- Preface By Friedrich Engels
- Translator's Note.
- Volume II. the Process of Circulation of Capital.
- Book II. the Circulation of Capital.
- Part I the Metamorphoses of Capital and Their Cycles.
- Part I, Chapter I the Circulation of Money-capital.
- Part I, Chapter Ii the Rotation of Productive Capital.
- Part I, Chapter Iii the Circulation of Commodity-capital.
- Part I, Chapter Iv the Three Diagrams of the Process of Circulation.
- Part I, Chapter V the Time of Circulation.
- Part I, Chapter Vi the Expenses of Circulation.
- Part Ii the Turn-over of Capital.
- Part Ii, Chapter Vii the Period and Number of Turn-overs.
- Part Ii, Chapter Viii Fixed Capital and Circulating Capital.
- Part Ii, Chapter Ix the Total Turn-over of Advanced Capital. Cycles of Turn-over.
- Part Ii, Chapter X Theories of Fixed and Circulating Capital, the Physiocrats and Adam Smith.
- Part Ii, Chapter Xi Theories of Fixed and Circulating Capital. Ricardo.
- Part Ii, Chapter Xii the Working Period.
- Part Ii, Chapter Xiii the Time of Production.
- Part Ii, Chapter Xiv the Time of Circulation.
- Part Ii, Chapter Xv Influence of the Time of Circulation On the Magnitude of an Advance of Capital.
- Part Ii, Chapter Xvi the Turn-over of the Variable Capital.
- Part Ii, Chapter Xvii the Circulation of Surplus-value.
- Part III. the Reproduction and Circulation of the Aggregate Social Capital.
- Part Iii, Chapter XVIII. 35 Introduction.
- Part Iii, Chapter XIX. Former Discussions of the Subject.
- Part Iii, Chapter Xx Simple Reproduction.
- Chapter XXI. Accumulation and Reproduction On an Enlarged Scale.
- IV. Concluding Remarks.
Part III, Chapter XX
I. THE FORMULATION OF THE QUESTION.
If we study the annual function of social capital —of the total capital whose fractional parts are the individual capitals, the movements of which are simultaneously their individual movements and links in the movements of the total capital—and its results, that is to say, if we study the product in commodities put forth by society during the year, then it must become apparent how the process of reproduction of the social capital proceeds, what characteristics distinguish this process of reproduction from that of an individual capital, and what characteristics are common to both. The annual product includes those portions of the social product which reproduce capital, the social reproduction, as well as those which go to the fund for consumption, which are consumed by capitalists and laborers, in other words, productive and individual consumption. It comprises the reproduction (maintenance) of the capitalist and working classes, and thus the reproduction of the capitalist character of the entire process of production.
It is evidently the circulation formula
which we have to analyze, and the consumption necessarily plays a role in it. For the point of departure, C' equal to C plus c, the commodity-capital, comprises the constant and variable capital as well as the surplus-value. Its movements, therefore, include both the individual and productive consumption. In the cycles M—C...P...C'—M', and P...C'—M'—C...P, the movement of the capital is the starting and finishing point. And this implies consumption, for the commodity, the product, must be sold. When these premises are accepted, it is immaterial for the movement of the individual capitals, what becomes of these commodities subsequently. On the other hand, in the movement of C'...C' the conditions of social reproduction are precisely different in this point, since it must be shown what becomes of every portion of value of this total product of C'. In this case, the total process of reproduction includes the process of consumption by way of the circulation quite as much as the process of reproduction of the capital itself.
This process of reproduction, now, must be considered for the purposes of our study both from the point of view of the reproduction of the value and of the substance of the individual component parts of C'. We cannot rest satisfied any longer, as we did in the analysis of the value of the product of the individual capital, with the assumption that the individual capitalist must first convert the component parts of his capital into money by the sale of his commodities, before he is able to reconvert it into productive capital by renewed purchase of the elements of production in the commodity market. Those elements of production, so far as they consist of things, constitute as much a portion of the social capital as the individual finished product, which is exchanged for them and reproduced by them. On the other hand, the movement of that portion of the social product in commodities, which is consumed by the laborer in the expenditure of his labor-power, and by the capitalist in spending his surplus-value, does not only form an integral part of the movement of the total product, but also intermingles with the movements of the individual capitals, and this process cannot be explained by merely assuming it.
The question which we have to face immediately, is this: How is the value of the capital consumed in production re-produced out of the annual product, and how does the movement of this reproduction intermingle with the consumption of surplus-value by the capitalists and of wages by the laborers? We are dealing, then, first with reproduction on a simple scale. It is furthermore assumed that products are exchanged at their value, and that no revolution in the value of the elements of productive capital takes place. Should there be any divergence of prices from values, this would not exert any influence on the movements of social capital. On the whole, there is the same exchange of the same quantity of products, although the individual capitalists would be taking shares in it which would no longer be proportional to their respective advances and to the quantities of value produced by each one. As for revolutions of value, they do not alter anything in the proportions of the elements of value of the various component parts of the total annual product, provided they are universally and uniformly distributed. To the extent that they are limited and unevenly distributed, they are disturbances, which, in the first place, can be understood only as divergences from equal proportions of value; and, in the second place, given the law according to which one portion of the annual product reproduces constant, and another variable capital, a revolution either in the value of the constant or variable capital would not alter this law. It would change merely the relative magnitude of the portions of value which serve in the one or the other capacity, seeing that other values would have taken the places of the original ones.
So long as we looked upon the production of value and the value of products from the point of view of individual capital, it was immaterial for the analysis which was the natural form of the product in commodities, whether it was, for instance that of a machine, of corn, or of looking glasses. It was always but a matter of illustration, and any line of production could serve that purpose. What we had to consider was the immediate process of production itself, which presented itself at every point as the process of some individual capital. So far as reproduction was concerned, it was sufficient to assume that that portion of the product in commodities, which represented capital in the sphere of circulation, found an opportunity to reconvert itself into its elements of production and thus into its form of productive capital. It likewise sufficed to assume that both the laborer and the capitalist found in the market those commodities for which they spend their wages and surplus-value. This merely formal manner of presentation does not suffice in the study of the total social capital and of the value of its products. The reconversion of one portion of the value of the product into capital, the passing of another portion into the individual consumption of the capitalist and working classes, form a movement within the value of the product itself which is created by the total capital; and this movement is not only a reproduction of value, but also of material, and is, therefore, as much conditioned on the relative proportions of the elements of value of the total social product as on its use-value, its material substance.
Simple reproduction on the same scale appears as an abstraction; inasmuch as the absence of all accumulation or reproduction on an enlarged scale is an irrelevant assumption in capitalist society, and, on the other hand, conditions of production do not remain exactly the same in different years (as was assumed). The assumption is that a social capital of a given magnitude produces the same quantity of value in commodities this year as last, and supplies the same quantity of wants, although the forms of the commodities may be changed in the process of reproduction. However, while accumulation does take place, simple reproduction is always a part of it and may, therefore, be studied in itself, being an actual factor in accumulation. The value of the annual product may decrease, although the quantity of use-values may remain the same; or, the value may remain the same, although the quantity of the use-values may decrease; or, the quantity of value and of use-values may decrease simultaneously. All this amounts to saying that reproduction takes place either under more favorable conditions than before, or under more difficult ones, which may result in an imperfect reproduction. But all this can refer only to the quantitative side of the various elements of reproduction, not to the role which they are playing as a reproducing capital, or as a reproduced revenue, in the entire process.
II. THE TWO DEPARTMENTS OF SOCIAL PRODUCTION.
The total product, and therefore the total production, of society, is divided into two great sections:
1. Means of Production, commodities having a form in which they must, or at least may, pass over into productive consumption.
II. Means of Consumption, commodities having a form in which they pass into the individual consumption of the capitalist and working classes.
In each of these two departments, all the various lines of production belonging to them form one single great line of production, the one that of the means of production, the other that of articles of consumption. The aggregate capital invested in each of these two departments of production constitutes a separate section of the entire social capital.
In each department, the capital consists of two parts:
(1) Variable Capital. This capital, so far as its value is concerned, is equal to the value of the social labor-power employed in this line of production, in other words equal to the sum of the wages paid for this labor-power. So far as its substance is concerned, it consists of the active labor-power itself, that is to say, of the living labor set in motion by this value of capital.
(2) Constant Capital. This is the value of all the means of production employed in this line. These, again, are divided into fixed capital, such as machines, instruments of labor, buildings, laboring animals, etc., and circulating capital, such as materials of production, raw and auxiliary materials, half-wrought articles, etc.
The value of the total annual product created with the capital of each of the two great departments of production consists of one portion representing the constant capital c consumed in the process of production and transferred to the product, and of another portion added by the entire labor of the year. This latter portion, again, consists of one part re-producing the advanced variable capital v, and of another representing an excess over the variable capital, the surplus-value s. And just as the value of every individual commodity, so that of the entire annual product of each department consists of c plus v plus s.
The portion c of the value, representing the constant capital consumed in production, is not identical with the value of the constant capital invested in production. It is true that the materials of production are entirely consumed and their values completely transferred to the product. But of the invested fixed capital, only a portion is consumed and its value transferred to the product. Another portion of the fixed capital, such as machines, buildings, etc., continues to exist and serve the same as before, merely depreciating to the extent of the annual wear and tear. This persistent portion of the fixed capital does not exist for us, when we consider the value of the product. It is a portion of the value of capital existing independently beside the new value in commodities produced by this capital. This was shown previously in the analysis of the value of the product of some individual capital (volume I, chapter VI). However, for the present we must leave aside the method of analysis employed there. We saw in the study of the value of the product of individual capital that the value withdrawn from the fixed capital by wear and tear was transferred to the product in commodities created during the time of wear, no matter whether any portion of this fixed capital is reproduced in its natural form out of the value thus transferred or not. At this point, however, in the study of the social product as a whole and of its value, we must for the present leave out of consideration that portion of value which is transferred from the fixed capital to the annual product by wear and tear, unless this fixed capital is reproduced in natura during the year. In one of the following sections of this chapter we shall return to this point.
We shall base our analysis of simple reproduction on the following diagram, in which c stands for constant capital, v for variable capital, and s for surplus-value, the rate of surplus-value between v and s being assumed at 100 per cent. The figures may indicate millions of francs, marks, pounds sterling, or dollars.
I. Production of Means of Production.
Capital...4000 c+1000 v=5000.
Product in Commodities...4000 c+1000 v+1000 s=6000.
These exist in the form of means of production.
II. Production of Means of Consumption.
Capital...2000 c+500 v=2500.
Product in Commodities...2000 c+500 v+500 s=3000.
These exist in articles of consumption.
Recapitulation: Total annual product in commodities:
I. 4000 c+1000 v+1000 s=6000 means of production.
II. 2000 c+ 500 v+ 500 s=3000 articles of consumption.
Total value 9000, exclusive of the fixed capital persisting in its natural form, according to our assumption.
Now, if we examine the transactions required on the basis of simple reproduction, where the entire surplus-value is unproductively consumed, leaving aside for the present the mediation of the money circulation, we obtain at the outset three great points of vantage.
(1) The 500 v, representing wages of the laborers, and 500 s, representing surplus-value of the capitalists, in department II, must be spent for articles of consumption. But their value exists in the articles of consumption to the amount of 1000, held by the capitalists of department II, which reproduce the 500 v and represent the 500 s. The wages and surplus-value of department II, then, are exchanged within this department for products of this same department. By this means, a quantity of articles of consumption equal to 1000 (500 v plus 500 s) disappear out of the total product of department II.
(2) The 1000 v and 1000 s of department I must likewise be spent for articles of consumption, in other words, for some of the products of department II. Hence they must be exchanged for the remaining 2000 c of constant value, which is equal in amount to them. Department II receives in return an equal quantity of means of production, the product of I, in which the value of 1000 v and 1000 s of I is incorporated. By this means, 2000 c of II and (1000 v + 1000 s) of I disappear out of the calculation.
(3) Nothing remains now but 4000 c of I. These consist of means of production which can be used up only in department I. They serve for the reproduction of its consumed constant capital, and are disposed of by the mutual exchange between the individual capitalists of I, just as are the (500 v + 500 s) in II by an exchange between the capitalists and laborers, or between the individual capitalists, of II.
This may serve for the present to render easier the understanding of the following statements.
III. THE TRANSACTIONS BETWEEN THE TWO DEPARTMENTS.
I (v + s) versus II c.
We begin with the great exchange between the two departments. The values of (1000 v + 1000 s), consisting of the natural form of means of production in the hands of their producers, are exchanged for 2000 c of II, for values consisting of articles of consumption in their natural form. The capitalist class of II thereby reconverts its constant capital of 2000 from the form of articles of consumption into that of means of production of articles of consumption. In this form it may serve once more as a factor in the labor-process as the value of constant capital in the process of self-expansion. On the other hand, the equivalent of the labor-power of I (1000 v) and of the surplus-value of the capitalists of I (1000 s) is realized in articles of consumption; both of them are converted from their natural form of means of production into a natural form in which they may be consumed as revenue.
Now, this mutual transaction is accomplished by means of a circulation of money, which facilitates it as much as it renders its understanding difficult, but which is of fundamental importance, because the variable portion of capital must ever resume the form of money, of money-capital converting itself from the form of money into labor-power. The variable capital must be advanced in the form of money in all lines of production carried on simultaneously, regardless of whether they belong to department I or II. The capitalist buys the labor-power before it enters into the process of production, but does not pay for it except at stipulated terms, after it has been expended in the production of use-values. He owns, with the remainder of the value of the product, also that portion of it which is an equivalent for the money expended in the payment of labor-power, in other words, that portion of the value of the product which represents variable capital. By this portion of value the laborer has supplied the capitalist with the equivalent for his own wages. But it is the reconversion of commodities into money by their sale which restores to the capitalist his variable capital in the form of money-capital, which he may advance once more for the purchase of labor-power.
In department I, then, the aggregate capitalist has paid 1000 pounds sterling (I use the term pounds sterling merely to indicate that it is value in the form of money), equal to 1000 v, for the v-portion of the already existing value of product I, that is to say, of the means of production created by him. The laborers buy with these 1000 pounds sterling articles of consumption of the same value from the capitalists II, thereby converting one-half of the constant capital II into money; the capitalists II, in their turn, buy with these 1000 pounds sterling means of production, valued at 1000, from the capitalists I; the variable capital-value of 1000 v, which consisted, in the natural form of the product of capitalists I, of means of production, is thus reconverted for them into money and may serve anew in their hands as money-capital, which is transformed into labor-power, the most essential element of productive capital. In this way, their variable capital returns to them in the form of money, as a result of the realization on some of their commodity-capital.
As for the money which is required for the exchange of the s portion of commodity-capital I for the second half of constant capital II, it may be advanced in various ways. In reality, this circulation implies innumerable small purchases and sales of the individual capitals of both departments, the money coming under all circumstances from these capitalists, since we have already disposed of the money thrown into circulation by the laborers. It may be that one of the capitalists of department II buys, with the money-capital he has aside from his productive capital, means of production from capitalists of department I, or that, vice versa, one of the capitalists of department I buys, with funds reserved for individual expenses, not for capital investment, articles of consumption from capitalists of department II. A certain supply of money, to be used either for investment as capital or for expenditure as revenue, must be assumed to exist beside the productive capital in the hands of the capitalists, under all circumstances, as we have shown in section I and II. Let us assume—it is immaterial what proportion we select for our purpose—that one-half of the money is advanced by the capitalists of department II in the purchase of means of production intended for the reproduction of their constant capital, while the other half is spent by the capitalists of department I for articles of consumption. For instance, let department II advance 500 pounds sterling for the purchase of means of production from department I, thereby reproducing (inclusive of the 1000 pounds sterling coming from the laborers of department I) three-quarters of its constant capital in its natural form; department I buys with the 500 pounds sterling so obtained articles of consumption from II, thus completing for one-half of the s-portion of its commodity-capital the circulation c—m—c and realizing on its product in a supply of articles of consumption. By means of this second transaction, the 500 pounds sterling return to the hands of the capitalists of department II, in the form of money-capital existing beside its productive capital. On the other hand, department I expends money to the amount of 500 pounds sterling, in anticipation of the realization on the other half of the s-portion of its still unsold commodity-capital, for the purchase of articles of consumption from department II. With the same 500 pounds sterling, department II buys from I means of production, thereby reproducing in natural form its entire constant capital (1000 + 500 + 500 = 2000), while I realizes its entire surplus-value in articles of consumption. The entire transaction would represent a transfer of commodities valued at 4000 pounds sterling with a circulation of 2000 pounds sterling in money. This last amount is sufficient only because we have assumed that the entire annual product is sold in bulk in a few large transactions. The important point is here that department II has not only reconverted its constant capital, which had been reproduced in the form of articles of consumption, into the form of means of production, but has also recovered the 500 pounds sterling which it had thrown into circulation for the purchase of means of production; and that in the same way department I possesses once more not only its variable capital, which it had produced in the form of means of production, in the form of money-capital, readily convertible into labor-power, but also the 500 pounds sterling expended in the purchase of articles of consumption previously to the sale of the s-portion of its capital in anticipation of its realization. It recovers these 500 pounds sterling, not by this expenditure, but by the subsequent sale of one-half of the s-portion of its commodity-capital.
In both cases, it is not merely the constant capital of department II which is reconverted from the form of a product into the natural form of means of production, in which it can alone serve as capital; nor is it merely the variable portion of the capital of I which is reconverted into its money-form, nor the surplus-portion of the means of production of I which is transformed into its consumable form of revenue. It is also the 500 pounds sterling of money-capital, advanced by department II in the purchase of means of production previously to the sale of the corresponding portion of the value of its constant capital, which return to II; and the 500 pounds sterling expended by I for means of consumption previously to the realization of its surplus-value. The fact that the money advanced by II at the expense of the constant portion of its commodities, and by I at the expense of the surplus-portion of its commodities, returns to them is due to the circumstance that one class of capitalists throws 500 pounds sterling into circulation over and above the constant capital existing in the form of commodities in department II, and another class a like amount over and above the surplus-value existing in the form of commodities in department I. In the last analysis, the two departments have mutually paid one another in full by the exchange of equivalents in the form of their respective commodities. The money thrown into circulation by each department in excess of the value of their commodities, as a means of transacting the exchange of these commodities, returns to each one of them out of the circulation at the same rate in which they had contributed to it. Neither has grown any richer thereby. Department II possessed a constant capital of 2000 in the form of articles of consumption plus 500 pounds sterling in money; now it possesses 2000 in means of production plus 500 pounds sterling in money, the same as before; in the same way, department I possesses, as before, a surplus-value of 1000 (consisting of commodities in the form of means of production, now converted into a supply of articles of consumption) plus 500 pounds sterling. The general conclusion is this: The money which the industrial capitalists throw into circulation for the purpose of accomplishing the mutual exchange of their commodities, either in account with the constant value of the commodities, or in account with the surplus-value existing in the commodities, to the extent that it is spent as revenue, returns into the hands of the respective capitalists in proportion to the amount advanced by them for the circulation of money.
As for the reconversion of the variable capital of department I into the form of money, this capital exists, after the capitalists of I have invested it in wages, first in the form of the commodities produced by the laborers. The capitalists have paid this capital in the form of money to these laborers as the price of their labor-power. The capitalists have to this extent paid for that portion of the value of their commodities, which is equal to the variable capital expended in the form of money. They are, for this reason, the owners of this portion of the commodity-product. But that portion of the working class which is employed by them does not buy the means of production created by it; these laborers buy articles of consumption produced by department II. Hence the variable capital advanced by the capitalists of I in the payment of labor-power does not return to these capitalists directly. It passes by means of the purchases of the laborers of I into the hands of the capitalist producers of the requirements of life of the laborer, or of other commodities accessible to them; in other words, it passes into the hands of capitalists of II. And not until these expend this money in the purchase of means of production does it return by this circuitous route into the hands of the capitalists of department I.
It follows that, on the basis of simple reproduction, the sum of the values of v plus s of the commodity-capital of I (and therefore a corresponding proportional part of the total product in commodities of I) must be equal to the constant capital c of department II, which is likewise disposed of as a proportional part of the entire product in commodities of department II; or I (v + s) = II c.
IV. TRANSACTIONS WITHIN DEPARTMENT II. NECESSITIES OF LIFE AND ARTICLES OF LUXURY.
It remains for us to analyze the portion v plus s of the value of the commodities of department II. This analysis has nothing to do with the most important question which occupies our attention in this chapter, namely the question, to what extent the separation of the value of every individual capitalist product in commodities into c plus v plus s applies also to the value of the entire annual product in commodities, even though this separation may be based on different forms. This question is solved by the transaction between I (v + s) and II c, and, on the other hand, by the analysis of the reproduction of I c in the annual product in commodities of I, to be analyzed later on.
Since II (v + s) exists in the natural form of articles of consumption; since, furthermore, the variable capital advanced in the payment of the labor-power of the laborers is mostly spent by them for articles of consumption; and since, finally, the s-portion of the value of commodities, on the basis of simple reproduction, is practically spent as revenue for articles of consumption, it is evident at the first glance that the laborers of II buy back, with the money received as wages from the capitalists of II, a portion of their own product, corresponding in value to the money-value represented by these wages. The capitalist class of II thereby reconvert the money-capital advanced by them in the payment of labor-power into the form of money. It is as though they had paid the laborers in mere checks on commodities. As soon as the laborers realize on these checks by the purchase of a portion of the commodities produced by them, but belonging to the capitalists, these checks return into the hands of the capitalists. Only, these checks do not merely represent value, but they are actually embodied in gold or silver. We shall analyze later on this sort of reflux of variable capital by means of a process in which the laborer appears as a purchaser and the capitalist as a seller. Here, however, it is a question of a different point, which must be discussed on the occasion of the return of this variable capital to its point of departure.
Department II of the annual production of commodities consists of a great variety of lines of production, which may, however, be divided into two great subdivisions according to their products.
(a) Articles of consumption required for the maintenance of the laboring class, and to the extent that they are material requirements of life, also forming a portion of the consumption of the capitalist class, although they are frequently different in quality and value. We may, for our purposes, comprise this entire subdivision under the name of necessary articles of consumption, regardless of whether a product of this class, such as tobacco, is really a necessary article of consumption from the physiological standpoint or not. It is sufficient that it may be habitually in demand.
(b) Articles of luxury, which are consumed only by the capitalist class, being purchased only with the surplus-value, which never falls to the share of the laborer.
