Theories of Surplus Value, Marx 1861-3
[See Adam Smith Archive.]
Adam Smith, like all economists worth speaking of, takes over from the Physiocrats the conception of the average wage, which he calls the natural price of wages.
“A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.” ([Adam Smith, Wealth of Nations, Oxford University Press, London, 1928. Vol. I, p. 75, Garnier] t. 1, l. I, ch. VIII, p. 136.*)
Adam Smith expressly states that the development of the productive powers of labour does not benefit the labourer himself. He says (1. I, ch. VIII [An Inquiry into the Nature and Causes of the Wealth of Nations] edit. McCulloch, London, 1828):
“The produce of labour constitutes the natural recompense or wages of labour. In that Original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him. Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper.” ‹At any rate all those things requiring a smaller quantity of labour for their reproduction, but they “would” not only have become cheaper; they have, in point of fact, become cheaper.› “They would have been produced by a smaller quantity of labour; and as the commodities produced by equal quantities of 1abour would naturally in this state of things be exchanged for one another, they would have been purchased likewise with ||244| the produce of a smaller quantity […] But this original state of things, in which the labourer enjoyed the whole produce of his own labour, could not last beyond the first introduction of the appropriation of land and the accumulation of stock. It was at an end, therefore, long before the most considerable improvements were made in the productive powers of labour, and it would be to no purpose to trace further what might have been its effects upon the recompense or wages of labour” (Vol. I, pp. 107–09).
Here Adam Smith very acutely notes that the really great development of the productive power of labour starts only from the moment when it is transformed into wage-labour, and the conditions of labour confront it on the one hand as landed property and on the other as capital. The development of the productive power of labour thus begins only under conditions in which the labourer himself can no longer appropriate its result. It is therefore quite useless to investigate how this growth of productive powers might have influenced or would influence “wages”, taken here as equal to the product of labour, on the hypothesis that the product of labour (or the value of this product) belonged to the labourer himself.
Adam Smith is very copiously infected with the conceptions of the Physiocrats, and often whole strata run through his work which belong to the Physiocrats and are in complete contradiction with the views specifically advanced by him. This is so, for example, in the theory of rent, etc. For our present purpose we can completely disregard these passages in his writings, which are not characteristic of himself, but in which he is a mere Physiocrat.
In the first part of this work, when dealing with the analysis of the commodity, I have already pointed out Adam Smith’s inconsistency in his treatment of how exchange-value is determined. In particular, [I have shown] how he sometimes confuses, and at other times substitutes, the determination of the value of commodities by the quantity of labour required for their production, with its determination by the quantity of living labour with which commodities can be bought, or, what is the same thing, the quantity of commodities with which a definite quantity of living labour can be bought. Here he makes the exchange-value of labour the measure for the value of commodities. In fact, he makes wages the measure; for wages are equal to the quantity of commodities bought with a definite quantity of living labour, or to the quantity of labour that can be bought by a definite quantity of commodities. The value of labour, or rather of labour-power, changes, like that of any other commodity, and is in no way specifically different from the value of other commodities. Here value is made the measuring rod and the basis for the explanation of value—so we have a vicious circle.
