Chapter XXIV.- Conversion of Surplus Value into Capital
Hitherto we have investigated how surplus value emanates from capital; we have now to see how capital arises from surplus value. Employing surplus value as capital, reconverting it into capital, is called accumulation of capital."
First let us consider this transaction from the standpoint of the individual capitalist. Suppose a spinner to have advanced a capital of £10,000, of which four-fifths (£8,000) are laid out in cotton, machinery, &c, and one-fifth (£2,000) in wages. Let him produce 240,000 lbs. of yarn annually, having a value of £12,000. The rate of surplus value being 100%, the surplus value lies in the surplus or net product of 40,000 lbs. of yarn, one-sixth of the gross product, with a value of £2,000 which will be realised by a sale. £2,000 is £2,000. We can neither see nor smell in this sum of money a trace of surplus value. When we know that a given value is surplus value, we know how its owner came by it; but that does not alter the nature either of value or of money.
In order to convert this additional sum of £2,000 into capital, the master-spinner will, all circumstances remaining as before, advance four-fifths of it (£1,600) in the purchase of cotton, &c, and one-fifth (£400) in the purchase of additional spinners, who will find in the market the necessaries of life whose value the master has advanced to them. Then the new capital of £2,000 functions in the spinning-mill, and brings in, in its turn, a surplus value of £400.
The capital value was originally advanced in the money form. The surplus value on the contrary is, originally, the value of a definite por-
Rheinische ^eitung are parts of some lectures given by me on that subject, in 1847, in the German "Arbeiter-Verein" at Brussels, the publication of which was interrupted by the revolution of February.[476]
' "Accumulation of capital; the employment of a portion of revenue as capital" (Malthus, Definitions, &c, ed. Cazenove, p. 11). "Conversion of revenue into capital" (Malthus, Princ. of Pol. Econ., 2nd Ed., Lond., 1836, p. 320).
tion of the gross product. If this gross product be sold, converted into money, the capital value regains its original form. From this moment the capital value and the surplus value are both of them sums of money, and their reconversion into capital takes place in precisely the same way. The one, as well as the other, is laid out by the capitalist in the purchase of commodities that place him in a position to begin afresh the fabrication of his goods, and this time, on an extended scale. But in order to be able to buy those commodities, he must find them ready in the market.
His own yarns circulate, only because he brings his annual product to market, as all other capitalists likewise do with their commodities. But these commodities, before coming to market, were part of the general annual product, part of the total mass of objects of every kind, into which the sum of the individual capitals, i.e., the total capital of society, had been converted in the course of the year, and of which each capitalist had in hand only an aliquot part. The transactions in the market effectuate only the interchange of the individual components of this annual product, transfer them from one hand to another, but can neither augment the total annual production, nor alter the nature of the objects produced. Hence the use that can be made of the total annual product, depends entirely upon its own composition, but in no way upon circulation.
The annual production must in the first place furnish all those objects (use values) from which the material components of capital, used up in the course of the year, have to be replaced. Deducting these there remains the net or surplus product, in which the surplus value lies. And of what does this surplus product consist? Only of things destined to satisfy the wants and desires of the capitalist class, things which, consequently, enter into the consumption fund of the capitalists? Were that the case, the cup of surplus value would be drained to the very dregs, and nothing but simple reproduction would ever take place.