It is obvious that the variable capital advanced in the production of the commodities of the class (a) must flow back directly to that portion of the capitalist class of II (in other words the capitalists of IIa) who have produced these material requirements of life. They sell them to their own laborers to the amount of the variable capital paid to them in wages. This reflux takes place in a direct way, so far as this entire subdivision (a) of the capitalist class of department II is concerned, no matter how numerous may be the transactions between the capitalists of the various lines of industry interested in this department, by means of which the returning variable capital is distributed pro rata. These transactions are processes of circulation, whose means of circulation are supplied directly by the money expended by the laborers. It is different with subdivision IIb. The entire portion of the values produced in this subdivision, IIb (v + s), exists in the natural form of articles of luxury; that is to say, articles which the laborer can buy no more than the value of the commodities Iv existing in the form of means of production, notwithstanding the fact that both articles of luxury and means of production are the products of the working class. Hence the reflux by which the variable capital advanced in this subdivision restores to the capitalist producers its value in the form of money cannot take place directly, but must be promoted indirectly, similarly as in the case of Iv.
Let us assume, for instance, that v stands for 500 and s also for 500, as they did in the case of the entire class II; but let the division of the variable capital and of the corresponding surplus-value be as follows:
(Subdivision a) Necessities of Life: v equal to 400 and s equal to 400; hence a total quantity of necessities of life valued at 400 v plus 400 s, equal to 800, in other words, IIa (400 v+400 s).
(Subdivision b) Articles of Luxury: Valued at 100 v plus 100 s, equal to 200, or IIb (100 v + 100 s).
The laborers of IIb have received 100 in money as payment of their labor-power, or say 100 pounds sterling. They buy with this money articles of consumption from the capitalists of IIa to the same amount. This class of capitalists buys with the same money 100 p. st. worth of the commodities of IIb, thereby returning to the capitalists of IIb their variable capital in the form of money.
In IIa there are available once more 400 v in money, in the hands of the capitalists, obtained by exchange with their laborers. Furthermore, the fourth part of the product representing surplus-value has been transferred to the laborers of IIb, and IIb (100v) have been purchased in the form of articles of luxury.
Now, assuming that the capitalists of IIa and IIb divide the expenditure of their revenue in the same proportion between necessities of life and luxuries—for instance, three-fifths for necessities and two-fifths for luxuries—the capitalists of IIa will spend their revenue from surplus-value, amounting to 400 s, three-fifths, or 240, for their own product of necessities of life, and two-fifths, or 160, for articles of luxury. The capitalists of subdivision IIb will divide their surplus-value of 100 s in the same way: three-fifths, or 60, for necessities, and two-fifths, or 40, for articles of luxury, these being produced and exchanged in their own sub-division.
The 160 in articles of luxury received by IIa for its surplus-value, pass into the hands of the capitalists of IIa in the following manner: Of the 400 s of IIa, we have seen that 100 were exchanged in the form of necessities of life for an equal amount of articles of luxury of IIb, and furthermore 60, consisting of necessities of life, for 60 s of IIb, consisting of luxuries. The total calculation then stands as follows:
IIa: 400 v plus 400 s; IIb: 100 v plus 100 s.
(1) 400 v of (a) are consumed by the laborers of IIa, a part of whose product is represented by that amount in necessities of life; the laborers buy these necessities from the capitalist producers of their own subdivision. These capitalists thereby recover 400 p. st., in money, which is the value of the variable capital paid by them to these same laborers. They can now buy more labor-power with it.
(2) One portion of the 400 s of (a), equal to the 100 v of (b); in other words, one-quarter of the surplus-value of (a) is exchanged for luxuries in the following way: The laborers of (b) received from the capitalists of their subdivision 100 p. st. in wages. With this amount these laborers bought one-quarter of the surplus-value of (a), in other words, commodities consisting of necessities of life. The capitalists of (a) buy with this same money articles of luxury to the same amount, which equals 100 v of (b), or one-half of the entire product in luxuries of (b). In this way the capitalists of (b) recover their variable capital in the form of money and are enabled to resume reproduction after having invested this amount once more in labor-power, since the entire constant capital of the whole department II has been reproduced by the exchange between I (v+s) and IIc. The labor-power of the laborers of IIb, the producers of articles of luxury, is under these circumstances, only saleable because the product created by them as an equivalent for their own wages is consumed by the capitalists of IIa. (The same applies to the sale of the labor-power of I, since the IIc for which I (v + s) is exchanged, consists of both articles of luxury and necessities of life, and that which is reproduced by means of I (v + s) consists of the means of production of both luxuries and necessities.)
(3) We now come to the exchange between a and b, to the extent that it is merely a transaction between the capitalists of these two subdivisions. So far we have disposed of the variable capital (400) v and of one portion of the surplus-value (100) s in (a), and of the variable capital (100) v in (b). We had furthermore assumed that the average proportion of the expenditure of the capitalist revenue was in both classes two-fifths for luxuries and three-fifths for necessities. Apart from the 100 thus expended for luxuries, the entire department therefore still has to spend 60 for luxuries in (a) and the same proportion, or 40, in (b).
(IIa) is then divided into 240 for necessities and 160 for luxuries, or 240 + 160=400 s (IIa).
(IIb) s is divided into 60 for necessities and 40 for luxuries; 60 + 40 = 100s (IIb). The last 40 are consumed by this class out of its own product (two-fifths of its surplus-value); the 60 for necessities are obtained by this class through the exchange of 60 of its surplus-value for 60 s of a.
We have, then, for the entire capitalist class of II, the following situation (v plus s in subdivision (a) consisting of necessities, in subdivision (b) of luxuries):
IIa (400 v + 400 s) +IIb (100 v + 100 s) = 1000; by this transaction there is realized 500 v (a + b) + 500 s (a + b) = 1000; the first member in this equation being realized in 400 v of (a) and 100 s of (b), the second in 300 s of (a) plus 100 v of (b) plus 100 s of (b).
Considering a and b, each by itself, we have the transaction:
If we retain, for the sake of simplicity, the same proportion between the variable and constant capital of each subdivision (which, by the way, is not at all necessary), we obtain for 400 v (a) a constant capital of 1600, and for 100 v (b) a constant capital of 400, and we have the following two subdivisions a and b in department II:
(IIa) 1600 c + 400 v + 400 s = 2400
(IIb) 400 c + 100 v + 100 s = 600
2000 c + 500 v + 500 s = 3000.
Accordingly, 1600 of the 2000 IIc in articles of consumption, which are exchanged for 2000 I (v + s), are disposed of for means of production of necessities of life, and 400 for means of production of luxuries.
The 2000 I (v + s), then, would be divided into (800 v + 800 s) I, for the 1600 means of production of necessities of life in section a, and (200 v + 200 s) I, for the 400 means of production of luxuries in b.
A considerable part of the instruments of labor, strictly so called, as well as of the raw and auxiliary materials, etc., is homogeneous for both departments. But so far as the transaction of the exchanges of the various portions of value of the total product I (v + s) are concerned, such a division would be immaterial. Both the above named 800 v of I and 200 v of I are realized by the spending of wages for articles of consumption 1000 c of II, and the money-capital advanced for this purpose is uniformly distributed, on its return, among the capitalist producers of I, reproducing their variable capital in money at the rate advanced by them. On the other hand, so far as the realization of the 1000 s of I is concerned, the capitalists will likewise draw uniformly, in proportion to the magnitude of their surplus-value, 600 IIa and 400 IIb out of the entire second half of IIc, equal to 1000; in other words, those who make up for the constant capital of IIa will draw 480, or three-fifths, out of 600 c of IIa, and 320, or two-fifths, out of 400 c of IIb, a total of 800; while those who make up for the constant capital of IIb will draw 120, or three-fifths out of 600 c of IIa and 80, or two-fifths out of 400 c of IIb, a total of 200. Grand total, 1000.
That which is arbitrary in this case is the proportion of the variable to the constant capital of both I and II and so is the uniformity of this proportion for I and II and their subdivisions. As for this uniformity, it has been assumed merely for the sake of simplifying the matter, and it would not alter in any way the fundamental conditions of the problem and its solution, if we had assumed different proportions. However, the necessary result of all this, on the basis of simple reproduction, is the following:
(1) That the new product in values created by the labor of one year in the natural form of means of production, divisible into v plus s, must be equal to the value of the constant capital c of the product in values created by the other part of annual labor, reproduced in the form of articles of consumption. If it were smaller than IIc, it would be impossible for II to reproduce its entire constant capital; if it were greater, a surplus would remain unused. In either case, the assumption of simple reproduction would be violated.
(2) That in the case of annual product which is reproduced in the form of articles of consumption, the variable capital v advanced in the form of money can be realized by its recipients, to the extent that they are laborers producing luxuries, only in that portion of the necessities of life which embodies for its capitalist producers primarily their surplus-value; so that v, invested in the production of luxuries, is equal in value to a corresponding portion of s produced in the form of necessities, and must be smaller than the whole of this s, which is s of IIa; and that, finally, the variable capital of the capitalist producers of luxuries returns to them in the form of money only by means of the realization of that v in this portion of s. This phenomenon is quite analogous to the realization of I (v +s) in IIc; only that in the second case, it is the v of IIb which is realized in a portion of s of IIa of the same value. These conditions determine the proportions of the various quantities in every distribution of the total annual product, to the extent that it actually enters into the process of the annual reproduction promoted by circulation. I (v+s) can be realized only in IIc, and IIc can renew its function as a component part of productive capital only by means of this realization; in the same way, the v of IIb can be realized only in a portion of s of IIa, and v of IIb can only thus be reconverted into the form of money-capital. Of course, all this applies only to the extent that it is a result of the process of reproduction itself, so that the capitalists of IIb do not, for instance, take up money-capital for v by credit from others. So far as mere quantity is concerned, the transactions for the exchange of the various portions of the annual product can take place only in the way indicated above, so long as the scale and the conditions determining value remain stationary, and so long as these strict conditions are not altered by the commerce with foreign countries.
Now, if we were to say after the manner of Adam Smith that I(v + s) resolves itself in IIc, and IIc resolves itself into I(v + s), or, as he says more frequently and more absurdly, I (v + s) constitutes the component parts of the price (or value in exchange, as he has it) of IIc, and IIc constitutes the entire component part of the value of I (v + s), then we could and should say that the v of IIb resolves itself into s of IIa, or the s of IIa into the v of IIb, or the v of IIb forms a component part of the s of IIa, or, vice versa, the surplus-value thus resolves itself into wages, or into variable capital, and the variable capital forms a component part of the surplus-value. This absurdity is indeed found in Adam Smith, since according to him wages are determined by the value of the necessities of life, and the values of these commodities in their turn by the value of the wages (variable capital) and surplus-value contained in them. He is so absorbed in the fractional parts, into which the product in values of one working day is divided on the basis of capitalist production—namely into v plus s—that he quite forgets that it is immaterial in the simple exchange of commodities, whether the equivalents existing in various natural forms consist of paid or unpaid labor, since their production costs in either case the same amount of labor; and that it is also immaterial, whether the commodity of A is a means of production and that of B an article of consumption, and whether one commodity has to serve as a component part of capital after its sale, while another passes into the fund for consumption and is consumed, according to Adam, as revenue. The use to which the buyer puts his commodity does not fall within the scope of the exchange of commodities, does not concern the circulation, and does not affect the value of the commodity. This fact is not in the least affected by the truth that, in the analysis of the circulation of the annual social product as a whole, the definite use for which it is intended, the mode of consumption of the various component parts of that product, must be taken into consideration.
In mentioning the fact that the conversion of the v of IIb into a portion of the s of IIa of the same value, and the further transactions between the s of IIa and the s of IIb, it is by no means assumed that either the individual capitalists of IIa and IIb or their respective totalities divide their surplus-value in the same proportion between necessities of life and articles of luxury. The one may spend more in this consumption, the other more in that. On the basis of simple reproduction we have merely assumed that a sum of values equal to the entire surplus-value is realized in a fund for consumption. The limits are thus given. Within each department, the one may do more in a, the other in b. But this may compensate itself mutually, so that the capitalist classes of a and b, each taken as a whole, each participate in the same proportion in both of them. The proportions of value—the proportional share of the two classes of producers, a and b, in the total value of the product of II—and with them a definite quantitative proportion between the departments of production supplying those products, are necessarily given in any concrete case; only a proportion chosen as an illustration is a hypothetical one. It does not alter the qualitative elements of the proposition, if we select another illustration; only the quantitative determinations would be altered. But if any circumstances cause an actual change in the proportional magnitude of a and b, then the conditions of simple reproduction would likewise be changed correspondingly.
Since the v of IIb is realized in an equivalent portion of the s of IIa, it follows that to the extent that the portion of the annual product consisting of luxuries grows, absorbing an increasing share of the labor-power in the production of luxuries, to the same extent is the reconversion of variable capital advanced by IIb into money conditioned on the prodigality of the capitalist class, who spend a considerable portion of their surplus-value in articles of luxury. It is by this means that the reconversion of this variable capital into money is promoted, and thereby the existence and reproduction of the laborers employed in IIb, by supplying them with the articles of consumption necessary for their life.
Every crisis momentarily lessens the consumption of luxuries. It retards and checks the reconversion of the v of IIb into money-capital, permitting it only partially and thus throwing a certain number of the laborers employed in the production of luxuries out of employment, while it on the other hand clogs by this means the sale of the necessary articles of consumption and reduces it. And there are, besides, the unproductive laborers who are dismissed at the same time, laborers who receive for their services a portion of the funds spent by the capitalists for luxuries (these laborers are themselves luxuries), and who take part to a very considerable extent in the consumption of necessities of life, etc. The reverse takes place in periods of prosperity, particularly during the times of bogus prosperity, in which the relative value of money, expressed in commodities, decreases primarily for other reasons (without any other actual revolution in values), so that the price of commodities rises independently of their own value. It is not alone the consumption of necessities of life which increases at such times. The working class, actively re-inforced by its entire reserve army, also enjoys momentarily articles of luxury ordinarily out of its reach, articles which at other times constitute for the greater part "necessities" only for the capitalist class. This contributes to a rise in prices from this quarter.
It is purely a tautology to say that crises are caused by the scarcity of solvent consumers, or of a paying consumption. The capitalist system does not know any other modes of consumption but a paying one, except that of the pauper or of the "thief." If any commodities are unsaleable, it means that no solvent purchasers have been found for them, in other words, consumers (whether commodities are bought in the last instance for productive or individual consumption). But if one were to attempt to clothe this tautology with a semblance of a profounder justification by saying that the working class receive too small a portion of their own product, and the evil would be remedied by giving them a larger share of it, or raising their wages, we should reply that crises are precisely always preceded by a period in which wages rise generally and the working class actually get a larger share of the annual product intended for consumption. From the point of view of the advocates of "simple" (!) common sense, such a period should rather remove a crisis. It seems, then, that capitalist production comprises certain conditions which are independent of good or bad will and permit the working class to enjoy that relative prosperity only momentarily, and at that always as a harbinger of a coming crisis.
We saw a while ago that the proportion between the production of necessities of life and that of luxuries requires the division of II (v + s) into IIa and IIb, and thus of IIc into (IIa) c and (IIb) c. Hence this division touches the character and the quantitative conditions of production to their very roots, and is an essential factor in its general conformation.
Simple reproduction is essentially directed toward consumption as an end, although the securing of surplus-value appears as the compelling motive of the individual capitalists; but surplus-value in this case, whatever may be its proportional magnitude, is supposed to serve merely for the individual consumption of the capitalist.
So far as simple reproduction is a part, and the most important one at that, of annual reproduction on an enlarged scale, consumption remains as a motive accompanying the accumulation of wealth as an end and distinguished from it. In reality, the matter appears more complicated, because some partners in the loot, the surplus-value of the capitalist, figure as consumers independently of him.
V. THE PROMOTION OF THE TRANSACTIONS BY THE CIRCULATION OF MONEY.
So far as we have analyzed circulation up to the present, it proceeded between the various classes of producers as indicated in the following diagrams:
(1) Between class I and class II:
I. 4000 c + 1000 v + 1000 s.
II....2000 c...+ 500 v + 500 s.
This disposes of the circulation of IIc (2000), which is exchanged for I (1000 v + 1000 s).
Leaving aside for the present the 4000 c of I, there still remains the circulation of v + s within class II. Now II (v + s) is subdivided between the subclasses IIa and IIb in the following manner:
(2) II. 500 v + 500 s=a (400 v + 400 s) + b (100 v + 100 s).
The 400 v of a circulate within their own subclass; the laborers paid with these wages buy with them articles of consumption, produced by themselves, from their employers, the capitalists of IIa.
Since the capitalists of both subclasses spend three-fifths of their surplus-value in products of IIa (necessities) and two-fifths in products of IIb (luxuries), the three-fifths of the surplus-value of a, or 240, are consumed within the subclass IIa itself; likewise two-fifths of the surplus-value of b (produced in the form of articles of luxury and existing as such) within the subclass IIb.
There remains to be exchanged between IIa and IIb: On the side of IIa: 160 s; on the side of IIb: 100 v + 60 s. These compensate one another. The laborers of IIb buy with their 100 in the form of money necessities of life to that amount from IIa. The capitalists of IIb likewise buy necessities from IIa to the amount of three-fifths, or 60, of their surplus-value. The capitalists of IIa thus obtain the money required for investing, as above assumed, two-fifths of their surplus-value, or 160 s, in luxuries produced by IIb (100 v held by the capitalists of IIb as a product reimbursing them for the wages paid by them, and 60 s). The diagram for this transaction is
the brackets indicating the amounts circulated and consumed within their own subclass.
The direct reflux of the money-capital advanced in variable capital, which takes place only in the case of the capitalist class of IIa who produce necessities of life, is but an expression, modified by special conditions, of the previously mentioned general law, that money advanced to the circulation by producers of commodities returns to them in the normal circulation of commodities. Consequently, if a money capitalist stands behind the producer of commodities and advances to the industrial capitalist money-capital (using this term in its strictest meaning, that is to say, capital-value in the form of money), the final point of reflux for this money is the pocket of this money-capitalist. In this way the mass of the circulating money belongs to that department of money-capital which is concentrated and organized in the form of banks, etc., although the money circulates more or less through all hands. The way in which this department advances its capital necessitates continually the final reflux to it in the form of money, although this takes place by way of the reconversion of the industrial capital into money-capital.
The circulation of commodities always requires two things: Commodities which are thrown into circulation, and money which is likewise thrown into it. "The process of circulation...does not, like direct barter of products, become extinguished upon the use-values changing places and hands. The money does not vanish on dropping out of the circuit of the metamorphosis of a given commodity. It is constantly being precipitated into new places in the arena of circulation vacated by other commodities," etc. (Volume I, chapter III, page 126.)
For instance, in the circulation between IIc and I (v + s) we assumed that 500 pounds sterling in gold had been advanced for it. In the innumerable processes of circulation, into which the circulation between great social groups resolves itself, now this, now that producer will first appear in one or the other group as a buyer, throwing money into circulation. Quite aside from individual circumstances, this is conditioned on the difference of the periods of production and thus of the turn-overs of the various commodity-capitals. Now II buys with these 500 pounds sterling means of production of the same value from I, and I buys from II articles of consumption valued at 500 pounds sterling. Hence the money flows back to II, but this department does not in any way increase its wealth by this reflux. It had thrown 500 pounds sterling in money into circulation and drew the same amount out of it in commodities; then it sells 500 pounds sterling worth of commodities and draws out of circulation the same amount in money; thus the 500 pounds sterling flow back to it. As a matter of fact, II has thrown into circulation 500 pounds sterling in money and 500 pounds sterling in commodities, a total of 1000 pounds sterling. It draws out of the circulation 500 pounds sterling in commodities and 500 pounds sterling in money. The circulation requires for the handling of 500 pounds sterling in commodities of I and 500 pounds sterling in commodities of II only 500 pounds sterling in money; and whoever has first advanced money in the purchase of commodities from other producers, recovers it when selling his own. Hence, if department I had been the first to buy commodities from II for 500 pounds sterling, and to sell later on to II commodities valued at 500 pounds sterling, these 500 pounds sterling would have returned to I instead of II.
In class I, the money invested in wages, in other words, the variable capital advanced in the form of money, does not return directly in this form, but indirectly by a detour. But in II, the 500 pounds sterling return directly from the laborers to the capitalists, and this return is always direct in the case where purchase and sale takes place repeatedly between the same persons in such a way that they are acting alternately as buyers and sellers of commodities. The capitalist of II pays for the labor-power in money; he thereby incorporates his labor-power in his capital and assumes the role of an industrial capitalist over his laborers as wage earners only by means of this transaction in circulation, which is for him merely a conversion of money-capital into productive capital. Thereupon the laborer, who is in the first instance a seller of his own labor-power, assumes in the second instance the role of a buyer, a possessor of money, while the capitalist acts now as a seller of commodities. In this way the capitalist recovers the money invested by him in wages. Unless this sale of his commodities implies cheating, etc., and remains but an exchange of equivalents in money and commodities, it is not a process by which the capitalist enriches himself. He does not pay the laborer twice, first in money, and then in commodities. His money returns to him as soon as the laborer exchanges it for his commodities.
Now, the money-capital converted into variable capital, the money advanced for wages, plays a prominent role in the circulation of money itself. For the laborer must live from hand to mouth and cannot give the industrial capitalists any credit for long periods. Hence variable capital in the form of money must be advanced simultaneously at innumerable localities in the social production in certain short intervals, such as weeks, etc., whatever may be the various periods of turn-over of the capitals in the different lines of industry. These intervals succeed one another with relative rapidity, and the shorter they are, the smaller is relatively the total amount of money thrown into circulation through this channel. In every country with a capitalist production the money-capital so advanced constitutes a proportionately influential share of the total circulation, so much more so as the same money, before its return to its point of departure, roams through many channels and serves as a medium of circulation for innumerable other businesses.
Now let us consider the circulation between I (v + s) and IIc from a different point of view.
The capitalists of I advance 1000 pounds sterling in the payment of wages. The laborers buy with this money 1000 pounds sterling's worth of commodities from the capitalists of II. These in turn buy with the same money means of production from the capitalists of I. These capitalists of I thereby recover their variable capital in the form of money, while the capitalists of II have reconverted one-half of their constant capital from the form of commodities into that of productive capital. The capitalists of II advance 500 pounds sterling more for the purchase of means of production from the capitalists of I. The capitalists of I spend this money in articles of consumption of II. These 500 pounds sterling thus return to the capitalists of II. They advance this amount again, in order to reconvert the last quarter of their constant capital, existing in the form of commodities, into means of production of I, its natural productive form. This money flows back to I, and once more withdraws from II articles of consumption to the same amount, returning 500 pounds sterling to II. The capitalists of II are then once more in possession of 500 pounds sterling in money and 2000 pounds sterling of constant capital, the latter having been reconverted from the form of commodity-capital into that of productive capital. By means of 1500 pounds sterling, a quantity of commodities valued at 5000 pounds sterling has been circulated. (1) I paid 1000 pounds sterling to his laborers for their labor-power of the same value; (2) the laborers bought with these same 1000 pounds sterling articles of consumption from II; (3) II bought with the same money means of production from I, thereby restoring to I its variable capital of 1000 pounds sterling in the form of money; (4) II buys 500 pounds sterling's worth of means of production from I; (5) I buys with the same 500 pounds sterling articles of consumption from II; (6) II buys with the same 500 pounds sterling means of production from I; (7) I buys with the same 500 pounds sterling articles of consumption from II. Thus 500 pounds sterling have returned to II, which it had thrown into circulation aside from its 2000 pounds sterling in commodities and for which it did not withdraw any equivalent from circulation.