From the exposition that follows, however, it will be seen that this vacillation and this jumbling up of completely heterogeneous determinations of value do not affect Smith’s investigations into the nature and origin of surplus-value, because in fact, without even being aware of it, whenever he examines this question, he keeps firmly to the correct determination of the exchange-value of commodities —that is, its determination by the quantity of labour or the labour-time expended on them. |244||
||VII-283a| <Many examples can be given to show how often in the course of his work, when he is explaining actual facts, Smith treats the quantity of labour contained in the product as value and determining value. Some of these are quoted by Ricardo. His whole doctrine of the influence of the division of labour and improved machinery on the price of commodities is based on it. Here one passage will be enough to cite. In ch. XI, l. I Adam Smith speaks of the cheapening of many manufactured goods in his time, as compared with earlier centuries, and he concludes with the words:
“It cost a greater quantity of labour ||283b| to bring the goods to market. When they were brought thither, therefore, they must have purchased, or exchanged for the price, of a greater quantity.” ([Wealth of Nations, O.U.P. edition, Vol. I, p. 284], [Garnier] t. II, p. 156).//|VII-283b||
||VI-245| Secondly, however, this contradiction in Adam Smith and his passing from one kind of explanation to another is based upon something deeper, which Ricardo, in exposing this contradiction, overlooked or did not rightly appreciate, and therefore also did not solve. Let us assume that all workers are producers of commodities, and not only produce their commodities but also sell them. The value of these commodities is determined by the necessary labour-time contained in them. If therefore the commodities are sold at their value, the labourer buys with one commodity, which is the product of twelve hours’ labour-time, another twelve hours’ labour-time in the form of another commodity, that is to say, twelve hours’ labour-time which is embodied in another use-value. The value of his labour is therefore equal to the value of his commodity; that is, it is equal to the product of twelve hours’ labour-time. The selling and buying again, in a word, the whole process of exchange, the metamorphosis of the commodity, alters nothing in this. It alters only the form of the use-value in which this twelve hours’ labour-time appears. The value of labour is therefore equal to the value of the product of labour. In the first place, equal quantities of materialised labour are exchanged in the commodities—in so far as they are exchanged at their value. Secondly, however, a certain quantity of living labour is exchanged for an equal quantity of materialised labour, because, firstly, the living labour is materialised in a product, a commodity, which belongs to the labourer, and secondly, this commodity is in turn exchanged for another commodity which contains an equally large quantity of labour. In fact, therefore, a certain quantity of living labour is exchanged for an equal amount of materialised labour. Thus it is not only commodity exchanging for commodity in the proportion in which they represent an equal quantity of materialised labour-time, but a quantity of living labour exchanging for a commodity which represents the same quantity of labour materialised.
On this assumption the value of labour (the quantity of commodities which can he bought with a given quantity of labour, or the quantity of labour which can be bought with a given quantity [of commodities]) could serve as the measure of the value of a commodity just as well as the quantity of labour contained in it, since the value of labour always represents the same quantity of materialised labour as the living labour requires for the production of this commodity; in other words, a definite quantity of living labour-time would always command a quantity of commodities which represents an equal amount of materialised labour-time. But in all modes of production—and particularly in the capitalist mode of production —in which the material conditions of labour belong to one or several classes, while on the other hand nothing but labour-power belongs to another class, the working class, what takes place is the opposite of this. The product or the value of the product of labour does not belong to the labourer. A definite quantity of living labour does not command the same quantity of materialised labour, or a definite quantity of labour materialised in a commodity commands a greater quantity of living labour than is contained in the commodity itself.
But as Adam Smith quite correctly takes as his starting-point the commodity and the exchange of commodities, and thus the producers initially confront each other only as possessors of commodities, sellers of commodities and buyers of commodities, he therefore discovers (so it seems to him) that in the exchange between capital and wage-labour, ||246| materialised labour and living labour, the general law at once ceases to apply, and commodities (for labour too is a commodity in so far as it is bought and sold) do not exchange in proportion to the quantities of labour which they represent. Hence he concludes that labour-time is no longer the immanent measure which regulates the exchange-value of commodities, from the moment when the conditions of labour confront the wage-labourer in the form of landed property and capital. He should on the contrary, as Ricardo rightly points out, have drawn the opposite conclusion, that the expressions “quantity of labour” and “value of labour” are now no longer identical, and that therefore the relative value of commodities, although determined by the labour-time contained in them, is not determined by the value of labour, since that was only correct so long as the latter expression remained identical with the former. Later on, when we deal with Malthus, we can show how wrong and absurd it would be, even when the labourer appropriated his own product, i.e., the value of his own product, to make this value or the value of labour the measure of value, in the same sense in which labour-time or labour itself is the measure of value and the value-creating element. For even in that case the labour which can be bought with a commodity cannot serve as a measure in the same sense as the labour contained in it. One would be merely an index to the other.
In any case Adam Smith feels the difficulty of deducing the exchange between capital and labour from the law that determines the exchange of commodities, since the former apparently rests on quite opposite and contradictory principles. And indeed the contradiction could not be solved so long as capital was set directly against labour instead of against labour-power. Adam Smith was well aware that the labour-time expended on the reproduction and maintenance of labour-power is very different from the labour which it [i.e., labour-power] itself can perform. Thus he himself quotes from Cantillon’s Essai sur la nature du commerce:
“The labour of an able-bodied slave, the same author adds, is computed to be worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth less than that of an able-bodied slave” ([Wealth of Nations, O.U.P. edition, Vol. I, p. 75], [Garnier] t. I, l. I, ch. VIII, p. 137).
