The freight carried during the 10 years, or the twist sold during the 12 years, must be sufficient for a new ship to replace the old one after 10 years and for a new spinning machine to replace the old one after 12. If the fixed capital is used up in V2 year, then the product must be returned from circulation in this period.
Besides the natural mortality periods for commodities as use values — periods which vary greatly amongst different use values— and besides the requirements of the continuity of the production process, which set even more varied final limits to the circulation time, according to whether the commodities must remain in the production sphere or can remain in the circulation sphere for a longer or shorter period of time, a third factor is thus added, namely, the different mortality periods, and therefore different requirements of reproduction, of the AUXILIARY CAPITAL used in the production of commodities.
Jones declares that the second condition [for the use of auxiliary capital] is the "profit" which the AUXILIARY CAPITAL must "produce", and this is the conditio sine qua non for all capitalist production, regardless of the particular form in which the capital is employed. Nowhere does Jones explain how he conceives the genesis of this profit. But since he merely derives it from "LABOUR", and the profit yielded by the AUXILIARY CAPITAL simply from the increased EFFICIENCY OF THE LABOUR OF THE WORKMEN, it must consist of absolute or relative SURPLUS LABOUR. It arises in general from the fact that after deducting the part of the product which either in natura or by EXCHANGE replaces the constituent parts of capital which consist either of raw materials or of instruments of labour, the capitalist, firstly, pays WAGES from the remainder of the product, and secondly, appropriates a part of it as SURPLUS PRODUCE, which he either sells or consumes in natura. (This latter is not a significant factor in capitalist production and occurs only in a few exceptional cases, when the capitalist directly produces necessary means of subsistence.) This SURPLUS PRODUCE however, just as the other parts of the product, consists of the workers' realised labour, but labour which is not paid for; this product of labour is appropriated by the capitalist without any equivalent.
What is new in Jones' presentation is that the increase in the AUXILIARY CAPITAL over and above a certain level is contingent on an INCREASE OF KNOWLEDGE. Jones declares that the necessary conditions
a r e : 1) THE MEANS TO SAVE THE ADDITIONAL CAPITAL; 2) THE WILL TO SAVE IT; 3) SOME INVENTION by means of which the productive power of labour is increased sufficiently to reproduce the ADDITIONAL CAPITAL and to produce a profit on it. What is necessary above all is that there should be a SURPLUS PRODUCE either in kind or CONVERTED INTO MONEY. In the production of cotton, for example, the planters in America (like those in India at the present time) were able to plant large areas, but did not have the means for converting the raw cotton into cotton by means of CLEANING at the right time. Part of the cotton rotted in the fields. This kind of thing was ended by the invention of the COTTON GIN. Part of the product is now converted into COTTON GIN. But the COTTON GIN does not merely replace its own cost; it also increases the New markets have the same effect, for instance, furthering the conversion of skins into money (likewise improved transport). Each new machine which consumes coal is a means for converting SURPLUS [produce] existing in the shape of coal into capital. T h e conversion of a part of the SURPLUS [produce] into AUXILIARY CAPITAL can take place in two ways: [firstly,] increase in the AUXILIARY CAPITAL already in existence, its reproduction on a larger scale; [secondly,] discovery of new use values or of a new use for well-known use values, and new inventions of machinery or of MOTIVE POWER leading to the creation of new kinds of AUXILIARY CAPITAL. In this context, EXTENSION OF KNOWLEDGE is obviously one of the conditions for increasing the AUXILIARY CAPITAL or, what amounts to the same thing, for the conversion of SURPLUS PRODUCE or SURPLUS MONEY (foreign trade is important in this connection) into SURPLUS OF AUXILIARY CAPITAL. For example, the telegraph opens u p a whole new field for the investment of AUXILIARY CAPITAL, SO do the railways, etc., and so does the whole gutta-percha and INDIAN RUBBER production.
[XVIII-1151] This point about the EXTENSION OF KNOWLEDGE is important.
Consequently, accumulation does not have to set new labour in motion, it may simply direct the labour previously employed into new channels. For example, the same mechanical atelier which previously made [hand] looms now makes power-looms and some of the weavers are taken over by [mills using] the changed methods of production while the others are thrown on to the street.