The exchange, therefore, follows this course:
(1) I pays 1000 pounds sterling in money for labor-power, or, in short, commodities at 1000 pounds sterling.
(2) The laborers buy with their wages amounting to 1000 pounds sterling articles of consumption from II; therefore we have again commodities at 1000 pounds sterling.
(3) II buys with the 1000 pounds sterling received from the laborers means of production to the same amount; hence, once more, commodities at 1000 pounds sterling.
By this transaction the 1000 pounds sterling have returned to I in the money-form of its variable capital.
(4) II buys 500 pounds worth of means of production from I, or, commodities at 500 pounds sterling.
(5) I buys with the same 500 pounds sterling articles of consumption from II; or, commodities at 500 pounds sterling.
(6) II buys with the same 500 pounds sterling means of production from I; or, commodities at 500 pounds sterling.
(7) I buys with the same 500 pounds sterling articles of consumption from II; or, commodities at 500 pounds sterling.
Total amount of value of commodities converted: 500 pounds sterling.
The 500 pounds sterling advanced by II in its first additional purchase have returned to it.
This, then, is the result:
(1) I possesses variable capital in the form of money to the amount of 1000 pounds sterling, which it had originally advanced to the circulation. It has furthermore expended 1000 pounds sterling for its individual consumption, in the shape of its product in commodities; that is to say, has spent money which it had originally received for the sale of means of production to the amount of 1000 pounds sterling.
On the other hand, the natural form in which variable capital existing in the form of money must be incorporated in order to be preserved, in other words, labor-power, has been maintained by consumption, and having been reproduced exists once more as the sole commodity which its owners have for sale in order to make a living. The relation of wage workers and capitalists, then, has likewise been reproduced.
(2) The constant capital of II is reproduced in its natural form, and the 500 p. st. advanced by the same department to the circulation have likewise returned to its hands.
So far as the laborers of I are concerned, the circulation takes place according to the simple schedule C—M—C. Labor-power1 C—1000 p. st. as the money-form of the variable capital of I; M2—necessities of life to the amount of 1000 p. st.; C3—these 1000 p. st. monetize to the same amount the constant capital of II existing in the form of commodities, of necessities of life.
From the point of view of the capitalists of II, the process is C—M, the transformation of a portion of their product into money, from which it is reconverted into the elements of productive capital, namely into a portion of the means of production required by them.
In the case of the advance of money of 500 p. st., made by the capitalists of II in the purchase of an additional portion of means of production, the money-form of that portion of IIc which exists as yet in the form of commodities, of articles of consumption, is anticipated, in the transaction M—C, in which II buys with M, and C is sold by I, the money (II) is converted into a portion of productive capital, while C (I) passes through the transaction C—M, changes itself into money, which, however, does not represent any component part of productive capital for I, but merely monetized surplus-value expended solely for articles of consumption.
In the circulation M—C..P..C1—M1, the first act, M—C, is that of one capitalist, the last C1—M1, of another (or at least in part); whether this C, by which M is converted into productive capital, represents an element of constant capital, variable capital, or surplus-value for the seller of C (who exchanges this C for money), is immaterial for the circulation of commodities itself.
Class I, so far as concerns the portion v plus s of its product in commodities, draws more money out of circulation than it threw in. In the first place, its 1000 p. st. of variable capital are restored to it; in the second place, it sells means of production valued at 500 p. st. (see above transaction No. 4); one-half of its surplus-value is thus monetized; then it sells once more 500 p. st.'s worth of means of production (transaction No. 6), the second half of its surplus-value, and thus its entire surplus-value is withdrawn from circulation in the shape of money. The successive transactions, then, have been (1) a reconversion of variable capital into money, to the amount of 1000 p. st.; (2) a monetization of one-half of the surplus-value, to the amount of 500 p. st.; (3) a monetization of the other half of the surplus-value, to the amount of 500 p. st., altogether 1000 v plus 1000 s that have been monetized, or 2000 p. st. Although department I threw only 1000 p. st. into circulation (aside from those transactions which promote the reproduction of Ic, and which we shall analyze later), it has withdrawn double that amount from it. Of course, the surplus-value passes into another hand, that of II, as soon as it has been converted into money, by being spent for articles of consumption. The capitalists of I withdrew only as much value in money as they threw into circulation in the form of commodities; the fact that this value is surplus-value, that is to say, that it does not cost the capitalists anything, does not alter the value of these commodities in any way; so far as the exchange of values in circulation is concerned, that fact is entirely irrelevant. The monetization of surplus-value is, of course, a transient act, the same as all other phases through which the advanced capital passes in its metamorphoses. It lasts no longer than the interval between the conversion of the commodities of I into money and the subsequent conversion of the money of I into commodities of II.
If the turn-overs had been assumed to be shorter—or, from the point of view of the simple circulation of commodities, the number of turn-overs of the circulating money more rapid—even less money would be required for the circulation of the exchanged values of commodities; the amount is always determined—if the number of successive transactions is given—by the sum of the prices, or the sum of values, of the circulating commodities. It is immaterial for this question what proportion of this sum of values consists of surplus-value or of capital-value.
If the wages of I, in our illustration, were paid four times per year, we should have 4 times 250, or 1000. In other words, 250 p. st. would suffice for the circulation between Iv and ½ of IIc, and for that between the variable capital of I and the labor-power of the same department. Furthermore, if the circulation between Is and IIc were to take place in four turn-overs, it would require only 250 p. st. in money, or in the aggregate a sum of money, or a money-capital, or 500 p. st. for the circulation of commodities worth 5000 p. st. In that case, the surplus-value would be converted into money by four successive transactions, monetizing one-fourth each time, instead of two transactions of one-half each time.
If department I instead of II, should assume the role of buyer in transaction No. 4 by expending 500 p. st. for articles of consumption of the same value, II would buy means of production with the same 500 p. st. in transaction No. 5, I would then buy articles of consumption with the same 500 p. st. in transaction No. 6; II would then buy means of production with the same 500 p. st. in transaction No. 7; so that the 500 p. st. would finally return to I, the same as they did in our previous illustration to II. The surplus-value is converted into money, in this second case, by means of an expenditure of money for articles of individual consumption on the part of its capitalist producer, and this expenditure of money discounts beforehand the revenue to be derived from the monetization of the surplus-value still contained in the unsold commodities. The surplus-value is not monetized by the reflux of the 500 p. st.; for aside from 1000 p. st. in the form of commodities of Iv, department I threw 500 p. st. in money into circulation at the close of transaction No. 4, and this was additional money, so far as we know, not money obtained by the sale of commodities. In recovering this money, department I merely pockets once more the additional money advanced by it. It has not monetized its surplus-value by this means. The monetization of the surplus-value of I takes place only by the sale of the commodities of Is, in which it is incorporated, and lasts only so long as the money obtained by the sale of the commodities is not expended in the purchase of new articles of consumption.
Department I buys with an additional amount of 500 p. st. in money articles of consumption from II; after spending this money, I holds its equivalent in commodities of II; the money returns for the first time by the purchase, on the part of II, of commodities to the amount of 500 p. st. from I; in other words, it returns as the equivalent of the commodities sold by I, but these commodities do not cost I anything, they constitute surplus-value for I, and thus the money thrown into circulation by this very department monetizes its own surplus-value. On buying for the second time, in transaction No. 6, I has likewise obtained its equivalent in commodities of II. Take it, now, that II would not buy means of production from I. In that case, I would have actually paid 1000 p. st. for articles of consumption, it would have consumed its entire surplus-value as revenue, namely 500 in its own commodities (means of production) and 500 in money; on the other hand, it would still have 500 p. st. in commodities (means of production) in stock, and would have gotten rid of 500 p. st. in money.
Department II, again, would have reconverted three-fourths of its constant capital from the form of commodity-capital into that of productive capital; but one-fourth, or 500 p. st., would be held by it in money, which, having interrupted its function and waiting for conversion, would be unproductive for the time being. If this condition of things should last for any length of time, II would have to cut down its scale of reproduction by one-fourth.
However, the 500 in means of production, which I has on its hands, are not surplus-value existing in the form of commodities; they occupy the place of the 500 p. st. advanced in money, which I possessed aside from its 1000 p. st. in commodities. In the form of money, they would be always convertible, as commodities they are momentarily unsalable. So much is evident, that simple reproduction—in which every element of productive capital must be reproduced in both II and I—remains possible in this case only, if the 500 golden birds, which I first sent flying, return to it.
If a capitalist (we have only industrial capitalists to deal with here, who are the representatives of all others) spends money for articles of consumption, it passes out of his life, it goes the way of the flesh. If it returns to him, it can do so only to the extent that he draws it out of circulation by means of his commodity-capital. The value of his entire annual product in commodities (which represents his commodity-capital) the same as that of every one of its elements, that is to say, of every individual commodity, resolves itself, from his point of view, into constant capital, variable capital, and surplus-value. The monetization of every individual commodity (each constituting an element of the product in commodities) is at the same time a monetization of a certain portion of the surplus-value contained in the entire product. In the cited case, then, it is literally true that the capitalist himself threw the very money into circulation by which his surplus-value is monetized, and he did so in the purchase of articles of consumption. Of course, it is not a question of the identical pieces of money, but rather of a certain amount of genuine money equal to the one (or an equal portion of the one) which he had previously thrown into circulation to satisfy his own individual wants.
In practice this is done in two ways: If the business has been opened in the current year, it will take quite a while before the capitalist will be enabled to use any portion of the receipts of his business for the satisfaction of his individual consumption. But he does not suspend his consumption for all that for a single moment. He advances to himself (immaterial whether out of his own pocket or by means of credit from others) money in anticipation of surplus-value to be realized by him. If the business has been running regularly for a period longer than the current year, payments and receipts are distributed over different terms of the year. But one thing continues uninterruptedly, namely the consumption of the capitalist, which anticipates a definite portion of the customary or estimated revenue and is calculated on a certain proportion of it. With every portion of commodities sold, a portion of the annually produced surplus-value is also realized. But if only as much of the produced commodities were sold during the entire year as is required to reproduce the values contained in the constant and variable capitals, or if prices were to fall to such an extent that only the value of the capital contained in it should be realized by the sale of the entire annual product in commodities, then the anticipatory character of the expenditure of money in expectation of future surplus-value would be clearly revealed. If our capitalist fails, then his creditors and the court investigate whether his anticipated private expenditures were reasonably proportionate to the volume of his business and to the receipts of surplus-value usually or normally corresponding to it.
So far as the entire capitalist class are concerned, the statement that they must themselves throw into circulation the money required for the realization of their surplus-value (eventually for the circulation of their constant and variable capital) is not only no paradox, but is the necessary premise of the entire mechanism. For there are only two classes in this case, the working class disposing of their labor-power, and the capitalist class owning the social means of production and the money. It would rather be a paradox if the working class were to advance in the first instance out of its own pockets the money required for the realization of the surplus-value contained in the commodities. But the individual capitalist makes this advance only by acting as a buyer, expending money in the purchase of articles of consumption, or advancing money in the purchase of elements of his productive capital. He never parts with his money unless he gets an equivalent for it. He advances money to the circulation only in the same way that he advances commodities to it. He acts in both instances as the point of departure of their circulation.
The actual transaction is obscured by two circumstances:
(1) The fact that merchant's capital (the first form of which is always money, since the merchant as such does not create any "product" or "commodity") and money-capital are manipulated by a special class of capitalists in the process of circulation of industrial capital.
(2) The division of surplus-value—which must always be first in the hands of the industrial capitalist—into various categories, represented, aside from industrial capitalists, by the land owner (for ground rent), the usurer (for interest), etc., furthermore by the government and its officials, by people living on their income, etc. This gentry appear as buyers as compared to the industrial capitalist, and to that extent as monetizers of his commodities; they likewise throw "money" into circulation on their part and the industrial gets it from them. But in that case, it is always forgotten from what source they derived it originally, and continue deriving it ever anew.
VI. THE CONSTANT CAPITAL OF DEPARTMENT I.
It remains for us to analyze the constant capital of department I, amounting to 4000 c. This value is equal to that of the means of production consumed in the creation of the commodity-product of I and incorporated in it. This re-appearing value, which was not produced in the process of production of I, but entered into it during the preceding year in the form of constant capital, representing the definite value of his means of production, exists now in the entire quantity of commodities not absorbed by department II. And the value of this quantity of commodities thus left in the hands of the capitalists of I equals two-thirds of the value of their entire annual commodity-product. In the case of the individual capitalist producing some particular means of production, we were enabled to say: He sells his commodity-product; he converts it into money. By converting it into money, he has also reconverted into money the constant portion of the value of his product. With this portion of value, thus converted into money, he then buys his means of production once more from other sellers of commodities, or transforms the constant portion of the value of his product into its natural form, in which it can resume its function of productive constant capital. But now this supposition becomes impossible. The capitalist class of I comprises all the capitalists producing means of production. Besides, the commodity-product of 4000, which is left on their hands, is a portion of the social product which cannot be exchanged for any other portion, because no other portion of the annual product remains. With the exception of these 4000, all the remainder of the product has been disposed of. One portion has been absorbed by the social fund for consumption, and another portion has to reproduce the constant capital of department II, which has already bargained for everything which it can exchange with I.
The difficulty is solved very easily, when we remember that the entire product of I in its natural form consists of means of production, that is to say, of material elements of the constant capital itself. We meet here the same phenomenon which we witnessed under II, only under a different aspect. In the case of II, the entire product consisted of articles of consumption. Hence one portion of it, measured by the wages plus surplus-value contained in this product, could be consumed by its own producers. Here, in the case of I, the entire product consists of means of production, such as buildings, machinery, tanks, raw and auxiliary materials, etc. One portion of them, namely that reproducing the constant capital employed in this sphere, can, therefore, be immediately set to work in its natural form to serve once more as an element of productive capital. So far as it goes into circulation, it circulates within department I. While a portion of the commodity-product of II is individually consumed in its natural form by its own producers, a portion of the commodity-product of I is productively consumed in its natural form by its capitalist producers.
In these 4000c of the commodity-product of I, the constant capital-value consumed in this category re-appears in its natural form in which it can immediately resume its services as a productive constant capital. In department II, that portion of the commodity-product of 3000 whose value is equal to the wages plus the surplus-value of 1000, passes directly into the individual consumption of the capitalists and laborers of II, while, on the other hand, the constant value of this commodity-product, equal to 2000, cannot re-enter into the productive consumption of the capitalists of II, but must be reproduced by exchange with I.
But in department I, that portion of its commodity-product of 6000, whose value is equal to the wages plus the surplus-value, or 2000, does not pass into the individual consumption of its producers, and could not on account of its natural form. It must first be exchanged with department II. On the other hand, the constant portion of the value of this product, or 4000, exists in a natural form, in which it can immediately resume its services as the constant capital of the capitalist class of I, taking this class as an aggregate. In other words, the entire product of department I consists of use-values which, on account of their natural form, can serve only as elements of constant capital, in a capitalist system of production. One third of this product of 6000, then, reproduces the constant capital of department II, or 2000, and the other two thirds the constant capital of department I.
The constant capital of I consists of a number of different groups of capital invested in the various lines of production of means of production, so much in iron works, so much in coal mines, etc. Every one of these groups of capital, or every one of these social capital groups, is in its turn composed of a larger or smaller number of independently functioning individual capitals. In the first place, the capital of society, for instance 7500 (millions, or any other denomination) is composed of various groups of capital; the social capital of 7500 is divided into separate parts, every one of which is invested in a special line of production, each portion invested in some particular line of production consists, so far as its natural composition is concerned, partly of means of production required in that special sphere of production, partly of the labor-power employed in that business and adapted to its requirements. This labor-power is modified by division of labor, according to the specific labor to be performed in each individual sphere of production. Each portion of social capital invested in any particular line of production in its turn consists of the sum of all individual capitals invested in it. This, of course, applies equally to departments I and II.
As for the value of the constant capital re-appearing in the form of the commodity-product of I, it re-enters in part as means of production into the particular sphere whose product it is (or even into the individual business), for instance, corn into the production of corn, coal into the production of coal, iron in the form of machines into the production of iron, etc.
However, the partial products constituting the value of the constant capital of I, so far as they do not return directly to their particular or individual sphere of production, merely change their place. They pass in their natural form to some other sphere of production of department I, while the product of other spheres of production of department I replaces them in their natural state. It is merely a change of place of the products. All of them become once more the elements in the reproduction of constant capital of I, only in another group of I instead of the same one. To the extent that an exchange takes place between the individual capitalists of I, it is an exchange of one natural form of constant capital for another, one kind of means of production for another. It is an exchange of the different individual constant parts of capital of I among themselves. Unless the products serve directly as means of production in their own line, they are transferred to another line and thus naturally replace one another. In other words (similarly to what we saw in the case of the surplus value II), every capitalist of I draws on this constant capital of 4000, of which he is part owner, to the extent of his share, in means of production required by him. If production were socialized, instead of capitalistic, it is evident that these products of department I would just as regularly be redistributed as means of production to the various lines of production of this department, for purposes of reproduction, one portion remaining directly in that sphere of production which created it, another passing over to other lines of production of the same department, thereby entertaining a constant mutual exchange between the various lines of production of this department.
VII. VARIABLE CAPITAL AND SURPLUS-VALUE IN BOTH DEPARTMENTS.
The total value of the articles of consumption annually produced is equal to the value of the variable capital of II produced during the year plus the newly created surplus-value of II (in other words, equal to the value newly produced by II during the year) plus the value of the variable capital of I reproduced during the year and the newly produced surplus-value of I (in other words, plus the value created by I during the year).
On the assumption of simple reproduction, then, the total value of the annually produced articles of consumption is equal to the annual product in values, in other words, equal to the total value produced during that year by social labor. And it must be so, for the reason that this entire value is consumed, on the basis of simple reproduction.
The total social working day is divided into two parts: (1) Necessary labor, which creates in the course of the year a value of 1500 v; (2), surplus labor, which creates an additional value, or surplus-value, of 1500 s. The sum of these values, 3000, is equal to the value of the annually produced articles of consumption of 3000. The total value of articles of consumption produced during the year is therefore equal to the total value produced by the social working day during the year, equal to the value of the variable social capital plus the social surplus-value, equal to the total new product of the year.
But we know that the total value of the commodities of II, the articles of consumption, is not produced in this department of social production, although these two classes of value are identical. They are identical, because the value of the constant capital re-appearing in department II is equal to the value newly produced by I (value of variable capital plus surplus value); so that I (v+s) can buy that portion of the product of II which represents the value of the constant capital of the producers in department II. This shows why the value of the product of the capitalists of II, from the point of view of society, may be resolved into v + s, although from their standpoint it is divided into c + v + s. It is because IIc is equal to I (v + s), and because these two elements of the social product are mutually exchanged in their natural forms, so that after this exchange IIc exists once more in means of production, and I (v + s) in articles of consumption.
And it is this circumstance which induced Adam Smith to claim that the value of the annual product resolves itself into v + s. But this is not true, in the first place, except for that part of the annual product which consists of articles of consumption; and in the second place, it does not apply in the sense that this total value is entirely produced by department II, so that its value in products would be equal to the variable capital advanced by II plus the surplus-value produced by II. It is true only in the sense that II (c + v + s) is equal to II (v + s) +I (v + s), or because IIc is equal to I (v + s).
It follows, furthermore:
Although the social working day (that is to say, the labor expended by the entire working class during the whole year), like every individual working day, is divided only in two parts, namely into necessary labor and surplus-labor, and although the value produced by this working day like-wise resolves itself into but two parts, namely into the value of variable capital, or that portion with which the laborer buys his own means of reproduction, and the surplus-value which the capitalist may spend for his own individual consumption, nevertheless, from the point of view of society, one portion of the social working day is exclusively devoted to the production of new constant capital, namely of products exclusively intended for service as means of production in the labor-process and thus as constant capital in the accompanying process of self-expansion. According to our assumption, the total social working day is represented by a money-value of 3000, only one third of which, or 1000, is produced in department II, which manufactures articles of consumption, that is to say, commodities in which the entire value of the variable capital and the entire surplus-value of society is finally realized. According to this assumption, two thirds of the social working day are employed in the production of new constant capital. Although, from the standpoint of the individual capitalists and laborers of department I, these two thirds of the social working day serve merely for the production of variable capital plus surplus-value, the same as the last third of the social working day in department II, nevertheless, from the point of view of society, and of the use-value of the product, these two thirds of the social working day serve only for the reproduction of constant capital in process of productive consumption or already so consumed. From the individual point of view, these two thirds of the working day, while producing a total value equal only to the value of the variable capital plus surplus-value, so far as its producer is concerned, nevertheless do not produce any use-values of the kind on which wages or surplus-value could be expended; for their products are means of production.
It must be noted, in the first place, that no portion of the social working day, whether in I or in II, serves for the production of the value of the constant capital employed and serving in these two great spheres of production. They produce only additional value, namely 2000 I (v + s) + constant capital, represented by 4000 Ic + 2000 IIc. The 1000 II (v + s), an addition to the existing value of the new value produced in the form of means of production is not yet constant capital. It merely is intended to be used as such in the future.
The entire product of II, the articles of consumption, viewed concretely as a use-value, in its natural form, is a creation of the one third of the social working day contributed by II. It is the product of labor in its concrete form, such as the labor of weaving, baking, etc., performed in this department as the subjective element of the labor process. But the constant portion of the value of this product of II re-appears only in a new use-value, in a new natural form, namely that of articles of consumption, while it existed previously in the form of means of production. Its value has been transferred by the labor-process from its old natural form to its new natural form. But this value of these two thirds of the product, or 2000, has not been produced in this year's productive process of II.