On the other hand it is strange that Adam Smith did not grasp how little the objection he raises has to do with the law that determines the exchange of commodities for each other. That commodities A and B exchange in proportion to the labour-time contained in them is in no way upset by the proportions in which the producers A or B divide the products A and B, or rather their value, between themselves. If a part of A goes to the landowner, another to the capitalist, and a third part to the labourer, no matter what the share of each may be, this does not alter the fact that A itself exchanges with B according to its value. The relation between the labour-time contained in commodities A and B is in no way affected by how the labour-time contained in A and B is appropriated by various persons. “When the exchange of broadcloth for linen has been accomplished, the producers of broadcloth will share in the linen in a proportion equal to that in which they previously shared in the broadcloth” ([Karl Marx], Misére de la Philosophie, p. 29). It is this, too, that later the Ricardians rightly maintained against ||247| Adam Smith. Thus the Malthusian John Cazenove says:
“… Interchange and Distribution distinct from each other. …* The circumstances which affect the one do not always affect the other. For instance, a reduction in the cost of producing any particular commodity will alter its relation to all others; but it will not necessarily alter its own distribution, nor will it in any way affect theirs. Again, a general reduction in the value of commodities affecting them all alike will not alter their relation to each other. It might or might not affect their distribution” (John Cazenove: Preface to his edition of Malthus’s Definitions in Political Economy, London, 1853, [p. VI]).
But since the “distribution” of the value of the product between capitalist and worker is itself based on an exchange between commodities —commodities and labour-power —Adam Smith is justifiably startled. The fact that he had also made the value of labour, or the extent to which a commodity (or money) can purchase labour, the measure of value, has a disturbing effect on Smith’s argument when he comes to the theory of prices, shows the influence of competition on the rate of profit, etc.; it deprives his work of all unity, and even excludes a number of essential questions from his inquiry. As we shall soon see, however, it did not affect his exposition of surplus-value in general, because here he keeps consistently to the correct determination of value by the labour-time expended in different commodities.
So now to his treatment of the question.
But first we must mention one other circumstance. Adam Smith mixes up different things. First he states in Book I, Ch. V:
“Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences and amusements of human life. But after the division of labour bas once thoroughly taken place, it is but a very small part of these with which a man’s own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must he rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it, himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities” ([Wealth of Nations, O.U.P. edition, Vol. I, pp. 32–33], [Garnier] t. I, pp. 59 to 60).
Further:“They” (the goods) “contain the value of a certain quantity of labour, which we exchange ||248| for what is supposed at the time to contain the value of an equal quantity… It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command” ([ibid., p. 33], [Garnier] l. I, ch. V, pp. 60–61).
Finally: “Wealth, as Mr. Hobbes says, is power. But the person who either acquires, or succeeds to a great fortune, does not necessarily acquire or succeed to any political power, either civil or military… The power which that possession immediately and directly conveys to him, is the power of purchasing a certain command over all the labour, or over all the produce of labour which is then in the market” ([Ibid.], [Garnier] i.e., p. 61).
It can be seen that in all these passages Adam Smith confuses the labour of other people with the produce of this labour. The exchange-value of the commodity which anyone possesses consists —after the division of labour—in the commodities belonging to someone else which he can buy, i.e., in the quantity of someone else’s labour which is contained in them, the quantity of someone else’s materialised labour. And this quantity of the labour of others is equal to the quantity of labour that is contained in his own commodity. As he expressly says:
“They” (the goods) “contain the value of a certain quantity of labour, which we exchange for what is supposed at the time to contain the value of an equal quantity.”
It emphasis here is on the change brought about by the division of labour: that is to say, that wealth no longer consists in the product of one’s own labour, but in the quantity of the labour of others which this product commands, the social labour which it can buy, the quantity of which is determined by the quantity of labour it itself contains. In fact, only the concept of exchange-value is here involved —that my labour now counts only as social labour, and consequently its product determines my wealth by its command over an equal quantity of social labour. My commodity, which contains a definite quantity of necessary labour-time, gives me command over all other commodities of equal value, and therefore over an equal quantity of the labour of others realised in other use-values. The emphasis here lies on the equalisation, brought about through the division of labour and exchange-value, of my labour with the labour of others, in other words, with social labour (the fact that my labour too, or the labour contained in my commodities, is already socially determined, and has fundamentally changed its character, escapes Adam), and not at all on the difference between materialised labour and living labour, and the specific laws of their exchange. In fact, Adam Smith is here saying nothing more than that the value of commodities is determined by the labour-time contained in them, and that the wealth of the owner of commodities consists in the quantity of social labour at his disposal.