When a machine replaces labour, it always demands less new labour (for its own production) than it replaces. Perhaps the old labour is simply given a new direction. In any case, labour is freed, which after a greater or lesser amount of trials and tribulations may be used in other ways. T h e h u m a n material FOR A NEW SPHERE OF PRODUCTION is thus provided. As far as the direct freeing of capital is concerned, it is not the capital which buys the machine which becomes free, BECAUSE IT IS INVESTED IN IT. And even assuming that the machine is cheaper than the amount of wages it replaces, more raw material, etc., will be required. If the workers now dismissed previously cost £500 and the new machine costs 500 too, then the capitalist previously had an outlay of 500 every year, whereas the machine may perhaps last 10 years, so that IN FACT he now has an outlay of only 50 a year. But what at any rate becomes free (after deducting the [expenditure for] the larger number of workers employed in the manufacture of the machine and in AUXILIARY connected with it, such as coal [production], etc.) is the capital which constituted the income of the [dismissed] workers or that [employed in the production of commodities] which these workers bought with their wages. This continues to exist as it did previously, if workers are simply replaced as MOTIVE POWER without the machinery itself being substantially altered, for example, if wind or water [now operate the machinery] where this was done previously [by workers], two lots of capital are freed, the capital previously spent on paying the workers and the capital for which their money income was exchanged. This is an example used by Ricardo."
But one part of the product previously converted into wages is now always reproduced as AUXILIARY CAPITAL.
A large part of the labour previously used directly in the production of means of subsistence is now used in the production of AUXILIARY CAPITAL. This too is in contradiction to Adam Smith's view, according to which the accumulation of capital=the employment of more productive labour.b Apart from the examples considered above, the result may be merely a CHANGE in the APPLICATION OF LABOUR and a WITHDRAWAL of labour from the direct production of means of subsistence and its transfer to the production of means of production, railways, bridges, machinery, canals and so on.
// How important the existing amount of means of production and the existing scale of production are for accumulation [is described in the following]:
"The astonishing expedition with which a great cotton factory, comprehending spinning and weaving, can be erected in Lancashire, arises from the vast c o l l e c t i o n of patterns of every variety, from those of gigantic steam engines, waterwheels, iron girders and joists, down to the smallest member of a throstle or loom in possession of the engineers, mill-wrights, and machine makers. In the course of last year Mr. Fairbairn equipped waterwheels equivalent to 700 horses power and steam engines to 400 horses power from his engineer factory alone, independent of his mill-wright and stea.m-boiler establishment. Hence, whenever capital comes forward to take advantage of improved demand for goods, the means of fructifying it are provided with such rapidity, that it may realise its own amount in profit, ere an analogous factory could be set a-going in France, Belgium or Germany" (A. Ure, Philosophie des manufactures etc., Vol. I, Paris, 1836, [pp.] 61-62).c [XVIII-1152] With development, machinery becomes cheaper, partly relatively — in comparison with its FORCE — and partly absolutely; at the same time, however, a massive concentration of machinery takes place in the workshop so that its value increases in proportion to the living labour employed, although the value of its individual components declines.
The driving force — the machine which produces the MOTIVE POWER — becomes cheaper as the machinery which TRANSMITS the power and the machine which the power operates, are improved, as friction is reduced, etc.
"The facilities resulting from the employment of self-acting tools have not only improved the accuracy and accelerated the construction of the machinery of a mill, but have also lowered its cost and increased its mobility in a remarkable degree. At present a throstle frame, made in the past manner, may be had complete at the rate of 9s. 6d. per spindle, and a MULE JENNY at about 8s. per spindle including the patent licence for the latter. The spindles in cotton factories move with so little friction that 1 horse power drives 500 on the fine hand mule, 300 on the MULE JENNY, and 180 on the throstle; which power includes all the subsidiary preparation machines as carding, roving, etc., a power of 3 horses is adequate to drive 30 large looms with their dressing machines" (I.e., [pp.] 62-63 [Engl, ed., p. 40]).a//
* "Over by far the greater part of the globe, the great majority of the labouring classes do not even receive their wages from capitalists; they either produce them themselves, or receive them from the revenue of their customers. The great primary step has not been taken which secures the continuity of their labour; they are aided by s u c h k n o w l e d g e only, and such an amount of mechanical power as may be found in the possession of persons labouring with their own hands for their subsistence. The skill and science of more advanced countries, the giant motive forces, the accumulated tools and machines which those forces may set in motion, are absent from the tasks of the industry which is carried on by such agents alone"* ([R. Jones, Text-book of Lectures on the Political Economy of Nations..., p.] 43).
//In England herself: * "Take agriculture... A knowledge of good farming is spread thinly, and with wide intervals, over the country. A very small part of the agricultural population is aided by all the capital which ... might be available in this branch of the national industry... The working in these" //great manufactories// "is the occupation of only a small portion of our non-agricultural labourers. In country workshops, in the case of all handicraftsmen and mechanics who carry on their separate task with little combination, there the division of labour is incomplete, and its continuity consequently imperfect... Abandon the great towns, observe the broad surface of the country, and you will see what a large portion of the national industry is lagging at a long distance from perfection, in either continuity, skill, or power"* (I.e., [p.] 44).//
Capitalist production leads to separation of science from labour and at the same time to the application of science to material production.