To accumulate it is necessary to convert a portion of the surplus product into capital. But we cannot, except by a miracle, convert into capital anything but such articles as can be employed in the labour process (i.e., means of production), and such further articles as are suitable for the sustenance of the labourer (i. e., means of subsistence). Consequently, a part of the annual surplus labour must have been applied to the production of additional means of production and subsistence, over and above the quantity of these things required to replace the capital advanced. In one word, surplus value is convertible into capital solely because the surplus product, whose value it is, already comprises the material elements of new capital.[1]'
Now in order to allow of these elements actually functioning as capital, the capitalist class requires additional labour. If the exploitation of the labourers already employed do not increase, either extensively or intensively, then additional labour power must be found. For this the mechanism of capitalist production provides beforehand, by converting the working class into a class dependent on wages, a class whose ordinary wages suffice, not only for its maintenance, but for its increase. It is only necessary for capital to incorporate this additional labour power, annually supplied by the working class in the shape of labourers of all ages, with the surplus means of production comprised in the annual produce, and the conversion of surplus value into capital is complete. From a concrete point of view, accumulation resolves itself into the reproduction of capital on a progressively increasing scale. The circle in which simple reproduction moves, alters its form, and, to use Sismondi's expression,[477] changes into a spiral.[2]'
Let us now return to our illustration. It is the old story: Abraham begat Isaac, Isaac begat Jacob, and so on.[478] The original capital of £10,000 brings in a surplus value of £2,000, which is capitalised. The new capital of £2,000 brings in a surplus value of £400, and this, too, is capitalised, converted into a second additional capital, which, in its turn, produces a further surplus value of £80. And so the ball rolls on.
We here leave out of consideration the portion of the surplus value consumed by the capitalist. Just as little does it concern us, for the moment, whether the additional capital is joined on to the original capital, or is separated from it to function independently; whether the same capitalist, who accumulated it, employs it, or whether he hands it over to another. This only we must not forget, that by the side of
" We here take no account of export trade, by means of which a nation can change articles of luxury either into means of production or means of subsistence, and vice versa. In order to examine the object of our investigation in its integrity, free from all disturbing subsidiary circumstances, we must treat the whole world as one nation, and assume that capitalist production is everywhere established and has possessed itself of every branch of industry.
[2]< Sismondi's analysis of accumulation suffers from the great defect, that he contents himself, to too great an extent, with the phrase "conversion of revenue into capital", without fathoming the material conditions of this operation.[3]
See this volume, p. 587, footnote 1.
the newly-formed capital, the original capital continues to reproduce itself, and to produce surplus value, and that this is also true of all accumulated capital, and the additional capital engendered by it.
The original capital was formed by the advance of £10,000. How did the owner become possessed of it? "By his own labour and that of his forefathers", answer unanimously the spokesmen of political economy." And, in fact, their supposition appears the only one conso-nant with the laws of the production of commodities.
But it is quite otherwise with regard to the additional capital of £2,000. How that originated we know perfectly well. There is not one single atom of its value that does not owe its existence to unpaid labour. The means of production, with which the additional labour power is incorporated, as well as the necessaries with which the labourers are sustained, are nothing but component parts of the surplus product, of the tribute annually exacted from the working class by the capitalist class. Though the latter with a portion of that tribute purchases the additional labour power even at its full price, so that equivalent is exchanged for equivalent, yet the transaction is for all that only the old dodge of every conqueror who buys commodities from the conquered with the money he has robbed them of.
If the additional capital employs the person who produced it, this producer must not only continue to augment the value of the original capital, but must buy back the fruits of his previous labour with more labour than they cost. When viewed as a transaction between the capitalist class and the working class, it makes no difference that additional labourers are employed by means of the unpaid labour of the previously employed labourers. The capitalist may even convert the additional capital into a machine that throws the producers of that capital out of work, and that replaces them by a few children. In every case the working class creates by the surplus labour of one year the capital destined to employ additional labour in the following year.[2]' And this is what is called: creating capital out of capital.
The accumulation of the first additional capital of £2,000 presupposes a value of £10,000 belonging to the capitalist by virtue of his "primitive labour", and advanced by him. The second additional capital of £400 presupposes, on the contrary, only the previous accu-l! "The original labour, to which his capital owed its origin." Sismondi, I.e., ed. Paris, t. 1, p. 109.
[21] "Labour creates capital before capital employs labour". E. G. Wakefield, England and America, Lond., 1833, Vol. II, p. 110.
mulation of the £2,000, of which the £400 is the surplus value capitalised. The ownership of past unpaid labour is thenceforth the sole condition for the appropriation of living unpaid labour on a constantly increasing scale. The more the capitalist has accumulated, the more is he able to accumulate.