However, the equating here of labour and product of labour ||249| in fact provides the first occasion for the confusion between the determination of the value of commodities by the quantity of labour contained in them, and the determination of their value by the quantity of living labour that they can buy, in other words, their determination by the value of labour. When Adam Smith says:
“His fortune is greater or less, precisely in proportion to the extent of this power, or to the quantity of either of other men’s labour, or, what is the same thing” (here is the false identification) “of the produce of other men’s labour, which it enables him to purchase”. ( [Wealth of Nations, O.U.P. edition, Vol. I, p. 33], [Garnier] l.c., p. 61.)
He might just as well have said: it is in proportion to the quantity of social labour contained in his own commodity or fortune; as indeed he also says:
“They” (the goods) “contain the value of a certain quantity of labour, which we exchange for what is supposed at the time [to contain] the value of an equal quantity.”
(The word value is here superfluous and meaningless.) The false conclusion emerges already in this Chapter V, when for example he says:
“Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places he estimated and compared” ([ibid., p. 36], [Garnier] l.c., p. 66).
What is true of labour itself and consequently of its measure, labour-time —that the value of commodities is always proportionate to the labour-time realised in them, no matter how the value of labour may change —is here claimed for this changing value of labour itself.
Here Adam Smith is examining only commodity exchange in general: the nature of exchange-value, of the division of labour and of money. The parties to the exchange still confront each other only as owners of commodities. They buy the labour of others in the form of a commodity, just as their own labour appears in the form of a commodity. The quantity of social labour which they command is therefore equal to the quantity of labour contained in the commodity with which they themselves make the purchase. But when in the following chapters he comes to the exchange between materialised labour and living labour, between capitalist and worker, and then stresses that the value of the commodity is now no longer determined by the quantity of labour it itself contains, but by the quantity —which is different from this —of living labour of others which it can command, i.e., buy, he is not in fact saying by this that commodities themselves no longer exchange in proportion to the labour-time they contain; but that the increase of wealth, the increase of the value contained in the commodity, and the extent of this increase, depends upon the greater or less quantity of living labour which the materialised labour sets in motion. And put in this way it is correct. Smith, however, remains unclear on this point.
||250| In Chapter VI of Book I Adam Smith passes on from those relations in which it is assumed that the producers confront one another only as sellers and possessors of commodities to the relations of exchange between those who possess the conditions of labour and those who possess labour-power alone.
“In that early and rude state of society which precedes both the accumulation of stock and the appropriation of land, the proportion between the quantities of labour necessary for acquiring different objects, seems to be the only circumstance which can afford any rule for exchanging them for one another… It is natural that what is usually the produce of two days’ or two hours’ labour, should be worth double of what is usually the produce of one day’s or one hour’s labour” ([ibid., p. 52] t. I, ch. VI. pp. 94–95, Garnier).
That is to say, the labour-time necessary to produce different commodities determines the proportion in which they exchange for one another, or their exchange-value.
“In this state of things, the whole produce of labour belongs to the labourer; and the quantity of labour commonly employed in acquiring or producing any commodity, is the only circumstance which can regulate the quantity of labour which it ought commonly to purchase, command, or exchange for” ([ibid., p. 53], [Garnier] l.c., p. 96).
Consequently, on this assumption the labourer is a mere seller of commodities, and one commands the labour of another only in so far as he buys the other’s commodity with his commodity. He thus commands with his commodity only so much of the other’s labour as is contained in his own commodity, since both exchange only commodities against each other, and the exchange-value of the commodities is determined by the labour-time or quantity of labour they contain.
But, Adam continues:
“As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or by what their labour adds to the value of the materials” ([ibid., p. 53], [Garnier] l.c., p. 96).