With regard to rent, Jones remarks correctly:
Rent, in the modern sense of the term, which depends entirely on profit, presupposes:
* "the power of moving capital and labour from one occupation to another ... the mobility of capital and labour, and in countries where agricultural capital and labour have no such mobility ... we cannot expect to observe any of the results which we see to arise here from that mobility exclusively" * (I.e., p. 59).
This "MOBILITY OF CAPITAL AND LABOUR" is, in general, the real prerequisite for the formation of a general rate of profit. It presupposes indifference to the specific form of labour. In reality friction takes place (at the expense of the working class) between the one-sided character which the division of labour and machinery impose on labour capacity on the one hand, while on the other hand, it confronts capital //which is thereby differentiated from its undeveloped form in craft-guild industry // merely as the living potentiality of any type of labour in general, which is given this or that direction according to the profit that can be made in this or that sphere of production, so that different masses of labour are transferable from one sphere to another.
In Asia, etc., * "the body of the population consists of labouring peasants; systems of cultivation [XVIII-1153] imperfectly developed, afford long intervals of leisure. As the peasant produces his own food, he also produces most of the other primary necessities which he consumes ... his dress, his implements, his furniture, even his buildings; for there is in this class little division of occupations. The fashions and habits of such a people do not change; they are handed down from parents to children; there is nothing to alter or disturb them" * ([p.] 97).
On the other hand, the capitalist production, whose characteristic features are MOBILITY OF CAPITAL AND LABOUR and continual REVOLUTIONS in the modes of production, and therefore in the relations of production and commerce and the way of life, leads to great MOBILITY IN THE HABITS, MODES OF THINKING, etc., of the PEOPLE.
Compare the following with the above-quoted passage about the
"INTERVALS OF LEISURE" a n d t h e "IMPERFECTLY DEVELOPED SYSTEMS OF CULTIVA-
T I O N " .
servants, the farmers, from becoming the most dependent class of men in the community" (Hodgskin, Popular Political Economy, p. 147,(4) note).200
The capitalist differs from capital in that he must live, and therefore must consume part of the SURPLUS VALUE as revenue, daily and hourly. Thus, the longer the period of production before the capitalist can bring his commodity to market, or the longer the period of time before h e gets RETURNS from the sale of his commodities, the longer he must live either on credit during the intervening time — a matter we are not discussing here — o r he must HOARD a STOCK OF MONEY as large as he spends as revenue. H e must advance his own revenue for a longer period. His capital must be larger. H e is obliged to leave a part of it always unused, as a consumption fund. / / I n small-scale farming, therefore, domestic industry is combined with agriculture; supplies for the year, etc.//
We now come to Jones' teaching on accumulation. His original contribution so far has been that it is by no means necessary for accumulation to arise from profit; and secondly, that THE
ACCUMULATION OF AUXILIARY CAPITAL DEPENDS UPON THE ADVANCE OF KNOWLEDGE. H e limits the latter to the discovery of new MECHANICAL APPLIANCES, MOTIVE FORCES, etc. But it is true in general. For example, if corn is used as raw material in the preparation of spirits, then a NEW SOURCE
OF ACCUMULATION is opened u p , BECAUSE THE SURPLUS PRODUCE MAY BE CONVERTED INTO NEW FORMS, SATISFY NEW WANTS, AND ENTER AS A PRODUCTIVE ELEMENT INTO A NEW SPHERE OF PRODUCTION. The same applies if starch, etc., is prepared from corn. T h e sphere of exchange of these particular commodities and of all commodities is thereby expanded. T h e same takes place when coal is used for lighting, etc.
Foreign trade, too, is of course a GREAT AGENT IN THE PROCESS OF ACCUMULATION, because it tends to increase the variety of use values and the volume of commodities.
What Jones says first of all is concerned with the connection between accumulation and the rate of profit. (He is by no means very clear about the origin of the latter.)
Europe" ([p.] 21). "During the period in which her" (England's) "wealth and capital have been increasing the most rapidly, the rate of profit has been gradually declining" ([pp.] 21-22). "The relative masses of the profits produced ... depend not alone on the rate of profit ... but on the rate of profit taken in combination with the relative quantities of capital employed" ([p.] 22). "The increasing quantity of capital of the richer nation ... is also usually accompanied by a decrease in the rate of profits, or a decrease in the proportion, which the annual revenue derived from the capital employed, bears to its gross amount" (I.e.). "If it be said that all other things being equal, the rate of profit will determine the power of accumulating from profit, the answer is, that the case, if practically possible, is too rare to deserve consideration. We know, from observation, that a declining rate of profit is the usual accompaniment of increasing differences in the mass of capital employed by different nations, and that, therefore, while the rate of profit in the richer nations declines, all other things are not equal. If it be asserted that the decline of profits may be great enough to make it impossible to accumulate from profits at all, the answer is, that it would be foolish to argue on the assumption of such a decline, because long before the rate of profits had reached such a point, capital would go abroad to realise greater profits elsewhere, and that the power of exporting will always establish some limit below which profits will never fall in any one country, while there are others in which the [rate of] profit is greater"* ([pp.] 22-23).