Just as, from the point of view of the labor-process, the product of II is the result of the function of new living labor and means of production previously given to it, which are the material objects in which it incorporates itself, so, from the point of view of the process of reproduction, the value of the product of II, or 3000, is composed of the new value (500 v + 500 s = 1000) produced by the newly added one third of the social working day and of a constant value, in which two thirds of a previous social working day are embodied, which passed away before the present process of production of II. This portion of the value of the product of II is materialized in a portion of the product itself. It exists in a quantity of articles of consumption valued at 2000, or two thirds of a social working day. This is the new use-form in which it re-appears. The exchange of a portion of the articles of consumption of 2000 IIc for means of production of I equal to I (1000 v + 1000 s) represents, therefore, indeed an exchange of two thirds of a social working day which do not constitute any portion of this year's labor, but passed away previously to this year, for two thirds of the social working day newly added this year. Two thirds of this year's social working day could not serve in the production of constant capital and yet at the same time constitute variable capital plus surplus-value for their own producers, unless they were compelled to exchange with a portion of the value of the annually consumed articles of consumption, in which two thirds of a working day spent and realized, not this year, but previously, are incorporated. It is an exchange of two thirds of this year's working day with two thirds of a preceding working day, an exchange of this year's labor with that of a previous year. This, then explains the riddle, how it is that the product in values of an entire social working day may resolve itself into variable capital plus surplus-value, although two thirds of this working day were not expended in the production of articles, in which variable capital or surplus-value can be realized, but rather in the production of means of production for the replacement of capital consumed during this year. The explanation is simply that two thirds of the value of the product of II, in which the capitalists and laborers of I realize the value of the variable capital and surplus-value produced by them (and which constitute two thirds of the value of the entire annual product), are, so far as their value is concerned, the product of two thirds of a social working day passed previously to this year.
The sum of the social product of I and II, comprising means of production and articles of consumption, so far as its concrete use-value in its natural form is concerned, is indeed the result of this year's labor, but only to the extent that this labor is regarded as useful and concrete, not as an expenditure of labor-power and creator of values. And even so, it is concrete labor only in the sense that the means of production have transformed themselves into this year's new product by dint of the living labor operating on them. On the other hand, it is also true that this year's labor could not have transformed itself into products without the help of means of production, of instruments of production and materials, which existed independently of it.
VIII. THE CONSTANT CAPITAL IN BOTH DEPARTMENTS.
The analysis of the total value of the product of 9000, and of the categories into which it is divided, does not present any greater difficulties than that of the value produced by some individual capital. It is rather identical with it.
In the present instance, the entire social product of this year contains three social working days, each of one year. The value represented by each one of these working days is 3000, so that the value of the total product is 3 × 3000, or 9000.
Furthermore, the following portions of this working time belong to a period previous to that of the process of production which we now analyze: In department I, four thirds of a working day (with a product valued at 4000), and in department II, two thirds of a working day (with a product valued at 2000), making a total of two social working days with a product valued at 6000. For this reason, 4000 Ic + 2000 IIc = 6000 c figure as the value of the means of production, or value of the constant capital, re-appearing in the total product of society.
Furthermore, one third of the social working day of one year newly added by department I is necessary labor, or labor reproducing the value of the variable capital of 1000 Iv and paying the price of the labor employed by I. In the same way, one sixth of the social working day of II is necessary labor valued at 500. Hence we have 1000 I v + 500 II v = 1500 v, expressing the value of one half of the social working day, the value of the first half of the working day added this year and consisting of necessary labor.
Finally, in department I, one third of the social working day of this year, with a product valued at 1000, is surplus-labor, and one sixth of one working day in department II, with a product valued at 500, is likewise surplus-labor. Together they constitute the other half of the newly added social working day, with a total value of surplus-labor amounting to 1000 I s + 500 II s = 1500 s.
This, then, is the situation:
Constant portion of capital in terms of the value of the social product (c): Two working days expended previously to the present process of production, worth 6000 in value.
Necessary labor (v) expended during the present year: One half of one working day expended during the present year, worth 1500 in value.
Surplus-labor (s) expended during the present year: One-half of one working day expended during the present year, worth 1500 in value.
Product in values of annual labor (v + s), 3000.
Total value of product (c + v + s), 9000.
The difficulty, then, does not consist in the analysis of the social product in values. It arises in the comparison of the component parts of the value of the social product with its material elements.
The constant, merely re-appearing, portion of value is equal to the value of that part of this product which consists of means of production, and it is incorporated in that part.
The product in values of the current year, equal to v + s, is equal to the value of that part of this product, which consists of articles of consumption, and is incorporated in it.
But with the exception of cases immaterial for this analysis, means of production and articles of consumption are vastly different kinds of commodities, products of widely different natural forms and use-value, and, therefore, products of radically different classes of concrete labor. The labor which employs machinery in the production of necessities of life is vastly different from the labor which makes machinery. The entire working day of the current year, which is 3000 in terms of value, figures as an expenditure in the production of articles of consumption valued at 3000, in which no portion of any constant value re-appears, since these 3000, equal to 1500 v + 1500 s, resolve themselves only into variable capital-value and surplus-value. On the other hand, the constant capital-value of 6000 re-appears in a class of products quite different from articles of consumption, namely in means of production, while as a matter of fact no portion of the present annual working day figures as an expenditure in the production of these new products. It appears rather that this entire working day consists only of classes of labor which do not result in means of production, but in articles of consumption. We have already solved this mystery. The product in values of the labor of the present year is equal to the value of the products of department II, the total value of the newly produced articles of consumption. But the value of these products is greater by two thirds than that portion of the annual labor which has been expended in the production of articles of consumption (department II). Only one third of the annual labor has been expended in their production. Two thirds of this annual labor have been expended in the production of means of production, that is to say, in department I. The value of the product created during this time in I, equal to the variable capital-value plus surplus-value produced in I, is equal to the constant capital-value of II re-appearing in articles of consumption of II. Hence they may be mutually exchanged and take one another's place in their natural form. The total value of the articles of consumption of II is, therefore, equal to the sum of the new product in values of I and II, or II (c + v + s) is equal to I (v + s) + II (v + s), in other words, equal to the sum of the new values produced by the labor of the current year in the form of v + s.
On the other hand, the total value of the means of production of I is equal to the sum of the constant capital-values re-appearing in the form of means of production of I and in that of articles of consumption of II, in other words, equal to the sum of the constant capital-values reappearing in the total product of society. This total value is equal in terms of value to four thirds of a working day preceding the process of production of I and two thirds of a working day preceding the process of production of II, in all equal to two annual working days.
The difficulty in the analysis of the annual social product arises, therefore, from the fact that the constant portion of value is represented by a different class of products (means of production) than the new portion of value (v + s) added to this constant portion and represented by articles of consumption. Thus the appearance is created, so far as the question of values is concerned, as though two thirds of the consumed mass of products were reproduced in a new form, without any labor having been expended by society in their production. This is not so in the case of an individual capital. Every individual capitalist employs some particular concrete class of labor, which transforms the means of production peculiar to it into products. For instance, the capitalist may be a manufacturer of machines, the constant capital expended by him during the current year may be 6000 c, the variable capital 1500 v, the surplus-value 1500s, the product 9000, represented, say, by 18 machines of 500 each. The entire product in this instance consists of the same form, of machines. If he produces various kinds, each one is calculated separately. The entire product in commodities is the result of the labor expended during the current year in machine manufacture by a combination of the same concrete labor with the same kind of means of production. The various portions of the value of the product therefore present themselves in the same natural form: 12 machines represent 6000 c, 3 machines 1500 v, and 3 machines 1500 s. It is evident that the value of the 12 machines is equal to 6000 c, not merely because there is incorporated in these machines labor performed previously to the manufacture of these machines and not expended in their making. The value of the means of production for 18 machines did not transform itself into machines of its own doing, but the value of these 12 machines (consisting itself of 4000 c + 1000 v + 1000 s) is equal to the total value of the constant capital-value contained in the 18 machines. The machine manufacturer must, therefore, sell 12 of the 18 machines, in order to recover his expended constant capital, which he requires for the reproduction of 18 new machines. On the other hand, the thing would be inexplicable, if the result of the labor expended solely in the manufacture of machines, were to be: On the one hand, 6 machines of 1500 v + 1500 s, on the other iron, copper, screws, belts, etc., to the amount of 6000 s, in other words, the natural means of production of the machines which the individual machine-building capitalist does not produce himself, but must secure by way of the process of circulation. And yet it seemed at the first glance as though the reproduction of the annual product of society took place in this absurd way.
The product of an individual capital, that is to say, of every aliquot part of the social capital endowed with a life of its own and acting independently, has some natural form. The only condition is that this product must have a certain use-value, which endows it with the character of a member of the world of commodities fit for circulation. It is immaterial and a matter of hazard, whether or not it can go back as a means of production into the same process of production from which it came as a product, in other words, whether that portion of its value as a product, in which the constant capital is incorporated, has a natural form, in which it can actually serve again as constant capital. If it has not, then this portion of the value of the product is reconverted into the form of its material elements by means of sale and purchase, and thus the constant capital is reproduced in the natural form adapted to its function.
It is different with the product of the total social capital. All the material elements of reproduction in their natural form must be a part of this product. The consumed constant portion of capital can be reproduced by the production as a whole only to the extent that the entire reappearing constant capital is represented in the product by the natural form of new means of production, which can actually serve as constant capital. Simple reproduction being assumed, the value of that portion of the product which consists of means of production must be equal to the constant portion of the value of social capital.
Furthermore: Individually considered, the capitalist produces in the value of his product by means of the newly added labor only his variable capital plus surplus-value, while the constant value is transferred by the concrete form of the newly added labor to the product.
Socially considered, that portion of the social working day which produces means of production, adding new value to them and transferring to them at the same time the value of the means of production consumed in their manufacture, creates nothing but new constant capital, which is intended to replace that consumed in the shape of the old means of production, that is to say of the constant capital consumed in department I and II. It creates only product intended for productive consumption. The entire value of this product, then, is a value which can serve only as a new constant capital, which can buy back only constant capital in its natural form, and which, for this reason, resolves itself neither into variable capital nor surplus-value, looking at it from the social point of view. On the other hand, if that portion of the social working day which produces articles of consumption does not create any portion of the social capital intended for reproduction, it creates only products intended, in their natural form, to realize the value of the variable capital and surplus-value of departments I and II.
Speaking of looking at things from the point of view of society as a whole, in this instance at the aggregate product of society, which comprises both the reproduction of social capital and individual consumption, we must not follow the manner copied by Proudhon from bourgeois economy, which looks upon this matter as though a society with a capitalist mode of production would lose its specific historical and economic characteristics by being taken as a unit. Not at all. We have, in that case, to deal with the aggregate capitalist. The aggregate capital appears as the capital stock of all individual capitalists combined. This stock company shares with many other stock companies the peculiarity that every one knows what he puts in, but not what he will get out of it.
IX. A RETROSPECT ON ADAM SMITH, STORCH, AND RAMSAY.
The total value of the social product amounts to 9000 equal to 6000 c+1500 v+1500 c, in other words, 6000 represent the value of the means of production, and 3000 that of the articles of consumption. The value of the social revenue (v + s), then, amounts to only one third of the value of the total product, and the totality of the consumers, laborers as well as capitalists, can draw on the total social product for commodities only to the amount of this third, for the purpose of individual consumption. On the other hand, 6000, or two thirds, of the value of the product, are the value of the constant capital which must be reproduced in its natural form. Means of production to this amount must again be incorporated in the productive fund. Storch recognizes this without being able to prove it: "It is clear that the value of the annual product is distributed partly to capital and partly to profits, and that each one of these portions of the value of the annual product is regularly employed in buying the products which the nation needs both for the maintenance of its capital and for stocking its fund for consumption. * * * * The products which constitute the capital of a nation are not consumable." (Storch, Considérations sur la nature du revenu national. Paris, 1824, page 150.)
Adam Smith, however, has promulgated this strange dogma, which is believed to this day, not only in the previously mentioned form, according to which the entire value of the social product resolves itself into revenue, that is to say, into wages plus surplus-value, or, as he expresses it, into wages plus profit (interest) plus ground rent, but also in the still more popular form, according to which the consumers must ultimately pay to the producers the entire value of the product. This is to this day one of the best established commonplaces, or rather of the eternal truths of the so-called science of political economy. This is illustrated in the following plausible manner: Take any article, for instance linen shirts. First, the spinner of linen yarn has to pay the flax grower the entire value of the flax, in other words the value of flax seed, fertilizers, cattle feed, etc., plus the value transferred to the product from the fixed capital of the flax grower, such as buildings, agricultural implements, etc.; furthermore the wages paid in the production of the flax; the surplus-value incorporated in the flax (profit, ground rent); finally the cost of transportation of the flax from its place of production to the spinnery. Next, the weaver has not only to reimburse the spinner for linen yarn, for the price of the flax, but also for that portion of the value of machinery, buildings, etc., in short of the fixed capital, which is transferred to the yarn, furthermore all the auxiliary materials consumed in the spinning process, the wages of the spinners, the surplus-value, etc., and so forth in the case of the bleaching process, the transportation of the finished linen, and finally the shirtmaker, who has to pay the entire price of all preceding producers, who supplied him only with his raw material. There is now a further addition of value by his hands, either by means of constant capital which is consumed in the shape of materials of labor, auxiliary materials, etc., used in the making of shirts, or by means of labor expended in it, which adds the value of the wages of the shirtmakers plus the surplus-value of the shirt manufacturer. Now let this entire product in shirts cost ultimately 100 p. st., and let this be the aliquot part of the total annual value in products expended by society in shirts. The consumers of the shirts pay these 100 p. st., that is to say the value of all the means of production, and of the wages plus surplus-value of the flax grower, spinner, weaver, bleacher, shirtmaker, and all carriers. This is quite true. Indeed, every child can see that. But now they continue: The same is true of the value of all other commodities. It should rather be said that this is true of the value of all articles of consumption, of the value of that portion of the social product which passes into consumption, in other words, that portion of the value of the social product which may be expended as revenue. It is true that the sum of the value of all these commodities is equal to the value of all the means of production (constant portions of capital) consumed in their creation, plus the value added by the last labor expended on them (wages plus surplus-value). Hence the totality of the consumers can pay for this entire sum of values, because, although the value of each individual commodity is made up by c + v + s, nevertheless the sum of the values of all commodities passing into consumption, taken at its maximum, can be equal only to that portion of the value of the social product, which resolves itself into v + s, in other words, equal to that value which the labor expended during the current year has added to the existing means of production representing the value of the constant capital. As for the value of the constant capital, we have seen that it is reproduced out of the mass of social products in a twofold way. First, by an exchange of the capitalists of II, who produce articles of consumption, with the capitalists of I, who produce the means of production. And here is the source of the phrase that what is capital for one is revenue for the other. But this is not the actual state of affairs. The 2000 II c, existing in the shape of articles of consumption valued at 2000, constitute a constant capital-value for the capitalists of class II. They cannot consume it themselves, although the product must be consumed on account of its natural form. On the other hand, the 2000 I (v + s) are wages plus surplus-value produced by the capitalist and working classes of I. They exist in the natural form of means of production, of things in a shape in which their own value cannot be consumed. We have here, then, values to the amount of 4000, only one half of which, either before or after the change, reproduce constant capital, while the other half form revenue. In the second place, the constant capital of I is reproduced in its natural form, partly by exchange among the capitalists of I, partly by reproduction in a natural form in each individual business.
The phrase that the entire annual value in products must be ultimately paid by the consumer would be correct only in the case that we were to include in the term consumer two vastly different classes, namely individual consumers and productive consumers. But to say that one portion of the product must be consumed productively is precisely to say that it must serve as capital and cannot be consumed as revenue.
On the other hand, if we divide the total value of the entire product, equal to 9000, into 6000 c+1500 v+1500 s, and look upon the 3000 (v + s) in the light of a revenue, then the variable capital seems to disappear and capital, socially speaking, seems to consist only of constant capital. For that which appeared originally as 1500 v has resolved itself into a portion of the social revenue, into wages, the revenue of the working class, and has thus lost its character of capital. This conclusion is actually drawn by Ramsay. According to him, capital, socially considered, consists only of fixed capital, but he means by fixed capital the constant capital, that quantity of values which consists of means of production, whether these are instruments or materials of labor, such as raw materials, partly finished products, auxiliary materials, etc. He calls the variable capital a circulating capital: "Circulating capital consists only of subsistence and other necessaries advanced to the workmen previously to the completion of the produce of their labor. * * * * Fixed capital alone, not circulating, is properly speaking a source of national wealth. * * * * Circulating capital is not an immediate agent in production, nor essential to it at all, but merely a convenience rendered necessary by the deplorable poverty of the mass of the people. * * * * Fixed capital alone constitutes an element of cost of production in a national point of view." (Ramsay, 1, c., pages 23 to 26, selected.) Ramsay defines fixed capital, by which he means constant capital, more closely in the following words: "The length of time during which any portion of the product of that labor" (namely labor bestowed on any commodity) "has existed as fixed capital i.e., in a form in which, though assisting to raise the future commodity, it does not maintain laborers." (Page 59.)
Here we see once more the confusion created by Adam Smith by drowning the distinction between constant and variable capital in that of fixed capital and circulating capital. The constant capital of Ramsay consists of means of production, his circulating capital of articles of consumption. Both of them are commodities of a given value. The one can no more create any surplus-value than the other.
X. CAPITAL AND REVENUE: VARIABLE CAPITAL AND WAGES.
The entire annual production, the entire product of a year, is the product of the useful labor of that year. But the value of this total product is greater than that portion of it in which the labor-power expended on production during the last year is incorporated. The product in values of this year, the new value created in its course in the form of commodities, is smaller than the value of the product, that is to say, THE TOTAL VALUE OF THE COMMODITIES FINISHED DURING THE ENTIRE YEAR. The difference obtained by deducting from the total value of the annual product that portion of value which was added by the labor of the last year, is not an actually reproduced value, but merely one re-appearing in a different form of existence. It is value transferred to the annual product from previously existing value, which may be of an earlier or later date, according to the wear of the constant portions of capital which have participated in that year's annual labor-process, a value which may be derived from some means of production which were first created during the year before last or in years even previous to that. It is under all circumstances a value transferred from means of production of former years to the product of the year under discussion.
Take our formula. We then have after the exchange of the elements, hitherto considered, between I and II, and within II:
(I) 4000 c + 1000 v + 1000 s (these last realized in articles of consumption of II c) = 6000.
(II) 2000 c (reproduced by exchange with I [v + s]) + 500 v + 500 s = 3000.
Sum of values 9000.
Value newly produced during the year is incorporated only in v and s. The sum of the product in values of this year is therefore equal to the sum of v + s, that is to say, 2000 I(v + s) + 1000 II (v + s) = 3000. All other portions of value in the products of this year are merely transferred values, derived from the value of means of production. previously produced and consumed in the annual production. Aside from the value of 3000, the current annual labor has not produced anything in the way of values. That 3000 represents its entire annual product in values.
Now, we have seen that the 2000 I (v + s) of department II replace its 2000 II c in the natural form of means of production. Two thirds of the annual labor, then, expended in department I, have newly produced the constant capital of II, both as regards its value and its natural form. Socially speaking, two thirds of the labor expended during the entire year have created a new constant capital-value, which is realized in a natural form meeting the requirements of department II. The greater portion of the annual labor of society, then, has been spent in the production of new constant capital (means of production representing capital-value) in order to replace the value of the constant capital expended in the production of articles of consumption. That which distinguishes in this case capitalist society from a society of savages is not, as Senior thinks, that it is a privilege and peculiarity of a savage to expend his labor during a certain time which does not secure for him any revenue convertible into articles of consumption, but the distinction is the following:
(a) Capitalist society employs more of its available annual labor in the production of means of production (and thus of constant capital) which are not convertible into revenue in the form of wages or surplus-value, but can serve only as capital.
(b) When a savage makes bows, arrows, stone hammers, axes, baskets, etc., he knows very well that he did not spend the time so employed in the production of articles of consumption, but that he has simply stocked his supply of means of production, and nothing else. Furthermore, a savage commits a grave economic sin by his utter indifference so far as waste of time is concerned, for Tyler tells us of him that he takes sometimes a whole month to make one arrow.
The current conception, by which some political economists seek to get rid of the theoretical difficulty, in other words, of the understanding of the real state of affairs, the conception that a thing may be capital for one and revenue for another, and vice versa, is only partially true, and it becomes wholly wrong, when it is made general, since it then implies a complete misunderstanding of the entire process of transactions taking place in annual reproduction and at the same time a misunderstanding of the actual basis of the partial truth.
We now review the actual conditions, on which the partial correctness of this conception rests, and we shall at the same time expose the wrong conception of these conditions.
(1) The variable capital serves as capital in the hands of the capitalist and as revenue in the hands of the wage worker.
The variable capital exists first in the hands of the capitalist as money-capital; and it performs the function of money-capital, when he buys labor-power with it. So long as it persists in the form of money in his hands, it is nothing but a given value existing in the form of money, in other words, a constant and not a variable magnitude. It is only a potential variable capital, owing to its convertibility into labor power. It becomes actually a variable capital only after divesting itself of its money-form and assuming the form of labor-power serving as an element of productive capital in the capitalist process.
The money which first served in the function of the money-form of the variable capital for the capitalist, now serves in the hands of the laborer as the money-form of his revenue, which he derives from the ever repeated sale of his labor-power.
We have here but the simple fact that the money in the hands of the buyer, in this case the capitalist, passes from these hands into those of the seller, in this case a seller of labor-power, the wage-worker. It is not the variable capital which serves twice, first as capital for the capitalist and then as revenue for the laborer. It is merely the same money, which exists first in the hands of the capitalist as the money-form of his variable capital representing a potential variable capital, and which serves in the hands of the laborer as an equivalent for sold labor-power, as soon as the capitalist has converted it into labor-power. But the fact that the same money serves another useful purpose in the hands of the buyer than in those of the seller is a peculiarity of the sale and purchase of all commodities.
Apologists in political economy present the matter in a wrong light, as we can see best when we keep our eye exclusively, without taking any notice of the following transactions, on the transaction in circulation indicated by M—L (a variation of M—C), the conversion of money into labor-power on the part of the capitalist buyer, which is L—M (C—M), a conversion of the commodity labor-power into money, on the part of the seller, the laborer. They say: "The same money realizes in this instance two capitals; the buyer—the capitalist—converts his money-capital into living labor-power, which he incorporates in his productive capital; on the other hand, the seller, the laborer, converts his commodity, his labor-power, into money, which he spends as his revenue, and this enables him to resell his labor-power in ever repeated turns and thereby to maintain it. His labor-power, then, represents his capital in the form of a commodity, which yields him a continuous revenue." Labor-power is indeed his wealth (ever self-renewing and reproductive), not his capital. It is the only commodity which he must and can sell continually, in order to live, and which does not serve as capital until it reaches the hands of the capitalist. The fact that a man is continually compelled to sell his labor-power (himself) to another man proves to those apologetic economists that he is a capitalist, for lo! he is continually selling his "commodity," himself. In that case, a slave is also a capitalist, although he is sold by another for once and all as a commodity, for the nature of this commodity, a laboring slave, has the peculiarity that its buyer does not only make it work every new day, but also provides it with the food which enables it to do ever new work—(compare on this point the remarks of Sismondi and Say in their letters to Malthus.)