Stop, before we follow the passage further. In the first place, whence come the “industrious people” who possess neither means of subsistence nor materials of labour—people who are hanging in mid air? If we strip Smith’s statement of its naïve phrasing, it means nothing more than: capitalist production begins from the moment when the conditions of labour belong to one class, and another class has at its disposal only labour-power. This separation of labour from the conditions of labour is the precondition of capitalist production.
Secondly, however, what does Adam Smith mean when he says that the employers of labour set labourers to work “in order to make a profit by the sale of their work, or by what their labour ||251| adds to the value of the materials”?
Does he mean by this that the profit comes from the sale, that the commodity is sold above its value —that is, what Steuart calls profit upon alienation, which is nothing but a vibration of wealth between parties?* Let him answer for himself.
“In exchanging the complete manufacture either for money, for labour,” (here again is a source of new error) “or for other goods, over and above what may he sufficient to pay the price of the materials, and the wages of the workmen, something must be given for the profits of the undertaker of the work, who hazards his stock in this adventure” ([ibid., p. 53], [Garnier], l.c.).
We shall return to this “hazarding” later (see notebook VII, p. 173) in the chapter on the apologetic accounts of profit.29 This something given for the profits of the undertaker, when the complete work is exchanged, does it come from the sale of the commodity above its value, is it Steuart’s profit upon alienation?
“The value,” Adam continues immediately, “which the workmen add to the materials, therefore, resolves itself in this case” (when capitalist production has begun) “into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock oaf materials and wages which he advanced” ([ibid., p. 53], [Garnier] l.c., pp. 96–97).
Here therefore Adam Smith explicitly states: the profit which is made on the sale of the complete manufacture originates not from the sale itself, not from the sale of the commodity above its value, is not profit upon alienation. The value, that is, the quantity of labour which the workmen add to the material, falls rather into two parts. One pays their wages or is paid for through their wages. By this transaction the workmen give in return only as much labour as they have received in the form of wages. The other part forms the profit of the capitalist, that is, it is a quantity of labour which he sells without having paid for it. If therefore he sells the commodity at its value, that is, for the labour-time contained in it, in other words if he exchanges it for other commodities in accordance with the law of value, then his profit originates from the fact that he has not paid for a part of the labour contained in the commodity, but has nevertheless sold it. Adam Smith has thereby himself refuted the idea that the circumstance that the whole product of his labour no longer belongs to the labourer, that he is obliged to share it or its value with the owner of capital, invalidates the law that the proportion in which commodities exchange for each other, or their exchange-value, is determined by the quantity of labour-time materialised in them. Indeed, on the contrary, he traces the profit of the capitalist precisely to the fact that he has not paid for a part of the labour added to the commodity, and it is from this that his profit on the sale of the commodity arises. We shall see how further on Adam Smith even more explicitly derives profit from the labour performed by the workman over and above the quantity of labour with which he pays for his wages, that is to say, replaces it by an equivalent. Thereby he has recognised the true origin of surplus-value. At the same time he has expressly stated that it does not arise from the ||252| advanced funds, whose value —however useful they may he in the real labour-process —merely reappears in the product; but that it arises exclusively from the new labour which the workmen add to the materials in the new process of production, in which those funds figure as means of labour or instruments of labour.
On the other hand, the phrase “in exchanging the complete manufacture either for money, for labour, or for other goods—“ is wrong (and arises from the confusion mentioned earlier).
If he exchanges the commodity for money or for a commodity, his profit arises from his selling more labour than he has paid for, from the fact that he does not exchange an equal quantity of materialised labour for an equal quantity of living labour. Adam Smith therefore must not put the exchange either for money or for other goods on the same footing as the exchange of the complete manufacture for labour. For in the first exchange the surplus-value originates from the fact that the commodities are exchanged at their value, for the labour-time contained in them, which however is in part unpaid for. Here it is assumed that the capitalist does not exchange an equal quantity of past labour for an equal quantity of living labour; that the quantity of living labour appropriated by him is greater than the quantity of living labour he has paid for. Otherwise the workman’s wage would be equal to the value of his product. The profit on the exchange of the complete manufacture for money or commodities, if they are exchanged at their value, arises therefore from the fact that the exchange between the complete manufacture and the living labour is subject to other laws; that no equivalents are exchanged here. These cases, therefore, must not be lumped together.