"Apart from the PRIMARY SOURCES OF ACCUMULATION, [there are] DERIVATIVE ONES, such as, for example, the OWNERS OF [the] NATIONAL DEBT, officials, etc." ([p.] 23).
ALL THIS IS bel et bon.[3] It is quite correct that the amounts ACCUMULATED by no means depend solely on the rate of profit, but on the rate of profit multiplied by the capital employed, that is, just as m u c h on the size of the capital advanced. If the capital e m p l o y e d = C , and the rate of profit=r, then accumulation = Cr, and it is clear that this product can increase if C grows more quickly than r declines. A n d this is indeed A FACT DERIVED FROM OBSERVATION. But this does not explain the cause, the raison d'être, of this FACT. Jones himself came very near to it when he made the observation that the AUXILIARY CAPITAL continuously increases RELATIVE-
LY TO THE WORKING POPULATION BY WHICH IT IS PUT INTO MOTION.
In so far as the decline in profit is due to the cause mentioned by Ricardo — the RISE OF RENT — the ratio of the total SURPLUS VALUE to the capital employed remains unchanged. But one part of it — RENT — increases, at the expense of the other part, i.e. of PROFIT; this leaves the proportion of the total SURPLUS VALUE, of which PROFIT, INTEREST AND RENT are only categories, [to the total capital] unchanged. Thus , in fact, Ricardo denies the p h e n o m e n o n itself.
cannot fall. For profit must always be higher than the [rate o f ] INTEREST. [XVIII-1155] Apart from the terror which the law of the declining rate of profit inspires in the economists, its most important corollary is the presupposition of a constantly increasing concentration of capitals, that is, a constantly increasing decapital-isation of the smaller capitalists. This, on the whole, is the result of all laws of capitalist production. And if we strip this fact of the contradictory character which, on the basis of capitalist production, is typical of it, what does this fact, this trend towards centralisation, indicate? Only that production loses its private character and becomes a social process, not formally — in the sense that all production subject to exchange is social because of the absolute dependence of the producers on one another and the necessity for presenting their labour as abstract social labour ([by means of] money)—but in actual fact. For the means of production are employed as communal, social means of production and therefore not [determined] by [the fact that they are] the property of an individual, but by their relation to production, and the labour likewise is performed on a social scale.
A separate section in Jones' work is headed "[On the] CAUSES WHICH DETERMINE THE INCLINATION TO ACCUMULATE".
*"1) Differences of temperament and disposition in the people. "2) Differences in the proportions in which the national revenues are divided among the different classes of the population.
"3) Different degrees of security for the safe enjoyment of the capital saved. "4) Different degrees of facility in investing profitably, as well as safely, successive savings.
"5) Differences in the opportunities offered to the different ranks of the population to better their positions by means of savings" * ([p.] 24).
All these 5 causes, in fact, boil down to this — that accumulation depends on the stage of the capitalist mode of production reached by a particular nation.
D'abord No. 2. Where capitalist production exists in a developed form, profit constitutes the chief SOURCE of accumulation, that is, the capitalists have concentrated the greater part of the NATIONAL REVENUE in their hands and even a section of the LANDLORDS seeks to capitalise [their revenue].
No. 3. Security (in the legal and police sense) increases in proportion to the degree to which the capitalists secure control of the state administration.
No. 4. As capital develops, the spheres of production increase on the one hand, and, on the other hand, the organisation of credit [develops] in order to collect every FARTHING in the hands of the MONEY-LENDERS (bankers).
No. 5). In capitalist production, the improvement of one's position depends solely on money, and everyone can delude himself into believing that he can become a Rothschild.
T h e r e remains No. 1). All peoples d o not have the same predisposition towards capitalist production. Some primitive peoples, such as the Turks, have neither the temperament nor the DISPOSITION to it. But these are exceptions. T h e development of capitalist production creates an AVERAGE level of bourgeois society and therefore an average level of temperament and disposition amongst the most varied peoples. [It is] as truly cosmopolitan as Christianity. This is why Christianity is likewise the special religion of capital. In both it is only men who count. One man in the abstract is worth just as much or as little as the next man. In the one case, all depends on whether or not he has faith, in the other, on whether or not he has credit. In addition, however, in the one case, predestination has to be added, and in the other case, the accident of whether or not a man is born with a silver spoon in his mouth.
The source of surplus value and PRIMITIVE RENT :
* "When land has been appropriated and cultivated, such land yields, in almost every case, to the labour employed on it, more than is necessary to continue the kind of cultivation already bestowed upon it. Whatever it produces [XVIII-1156] beyond this, we will call its surplus produce. Now this surplus produce is the source of primitive rents, and limits the extent of such revenues, as can be continuously derived from the land by its owners, as distinct from its occupiers"* ([p.] 19).