(2) In the exchange of 1000 Iv + 1000 Is for 2000 II c, we see that what is constant capital for one (2000 II c) is variable capital and surplus-value, or in short, revenue for others; and what is variable capital and surplus-value (2000 I (v + s), or in short, revenue for one, becomes constant capital for another.
Let us first look at the exchange of I v for II c, beginning with the point of view of the laborer.
The aggregate laborer of I has sold his labor-power to the aggregate capitalist of I for 1000; he receives this value in money as his wages. With this money, he buys from II articles of consumption of the same value. The capitalist of II meets him only in the role of a seller of commodities, nothing else, even if the laborer buys from his own capitalist, as he does in the exchange of 500 II v, as we have seen above. The form of circulation through which his commodity, labor-power, passes, is that of the simple circulation of commodities for the mere purpose of consumption in the satisfaction of needs, the form C (labor-power)—M—C (articles of consumption). The result of this transaction in circulation is that the laborer maintains himself as a labor-power for a capitalist, and in order to continue maintaining himself as such, he must continually renew the transaction L (C)—M—C. His wages are realized in articles of consumption, they are spent as revenue, and, taking the working class as a whole, are again and again spent as a revenue.
Now let us look at the same transaction, the exchange of I v for II c, from the point of view of the capitalist. The entire commodity-product of II consists of articles of consumption, of things intended for annual consumption, serving in the realization of revenue for some one, in the present case for the aggregate laborer of I. But so far as the aggregate capitalist of II is concerned, one portion of his commodity-product, equal to 2000, is now the form of the constant portion of the value of his productive capital converted into commodities. It must be reconverted from the form of commodities into its natural form, in which it may serve again as the constant portion of a productive capital. What the capitalist of II has accomplished so far is that he has reconverted one half (1000) of the constant portion of his capital, which had been reproduced in the shape of commodities, into the form of money by means of sale to the laborers of I. Hence it is not the variable capital I v, which has been exchanged for this first half of the value of the constant capital of II, but simply the money which served I as money-capital in the exchange for labor-power has thus been transferred to the possession of the seller of labor-power, and for him it did not represent any capital, but merely revenue in the form of money, which is to be expended in the purchase of articles of consumption. The money to the amount of 1000, on the other hand, which has come into the hands of the capitalists of II by means of the transaction with the laborers of I, cannot as yet serve as the constant element of the productive capital of II. For the present it is but the money-form of the commodity-capital of II, to be commuted into fixed or circulating portions of constant capital. Department II now buys with the money received from the laborers of I, the buyers of its commodities, means of production from I to the amount of 1000. By this means the constant value of the capital of II is renewed to the extent of one half of its total amount in its natural form, in which it can serve once more as an element of the productive capital of II. The circulation in this instance took the course C—M—C, that is to say, articles of consumption to the amount of 1000—money to the amount of 1000—means of production to the amount of 1000.
But C—M—C represents here the movement of capital. C, when sold to the laborers, is converted into M, and this M is converted into means of production. It is the reconversion of commodities into the material elements of which this commodity is made. On the other hand, just as the capitalist of II plays only the role of a buyer of commodities with regard to I, so the capitalist of I acts only as a seller of commodities with regard to II. Department I bought originally labor-power valued at 1000 with that amount of money intended for service as variable capital. It has therefore received an equivalent for the 1000 v which it expended in money. This money now belongs to the laborers, who spend it in purchases from II. Department I cannot recover this money from II unless it secures the amount by the sale of commodities of the same value to II.
Department I first had a certain sum of money amounting to 1000 and destined to serve as variable capital. The money performs this service by its exchange for labor-power to the same amount. The laborer in his turn supplied as a result of the process of production a quantity of commodities (means of production) to the amount of 6000, of which one sixth, or 1000, are equivalent in value to the variable portion of capital advanced in money. This variable portion of value no more serves as variable capital so long as it retains the form of commodities than it did while in the form of money. It serves as variable capital only after its conversion into living labor-power, and only so long as this labor-power serves in the process of production. So long as this value was incorporated in money, it represented only potential variable capital. But it had at least a form, in which it was immediately convertible into labor-power. But in the form of commodities, the same variable value is but potential money, it must first assume the form of money by means of the sale of commodities, in the present instance by the sale of 1000 in value of commodities of I to department II. The movement of the circulation passes here through the form 1000 v (money)—1000 c (labor-power)—1000 c (commodities equivalent in value to the variable capital)—1000 v (money); in other words, M—C...C—M (identical with M—L...C—M). The process of production intervening between C...C does not belong to the sphere of circulation. It does not figure in the mutual exchange of the various elements of annual reproduction, although this exchange includes the reproduction of all the elements of productive capital, the constant as well as the variable element (labor-power). All the participants in this exchange appear either as buyers, or as sellers, or as both. The laborers appear only as buyers of commodities. The capitalists act alternately as buyers and sellers, and within certain limits only on one side, either as buyers of commodities or as sellers of commodities.
The result is that department I possesses once more the variable part of the value of its capital in the form of money, from which alone it is immediately convertible into labor-power, in other words, department I once more holds its variable capital value in the only form in which it can again be advanced as an actual variable element of its productive capital. On the other hand, the laborer must again act as a seller of commodities, of his labor-power, before he can act as a buyer of commodities.
So far as the variable capital of department II (500 II v) is concerned, the circulation between the capitalists and laborers of the same department takes place without any intermediate transactions, since we look upon it as taking place between the aggregate capitalist and the aggregate laborer of II.
The aggregate capitalist of II advances 500 v for the purchase of labor-power to the same amount. In this case, the aggregate capitalist is a buyer, the aggregate laborer a seller. Thereupon the laborer acts as a buyer of a portion of the commodities produced by himself, using the money received for his labor-power. In this case, the capitalist is the seller. The laborer has reproduced for the capitalist the money paid in the purchase of labor-power by means of a portion of the newly produced commodity-capital of II, amounting to 500 v in commodities. The capitalist then holds in the form of commodities the same v, which he had in the form of money before the exchange for labor-power; while the laborer has realized the value of his labor-power in money, and uses this money by spending it as his revenue in the purchase of articles of consumption produced by himself. It is an exchange of the revenue of the laborer in money for a portion of the commodities in which he has himself reproduced 500 of the value of the variable capital of the capitalist employing him. In this way this money returns to the capitalist of II as the money-form of his variable capital. An equivalent value of revenue in the form of money thus reproduces variable value of capital in the form of commodities.
The capitalist does not increase his wealth by recovering the money paid by him to the laborer in the purchase of labor-power through the sale of an equivalent quantity of commodities to the laborer. He would really pay the laborer twice, if he were to pay him first 500 in the purchase of labor-power, and then give him in addition thereto a quantity of commodities valued at 500, after the laborer had produced them. On the other hand, if the laborer were to produce nothing but an equivalent in commodities valued at 500 for the price of his labor-power of 500, the capitalist would be no better off after the transaction than before it. But the laborer has actually reproduced a product of 3000. He has preserved the constant portion of the value of the product, that is to say, the value of the means of production incorporated in the product, to the amount of 2000, by converting it into a new product. He has furthermore added to this existing value a value of 1000 (v + s). (The idea that the capitalist grows richer by the return of 500 in money is advanced by Destutt de Tracy, as shown in detail in section XIII of this chapter.)
By the purchase of articles of consumption to the value of 500 on the part of the laborer of II, the capitalist of II recovers the value of 500 II v, which he had just held in the shape of commodities, but which he now holds in the form of money, in which he advances it originally. The immediate result of this transaction, as of any other sale of commodities, is the conversion of a given value from the form of commodities into that of money. Nor is the resulting reflux of the money to its point of departure anything specific. If capitalist of II had bought, with 500 of money, commodities from the capitalist of I, and then sold to the capitalist of I commodities valued at 500, he would likewise have recovered 500 in money. This sum of 500 in money would merely have served for the circulation of commodities valued at 1000, and according to a law previously mentioned, the money would have returned to the one starting it into circulation.
But the 500 in money, which have returned to the capitalist of II, represent at the same time a renewed potential variable capital. Why is this so? Money, and money-capital, is a potential variable capital only to the extent that it is convertible into labor-power. The return of 500 p. st. in money to the capitalist of II is accompanied by the return of the labor-power of II to the market. The return of both of these at opposite poles—and to this extent the reappearance of 500 in money not merely in the capacity of money, but of variable capital in the form of money—is conditioned on one and the same process. The money of 500 returns to the capitalist of II, because he sold to the laborers of II articles of consumption valued at 500, for which the laborer spent his wages, in order to maintain himself and his family and thus his labor-power. In order to be able to live on and act again as a buyer of commodities he must again sell his labor-power. The return of 500 in money to the capitalist of II is therefore at the same time a return, or a staying, of labor-power in the capacity of a commodity purchasable with 500 in money, and thereby a return of 500 in money to its capacity of potential variable capital.
As for the v of department II b, which produces articles of luxury, this (II b) v is treated the same as I v. The money which renews the variable capital of the capitalists of II b in the form of money returns to them in a round-about way through the hands of the capitalists of II a. But it makes nevertheless a difference, whether the laborers buy their articles of consumption by direct purchase from the same capitalist producers to whom they sell their labor-power, or whether they buy from capitalists of another department, through whose hands the money returns indirectly to the capitalists of their own department. Since the working class live from hand to mouth, they buy just as long as they have the means. It is different with the capitalists, for instance in the transaction between 1000 II c and 1000 I v. The capitalist does not live from hand to mouth. His compelling motive is the utmost self-expansion of his capital. Now, if circumstances seem to promise greater advantages to the capitalist of II by holding on to his money for a while, instead of immediately renewing his constant capital, then the return of 1000 II c in money to I is retarded. This implies a retardation in the return of 1000 I v to the form of money, and in that case the capitalist of I cannot continue his business on the same scale, unless he can draw on some reserve capital. Generally speaking, reserve capital in the form of money is always necessary, in order to be able to work without interruption, regardless of the rapid or slow reflux of the variable portion of capital-value in money.
If the transactions of the various elements of the current annual reproduction are to be investigated, the results of the labor of the preceding year, which has come to a close, must also be taken into consideration. The process of production which resulted in the product of the present year, is past and incorporated in its products, and so much more is this the case with the process of circulation preceding the process of production or running parallel with it, by which potential variable capital is transformed into actual variable capital, in other words, the sale and purchase of labor-power. The labor-market is not a part of the commodity-market which concerns us here. For the laborer has not only disposed of his labor-power before this, but also supplied an equivalent of the price of his labor-power in the shape of commodities, aside from the surplus-value created by him. He has furthermore his wages in his pocket and figures during the present transactions only as a buyer of commodities (articles of consumption). On the other hand, the annual product must contain all the elements of reproduction, must renew all the elements of productive capital, above all its most important element, the variable capital. And we have seen, indeed, that the result of the present transactions, so far as the variable capital is concerned, is this: The laborer as a buyer of commodities, by means of the expenditure of his wages, and the consumption of the purchased commodities, reproduces his labor-power, this being the only commodity which he has to sell. Just as the money advanced in the purchase of this labor-power by the capitalists returns to them, so labor-power returns to the market to be once more exchanged for this money. The result in the special case of 1000 I v is that the capitalists of I hold 1000 v in money and the laborers of I offer them 1000 in labor-power, so that the entire process of reproduction of I can be renewed. This is one result of the process of circulation.
On the other hand, the expenditure of the wages of the laborers of I drew on II for articles of consumption to the amount of 1000 II c, transforming them from commodities into money. Department II reconverted them into the natural form of its constant capital, by purchasing from I commodities valued at 1000 v and thus restoring to I the value of its variable capital in money.
The variable capital of I passes through three metamorphoses, which are only indicated in the circulation of the annual product or do not appear at all in it.
(1) The first form is 1000 I v in money, which is converted into labor-power of the same value. This transaction does not itself appear in the exchange of commodities between I and II, but its result is seen in the fact that the working class of I approach the capitalist seller of commodities of II with 1000 in money, just as the working class of II approach the capitalist of II with 500 in money in order to buy his 500 II v of commodities.
(2) The second form is the only one in which variable capital actually varies and serves as variable capital. In this form, a power which creates values takes the place of given values offered in exchange for it. It belongs exclusively to the process of production which is past.
(3) The third form, in which the variable capital as such performs its function in the process of production, is the annual product in values, which in the case of I amounts to 1000 v plus 1000 s, or 2000 I (v+s). In the place of its original value of 1000 in money we have a value of double this amount, or 2000, in commodities. The variable capital-value of 1000 is therefore only one half of the product in values created by it as an element of productive capital. The 1000 I v in commodities are an exact equivalent of the variable part of capital originally advanced in money. But in the form of commodities they are but potential money (they do not become money until they are sold), so that they are still less directly money-capital. They finally become money-capital by the sale of the commodities of 1000 I v to II c, and by the hurried reappearance of labor-power as a purchasable commodity, as a material for which 1000 v in money may be exchanged.
During all these transactions the capitalist of I continually holds the variable capital in his hands; (1) originally as money-capital; (2) then as an element of his productive capital; (3) still later as a portion of the value of his commodity-capital, in the form of the value of commodities; (4) finally once more in money which seeks the company of labor-power for the purpose of exchange. During the process of production, the capitalist has the variable capital in his control as a labor-power creating values, but not as a value of a given magnitude. But since he never pays the laborer until the laborer's power has been applied for a certain length of time, he always holds in his hands the value created by labor for its own reproduction and the surplus-value in excess of this, before he pays him.
Seeing that the variable capital always stays in the hands of the capitalist, it cannot be claimed in any way that it converts itself into revenue for any one. On the contrary, 1000 I v converts itself into money by its sale to II, whose constant capital it reproduces to the extent of one half in its natural form.
That which resolves itself into revenue is not the variable capital of I, represented by 1000 v in money. This money has ceased to serve as the money-form of the variable capital of I as soon as it has converted itself into labor-power, just as the money of any other seller of commodities ceases to represent any of his property as soon as he has exchanged it for commodities of some other seller. The transactions which the money paid as wages makes in the hands of the working class are not transactions of variable capital, but of the value of their labor-power converted into money. So are the transactions of the product in values (2000 I (v+s)), created by the working class, only transactions of commodities belonging to the capitalists, which do not concern the laborers. However, the capitalist, and still more his theoretical interpreter, the political economist, can rid himself only with the greatest difficulty of the idea that the money paid to the laborer is still the capitalist's money. If the capitalist is a producer of money, then the variable portion of value—in other words, the equivalent in commodities which reproduces for him the price of the labor-power bought by him—appears immediately in the form of money, so that it can serve again as variable money-capital without the circuitous route of a reflux. But so far as the laborer of II is concerned—aside from the laborer who produces articles of luxury—500 v exists in the form of commodities intended for the consumption of the laborer, which he, the aggregate laborer, buys by direct purchase from the same aggregate capitalist to whom he had sold his labor-power. The variable portion of the capital of II, so far as its natural form is concerned, consists of articles of consumption, the greater portion of which are intended for the consumption of the laboring class. But it is not the variable capital which is spent in this form by the laborer. It is the wages, the money of the laborer, which by its realization in these articles of consumption restores to the capitalist the variable capital 500 II v in its money-form. The variable capital II v is reproduced in articles of consumption, the same as the constant capital 2000 II c. The one resolves itself no more into revenue than the other does. In either case it is the wages which resolve themselves into revenue.
It is a weighty fact in the circulation of the annual production that the expenditure of wages restores both the constant and variable capital to the form of money-capital, in the one case 1000 II c, in the other 1000 I v and 500 II v (In the case of the variable capital either by means of a direct or indirect reflux).
XI. REPRODUCTION OF THE FIXED CAPITAL.
A great difficulty in the analysis of the transactions in annual reproduction is the following. Take the simplest form in which the matter may be presented, as follows:
(I.) 4000 c + 1000 v + 1000 s +
(II.) 2000 c + 500 v + 500s = 9000.
This resolves itself finally into
4000 I c + 2000 II c + 1000 I v + 500 II v + 1000 I s + 500 II s = 6000 c + 1500 v + 1500 s = 9000.
One portion of the value of the constant capital, to the extent that it consists of instruments of production in the strict meaning of the term (as a distinct section of the means of production) is transferred from the instruments of labor to the product of labor (commodities); these instruments of labor continue to serve as elements of productive capital in their old natural form. It is their wear and tear, the loss in value experienced by them after a certain period of service, which re-appears as an element of value in the commodities produced by means of them, which is transferred from the instruments of labor to the product of labor. In a question of annual reproduction, therefore, only those elements of fixed capital demand consideration, which last longer than one year. If they are completely worn out within one year, then they must be completely reproduced by the annual reproduction, and the point of issue does not concern them at all. It may happen in the case of machines and other lasting forms of fixed capital—and it frequently does happen—that certain parts of them must be completely reproduced within one year, although the organism of the building or machine as a whole lasts a much longer time. These partial organs belong in the same category with the elements of fixed capital which must be reproduced within one year.
This element of the value of commodities must not be confounded with the cost of repairs. If a commodity is sold, this element is turned into money, the same as all others. But after it has been turned into money, its difference from all other elements becomes apparent. The raw and auxiliary materials consumed in the production of commodities must be replaced in their natural form, in order that the reproduction of commodities may begin anew (or that the production of commodities in general may be continuous). The labor-power embodied in them must also be renewed by fresh labor-power. For this reason, the money realized on the commodities must be continually reconverted into these elements of productive capital, a conversion of money into commodities. It does not alter the matter that raw and auxiliary materials, for instance, are bought in large quantities in certain intervals, so that they constitute a productive supply, and need not be secured by new purchases during those intervals. Nor does it matter that the money coming in through the sale of commodities, to the extent that it is intended for the purchase of those means of production, may accumulate while they last, so that this portion of constant capital appears temporarily in the role of money-capital suspended from its active function. It is not a revenue-capital. It is productive capital suspended in the form of money. The renewal of the means of production must continue all the time, but the form of their renewal—with reference to the circulation—may vary. The new purchases, the transactions in the circulation by which they are renewed, may take place in more or less prolonged intervals, and a large amount may be invested at one stroke in a correspondingly large supply of means of production. Or, the intervals between purchases may be small, and in that case small amounts of money are invested in correspondingly small supplies of means of production. But this does not alter the matter itself. The same applies to labor-power. Wherever production is carried on continuously throughout the year on the same scale, there the consumed labor-power must be continuously replaced by new labor-power. Where work depends on seasons, or different portions of the work are done at different periods, as in agriculture, there the purchases of labor-power are relatively smaller. But the money received through the sale of commodities, so far as it represents the value of the wear and tear of fixed capital, is not reconverted into that component part of productive capital whose loss in value it makes good. It settles down beside the productive capital and retains the form of money. This precipitation of money is repeated, until the period of reproduction, consisting of a small or great length of time has elapsed, during which the fixed element of constant capital continues to perform its function in the process of production in its old natural form. As soon as the fixed element, such as buildings, machinery, etc., has been worn out and can no longer serve in the process of production, its value exists fully in money, in the sum of money precipitated by the values which had been gradually transferred by the fixed capital to the commodities in whose production it assisted, and which had been converted into money by the sale of these commodities. This money then serves to replace the fixed capital (or its elements, since its various elements have a different durability) in its natural form and thus to renew this part of the productive capital in reality. This money is, therefore, the money-form of a part of the value of the productive capital, namely of its fixed part. The formation of this hoard is thus a factor in the capitalist process of reproduction, it is the reproduction and storage, in the form of money, of the value of the fixed capital, or its individual elements, until such time as the fixed capital, shall be worn out, until it shall have transferred its entire value to the commodities produced and must be reproduced in its natural form. And this money does not lose the form of a hoard and resume its activity in the process of reproduction of capital promoted by the circulation, until it is reconverted into new elements of fixed capital which will replace the worn-out elements.
The transactions disposing of the annual product in commodities can no more be dissolved into a mere direct exchange of its individual elements than the simple circulation of commodities can be regarded as identical with a simple exchange of commodities. Money plays a specific role in this circulation, which is particularly marked by the manner in which the value of the fixed capital is reproduced. (It is left to a later analysis to ascertain how the matter would present itself, if production were collective and no longer a production of commodities.)
Let us now return to our fundamental diagram, which showed in department II the formula 2000 c + 500 v + 500 s. All the articles of consumption produced in the course of the year are in that case valued at 3000. And every one of the different elements of the commodities composing the total quantity of the product consists, so far as its value is concerned, of 2-3 c + 1-6 v + 1-6 s, or in percentages, 66 2-3 c + 16 2-3 v + 16 2-3 s. The various kinds of commodities of department II may contain different proportions of constant capital. The fixed portion of their constant capitals may be different. The duration of this fixed portion, its wear and tear and therefore that portion of value which it transfers by degrees to the commodities, produced by its assistance, may also differ. But that is immaterial. So far as the process of social reproduction is concerned, it is only a question of transactions between departments II and I. These two departments are here confronted by each other only as social masses. Hence the proportional magnitude of the portion c of the value of the commodity-product of II (which is the only essential one in the settlement of the present question) gives the average proportion, if all the branches of production classed under II are taken as a whole.
Every kind of commodities (and they are largely the same kinds) classed under 2000 c + 500 v + 500 s thus shares uniformly in the value to the extent of 66 2-3 % c + 16 2-3 % v + 16 2-3 % s. This applies equally to every 100 of the commodities classed under c, or v, or s.
The commodities in which the 2000 are incorporated may be further divided into
(1) 1333 1-3 c + 333 1-3 v + 333 1-3 s = 2000 c.
Those under 500 v may be divided into
(2) 333 1-3 c + 83 1-3 v + 83 1-3 s = 500 v.
Those under 500 s may be divided into
(3) 333 1-3 c + 83 1-3 v + 83 1-3 s = 500 s.
Now, if we add these three formulae, we have 1333 1-3 c + 333 1-3 c + 333 1-3 c = 2000 c. Furthermore 333 1-3 v + 83 1-3 v + 83 1-3 v=500 v. And the same in the case of s. The addition gives the same total value of 3000 as above.
The entire constant capital-value contained in the quantity of commodities of II represented by 3000 is therefore incorporated in 2000 c, and neither 500 v nor 500 s contain an atom of it. The same is true of v and s in the case of 500 v and 500 s.
In other words, the entire quantity of constant capital-value, embodied in the commodities of II and reconvertible either into its natural or its money-form, exists in 2000 c. Everything referring to the conversion of the constant value of the commodities of II is therefore dealing only with the movements of 2000 c of II. And these transactions can be made only with 1000 v + 1000 s of I.