In so far as the surplus value, of which the additional capital, No. 1, consists, is the result of the purchase of labour power with part of the original capital, a purchase that conformed to the laws of the exchange of commodities, and that, from a legal standpoint, presupposes nothing beyond the free disposal, on the part of the labourer, of his own capacities, and on the part of the owner of money or commodities, of the values that belong to him; in so far as the additional capital, No. 2, &c, is the mere result of No. 1, and, therefore, a consequence of the above conditions; in so far as each single transaction invariably conforms to the laws of the exchange of commodities, the capitalist buying labour power, the labourer selling it, and we will assume at its real value; in so far as all this is true, it is evident that the laws of appropriation or of private property, laws that are based on the production and circulation of commodities, become by their own inner and inexorable dialectic changed into their very opposite.^ The exchange of equivalents, the original operation with which we started, has now become turned round in such a way that there is only an apparent exchange. This is owing to the fact, first, that the capital which is exchanged for labour power is itself but a portion of the product of others' labour appropriated without an equivalent; and, secondly, that this capital must not only be replaced by its producer, but replaced together with an added surplus. The relation of exchange subsisting between capitalist and labourer becomes a mere semblance appertaining to the process of circulation, a mere form, foreign to the real nature of the transaction, and only mystifying it. The ever repeated purchase and sale of labour power is now the mere form; what really takes place is this — the capitalist again and again appropriates, without equivalent, a portion of the
[11] Just as at a given stage in its development, commodity production necessarily passes into capitalistic commodity production (in fact, it is only on the basis of capitalistic production that products take the general and predominant form of commodities), so the laws of property that are based on commodity production, necessarily turn into the laws of capitalist appropriation. We may well, therefore, feel astonished at the clev-erness of Proudhon, who would abolish capitalistic property by enforcing the eternal laws of property that are based on commodity production![479] previously materialised labour of others, and exchanges it for a greater quantity of living labour. At first the rights of property seemed to us to be based on a man's own labour. At least, some such assumption was necessary since only commodity owners with equal rights confronted each other, and the sole means by which a man could become possessed of the commodities of others, was by alienating his own commodities; and these could be replaced by labour alone. Now, however, property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labour of others or its product, and to be the impossibility, on the part of the labourer, of appropriating his own product. The separation of property from labour has become the necessary consequence of a law that apparently originated in their identity.1480
We have seen that even in the case of simple reproduction, all capital, whatever its original source, becomes converted into accumulated capital, capitalised surplus value. But in the flood of production all the capital originally advanced becomes a vanishing quantity [magnitudo evanescens, in the mathematical sense), compared with the directly accumulated capital, i. e., with the surplus value or surplus product that is reconverted into capital, whether it functions in the hands of its accumulator, or in those of others. Hence, political economy describes capital in general as "accumulated wealth" (converted surplus value or revenue), "that is employed over again in the production of surplus value"[2]' and the capitalist as "the owner of surplus value".[31] It is merely another way of expressing the same thing to say that all existing capital is accumulated or capitalised interest, for interest is a mere fragment of surplus value.[4]'
,: The property of the capitalist in the product of the labour of others "is a strict consequence of the law of appropriation, the fundamental principle of which was, on the contrary, the exclusive title of every labourer to the product of his own labour" (Cherbuliez, Richesse ou Pauvreté, Paris, 1841, p. 58, where, however, the dialectical re-versal is not properly developed).
[21] "Capital, viz., accumulated wealth employed with a view to profit" (Malthus, 1. c ) . "Capital... consists of wealth saved from revenue, and used with a view to profit" (R.Jones, An Introductory Lecture on Polit. Econ., Lond., 1833, p. 16).
3! "The possessors of surplus produce or capital" ([Ch.W. Dilke,] "The Source and Remedy of the National Difficulties. A Letter to Lord John Russell," Lond., 1821).
[41] "Capital, with compound interest on every portion of capital saved, is so all en-grossing that all the wealth in the world from which income is derived, has long ago become the interest on capital" (London, Economist, 19th July, 1851).