These PRIMITIVE RENTS are the first social form in which SURPLUS VALUE is represented, and this is the obscure conception which forms the foundation of the theory of the Physiocrats.
Both absolute and relative SURPLUS VALUE have this in common that they presuppose a certain level of the productive power of labour. If the entire working day (available labour time) of a man (any man) were only sufficient to feed himself (and at best his FAMILY as well), then there would be n o SURPLUS LABOUR, SURPLUS VALUE and SURPLUS PRODUCE. This prerequisite of a certain level of productive power is based on the natural productiveness of land and water, the NATURAL SOURCES OF WEALTH. It is different in different countries, etc. Needs are simple and crude in early times and the MINIMUM PRODUCE required for the maintenance of the producers themselves is consequently small, and so is the SURPLUS PRODUCE. On the other hand, the n u m b e r of people who live off the SURPLUS PRODUCE in those circumstances is likewise very small, so that they receive the sum total of the small amounts of SURPLUS PRODUCE obtained from a relatively large number of producers.
The basis for absolute SURPLUS VALUE — that is, the real precondi-tion for its existence — is the natural fertility of the land, of nature, whereas relative SURPLUS VALUE depends on the development of the social productive forces.
And with this we finish with Jones.
Dominance of the merchant estate: In the part of London called Tower Hamlets, one finds very extensive furniture-making. There exists there a division of labour, in the sense that production as a whole is subdivided, falls into a large number of mutually independent branches of business. One shop only makes chairs, another makes tables, another again cupboards, etc. But these shops are run plus ou moins(5) on a handicraft basis, by a small master-craftsman with a few journeymen. Still their output is too large for them to work on direct orders from private individuals. Their customers are the owners of furniture warehouses. On Saturday the master visits them and sells his product, and [...](6)
there is haggling over the price as in a pawnshop over the loan to [be] extended for one article of dress or another, etc. These master-craftsmen must sell weekly, if only to be able [to buy] the raw materials for the next week. UNDER THESE CIRCUMSTANCES they are, properly speaking, merely MIDDLEMEN between the trader and their own [work]ers. The trader is the capitalist proper, and he pockets the greater part of the SURPLUS VALUE. Along these lines [... the] transition to manufacture from branches which were previously carried on on the handicraft basis or as subsidiary branches [of rural] industry. Thus in Lyons, etc., Nottingham, etc., the trader is called the manufacturer, although those MIDDLEMEN ... exploit [... the] workers. This is the transition to manufacture or also to large-scale industry, depending on the level of technological development of small independent production. Where it is already based on handicraft-type machines — or machines used WITHIN THE LIMITS of [handicraft] production — we see a transition to large-scale industry.
["E.g. in the west] of the United States most SETTLERS, having paid for their land, REACH it with no property in [the world except] an ax, a spade, a hoe, a gun, a cow, a few household utensils, and one or two [...] (A CHANGE OR TWO OF CLOTHING). The land [is] covered with timber [and] is of no use in its present [XVIII-1157] condition for TILLAGE. They go to a neighbouring merchant. He let them have on credit — against the future CROP — some of [his] capital, in the form of sugar, tea, coffee, flour, corn, potatoes, seed, salt, PROVISIONS, winter clothing, etc. With this borrowed capital * each settler begins his labours, and when the crops are harvested, the merchant is paid in grain and other productions, and the settler finds himself, by the aid of this credit, in possession of a surplus, sufficient in part to support his family for another year, which he could not have possibly possessed had the merchant refused to give him credit...* A large part *of the planters of the cotton growing states * receive * large supplies of clothing and subsistence for their slaves and of every article of their very consumption, upon credit from the neighbouring merchants, in anticipation of the next year's crop...* As regards these COUNTRY MERCHANTS themselves, * who aid the settlers and planters, few or none of them have a capital of their own adequate to carry on business to the extent they do. They are themselves obliged to obtain most of their supplies upon credit from the wholesale merchants of the large interior towns and the Atlantic cities, while those in turn avail themselves more or less of credit with the European manufacturers... It not unfrequently happens that a settler in [the] remotest region of Missouri plants his land and produces his crop by means of credit obtained, it may be, through three or four successive links, from a manufacturer of hardware in Birmingham, or from one of dry goods in Manchester" (Condy Raguet, A Treatise on Currency and Banking, 2nd ed., Philadelphia, 1840, [pp.] 50-52).*
R i c h a r d J o n e s s u m s u p c o r r e c t l y in the following p a s s a g e :
* "The amount of capital devoted to the maintenance of labour may vary, independently of any changes in the whole amount of capital... Great fluctuations in the amount of employment, and great suffering, may sometimes be observed to become more frequent as capital itself becomes more plentiful" (R. Jones, An Introductory Lecture on Political Economy, London, 1833, p. 52).*
The total capital may remain the same and a CHANGE (decline especially) may take place in the variable capital. A CHANGE in the proportion between the two constituent parts of capital does not necessarily involve CHANGES in the size of the total cap[ital].