In the same way, all remarks made with reference to the transactions of the constant capital-value of department I are confined to a consideration of 4000 I c.
(1) The Reproduction of the Value of the Worn-out Part in the Form of Money.
Let us first consider the diagram
The exchange of the commodities represented by 2000 II c for commodities of I of the same value (1000 v + 1000 s) is conditioned on the assumption that the entire 2000 II c are reconverted from their natural form into that of the elements of the constant capital of II, produced by I. But the value of the commodities of 2000 c, of which the constant capital of II consists, contains an element making good the loss in the value of fixed capital, which is not to be immediately reproduced in its natural form, but converted into money and accumulated until such time as shall require the natural reproduction of the fixed capital on account of its having been completely worn out. Every year registers the finish of some fixed capital which must be renewed in this or that individual business, or this or that line of industry. In the case of one and the same individual capital, this or that portion of its fixed capital must be renewed, since its elements have a different durability. In examining annual reproduction, even on a simple scale, that is to say, disregarding all accumulation, we do not begin at the very beginning of things. The year which we study is one in the flow of many, it is not the year of the first birth of capitalist production. The various capitals invested in the numerous lines of production of department II are, therefore, of different age. Just as a great many persons die annually in the service of these lines of production, so scores of fixed capitals expire annually in the same service and must be restored in their natural form by means of the accumulated fund of money. To that extent the exchange of 2000 II c for 2000 I (v + s) implies a conversion of 2000 II c from the form of commodities (articles of consumption) into that of natural elements of constant capital, which consist not only of raw and auxiliary materials, but also of natural elements of fixed capital, such as machinery, tools, buildings, etc. The wear and tear, which must be reproduced in money in the value of 2000 II c, by no means corresponds to the volume of the actively engaged fixed capital, since a portion of this must be reproduced every year in its natural form. The necessary preparation for this reproduction is an accumulation of money in preceding years on the part of the capitalists of II. And the same condition holds good for the current year as well as for the preceding ones.
In the transaction of I (1000 v + 1000 s) it must be noted that the magnitude I (v + s) does not contain any elements of constant capital, so that none of it implies a reproduction of wear and tear, that is to say, of elements transferred from the fixed portion of some constant capital to the commodities which represent the natural form of v + s. On the other hand, such elements do exist in II c and constitute that portion of value due to fixed capital which is not immediately converted from money into its natural form, but first accumulated in the form of money. The exchange between I (1000 v + 1000 s) and 2000 II c, therefore, presents the difficulty, that the means of production of I, which are the natural form of (1000 v + 1000 s), are to be exchanged to the full value of 2000 for articles of consumption of II, while the 2000 II c of articles of consumption cannot be offered entirely in exchange for I (1000 v + 1000 s), because a portion of them, corresponding in value to the wear and tear of the fixed capital, must be accumulated in the form of money and do not serve as a medium of circulation during the current period of annual reproduction which we are examining. But the money paying for this element of wear and tear incorporated in the value of 2000 II c can come only from department I, since II cannot pay for its own articles, but must secure payment for them by selling them, and since we have assumed that I (1000 v + 1000 s) buys the full amount of commodities of 2000 II c. Hence department I must supply the money to cover that wear and tear of II c. Now, according to the rules previously determined, money advanced to the circulation returns to that capitalist producer who later on throws an equal amount of commodities into the circulation. It is evident that department I, in buying II c, cannot transfer commodities worth 2000 to department II and yield up to it every time an additional amount of money, without any equivalent returning by way of the circulation. Otherwise department I would buy the commodities II c at a price exceeding their value. If department II actually exchanges its 2000 c for I (1000 v + 1000 s), then it has no further claims on department I, and the money circulating in this transaction returns either to I or to II, according to whether I or II acted first as a buyer. And in that case department II would have reconverted the entire value of its commodity-capital into the natural form of means of production, contrary to our assumption that it would not reconvert an aliquot portion during the current period of annual reproduction into the natural form of fixed elements of its constant capital. Department II could not secure a balance of money in its favor, unless it sold a value of 2000 to department I and bought less than that from department I, for instance, only 1800. In that case department I would have to make good the balance of 200 in money, which would not return to it, because it would not have recovered this amount by an equivalent surrender of commodities to the circulation. Only then could II have a fund of money which it could place to the credit of the wear and tear of its fixed capital. But then we should also have an overproduction of means of production to the amount of 200 on the part of department I, and the basis of our diagram would be destroyed, which assumed reproduction on the same scale, in other words, a complete proportionality between the various systems of production. We should have done away with one difficulty and created another, which would be still worse.
As this problem offers peculiar difficulties and has never been mentioned by political economy, we shall consider one by one all possible solutions (at least apparent solutions), or rather all possible formulations of the problem.
In the first place, we had just assumed that department II sells commodities valued at 2000 to department I, but buys from it only 1800 worth. The value of the commodities of 2000 c contains 200 for wear and tear of fixed capital, which must be accumulated as money. The value of 2000 c would therefore be dissolved into 1800, which would be exchanged for means of production of I, and 200 for the reproduction of worn-out elements of fixed capital, which would be held in the form of money after the sale of 2000 II c to department I. Expressed in terms of value, this would be 2000 II c = 1800 c + 200 w, this w standing for wear and tear.
We should then be studying the transaction
Department I buys with 1000 p. st., which the laborers have received as wages in payment for their labor-power, 1000 II c of articles of consumption. Department II buys with the same 1000 p. st. means of production from department I from the lot 1000 v. The capitalists of I thus recover their variable capital in the form of money and can employ it next year in the purchase of labor-power to the same amount, that is to say, they can reproduce the variable portion of their productive capital in its natural form.—Department II furthermore advances 400 p. st. and buys means of production from the lot I s, and department I s buys with the same 400 p. st. articles of consumption from II c. The 400 p. st. advanced by the capitalists of II have thus returned to them, but only as an equivalent for sold commodities. Department I now buys from II articles of consumption to the amount of 400 p. st.; II buys from I 400 worth of means of production, thereby returning the 400 p. st. to department I.
So far, then, we have the following calculation: Department I b throws into circulation 1000 v + 800 s in commodities; it also throws into circulation, in money, 1000 p. st. of wages and 400 p. st., thus facilitating its transaction with II. After the transaction is closed, department I has 1000 v in money, 800 s exchanged for articles of consumption from 800 II c, and 400 p. st. in money.
Department II throws into circulation 1800 c in commodities (articles of consumption) and 400 p. st. in money. At the close of the transaction it has 1800 in commodities (means of production from department I) and 400 p. st. in money.
There still remain on the side of department I 200 s in means of production, and on the side of II 200 c (w) in articles of consumption.
According to our assumption department I buys with 200 p. st. the articles of consumption II w, valued at the same amount. But II holds these 200 p. st., since 200 w represents wear and tear and is not immediately reconverted into means of production. Therefore 200 I s cannot be sold. One-tenth of the surplus-value of I cannot be realized by any exchange, cannot be converted from the natural form of means of production into that of articles of consumption.
This does not only contradict our assumption of reproduction on a simple scale, but it is not even a hypothesis which would explain the payment of 200 II w in money. It is another way of saying that it cannot be explained. Since it cannot be demonstrated in what manner 200 w is converted into money, it is assumed that department I is obliging enough to supply the money, just because it is not able to convert its own remainder of 200 s into money. This is as much a legitimate method of analysis as the assumption that 200 p. st. fall every year from the clouds in order to convert 200 II w into money.
But the absurdity of such an assumption does not become evident at once, if I s, instead of appearing, as it does in this case, in its primitive mode of existence—that is to say as an element of the value of means of production, as an element of the value of commodities which must be converted into money by their capitalist producers—appears in the hands of capitalist stockholders, for instance as ground rent in the hands of land owners, or as interest in the hands of money-lenders. Now, if that portion of the surplus-value of commodities, which the industrial capitalist yields in the form of ground rent or interest to other shareholders in the surplus-value, cannot be in the long run converted into money by the sale of the commodities, then there is an end to the payment of rent and interest, and the land owners or recipients of interest can no longer serve in the role of miraculous interlopers, who convert aliquot portions of the annual reproduction into money by spending their revenue. The same is true of the expenditures of all so-called unproductive laborers, state officials, physicians, lawyers, etc., and others who serve economists as an excuse for explaining inexplicable things, in the role of the "general public."
Nor does it improve the matter, if the direct transaction between departments I and II, the two great departments of capitalist producers, is circumvented and the merchant is dragged in as a mediator, in order to overcome all difficulties with his "money." In the present case, for instance, 200 I s must ultimately be sold to the industrial capitalists of II. It may pass through the hands of a number of merchants, but the last of them will find himself in the same predicament, in which the capitalists of I were at the outset, that is to say he cannot sell the 200 I s to the capitalists of II. And this amount, being arrested in its course, cannot renew the same process with department I.
We see, then, that, aside from our ultimate purpose, it is quite necessary to view the process of reproduction in its fundamental simplicity, in order to get rid of all obscuring interference and dispose of the false subterfuges, which assume the semblance of scientific analysis, but which cannot be removed so long as the process of social reproduction is immediately analyzed in its concrete and complicated form.
The law that under normal conditions of reproduction—whether it be on a simple or on an enlarged scale—the money advanced by the capitalist producer to the circulation must return to its point of departure (no matter whether the money is his own or borrowed) excludes decidedly the hypotheses that 200 II w can be converted into money by an advance of money on the part of department I.
(2) The Reproduction of Fixed Capital in its Natural Form.
Having disposed of the above hypothesis, only such hypotheses remain as assume the possibility of a reproduction of the worn-out fixed capital partly in money and partly in its natural form.
We had assumed in the preceding case
(a) That 1000 p. st. had been paid in wages by department I and spent by the laborers for articles of consumption of II c to the same amount.
It is a simple affirmation of fact that these 1000 p. st. are advanced by I in money. Wages must be paid in money by the various capitalist producers. This money is then spent by the laborers for articles of consumption and serves the sellers of articles of consumption in their turn as a medium of circulation in the conversion of their constant capital from a commodity-capital into a productive capital. It passes indeed through many channels (store keepers, house owners, tax collectors, unproductive laborers, such as physicians, etc., who are needed by the laborer himself) and therefore it flows only in part directly from the hands of the laborer of I into those of the capitalist of II. Its flow may be retarded more or less and the capitalist may therefore require more reserve funds of money. But all this is ruled out of the analysis of the simplest fundamental form.
(b) We had furthermore assumed that department I advances at a certain time 400 p. st. in money for the purchase of articles from II and that this money returns to it, while at some other time department II advances also 400 p. st. for the purchase of commodities from I and likewise recovers this money. This assumption must be granted, for it would be arbitrary to think that only the capitalist class of I, or only that of II, should advance the money required for the exchange of their commodities. Now, since we have shown (under 1) that it would be absurd to think that department I should throw money into circulation in order to promote the conversion of 200 II w into money, there would remain only the seemingly still more absurd hypothesis that department II itself should advance this money, by which that portion of the value of its commodities which makes good the depreciation of its fixed capital through wear and tear is converted into money. For instance, that portion of value which is lost by the spinning machine of Mr. X. in the process of production re-appears as a portion of the value of the yarn. That which his spinning machine loses on the one hand through wear and tear, is supposed on the other hand to be accumulated by him in money. Now take it that X. buys 200 p. st.'s worth of cotton from Y. and advances 200 p. st. in money for this purpose. Y then buys from him 200 p. st.'s worth of yarn, and X. now accumulates this money as a fund for the reproduction of the worn-out portion of his machine. This would simply amount to the statement that X., aside from his production, its product, and the sale of this product, keeps 200 p. st. in reserve, in order to make good to himself the depreciation of his machine, in other words, that he not only loses 200 p. st. by the depreciation of his machine, but must also put up 200 p. st. additional every year out of his own pocket in order to be finally able to buy a new spinning machine.
This looks only seemingly absurd. For the producers of department II are capitalists whose fixed capital is in various stages of its reproduction. In the case of some of them it has arrived at the stage where it must be entirely renewed in its natural form. In the case of the others it is more or less removed from this stage. All the capitalists of these last named stages have this in common, that their fixed capital is not actually reproduced, that is to say, not actually renewed in its natural form by a new specimen of the same kind, but that its value is successively accumulated in money. The first class of the capitalists of II are in the same (or almost the same) position as they were at the establishment of their business, when they came on the market with their money-capital in order to convert this money partly into constant (fixed and circulating) capital, partly into labor-power (variable capital). They have once more to advance this money to the circulation, the value of fixed constant capital as well as that of circulating constant and variable capital.
Hence, if we assume that half of the 400 p. st. thrown into circulation by the capitalist class of II for the purpose of transacting business with department I comes from those capitalists of II who have to reproduce by means of the sale of their commodities not only their means of production so far as they are circulating capital, but also to buy with money new fixed capital in its natural form, while the other half of the capitalists of II reproduce with their money only the circulating portion of their constant capital in its natural form, but not the fixed portion, then there is no contradiction in the statement that these 400 p. st., when returned by department I in exchange for articles of consumption, are variously distributed among these two classes of department II. They return to department II, but they do not return into the same hands. They are distributed within this department and pass from one of its sections to another.
One section of II has secured means of production whose value is covered by their commodities, and has furthermore converted 200 p. st. of money into natural elements of new fixed capital. The money thus spent does not return to this section by way of the circulation until after a succession of years and is gradually accumulated by the sale of products created by this fixed capital and bearing the value of its worn-out portion.
But the other section of II did not purchase any commodities from I for 200 p. st. That section is rather paid with the money which the first section of II spent for elements of its fixed capital. The first section of II has its fixed capital-value once more in a natural form, while the second section is still engaged in accumulating money for the purpose of renewing its fixed capital later on.
The basis on which we now have to work, after the previous transactions have been closed, is the remainder of the commodities still to be exchanged by the two departments; 400 s on the part of I, and 400 c on the part of II. We assume that II advances 400 p. st. in money for the exchange of commodities aggregating 800 in value. One-half, or 200 p. st., must be advanced under all circumstances by that section of II c which has accumulated 200 in money for making good the depreciation by wear and tear and which has to reconvert this fund into the natural form of its fixed capital.
Just as constant capital-value, variable capital-value, and surplus-value—being the elements of the value of the commodity-capital of II and I—may be represented by proportional quantities of the commodities of II and I, so that portion of the value of the constant capital which is not to be converted into the natural form of fixed capital for the present, but rather to be accumulated in money, may like-wise be represented. A certain quantity of commodities of II (in the present case one-half of the remainder of 400, or 200) is as yet the bearer of the value of this depreciation, which has to be converted into money by sale. (The first section of the capitalists of II, who renew their fixed capital in its natural form, may have done so with a portion of its depreciation by means of a corresponding portion of the remaining commodities, but they still have to realize 200 in money.)
The second 200 of the 400 thrown into circulation by II in this remaining transaction buy circulating elements of constant capital from I. A portion of these 200 p. st. may be thrown into circulation by both sections of II, or only by the one not renewing its fixed capital in its natural form.
Department I, then, secures with these 400 p. st. in the first place commodities valued at 200 p. st., consisting only of elements of fixed capital; in the second place, commodities valued at 200 p. st., reproducing only natural elements of the circulating portion of the constant capital of II. Department I has then sold its entire annual product in commodities, so far as it is sold to department II. And the value of one-fifth, or 400 p. st., is now held in its hands in the form of money. This money is monetized surplus-value which must be spent as revenue for articles of consumption. Department I having bought with its 400 p. st. the entire stock of department II, valued at 400, this money flows back to II.
Now we may assume three possibilities. Let us name those capitalists of II, who renew their fixed capital in its natural form, section 1, and those, who accumulate the equivalent for the depreciation of fixed capital, section 2. The three possibilities are: (a) That the 400 still remaining in the shape of commodities of II may make good certain portions of the circulating part of the constant capital of both section 1 and section 2 (perhaps one-half for each); (b) that section 1 has already sold all its commodities, so that section 2 has for sale all of the 400; (c) that section 2 has sold all but the 200 which are the bearers of the value of depreciation.
Then we have the following distributions:
(a) Of the value of the commodities still in the hands of department II, namely 400 c, section 1 holds 100, and section 2 holds 300; 200 out of the 300 represent depreciation. In that case section 1 originally advanced 300 of the 400 in money returned by department I for commodities of II, namely 200 in money, for which it secured elements of fixed capital from I, and 100 in money for the promotion of its transaction with I. Section 2, on the other hand, advanced only 100 of the 400, likewise for the promotion of its exchange with I.
Remember, then, that section 1 advanced 300, and section 2 advanced 100 of the 400.
Now these 400 return in the following manner: Section 1 recovers only one-third of the money advanced by it, or 100. But it has in place of the other 200 a renewed fixed capital. Section 1 has given money to department I for these elements of fixed capital, but sold no more commodities. So far as this money is concerned, section 1 has met department I for the purpose of buying, but not of selling later on. This money cannot return to section 1, otherwise it would receive the elements of fixed capital from I as a gift. So far as the last third of its advanced money is concerned, section 1 first acted as a buyer of circulating elements of its constant capital. The same money serves department I for the purchase of the remainder of the commodities of section 1, valued at 100. This money, then, returns to section 1 of department II, because it acts as a seller of commodities soon after having acted as a buyer. If this money did not return, then section 1 of department II would have given to department I a sum of 100 in money for commodities of the same value and in addition thereto 100 in commodities, in other words, it would have given away its commodities as a present.
On the other hand, section 2 receives 300 in money back, while it has advanced only 100 in money. As a buyer it first threw 100 in money into circulation, and these it receives back when acting as a seller. And it receives 200 more, because it acts only as a seller of commodities to that amount, but not in turn as a buyer. Hence the money cannot return to department I. The value of the depreciation of the fixed capital is thus balanced by the money thrown into circulation by section 1 of department II in the purchase of elements of fixed capital. But it reaches the hands of section 2, not as money of section 1, but as money of department I.
(b) Under these conditions the remainder of IIc is distributed so that section 1 has 200 in money, and section 2 has 400 in commodities.
Section 1 has sold all of its commodities, but 200 in money are a changed form of the fixed elements of its constant capital which it has to renew in their natural form. It acts only as a buyer in the present case and receives in exchange for its money the same value in commodities of department I having the natural form of elements of its fixed capital. Section 2 has to throw 200 p. st. into circulation, at a maximum (if department I does not advance any money for the transaction between I and II), since it is to the extent of one-half of the value of its commodities only a seller to I, not a buyer from I.
It recovers from the circulation 400 p. st. It gets 200, because it has advanced them as a buyer and recovers them as a seller of commodities of the same value. It receives another 200, because it sells commodities of that value to I without buying an equivalent from I.
(c) Section 1 has 200 in money and 200c in commodities. Section 2 has 200c (w) in commodities.
Section 2 has not any advance of money to make under these circumstances, because it does not act any more in the role of a buyer from I, but only as a seller, so that it must wait till some one wants to buy from it.
Section 1 advances 400 p. st. in money, of which 200 serve for a mutual exchange with department I, while 200 are used to buy from I. The last 200 serve in the purchase of the elements of fixed capital.
Department I buys from section 1 commodities to the value of 200 with 200 p. st. in money, so that section 1 thus recovers the money it had advanced for its transaction with I. And I buys with the other 200 p. st., which it has likewise received from section 1, commodities valued at 200 from section 2, which thus recovers the value of the depreciation of its fixed capital.
The matter would not be altered by the assumption that, in the case of (c), department II instead of section 1 of this department should advance the 200 in money required for the exchange of the existing commodities. If I buys in that case first 200 in commodities from section 2 of department II—assuming that this section has only this much left to sell—then the 200 p. st. do not return to I, since section 2 of department II no longer acts in the role of buyer. But section 1 of department II has in that case 200 p. st. to spend in buying and 200 in commodities to offer for sale, making a total of 400 which it has to trade with department I. 200 p. st. in money then return to department I from section 1 of department II. When I spends them again in the purchase of 200 in commodities from section 1 of department II, then they return to department I as soon as section 1 of department II buys the second half of the 400 in commodities from I. Section 1 of department II has spent 200 p. st. in the purchase of elements of fixed capital, without selling anything in return. Therefore this money does not return to it, but serves to monetize the remaining 200 c of commodities of section 2 of department II, while the 200 p. st. in money advanced by I for the promotion of the transactions return to it by way of section 1 of department II, not section 2. In the place of its commodities of 400 it has secured an equivalent, and the 200 p. st. in money advanced by it for transacting business to the extent of 800 in commodities have likewise returned to it. Everything is therefore settled.
The difficulty encountered in the transaction between I (1000 v + 1000 s) and II 2000 c was reduced to the difficulty of balancing accounts between I 400 s and II (section 1) 200 in money plus 200 c in commodities plus (section 2) 200 c in commodities. Or, to make the matter still clearer, 1 (200 s + 200 s) against II (200 in money of section 1 plus 200 c in commodities of section 1 plus 200 c in commodities of section 2).
Since section I of department II exchanges 200c for commodities of department I representing 200s, and since all the money circulating in this exchange of 400 commodities between I and II returns to him who first advances it, be he I or II, this money promoting the exchange between I and II is not an element of the problem which troubles us here. Or, to express it differently, if we assume that the money used in the transaction between 200 I s (commodities) and 200 IIc (commodities of section 1, department II) serves only as a medium of payment, not as a medium of purchase and therefore not as a "medium of circulation," strictly speaking, it is evident that the means of production valued at 200 are exchanged for articles of consumption valued at 200, because the commodities of 200 I s and 200 IIc (section 1) are equivalent in value, that therefore the money serves here merely ideally, and that neither side has to advance any money to the circulation for the payment of any balance. Hence the problem does not show itself in its clearest form, until we eliminate the commodities of 200 I s and their equivalent, the commodities of 200 IIc (section 1), from both sides.
After the elimination of these two amounts of commodities of equal value, which balance one another in I and II, the remainder of the transaction shows the problem clearly, namely I 200s in commodities against II (200c in money of section 1 plus 200c in commodities of section 2).
It is evident that section 1 of department II buys with 200 in money the elements of its fixed capital from 200 I s. The fixed capital of section 1, department II, is there-by renewed in its natural form, and the surplus-value of I, to the amount of 200, is converted form the form of commodities (means of production representing elements of fixed capital) into that of money. Department I buys with this money articles of consumption from section 2, department II, and the result for II is that section 1 has renewed a fixed element of its constant capital in its natural form; and that section 2 has stored up another element in money which is destined to make good the depreciation of its fixed capital. And this continues every year, until this last element is also renewed in its natural form.