Endnotes
[476] The German Arbeiter-Verein (Workers' Society) in Brussels was founded by Marx and Engels at the end of August 1847 for the political education of German workers living in Belgium. Soon after the February Revolution of 1848 in France, the Society ceased its activities because its members were arrested and deported by the Belgian police.— 578
[1] Capital—Marx's major work to which he devoted four decades (from the early 1840s till the end of his life). Marx started studying political economy at the end of 1843 in Paris. His aim was to write a treatise containing a critical analysis of political economy. As a result of his research in this field appeared such works as the Economic and Philosophic Manuscripts of 1844, The German Ideology, The Poverty of Philosophy, Wage Labour and Capital, Manifesto of the Communist Party and others. After an interval caused by the 1848-49 revolution, Marx continued his economic studies in London, where he lived as a refugee from August 1849. Here he studied the works of different economists, the history of economic development and the economics of his time in various countries, especially in England which was then a classic example of a capitalist country. He investigated theories of money, credit and the causes of economic crises, the history of landownership and the theory of ground rent, the socio-economic condition of the working class and questions of population, the history of technology and other problems. -By 1857 he had completed his enormous preparatory work and then proceeded to the final stage — the systématisation and generalisation of the collected material. From January 1857 to June 1858, Marx wrote a manuscript containing 50 signatures, which was, in fact, the first rough draft of Capital. In the present edition it was published in vols 28 and 29. At first Marx intended to publish his work in separate instalments, and the first instalment, as he wrote, "should form a relative whole" (see present edition, Vol. 40, p. 287), which embraces only the first section of Book I — the section consisting of 3 chapters: 1) The Commodity; 2) Money or Simple Circulation and 3) Capital. However, the final variant of the first instalment — A Contribution to the Critique of Political Economy — does not contain the third chapter. Marx wrote the chapter on commodity especially. He wrote the chapter on money for "the first instalment" on the basis of the manuscript of 1857-58. A Contribution to the Critique of Political Economy. Part One was published in 1859 (present edition, Vol. 29). It was to be followed by "the second instalment", i. e. by the chapter on capital. However, soon afterwards, Marx had to postpone this work for a year and a half as he was occupied in writing the pamphlet Herr Vogt (present edition, Vol. 17) and in other urgent matters. Only in August 1861, did he begin work on "the second instalment". By the middle of 1863, he had written a new rough draft which was considerably longer than the manuscript of 1857-58 — 23 notebooks, having a total volume of about 200 signatures. The complete manuscript of 1861-63, which is considered to be the second rough draft of Capital, is reproduced in vols 30-34 of the present edition. Later on Marx decided to divide the theoretical part of the work on capital into 3 parts. The historico-critical section was to be the fourth and concluding part, and was to be based on the part of the 1861-63 manuscript entitled "Theories of Surplus Value". In his letter to Kugelmann dated October 13, 1866, Marx writes, "The whole work is thus divided into the following parts: Book I. The Process of Production of Capital. Book II. The Process of Circulation of Capital. Book III. Structure of the Process as a Whole. Book IV. On the History of the Theory" (see present edition, Vol. 42, p. 328). Marx also gave up his plan to publish the work in separate instalments and decided first to complete the whole work and then to publish it. Marx continued his work, concentrating mainly on those parts that were not sufficiently elaborated in the 1861-63 manuscript. He studied an enormous quantity of economic and technical literature, including books on agriculture, on credit and money and turnover. He also studied statistical material, various parliamentary documents, official reports on child labour in industry, on housing conditions of the British working class, etc. Marx then wrote a new manuscript (from August 1863 to the end of 1865), which constituted a more detailed variant of the three theoretical volumes of Capital. Only after the whole work was completed (January 1866), did Marx begin preparing it