An increase in the total capital, on the other hand, may be accompanied not only by a relative, but by an absolute diminution of variable capital and is always connected with violent FLUCTUATIONS in the variable capital and consequently with "FLUCTUATIONS IN THE
AMOUNT OF EMPLOYMENT".
Endnotes
[153] In this manuscript Marx holds that the "real movement of capital" (it can be observed in competition, credit, share capital and other more concrete forms of interaction between numerous capitals) should be examined following a clarification of what is meant by the general nature of capital as expressed by the concept "capital in general" (see also notes 1 and 44).—242
[155] -phe American Civil War (1861-65) led, among other things, to a blockade of US cotton exports to Britain, bringing about a crisis in the country's textile industry. Many factories were closed down and their workers sacked. The price of cotton rose, bringing with it unbridled speculation on the Liverpool cotton market. Marx later returned to this in Capital, Volume III, Chapter VI, point III (see present edition, Vol. 37).—249
[156] T n e t e x t o n pp XVIII — 1084-1157 belongs mainly to the Theories of Surplus Value (see present edition, vols 30-32).—253
[159] Marx is referring to Notebook IX of excerpts which he compiled in London in 1851. Page 47 of this notebook carries the pertinent excerpts from pp. 252-56 of Hodgskin's book Popular Political Economy.—255
[150] Ricardo advanced this hypothesis in chapters XIII and XXVIII of his book On the Principles of Political Economy, and Taxation. Here Marx, too, adheres to this hypothesis (see, for example, this volume, p. 193), considering it to be correct (see its substantiation in Capital, Volume II, Chapter XX, point XII, "The Reproduction of the Money Material"—present edition, Vol. 36). At the same time, Marx noted Ricardo's extreme inconsistency on this issue back in his work A Contribution to the Critique of Political Economy. Part One (see present edition, Vol. 29, pp. 401-02).—231
[43] In this manuscript Marx often refers to "wage labour" or "labour" pure and simple when he means hired labour power (see also Note 36).—39, 50, 175, 176, 179, 198, 204, 206, 234, 262
[161] The term "average price" (Durchschnittspreis) is used here by Marx in the sense of price of production, i.e., the costs of production plus average profit, since he is referring to the "average market price over a long period, or the central point towards which the market price gravitates", as he explains on p. XII — 605 (present edition, Vol. 31, p. 530). Marx first used this term on p. VI — 264 (ibid., Vol. 30, p. 400). In the present manuscript, the said term is used as a synonym for the terms "cost price" and "price of production". See also Note 151.—259
[162] Marx expands on Mill's example of the "wine in the cellar" on p. VIII — 341 and also on pp. XIV — 792, 845 of the manuscript (see present edition, Vol. 31, pp. 70-71, Vol. 32, pp. 277, 362).—259
[163] The reference is to the "exceptions" formulated by Ricardo on the basis of the law which stipulates that value is determined by labour time. Marx goes into greater detail on this on pp. XI — 528-542 and also pp. XIV— 782-783 of the manuscript (see present edition, Vol. 31, pp. 400-26, Vol. 32, pp. 258-62).—261
[164] Marx is referring to the third chapter (or section — see Note 4) on "Capital and Profit", which he began in Notebook XVI and in point 2 of which he proposed to discuss the question of the "transformation of values into prices of production"—cf. his draft plan on p. XVIII — 1139 (this volume, p. 346). Subsequently this question was examined in Capital, Volume III, chapters VIII-XII (see present edition, Vol. 37).—261
[165] In the original calculation it was assumed that in the second case the cost of production of instruments of labour and labour capacity would be reckoned against the halved value of a quarter of corn resulting from the doubling in the size of the harvest. Now Marx points out that this fall in value occurred only in the autumn of the second year, whilst up to that autumn the value of a quarter was twice as high. Thus, whilst in the original calculation the costs of. production in the second case amount to 20c+40c+40u = 100 quarters, it now turns out that they are expressed by the first sum, i.e., the sum in the first case: 20c + 20c+20u = 60 quarters. Since the harvest in the second case amounts to 200 quarters, the share of profit equals 140 quarters.—267
[166] Marx is apparently referring to the conversion of part of profit and part of capital into rent, which he examined on pp. XIII — 684-687, when analysing Ricardo's theory of profit (see present edition, Vol. 32, pp. 87-92).—272
[167] On p. Ill — 126 of the manuscript, Marx, examining the influence of a rise in labour productivity on a fall in the value of constant and variable capital, noted: "see Ramsay" (see present edition, Vol. 30, p. 236).—273