The first condition is here evidently that this fixed element of constant capital II, which must annually be reconverted into money to the full extent of its value and, therefore, entirely reproduced in its natural form (section 1), should be equal to the annual depreciation of the other fixed element of constant capital II, which continues its function in its old natural form and whose depreciation, represented by the value transferred by it to the commodities produced by it, is first accumulated in money. Such a balance of value would seem to be a law of reproduction on the same scale. This is equivalent to saying that the proportional division of labor in department I, which puts out means of production, must remain unchanged, to the extent that it produces partly circulating, partly fixed portions of the constant capital of department II.
Before we analyze this more closely, we must first see how the matter looks, if the remaining amount of II c (1) is not equal to the remainder of II c (2). It may be larger or smaller. Let us study either case.
I. 200 s.
II. (1) 220 c in money plus (2) 200 c in commodities.
In this case II c (1) buys with 200 p. st. the commodities of 200 I s, and I buys with the same money the commodities of 200 II c (2), in other words, that portion of the fixed capital which has to be accumulated in money. This portion is thus converted into money. But 20 II c (1) cannot be reconverted into the natural form of fixed capital.
It seems that we might remedy this inconvenience by making the remainder of I s 220 instead of 200, so that only 1780 instead of 1800 of the 2000 I would be disposed of by former transactions. Then we should have:
I. 220 s.
II. (1) 220 c in money plus (2) 200 c in commodities.
Section 1 of II c buys with 220 p. st. in money the 220 I s, and I buys with 200 p. st. the 200 II c (2) of commodities. But now 20 p. st. in money remain on the side of I, a portion of surplus-value which it can hold only in money, without being able to spend it in articles of consumption. The difficulty is thus merely transferred from section 1, department II c, to I s.
Let us now assume, on the other hand, that section 1, II c, is smaller than section 2, II c, then we have:
I. 200 s in commodities.
II. (1) 180 c in money plus (2) 200 c in commodities.
Section 1, department II, buys with 180 p. st. in money the commodities of 180 I s. Department I buys with the same money commodities of the same value from section 2, department II, that is to say, 180 II c (2). There remain 20 I s unsaleable on one side, and 20 II c of section 2 on the other. In other words, commodities valued at 40 remain unsaleable.
It would not help us any to make the remainder of I equal to 180. It is true, there would not be any surplus in I under these circumstances, but the same surplus of 20 would remain unsaleable in section 2 of department II and could not be converted into money.
In the first case, where section 1 of department II is greater than section 2 of department II, there remains a surplus of money in section 1 of department II and cannot be converted into fixed capital; or, if the remainder in I s is assumed to be equal to II c (1), the same surplus in money remains inconvertible into articles of consumption in I s.
In the second case, where II c (1) is smaller than II c (2), there remains a deficit of money on the side of 200 I s and II c (2), and an equal surplus of commodities on both sides, or, if the remainder of I s is assumed to be equal to II c (2), there remains a deficit of money and a surplus of commodities in II c (2).
If we assume the remainder of I s to be always equal to II c (1)—seeing that production is determined by demand, and reproduction is not altered by the fact that there may be a greater output of fixed elements of capital this year, and a greater output of circulating elements of constant capitals I and II next year—then I s could not be reconverted into articles of consumption in the first case, unless I brought with it a portion of the surplus-value of II and accumulated it in money instead of consuming it; in the second case there would be no other way out but an expenditure of the money on the part of I itself, an assumption which we have already rejected.
If II c (1) is greater than II c (2), then the importation of foreign commodities is required for the employment of the money-surplus in I s. If II c (1) is smaller than II c (2), then an exportation of commodities (articles of consumption) is required for the realization of the value of the depreciation of II c in means of production. In either case, foreign trade is necessary.
Even assuming that, on the basis of simple reproduction on the same scale, the productivity of all lines of industry, and thus the proportional relation of the value of their commodities, would remain unchanged, there would nevertheless be an incentive for production on an enlarged scale whenever the two last named cases may occur, in which II c (1) is greater or smaller than II c (2).
With reference to the reproduction of the fixed capital, the following general remarks may be made:
If a larger portion of the fixed element of II c expires this year than last and must be reproduced in its natural form—all other circumstances remaining the same, that is to say, not only the scale of production, but also the productivity of labor, etc.—then that portion of the fixed capital, which is as yet only declining and must be temporarily accumulated in money until its term of expiration arrives, must decline in the same proportion, since we have assumed that the sum of the fixed capital serving in II (also the sum of its values) remains unchanged. This implies the following consequences: If a greater portion of the commodity-capital of I consists of elements of the fixed capital of II c, then a correspondingly smaller portion consists of circulating elements of II c, because the total production of I for II c remains unchanged. If one of these portions increases, then the other decreases, and vice versa. On the other hand, the total production of II also retains the same volume. But how is this possible, if the production of its raw materials, half-wrought products, and auxiliary materials (the circulating elements of the constant capital of II) decreases? In the second place, a greater portion of fixed capital of II c, restored to its money-form, flows into department I, in order to be reconverted from its money-form into its natural form. In other words, there is a greater flow of money into department I, aside from the money circulating between I and II merely for the transaction of their business, more money which does not merely serve as a medium for the mutual exchange of their commodities, but acts onesidedly in purchase without a corresponding sale. At the same time the quantity of commodities of II c, the bearers of the value of the depreciation of fixed capital, would have decreased proportionately. This is that quantity of commodities of II which is not exchanged for commodities of I, but must be converted into money of I. More money would have flown from II into I for onesided purchase, and there would be fewer commodities of II which would stand only in the relation of a buyer toward I. Under these circumstances a great portion of I s—for I v has already been converted into commodities of II—would not be convertible into commodities of II, but would be held in the form of money.
The opposite case, in which the reproduction of expired fixed capitals of a certain year exceeds that of the depreciation, need not be discussed in detail after the preceding statements.
The result would be a crisis—a crisis in production—in spite of the fact that reproduction had taken place on the same scale.
In short, unless a constant proportion between expiring (and about to be renewed) fixed capital and still continuing (merely transferring the value of its depreciation to its product) fixed capital is assumed, so long as reproduction takes place on a simple scale under the same conditions, such as productivity, volume, intensity of labor, the mass of circulating elements to be reproduced in one case would remain the same while the mass of fixed elements to be reproduced would have been increased. Therefore the aggregate production of I would have to increase, or, there would be a deficit in the reproduction, even aside from money matters.
In the other case, if the proportional magnitude of the fixed capital of II, to be reproduced in its natural form, should decrease and the elements of the fixed capital of II, which must be merely accumulated in money, should increase in the same ratio, then the quantity of the circulating elements of the constant capital of II, reproduced by I, would remain unchanged, while that of the fixed elements about to be reproduced would have decreased. Hence there would be either a decrease in the aggregate production of I, or a surplus (the same as previously a deficit) which could not be converted into money.
It is true that the same labor may, in the first case, supply a greater product with an increase in its productivity, extension, or intensity, and so the deficit could be covered in the first case. But such a change could not take place without a transfer of capital and labor from one line of production of department I to another, and every transfer would cause monetary disturbances. Furthermore, to the extent that an expansion and intensification of labor would increase, department I would have to exchange more of its value for less value of II. In other words, there would be a depreciation of the product of I.
The reverse would take place in the second case, where I must contract its production, which implies a crisis for its laborers and capitalists, or produce a surplus, which implies another crisis. Such a surplus is not an evil in itself, but it is an evil under the capitalist system of production.
Foreign trade could relieve the pressure in either case. In the first case it would convert products of I held in the form of money into articles of consumption, in the second case it would dispose of the surplus of commodities. But foreign trade, so far as it does not merely reproduce certain elements of production, only transfers these contradictions to a wider sphere and gives them a greater latitude.
Once that the capitalist mode of production is abolished, the problem resolves itself into the simple proposition that the magnitude of the expiring portion of fixed capital, which must be reproduced in its natural form every year (which served in our illustration for the production of articles of consumption), varies in successive years. If it is very large in a certain year (in excess of the average mortality, the same as among men), then it is so much smaller in the next year. The quantity of raw materials, half wrought articles, and auxiliary materials required for the annual production of the articles of consumption—other circumstances remaining the same—does not decrease in consequence. Hence the aggregate production of means of production would have to increase in the one case and decrease in the other. This can be remedied only by a continuous relative overproduction. There must be on the one hand a certain quantity of fixed capital in excess of that which is immediately required; on the other hand there must be above all a supply of raw materials, etc., in excess of the actual requirements of annual production (this applies particularly to articles of consumption). This sort of reproduction may take place when society controls the material requirements of its own reproduction. But in capitalist society it is an element of anarchy.
This illustration of fixed capital, on the basis of an unchanged scale of reproduction, is convincing. A disproportion of the production of fixed and circulating capital is one of the favorite arguments of political economists in explaining productive crises. That such a disproportion can and must arise even when the fixed capital is merely preserved by renewal is new to them. And yet, it can and must arise even on the assumption of an ideal and normal production on the basis of a simple reproduction of the already existing capital of society.
XII. THE REPRODUCTION OF THE MONEY SUPPLY.
One element has so far been entirely disregarded, namely the annual reproduction of gold and silver. To the extent that these metals serve as material for articles of luxury, gilding, etc., they do not deserve any special mention, any more than any other products. But they play an important role as money-material, as potential money. For the sake of simplicity, we regard only gold as material for money.
According to older statements, the entire annual production of gold amounts to about 8-900,000 lbs., equal to about 1100 to 1250 million marks (264 to 392.5 million dollars). But according to Soetbeer it amounts to only 170,675 kilograms, valued at about 476 million marks on an average of the years 1871 to 1875. Of this amount, Australia supplied about 167, the United States 166, Russia 93 million marks. The remainder is distributed over various countries in sums of less than 10 million marks each. The annual production of silver, during the same period, amounted to somewhat less than 2 million kilograms, valued at 354.5 million marks. Of this amount, Mexico supplied about 108, the United States 102, South America about 67, Germany about 26 million, etc.
Among the countries with predominating capitalist production only the United States are producers of gold and silver. The capitalist countries of Europe obtain almost all their gold and by far the greater part of their silver from Australia, the United States, Mexico, South America, and Russia.
But we transfer the gold mines into the country with capitalist production whose annual reproduction we are analyzing, for the following reasons:
Capitalist production does not exist at all without foreign commerce. But when we assume annual reproduction on a given scale, we also assume that foreign commerce replaces home products only by articles of other use-value, or natural form, without affecting the relations of value, such as those of the two categories known as means of production and articles of consumption and their transactions, nor the relations of constant capital, variable capital, and surplus-value, into which the value of the products of each of these categories may be dissolved. The introduction of foreign commerce into the analysis of the annually reproduced value of products can, therefore, produce only confusion, without furnishing any new point in the aspect or solution of the problem. For this reason we leave it aside. And consequently gold as a direct element of annual reproduction is not regarded as a commodity imported from a foreign country.
The production of gold, like that of metals generally, belongs to department I, which occupies itself with means of production. Let us assume that the annual production of gold amounts to 30 (from reasons of expediency, although it is far too high compared to the other figures of our diagrams). Let this value be resolved into 20 c+5 v+5 s; 20 c is to be exchanged for other elements of department I c, and this is to be studied later; but the 5 v+5 s are to be exchanged for elements of II c, namely, articles of consumption.
As for the 5 v, every gold producing business begins by buying labor-power. This is done, not with money produced by this particular business, but with a portion of the money existing in the land. The laborers buy with this 5 v articles of consumption from II, and this department buys with the same money means of production from I. Let us say that II buys from I gold for elements of its commodities (elements of constant capital) to the value of 2, then 2 v flow back to the gold producers of I in money which was formerly in circulation. If II does not buy any more material from I, then I buys from II by throwing its gold into circulation, for gold can buy any commodity. The difference is only that I does not act as a seller, but as a buyer, in that case. The gold producers of I can always get rid of their product, for it is always in a form which may be directly exchanged.
Take it that some producer of yarn has paid 5 v to his laborers, who create for him in return—aside from a surplus-product—yarn to the amount of 5. The laborers buy values worth 5 from II c, and II c buys with the same 5 in money yarn from I, and this 5 in money flows back to the producer of yarn. Now we had assumed that I g (meaning the producer of gold) advanced to his laborers 5 v in money which had previously belonged to the circulation. The laborers spend it for articles of consumption, but only 2 of the 5 return from II to I g. However, I g can begin his process of reproduction anew, just as well as the producer of yarn. For his laborers have supplied him with 5 in gold, 2 of which he sold, and 3 of which he still has, so that he has but to coin it, or exchange it for bank notes, in order that his entire variable capital may be immediately in his hands, without the intervention of II.
Even this very first process of annual reproduction has wrought a change in the quantity of money actually or virtually in circulation. We assumed that II c bought 2 v from I g for material, and that I g invested 3 in II as the money-form of its variable capital. In other words, 3 of the amount of money supplied by the new gold production remained within department II and did not return to I. According to our assumption II has satisfied its needs for gold material. The 3 remain in its hands as a hoard of gold. Since they cannot constitute any elements of its constant capital, and since II had previously enough money-capital for the purchase of labor-power; since, furthermore, these additional 3 g, with the exception of the element making good the loss through depreciation, have no function to perform within II c, for a portion of which they were exchanged (they could only serve to cover a shortage in the element making good loss through depreciation, in the case that section 1 of department II should be smaller than section 2 of department II, which would be accidental); and since, on the other hand, the entire commodity-product of II c, with the exception of the element making up for depreciation, must be exchanged for means of production of I (v+s); therefore this money must be entirely transferred from II c to II s, no matter whether it exists in necessities of life or articles of luxury, and vice versa, a corresponding value of commodities must be transferred from IIs to II c. Result: A portion of the surplus-value is accumulated as a hoard of money.
In the second year of reproduction, when the same proportion of annually produced gold continues to be used as material, 2 will again flow back to I g, and 3 will be reproduced in its natural form, that is to say, it will be set aside in department II as a hoard, etc.
With reference to the variable capital in general, it may be said that the capitalist of I g must continually advance money for the purchase of labor-power, the same as every other capitalist. But so far as these wages are concerned, it is not he, but his laborers who buy from II. He can never appear as a buyer, transferring gold to II, without the initiative of II. But to the extent that II buys material from him for the purpose of converting its constant capital II c into a gold supply, a portion of the v of I g flows back to it from II in the same way that it does to other capitalists of I. And so far as this is not the case, he reproduces his v in gold direct from his product. But to the extent that the v advanced by him in money does not flow back to him from II, a portion of the existing medium of circulation (received from I and not returned to it) is converted by II into a hoard and a portion of its surplus-value is not converted into articles of consumption. Since new gold mines are continually opened or old ones re-opened, a certain proportion of the money invested by I g in v is always money existing previously to the new gold production, and passing from I g by way of its laborers into II, where it becomes an element in the formation of a hoard, or as much of it as is not returned from II to I g.
But as for (I g)s, department I g can always act as a buyer in this case. It throws its s in the shape of gold into circulation and withdraws from it in return articles of consumption of II c. The gold is there used in part as material, and thus serves as a real element of the constant portions c of productive capital II. And any portion of the gold not so employed becomes once more an element in the formation of a hoard in the role of that part of II s which retains the shape of money. We see, then,—aside from I c which we reserve for a later analysis—that even simple reproduction, excluding accumulation strictly so called, namely reproduction, on an enlarged scale, inevitably includes the accumulation, or hoarding, of money. And as this is annually repeated, it explains the assumption from which we started in the analysis of capitalist production, namely that a supply of money corresponding to the exchange of commodities is in the hands of the capitalists of departments I and II at the beginning of the reproduction. Such an accumulation takes place even after deducting the amount of gold lost by the depreciation of money in circulation.
It is a matter of course, that the quantity of money accumulated on all sides increases in proportion to the advancing age of capitalist production, and that the quantity annually added to this hoard by the production of new gold decreases proportionately, although the absolute quantity thus added may be considerable. We revert once more in general terms to the objection raised against Tooke and contained in the question: How is it possible that every capitalist draws a surplus-value in money out of the circulation, in other words, draws more money out of the circulation than he throws into it, seeing that the capitalist class must be the ultimate source which throws all money into circulation?
We reply by summarizing the statements made previously (in chapter XVII):
(1) The only essential assumption, namely, that there is money enough available for the exchange of the various elements of annual reproduction, is not touched by the fact that a portion of the value of commodities consists of surplus-value. Take it that the entire production belonged to the laborers, so that their surplus-labor were done for themselves, not for the capitalists, then the quantity of circulating commodity-values would be the same and, other circumstances remaining equal, would require the same amount of money for circulation. The question in either case is therefore only: Where does the money come from which serves as a medium of exchange for this quantity of commodity-values? It is not at all: Where does the money come from which monetizes the surplus-value?
It is true, to repeat it once more, that every individual commodity consists of c+v+s, and the circulation of the entire quantity of commodities therefore requires a certain quantity of money for the circulation of the capital c+v, and another for the circulation of s, the revenue of the capitalists. For the individual capitalist as well as for the entire capitalist class, the money in which they advance capital is distinct from the money in which they spend their revenue. Where does this last money come from? Simply from the entire quantity of money available in society, a portion of which circulates as the revenue of the capitalists. We have already seen in previous instances that every capitalist establishing a new business recovers the money which he spent for his maintenance in the purchase of articles of consumption, by the process of converting his surplus-value into money, once that his business is fairly under way. But generally speaking the difficulty is due to two sources:
In the first place, if we analyze only the circulation and the turn-over of capital, regarding the capitalist merely as a personification of capital, not as a capitalist consumer and sport, then we see indeed that he is continually throwing surplus-value into circulation as a part of his commodity-capital, but we never see money as a form of revenue in his hands. We never see him throwing money into circulation for the consumption of his surplus-value.
In the second place, if the capitalist class throw a certain amount of money into circulation in the shape of revenue, it seems as though they were paying an equivalent for this portion of the total annual product, so that this portion is then no longer surplus-value. But the surplus product in which the surplus value is incorporated does not cost the capitalist anything. As a class, they possess and enjoy it gratuitously, and the circulation of money cannot alter this fact. The alteration due to this circulation consists merely in the fact that every capitalist, instead of consuming his surplus-product in its natural form, a thing which is generally impossible, draws commodities of all sorts up to the amount of his surplus-value out of the general stock of the annual surplus-product of society and appropriates them for his own use. But the mechanism of the circulation has shown that the capitalist class, while throwing money into the circulation for the purpose of spending their revenue, also recover this money from the circulation, so that they can continue the same process over and over; so that, as a class of capitalists, they always remain in possession of the amount of money necessary for the monetization of their surplus-value. Hence, seeing that the capitalist does not only withdraw his surplus-value from the market in the form of commodities for his individual consumption, but also the money which he has paid for these commodities, it is evident that he secures the commodities without paying an equivalent for them. They do not cost him anything, although he pays money for them. If I buy commodities for one pound sterling and recover this money from the seller by means of a surplus product which I got for nothing, it is obvious that I have received the commodities gratis. The continual repetition of this transaction does not alter the fact that I continually secure commodities and continually remain in possession of my pound sterling, although I release it temporarily in the purchase of the commodities. The capitalist continually retains this money as an equivalent of surplus-value that has not cost him anything.
We have seen that with Adam Smith the entire value of the social product resolves itself into revenue, into v+s, so that the constant capital-value is set down as zero. It follows necessarily that the money required for the circulation of the yearly revenue must also suffice for the circulation of the entire annual product, so that, in our illustration, the money of 3000 required for the circulation of the articles of consumption of the same value must also suffice for the circulation of the entire annual product valued at 9000. This is indeed the opinion of Adam Smith, and it is repeated by Th. Tooke. This erroneous conception of the ratio of the quantity of money required for the realization of the revenue to the quantity of money required for the circulation of the entire social product is a necessary result of misapprehending, thoughtlessly conceiving the manner in which the various elements of material and value of the total annual product are reproduced and annually renewed. It has already been refuted by us.
Let us listen to Smith and Tooke themselves.
Smith says in Book II, chapter 2: "The circulation of every country may be divided into two parts: the circulation of the merchants among themselves and the circulation between merchants and consumers. Although the same pieces of money, paper or metal, may be used now in the one, now in the other circulation, both of them nevertheless take place continually side by side, and each one of them requires therefore a certain quantity of money of this or that kind in order to keep moving. The value of the commodities circulating among the various merchants can never exceed the value of the commodities circulating between merchants and consumers; for whatever the merchants may buy must be sold ultimately to the consumers. As the circulation between the merchants is wholesale, it generally requires a rather large sum for every exchange. The circulation between merchants and consumers, on the other hand, is mostly retail and requires often but very small sums of money: one shilling, or even half penny, suffices sometimes. But small sums circulate much more rapidly than large ones. * * * * Although the annual purchases of all consumers are therefore at least"—this at least is rich—"equal in value to those of the merchants, they may nevertheless be effected, as a rule, with a much smaller quantity of money," etc.
Th. Tooke remarks to this passage of Adam Smith (in "An Inquiry into the Currency Principle," London, 1844, pages 34 to 36): "There cannot be any doubt that the distinction here made is essentially correct. * * * * The exchange between merchants and consumers includes also the payment of wages, which are the principal means of the consumers. * * * * All transactions between merchant and merchant, that is to say, all sales from the producer or importer, through all gradations of intermediate processes of manufacture, etc., down to the retail merchant or export merchant, may be dissolved into movements transferring capital. But transfers of capital do not necessarily imply, nor indeed carry actually with them, in the great number of exchanges, a real cession of bank notes or coin—I mean a substantial, not a fictitious, cession—at the time of transfer. * * * * The total amount of exchanges between merchants and merchants must in the last instance be determined and limited by the amount of exchanges between merchants and consumers."
If this last sentence stood by itself, one might think that Tooke stated simply the fact of a ratio between the exchanges of merchants and merchants and those of merchants and consumers, in other words, a ratio between the value of the total annual revenue and the value of the capital with which it is produced. But this is not the case. He explicitly endorses the view of Adam Smith. A special criticism of his theory of circulation is therefore superfluous.
(2) Every industrial capital, when beginning its career, throws at one single investment enough money into circulation to cover its entire fixed element, which it recovers but gradually in the course of years by the sale of its annual products. Thus it throws at first more money into circulation than it recovers from it. This is repeated at every renewal of its entire capital in a natural form. It is repeated every year in a certain number of enterprises whose fixed capital must be renewed in its natural form. It is repeated in fragments at every repair, every partial renewal of fixed capital. While more money is on the one hand withdrawn from circulation than is thrown into it, the opposite takes place on the other hand.
In all lines of industry whose period of production—as distinguished from the working period—extends over a long term, money is continually thrown into circulation during this period by the capitalist producers, either in payment for labor-power employed, or in the purchase of means of production to be consumed. Means of production are thus directly withdrawn from the commodity market, and articles of consumption either indirectly by the laborers spending their wages, or directly by the capitalists, who do not by any means stop consuming, although they do not immediately throw any equivalent on the market, in the shape of commodities. During this period, the money thrown by them into circulation serves for the conversion of the value of commodities, including the surplus value embodied in them, into money. This element becomes very important in an advanced stage of capitalist production in the case of lengthy enterprises, such as are undertaken by stock companies, for instance the construction of railways, canals, docks, large municipal buildings, iron ships, drainage of land on a large scale, etc.