for the press, having decided, on Engels' advice, not to prepare the whole work but only Volume I of Capital. The final touches were made by Marx with great thoroughness and, in fact, became yet another recasting of Volume I of Capital as a whole. To ensure the integrity, completeness and clarity of the exposition, Marx thought it necessary to reproduce in a comparatively short form the major problems dealt with in A Contribution to the Critique of Political Economy (published in 1859) at the beginning of Volume I of Capital—they now constitute the whole of the first part "Commodities and Money" (in the first edition which was not yet subdivided into parts the first chapter bore this title). After the publication of Volume I of Capital (September 1867), Marx continued work on it in preparation for publication in German and translation into foreign lan-guages. For the second edition (1872) he made more subdivisions and also a lot of changes in the text (see this volume, pp. 12-13), gave important instructions for the Russian edition, published in Petersburg in 1872 and the first foreign translation of Capital, once more changed the book's structure and thoroughly edited the French edition (1872-75). Marx intended to take into consideration most of the changes made in the French edition when preparing the third German edition of Volume I. At the same time, after the publication of Volume I of Capital Marx continued his work on the subsequent volumes, intending to finish the whole edition as soon as possible. However, he was unable to do so. A lot of time was taken up by his activities in the General Council of the First International, and his work was increasingly hampered by poor health. After Marx's death, Engels finished preparing the third (1883) German edition of Volume I of Capital for press, which was taken as the basis for the translation into English made by Samuel Moore and Eduard Aveling and edited by Engels (1887).— 1,311
[4 7 7] Simonde de Sismondi, J. C. L. Nouveaux principes d'économie politique, ou de la richesse dans ses rapports avec la population, t. I, Paris, 1819, p. 119.— 580
[478] Matthew 1:2.-580
[3] A reference to Lassalle's work Herr Bastiat-Schulze von Delitzsch der ökonomische Julian, oder: Capital und Arbeit, Berlin, 1864, Drittes Kapitel: "III. Tausch, Werth und freie Concurrenz", especially p. 149.— 8
[11] 1 ' The plan outlined here was not realised by Marx. The work referred to here as Book II, was published by Engels as Volume II of Capital (1885) after Marx's death, and Book III as Volume III of Capital (1894). Book IV was not published in Marx's or Engels' lifetime. See also Note 2.— 11, 565
[479] Cf. K. Marx, Capital, Vol. II, Part III (present edition, Vol. 37).—582
[31] See K. Marx, Contribution to the Critique of Hegel's Philosophy of Law (present edition, Vol. 3, pp. 3-129).—19
[4] Mutato nomine de te fabula narratur! (It is of you that the story is told) — Horace, Satires, Bk. I, Satire 1.— 8, 272
[41] Engels wrote his work In the Case of Brentano Versus Marx specially for the purpose of defending Marx against repeated accusations of deliberately falsifying a quotation from Gladstone's speech of 16 April 1863 (see present edition, Vol. 27, pp. 95-176).—38
[2] Marx is referring to the sections "Historical Notes on the Analysis of Commodities" and "Theories of the Medium of Circulation and of Money" in A Contribution to the Critique of Political Economy. Part One (present edition, Vol. 29, pp. 292-302, 389-417), which he later abandoned as he intended to prepare a special historico-critical concluding volume of Capital (see Note 1).— 7, 532
[21] The Anti-Corn Law League was founded in 1838 by the Manchester factory owners Cobden and Bright. Defending the interests of manufacturers, the League secured the repeal of the Corn Laws which provided for the limitation and prohibition of grain imports, which served the interests of the landed aristocracy. The Corn Law adopted in 1815 prohibited the import of corn while the price of bread in England itself remained less than 80 sh. per quarter. In 1822 this law was slightly altered, and in 1828 a sliding scale was introduced, according to which there was a rise in import duties on corn when its price fell on the home market and vice versa. Trying to achieve the repeal of corn laws and to establish trade in corn, the League aimed at reducing domestic prices for corn and thus at reducing wages for wage-workers.The slogan of free trade was widely used by the League in its advocacy of the unity of interests of workers and manufacturers. The Corn Laws were repealed in 1846.'— 15, 296, 458, 462, 667, 703