[67] When working on this manuscript, Marx was guided in his study of capital by the plan he had devised when writing the manuscript of 1857-58 and which he set out in a letter to Engels of April 2, 1858: "Capital falls into 4 sections, a) Capital en general... b) Competition, or the interaction of many capitals, c) Credit, where capital, as against individual capitals, is shown to be a universal element, d) Share capital as the most perfected form (turning into communism) together with all its contradictions" (see present edition, Vol. 40, p. 298).—75, 88, 94, 101, 111, 113, 170, 179, 184, 212, 280
[168] On workers' cooperative factories in Britain see also p. XV — 919 of the manuscript (present edition, Vol. 32, p. 497).—280
[169] The summary of contents for the Theories of Surplus Value written on the inside front cover of Notebook XIV of the manuscript includes point "n) Cherbuliez" (see present edition, Vol. 32, p. 8). Marx intended to examine Sismondi's views, not in the Theories of Surplus Value, but in the subsequent part of his work where he planned to analyse the "real movement of capital (competition and credit)" (ibid., p. 245). See also Note 6 7 . - 2 8 5
[170] In the manuscript Marx crossed out the following here: "Although now, in view of the fivefold turnover, this individual capitalist has to lay out only £2,500 on cotton, the capital spent on cotton is, if we consider the overall product, 5 times that contained in labour."—290
[172] Apart from the extraction of minerals, the production of timber, fishing and hunting, Cherbuliez included among the "extractive industries (industries extractives) all types of farming which produce agricultural raw materials.— 292
[173] What Marx means when he refers to the need to "reduce the first proposition to its correct formulation" is that the original lacks the word "value" (see also next page) given here in italics, since Cherbuliez makes no distinction between the value of products and their material form, or use value.— 294
[174] Marx is referring to the examination of mercantile capital in notebooks XV and XVII of the manuscript, notably pp. 964 and 1030 (see this volume, pp. 48-50, 155-57).—317
[175] Marx is summarising James Mill's arguments as contained in Elements of Political Economy, London, 1821, Chapter 4, Section 5, "Taxes on Rent".—319
[176] Cherbuliez describes the inequality between the rich and the poor who depend on them as the first result of the present distribution of wealth.—320
[177] The reference is to the anonymous review of this book by Jones published in the issue of August-September 1831 (Vol. LIV), pp. 84-99.—320
[178] Ryot — an Indian peasant. Jones applies this term to the peasants in India and other Asian countries who paid rent — a tax in kind — to the sovereign, who was the supreme owner of all the land.— 321
[79] The example to which Marx refers is given on p. V — 205 of the manuscript of 1861-63 (see present edition, Vol. 30, p. 339).—89
[180] When examining Ricardo's views on the question of rent, Marx referred to this fact on pp. XI — 492, 504, as well as on p. XII — 605 of the manuscript (see present edition, Vol. 31, pp. 338-39, 358-60, 529-30).—323
[181] See Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations; with Notes and an Additional Volume by David Buchanan, Vol. II, Edinburgh, London, 1814, p. 55, note; J. C. L. Simonde de Sismondi, Nouveaux principes d'économie politique.... Vol. I, Paris, 1827, pp. 300-13; Th. Hopkins, Economical Enquiries..., London, 1822, p. 11 et seq. and p. 31 et seq.; idem., On Rent of Land..., London, 1828, pp. 6, 15. See also the manuscript, pp. XI — 508a-510, 522; XII — 644 (present edition, Vol. 31, pp. 365-68, 387, Vol. 32, p. 22).—324
[8] The "Episode" is to be found on pp. XVII— 1038-1065aand XVIII —1068-1074 (see this volume, pp. 171-222 and 226-38). In the draft plan for the third section (the future Volume III) of Capital it has a somewhat different title, namely "Reflux Movements of Money in the Process of Capitalist Production as a Whole" (see this volume, pp. 346-47).—8
[11] The notes given below were made on the inside front cover of Notebook XX of the manuscript of 1861-63. On the front cover of Notebook XX Marx wrote: "März. April, Mai. 1863", the last two months being inserted in retrospect.—8
[183] What Jones calls the "labour fund" figures in Malthus as "funds for the maintenance of labour". This term was used repeatedly in the first edition of Malthus' Essay on the Principle of Population..., London, 1798, pp. 303, 305, 306, 307, 312, 313, et seq. It also occurs in his Principles of Political Economy...—333
[184] In his Text-book of Lectures on the Political Economy of Nations, Hertford, 1852, p. 71, Jones recalls that the Earl of Warwick, the "king-maker", alone fed daily, in his various castles, 40,000 men.—335
[188] Only Jones was a clergyman.—345
[19] Cf. Outlines of the Critique of Political Economy (Rough Draft of 1857-58) (present edition, Vol. 29, p. 233) and also Capital, Vol. Ill, chapters XX and XXXVI (present edition, Vol. 37).—12, 20
[192] Marx gave a detailed examination of commercial capital in notebooks XV, XVII and XVIII of the manuscript (see present edition, Vol. 32, pp. 464-69 and also this volume, pp. 9-68, 154-70, 239-52).—351