(3) While the other capitalists, aside from the investment of fixed capital, draw more money out of the circulation than they threw into it in the purchase of labor-power and the circulating elements of capital, the gold and silver producing capitalists, on the other hand throw only money into the circulation, aside from the precious metals which serve as raw material, while they withdraw only commodities from it. The constant capital, with the exception of the depreciated portion, furthermore the greater portion of the variable capital and the entire surplus-value, with the exception of the hoard which is eventually accumulated in the hands of these capitalists, is thrown into the circulation as money.
(4) On one side, various things circulate as commodities which were not produced during the current year, such as real estate, houses, etc., furthermore products whose period of production extends over more than one year, such as cattle, wood, wine, etc. It is important to emphasize in this respect that aside from the quantity of money required for the immediate circulation, there is always a certain quantity in a latent state which may enter into service when so required. Furthermore, the value of such products circulates often in fractions and gradually, for instance, the value of houses in the rents of a number of years.
On the other hand, not all movements of the process of reproduction are promoted by the circulation of money. The entire process of production, once that its elements have been purchased, is excluded from it. Furthermore all products, which the producer consumed directly in his own individual or productive consumption. Under this head belongs also the board of agricultural laborers.
The quantity of money, then, which circulates the annual product, exists in society, having been gradually accumulated. It does not belong to the values produced during the current year, with the exception of the gold used for making good the loss of depreciated money.
This presentation of the matter assumes the exclusive circulation of precious metals as money, and the simplest form of cash purchases and sales, although even plain metals, as a basis of circulation, may serve as money, and have actually so served in history and have been the fundament for the development of a credit system and of certain portions of its mechanism.
This assumption is not made from mere considerations of method, although these are important enough, as demonstrated by the fact that Tooke and his school as well as his adversaries were continually compelled in their controversies concerning the circulation of bank notes to revert to the hypothesis of a purely metallic circulation. They were compelled to do so subsequently, and did so very superficially, because they thus reduced to an incidental point what should have been the point of departure of their analysis.
But the simplest study of the circulation of money in its primitive form, which is the immanent factor of the process of annual reproduction, demonstrates:
(a) Assuming capitalist production to be developed to the point where the wage system predominates, money-capital evidently plays a prominent role, seeing that it is the form in which the variable capital is advanced. To the extent that the wage system develops, all products are converted into commodities and must, therefore, pass through the stage of money as one phase of their metamorphoses, with a few important exceptions. The quantity of circulating money must suffice for this conversion of commodities into money, and the greater part of this quantity is furnished in the form of wages, in that money, which is the money-form of the variable capital advanced by the industrial capitalists in payment for labor-power, and which serves in the hands of the laborers overwhelmingly as a medium of circulation (of purchase). It is quite the reverse under a system of natural economy such as was predominant under every form of vassalage (including serfdom), and still more in more or less primitive communities, whether they are infected by conditions of vassalage or slavery, or not.
In a slave system, the money-capital invested in the purchase of slaves plays the role of the fixed capital in money-form, which is but gradually replaced after the expiration of the active life period of the slaves. Among the Athenians, therefore, the gain realized by a slave owner through the industrial employment of his slaves, or indirectly by hiring them out to other industrial employers (for instance mine owners), was regarded merely as an interest (with sinking fund) on the advanced money-capital, just as the industrial capitalist under capitalist production places a portion of the surplus-value plus the depreciation of his fixed capital to the account of interest and renewal of his fixed capital. This is also the rule in the case of capitalists offering fixed capital, such as houses, machinery, etc., for rent. Mere household slaves, who perform the necessary services or are kept as luxuries are not considered here. They correspond to the modern servant class. But the slave system—so long as it is the dominant form of productive labor in agriculture, manufacture, navigation, etc., as it was in the advanced states of Greece and Rome—preserves an element of natural economy. The slave market maintains its supply of labor-power by war, piracy, etc., and this rape is not promoted by a process of circulation, but by the natural appropriation of the labor-power of others by physical force. Even in the United States, after the conversion of the neutral territory between the wage labor states of the North and the slave labor states of the South into a slave breeding region for the South, where the slave thus raised for the market had become an element of annual reproduction, this method did not suffice for a long time, so that the African slave trade was continued as long as possible for the purpose of supplying the market.
(b) The natural flux and reflux of money by the exchange of the annual products on the basis of capitalist production; the advances of fixed capital in one bulk to the full value and the gradual and prolonged recovery of this outlay from the circulation in the course of successive years, in other words, the gradual reconstitution of fixed capital in money by the annual formation of a hoard, which is different from the simultaneous accumulation of a hoard based on the annual production of new gold; the different length of time in which money is advanced according to the duration of the periods of reproduction of commodities, and in which money must, therefore, be accumulated anew, before it can be recovered from the circulation by the sale of commodities; the different length of time for which money must be advanced, resulting even from the different distances of the places of production from their selling market; furthermore the differences in the magnitude and period of the reflux according to the relative size or condition of the productive supplies in the various lines of business and in the individual businesses of the same line, and with them the terms at which the elements of constant capital are bought—all this taking place during the year of reproduction, it was necessary that all these different factors should be noted and brought home by experience in order to give rise to a systematization of the mechanical aids of the credit-system and to an actual discovery of whatever capital was available for lending.
This is further complicated by a difference between lines of business whose production proceeds continuously under normal conditions on the same scale, and those which are carried on at different scales at different periods of the year, such as agriculture.
XIII. DESTUTT DE TRACY'S THEORY OF REPRODUCTION.
As an illustration of the confused and at the same time boastful thoughtlessness of political economists analyzing social reproduction, the great logician Destutt de Tracy may serve (compare volume I, page 181, footnote 1), whom even Ricardo took seriously, calling him a very distinguished writer.
This distinguished writer makes the following revelations concerning the entire process of social reproduction and circulation:
"One may ask me how these industrial capitalists can make such large profits and out of whom they can draw them. I reply that they do so by selling everything which they produce for more than it has cost to produce; and that they sell
(1) to one another to the extent of the entire share of their consumption, intended for the satisfaction of their needs, which they pay with a portion of their profits;
(2) to the wage workers, both those whom they pay and those whom the idle capitalists pay; from these wage workers they recover the entire wages in this way, except what little they may save;
(3) to the idle capitalist, whom they pay with a portion of their revenue which they have not spent for the wages of the laborers employed by them directly; so that the entire rent, which they pay them annually, flows back to them in this way." (Destutt de Tracy, Traité de la volonté et de ses effets. Paris, 1821. Page 239.)
In other words, the capitalists enrich themselves by mutually getting the best of one another in the exchange of that portion of their surplus-value which they reserve for their individual consumption, or consume as revenue. For instance, if this portion of their surplus-value, or of their profits, is 400 p. st., this sum is supposed to be increased to, say, 500 p. st. by mutually selling their respective shares at an excess of 25% over the normal. But if all do the same, the result will be just what it would have been if they had mutually sold their shares at their normal values. They merely need in that case 500 p. st. in money for the circulation of commodities valued at 400 p. st., and this would seem to be rather a method of impoverishing than of enriching themselves, since it means that they are compelled to reserve a large portion of their total wealth unproductively in the state of a medium of circulation. The outcome is simply that the capitalist class can divide only 400 p. st.'s worth of commodities among themselves for their individual consumption, after nominally raising prices all around, but that they do one another the favor of circulating 400 p. st.'s worth of commodities by means of a quantity of money which would just as well circulate 500 p. st.'s worth of commodities.
And this is saying nothing about the fact that the assumption deals here only with a "portion of their profits," or any supply of commodities representing profits. But Destutt undertook precisely to tell us where these profits come from. The quantity of money required to circulate it represents a very subordinate question. It seems that the quantity of commodities, in which the profit is incorporated, is produced by the circumstance that the capitalists do not only sell these commodities to one another (an assumption which is quite fine and profound), but also mutually sell them too dearly. Thus we are acquainted with the secret of the wealth of the capitalists. It is on a par with the secret of Reuter's funny "Inspector Braesig" who discovered that the great poverty is due to the great "pauvreté."
(2) The same capitalists, furthermore, sell "to the wage workers, both those whom they pay and those whom the idle capitalists pay; from these wage workers they recover the entire wages in this way, except what little they may save."
According to Destutt, then, the reflux of the money-capital advanced to the laborers as wages, is the second source of the wealth of the capitalists.
For instance, if the capitalists have paid 100 p. st. to their laborers as wages, and if these same laborers buy from the same capitalists commodities of this same value of 100 p. st., so that what the capitalists have advanced to the laborers as wages returns to the capitalists when the laborers spend it for commodities, then the capitalists get richer. A common mortal would think that the capitalists recover only their 100 p. st., which they possessed before this transaction. At the beginning of the transaction they have 100 p. st. They buy labor-power valued at 100 p. st. This labor-power, so bought, produces commodities of a certain value, which, so far as we know, amounts to 100 p. st. By selling these commodities for 100 p. st. to their laborers, the capitalists recover 100 p. st. in money. The capitalists then have once more 100 p. st., the same as before, and the laborers have 100 p. st.'s worth of commodities which they have themselves produced. It is hard to understand how that can make the capitalists any richer. If they did not recover the 100 p. st., then they would have to pay first 100 p. st. to the laborers in wages and then to give them their product for nothing, although it is also worth 100 p. st. The reflux of this money might therefore at best explain, why the capitalists do not get any poorer by this transaction, but not, why they get richer by it.
It is another question, how the capitalists got possession of the 100 p. st., and why the laborers, instead of working for their own account, are compelled to exchange their labor-power for this money. But this is a fact which is self-explanatory for a thinker of Destutt's caliber.
However, Destutt himself is not quite satisfied with his solution. He did not simply tell us that the capitalists get richer by spending a sum of 100 p. st. in money and then recovering the same amount. He had not plainly spoken of a reflux of 100 p. st. which merely explains why this money is not lost. He had told us that the capitalists get richer "by selling everything which they produce for more than it has cost to produce."
Consequently the capitalists must also get richer by their transaction with the laborers by selling too dearly to them. Very well! "They pay wages * * * * and all this flows back to them by the expenditures of all these people who pay them more" (for the products) "than they cost the capitalists in wages." (Page 240.) In other words, the capitalists pay 100 p. st. in wages to the laborers, and then they sell to these laborers their own product at 120 p. st., so that they not only recover their 100 p. st., but also gain 20 p. st. That is impossible. The laborers can pay for the commodities only with the money which they receive in the form of wages. If they get only 100 p. st. in wages, they can buy only 100 p. st.'s worth, not 120 p. st.'s worth. This is therefore impracticable. But there is still another way. The laborers buy from the capitalists commodities for 100 p. st., but receive only 80 p. st.'s worth. They are cheated out of 20 p. st. Then the capitalists have certainly gained 20 p. st., because he practically pays 20% less than the actual value for labor-power. This is equivalent to cutting wages 20% by a circuitous route.
The capitalists would accomplish the same end if they paid the laborers in the first place only 80 p. st. in wages and gave them only 80 p. st.'s worth of commodities in exchange. This seems to be the normal way for the class of capitalists as a whole, for according to Destutt the laboring class must "receive sufficient wages" (page 219), since their wages must be at least sufficient to maintain them alive and working, "to gain the barest subsistence" (page 180). If the laborers do not receive such sufficient wages, then that means according to the same Destutt "the death of industry" (page 208), which does not seem to be a way by which the capitalists can get richer. But whatever may be the scale of wages, paid by the capitalists to the laborers, they have a certain value, for instance, 80 p. st. If the capitalist class pays the laborers 80 p. st., then it has to supply them with commodities worth 80 p. st. in exchange for these wages, and the reflux of this sum does not make the capitalists any richer. If the capitalists pay the laborers 100 p. st. in wages, and supply them in exchange for 100 p. st. only with 80 p. st.'s worth of commodities, then they pay 20% above the normal scale in wages and supply on the other hand 20% less in commodities.
In other words, the fund from which the capitalist class would derive its profits, would be made up of deductions from the normal scale of wages of the laborers, by paying less than its value for labor-power, in other words, less than the value of the necessities of life required for the normal reproduction of the laborer. If the normal scale of wages were paid, which is supposed to be the case according to Destutt, there can be no fund for profits, neither for the industrial nor for the idle capitalists.
Hence Destutt should have reduced the entire secret of how the capitalist class get richer, to these words: A deduction from the wages of the laborers. In that case the other sources of surplus-value, which he mentions under (1) and (3), would not exist.
Under these conditions all the countries, in which the money paid to the laborers in wages is reduced to the value of the articles of consumption required for the subsistence of the working class, would not have any fund for the consumption of capitalists, nor any fund for the accumulation of capital. In other words, there would be no fund permitting a capitalist class to live, and therefore no capitalist class. And according to Destutt this would be the case in all wealthy and developed countries with an old civilization, for in them, "in our deeprooted old societies, the fund from which wages are paid * * * * is an almost constant magnitude" (page 202).
Even with a deduction from the wages, the capitalist does not enrich himself by first paying the laborer 100 p. st. in wages and then supplying him with 80 p. st.'s worth of commodities for 100 p. st. of wages, in other words, by circulating 80 p. st.'s worth of commodities by means of 100 p. st., an excess of 20%. The capitalist gets richer by appropriating, aside from the surplus-value—that portion of the product in which surplus-value is incorporated—20% of that portion of the product which the laborer should receive in exchange for his wages: The capitalist class would not gain anything by the silly method which Destutt assumes. They pay 100 p. st. for wages and give to the laborer for these 100 p. st. a part of his own product valued at 80 p. st. But in the next transaction they must again advance 100 p. st. for the same purpose. They would thus indulge in the useless sport of advancing 100 p. st. in money and giving in exchange therefor 80 p. st. in commodities, instead of paying 80 p. st. and exchanging it for 80 p. st. in commodities. That is to say, they would be continually advancing a money-capital which is 20% in excess of the normal required for the circulation of their variable capital. That is a very peculiar method to get rich.
(3) The capitalist class, finally, sells "to the idle capitalists, whom they pay with a portion of their revenue which they have not spent for the wages of the laborers employed by them directly; so that the entire rent, which they pay them annually, flows back to them in this way."
We have seen a while ago that the industrial capitalists pay with a portion of their profits "the entire share of their consumption, intended for the satisfaction of their needs." Take it, then, that their profits amount to 200 p. st. And let them consume 100 p. st. of this in their individual consumption. But the other half, or 100 p. st., does not belong to them. It belongs to the "idle" capitalists, that is to say, to those who take ground rent and lend money on interest. In other words, they have to pay 100 p. st. to this gentry. Let us assume that this gentry use 80 p. st. for their individual consumption, and 20 p. st. for the purchase of servants, etc. They buy with those 80 p. st. articles of consumption from the industrial capitalists. These capitalists, then give up commodities valued at 80 p. st. and receive in return 80 p. st. in money, or four fifths of the 100 p. st. paid by them to the idle capitalists under the name of rent, interest, etc. The servant class, who are the wage workers directly in attendance upon the idle capitalists, have received 20 p. st. from their masters. These servants likewise buy articles of consumption from the industrial capitalists to the amount of 20 p. st. In this way these capitalists recover also the last 20 p. st., or the last fifth, of the 100 p. st., which they have paid to the idle capitalists for rent, interest, etc., while they give up in return commodities valued at 20 p. st.
At the close of this transaction the industrial capitalists have recovered the full 100 p. st., which they paid to the idle capitalists for rent, interest, etc., in money. But one half of their surplus products, valued at 100 p. st., have passed from their hands into the fund for the individual consumption of the idle capitalists.
It is evidently immaterial for the present question, whether the division of the 100 p. st. among the idle capitalists and their dependent wage workers is drawn into this discussion or not. The matter is simple: Their rent, interest, in short, their share in the surplus-value of 200 p. st., is paid to them by the industrial capitalists in money to the amount of 100 p. st. With these 100 p. st. they buy directly or indirectly articles of consumption from the industrial capitalists. They return the 100 p. st. in money to them and take from them instead articles of consumption valued at 100 p. st.
This completes the reflux of the 100 p. st. paid by the industrial capitalists to the idle capitalists. Is this transaction a means of making the industrial capitalists any richer, as Destutt imagines? Before this transaction they had values amounting to 200 p. st., 100 being money and 100 articles of consumption. After the transaction they have only one half of the original amount of values. They have once more 100 p. st. in money, but they have lost the articles of consumption valued at 100 p. st., which have passed into the possession of the idle capitalists. In other words, they have become poorer to the extent of 100 p. st., instead of being richer. If, instead of first choosing the circuitous route of paying out 100 p. st. in money, and then receiving this money back in payment for articles of consumption valued at 100 p. st., they had paid rent, interest, etc., directly in the natural form of commodities, then they would not recover any 100 p. st. in money, because they did not throw that amount of money into the circulation. In the case of a payment in commodities, the transaction would simply have been confined to keeping one-half of the surplus product of 200 p. st. for themselves and giving the other half to the idle capitalists without receiving any equivalent in return. Even Destutt would not have been able to consider this a means of getting richer.
Of course, the land and capital borrowed by the industrial capitalists from the idle capitalists and paid for by a portion of their surplus-value in the form of ground rent and interest, etc., are profitable for them, for they constitute one of the conditions for the production of any commodity, and more especially of that portion of the product, which creates surplus-value, or in which surplus-value is incorporated. This profit flows from the use of the borrowed land and capital, not out of the price paid for them. This price rather constitutes a deduction from the profit. Or one would have to contend, that the industrial capitalists do not get richer, but poorer, if they are enabled to keep the other half of their surplus-value, instead of being compelled to give it up. This is the confusion which results from the indiscriminate mixing up of such phenomena of circulation as a reflux of money with the distribution of the product, which is merely promoted by this circulation.
And yet the same Destutt is so sharp as to remark: "Whence come the revenues of these idle people? Do they not come out of the rent paid by them out of the profits of those who put the capitals of the former to work, that is to say, who pay with the funds of the former a certain kind of labor which produces more than it costs, in other words, the profits of the industrial capitalists? It is always necessary to revert to them, in order to find the source of wealth. It is they who in reality feed the wage workers employed by the idle capitalists." (Page 246).
In other words, in this quotation the rent, etc., of the idle capitalists is a deduction from the profit of the industrial capitalists. In former quotations it was a means of enriching them.
But at least one consolation is left for our friend Destutt. These good industrials treat the idle capitalists in the same way that they have treated one another and their laborers. They sell them all commodities too dearly, for instance, at a raise of 20%. Now there are two possibilities. The idle capitalists either have other funds of money aside from the 100 p. st. which they receive from the industrials, or they have not. In the first case, the industrials sell them commodities valued at 100 p. st. at a price of, say, 120 p. st. In other words, they recover by the sale of their commodities not only the 100 p. st. paid to the idle capitalists, but also 20 p. st. of new values. Now, how stands the account? They have given away 100 p. st. in commodities for nothing, for the 100 p. st. that paid for their commodities were their own money. Their own commodities have been paid with their own money. In other words, they have lost 100 p. st. But they have also received an additional sum of 20 p. st. in the price of their commodities. In other words, 20 p. st. of gain. Balance this against the loss of 100 p. st., and you still have a loss of 80 p. st. Never a plus, always a minus. The advantage taken by the industrials over the idle capitalists has reduced the loss of the industrials, but for all that it has not transformed a reduction of their wealth into an increase of wealth. But this method cannot go on indefinitely, for the idle capitalists cannot pay year after year 120 p. st., if they receive only 100 p. st.
There remains the other possibility. The industrials sell commodities valued at 80 p. st. in exchange for the 100 p. st. paid to the idle capitalists. In this case, they still give away 80 p. st. for nothing, in the form of rent, interest, etc. By means of cheating the industrials have reduced their tribute to the idlers, but it nevertheless is exacted from them the same as ever, and the idlers are enabled, on the same theory, assuming the prices to depend on the free will of the sellers, to demand in the future 120 p. st. instead of 100 p. st. as rent and interest on their land and capital.
This brilliant analysis is quite worthy of that depth of thought which copies on the one hand from Adam Smith that "labor is the source of all wealth" (page 242), that the industrial capitalists "employ their capital for the payment of labor that reproduces it with a profit" (page 246), and which concludes on the other hand that these industrial capitalists "maintain all the other people, are the only ones who increase the public wealth, and create all the means for our enjoyment" (page 242), that it is not the capitalists who are maintained by the laborers, but the laborers who are maintained by the capitalists, for the brilliant reason that the money, with which the laborers are paid, does not remain in their hands, but continually returns to the capitalists in payment of the commodities produced by the laborers. "They receive only with one hand, and return with the other. Their consumption must therefore be regarded as being due to those who pay their wages." (Page 235).
After this exhaustive analysis of social reproduction and consumption, as promoted by the circulation of money, Destutt continues: "This is what perfects this perpetuum mobile of wealth, this movement which,-though ill understood" (I should say so!) "yet has justly been named circulation. For it is indeed a circulation and always returns to its point of departure. This is the point where production is accomplished." (Pages 139, 140.)
Destutt, that very distinguished writer, membre de l'Institut de France et de la Sociéte Philosophique de Philadelphie, and indeed to a certain extent a beacon light among the vulgar economists, finally requests his readers to admire the wonderful lucidity with which he has presented to them the course of the social process, the flood of light which he has poured over the matter, and he is condescending enough to communicate to his readers, where all this light comes from. This must be read in the original in order to be appreciated.
"On remarquera, j'espere, combien cette maniere de considérer la consommation de nos richesses est corcordante avec tout ce que nous avons dit a propos de leur production et de leur distribution, et en meme temps quelle clarté elle répand sur toute la marche de la société. D'ou viennent cet accord et cette lucidité? De ce que nous avons rencontré la vérité. Cela rappelle I' effet de ces miroirs ou les objets se peignent nettement et dans leurs justes proportions, quand on est placé dans leur vrai point-de-vue, et ou tout parait confus et desuni, quand on est trop près ou trop loin." (Pages 242, 243). (It will be noted, I hope, how much this manner of viewing the consummation of our wealth is in accord with all we have said concerning its production and distribution, and also how much light it throws on the entire course of society. Whence come this accord and this lucidity? It is due to the fact that we have met truth face to face. This recalls the effect of those mirrors, in which the objects are reflected clearly and in their true proportions, when we are placed in their correct focus, but in which everything appears confused and distorted, when we are too close or too far away from them).
There you have the bourgeois idiocy in all its beatitude!