[193] The reference is evidently to the latter's book System der Volkswirthschaft, Vol. 1: Die Grundlagen der Nationalökonomie, Stuttgart and Augsburg, 1858, p. 384 et seq.—351
[194] Here Jones quotes from the Physiocrats' monthly calendar Ephémérides du Citoyen, 1767, Part III, p. 56.-355
[196] Cf. also the descriptions of Indian towns in Bernier's book which Marx cites in his letter to Engels of June 2, 1853 (present edition, Vol. 39, pp. 332-33).—357
[197] Marx refers to "depreciation" here because organic fertilisers applied to the soil function as fixed capital and transfer their value to the product only gradually, one part after another.—359
[15] Above, on p. XV — 939 of the manuscript, Marx writes on this score: "The usurer in all pre-capitalist modes of production has a revolutionary impact only in the political sense, in that he destroys and wrecks the forms of property whose constant reproduction in the same form constitutes the stable basis of the political structure" (see present edition, Vol. 32, p. 535).—10
[2] The section on Ravenstone begins on p. XIV — 861 of the manuscript (see present edition, Vol. 32, p. 392). Preceding it in Notebook XIV and numbered "1)" is a section devoted to the anonymous pamphlet The Source and Remedy of the National Difficulties.— 7
[6] Marx evidently meant the ratio between the rate of profit and the rate of surplus value, which is in inverse proportion to the ratio of variable to total capital. On the importance of distinguishing between the rate of surplus value and the rate of profit see p. Ill — 124e of the manuscript (see present edition, Vol. 30, p. 229).—7, 77
[3] An analysis of vulgar political economy is to be found in Notebook XV, where revenue and its sources are examined (see present edition, Vol. 32, pp. 449-541). On p. XV — 935, Marx refers to the "section on the vulgarians" in which he will "return" to the polemic between Proudhon and Bastiat mentioned here chapter specifically devoted to vulgar political economy is provided by the plan for the third part of Capital, which he drew up in January 1863; the eleventh, and penultimate, chapter was to have the title "Vulgar Economy" (see this volume, p. 347).—7, 255
[4] By the "third chapter" or "third section" Marx means the entire third part of the investigation of "capital in general" (see Note 1). The title "Third Chapter. Capital and Profit", and also the draft plan of this chapter, are to be found on the inside front cover of Notebook XVI (originally Marx called this notebook, dated December 1861-January 1862, "Notebook Ultimum"). This title is also reproduced on p. XVI — 973. A slightly changed and extended version of the plan for this section of his study is given by Marx on p. XVIII — 1139 (see this volume, pp. 346-47). In mid-1863, when embarking on a new, third, version of the work which was later to become Capital, Marx concluded that the chapters, or sections,in his study of "capital in general" would actually represent separate books that would be comprised in Capital. From this time on, the third chapter began to figure as Book III (later Volume III) of Capital.—7, 346, 380, 478
[1] Having completed the economic manuscript of 1857-58 (see present edition, vols 28 and 29), Marx embarked on a substantial economic work which, as he planned, was to encompass all aspects of life in capitalist society. The first step was the publication, in 1859, of A Contribution to the Critique of Political Economy. Part One. In the preface to this work, Marx sets out the plan of his ambitious project: "I examine the system of bourgeois economy in the following order: capital, landed property, wage-labour; the State, foreign trade, world market... The first part of the first book, dealing with Capital, comprises the following chapters: 1. The commodity; 2. Money or simple circulation; 3. Capital in general. The present part consists of the first two chapters" (see present edition, Vol. 29, p. 261). The extant correspondence (see present edition, Vol. 40) shows that after the publication of Part One Marx intended to start immediately on the second part, dealing with capital in general. However, certain circumstances, his preoccupation with Herr Vogt among them, prevented him from immediately carrying out this intention. Preparatory work (drafting plans, reviewing the 1857-58 manuscript and excerpts dealing with capital — see present edition, Vol. 29 — as well as making new excerpts, etc.), continued up to the summer of 1861, and in August 1861 Marx began writing. Viewed as the second part of A Contribution to the Critique of Political Economy, the new manuscript originally bore the same title, and on the covers of the first two notebooks he wrote the subtitle "Third Chapter. Capital in General" (see present edition, Vol. 30, p. 6). But soon the size of the manuscript grew considerably and reached 23 notebooks, 1,472 large pages in all. In the present edition it is published in vols 30-34.—5
[5] Marx drew attention to the need for a special examination of the relation between surplus value and profit on p. Ill — 98 of the manuscript (see present edition, Vol. 30, p. 178).—7