Profit is consequently nothing but a deduction from the value which the workmen have added to the material of labour. They add to the material, however, nothing but a new quantity of labour. The workman’s labour-time therefore resolves itself into two parts: one for which he has received an equivalent, his wages, from the capitalist; the other which he gives to him gratis and which constitutes the profit. Adam Smith rightly points out that only the part of the labour (value) which the workman newly adds to the material resolves itself into wages and profit, that is to say, the newly-created surplus-value in itself has nothing to do with the part of the capital which has been advanced (as materials and instruments).
Adam Smith, who has thus reduced profit to the appropriation of the unpaid labour of others, at once goes on to say:
“The profits of stock, it may perhaps he thought, are only a different name for the wages of a particular sort of labour, the labour of inspection and direction” ([ibid., p. 53], [Garnier] p. 97).
And he refutes this false view of the labour of superintendence. We shall return to this later, in another chapter. Here it is only important to stress that Adam Smith very clearly recognises, brings out and expressly emphasises the contradistinction between his view of the origin of profit and this apologist view. After pointing out this contradistinction he proceeds:
||253| “In this state of things the whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither is the quantity of labour commonly employed in acquiring or producing any commodity, the only circumstance which can regulate the quantity which it ought commonly to purchase, command or exchange for. An additional quantity, it is evident, must he due for the profits of the stock which advanced the wages and furnished the materials of that labour” ([ibid., pp. 54–55], [Garnier] l.c., p. 99).
This is quite correct. Given capitalist production, materialised Labour—in the form of money or commodity—always purchases, besides the quantity of labour which it itself contains, an “additional quantity” of living labour “for the profits of the stock”; which however in other words means nothing but that it appropriates for nothing, appropriates without paying for it, a part of the living labour. Adam Smith is superior to Ricardo in that he so strongly emphasises how this change begins with capitalist production. On the other hand, he is inferior to Ricardo in that he is never able to free himself from the viewpoint —though it is one he himself refuted by his own analysis —that through this changed relation between materialised labour and living labour a change takes place in the determination of the relative value of commodities, which in relation to each other represent nothing but materialised labour, given quantities of realised labour.
After thus presenting surplus-value in the one form, the form of profit, as part of the labour which the worker performs over and above the part of the labour which pays his wages, he does the same with the other form of surplus-value, rent of land. One of the objective conditions of labour alienated from labour, and therefore confronting it as other men’s property, is capital; the other is the land itself, the land as landed property. Therefore after dealing with the owner of capital, Adam Smith continues:
“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce… He” (the labourer) “must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land” ([ibid., p. 55], [Garnier], l.c., pp. 99–100).
Like industrial profit proper, rent of land is only a part of the labour which is added by the labourer to the materials and which he gives up, hands over to the owner of the land without being paid for it; hence, only a part of the surplus-labour performed by him over and above the part of the labour-time which he works to pay his wages or to return an equivalent for the labour-time contained in his wages.
Thus Adam Smith conceives surplus-value—that is, surplus-labour, the excess of labour performed and realised in the commodity over and above the paid labour, the labour which has received its equivalent in the wages —as the general category, ||254| of which profit in the strict sense and rent of land are merely branches. Nevertheless, he does not distinguish surplus-value as such as a category on its own, distinct from the specific forms it assumes in profit and rent. This is the source of much error and inadequacy in his inquiry, and of even more in the work of Ricardo.
Another form in which surplus-value appears is interest on capital, interest on money. But this “interest on money is always”, Adam Smith says in the same chapter, “a derivative revenue, which, if it is not paid from the profit which is made by the use of the money, must he paid from some other source of revenue” (therefore either rent or wages. In the latter case, assuming the average wage, it does not originate from surplus-value but is a deduction from the wage itself or—and in this form, as we shall later have occasion to see, it appears in undeveloped capitalist production —it is only another form of profit) “unless perhaps the borrower is a spendthrift, who contracts a second debt in order to pay the interest of the first” ([ibid., p. 581, [Garnier], l. c., pp. 105–06). Interest is therefore either a part of the profit made with the capital lent; in this case it is only a secondary form of profit itself, a branch of profit, and thus only a further division between different persons of the surplus-value appropriated in the form of profit. Or it is paid out of rent. In which case the same holds good. Or the borrower pays the interest out of his own or someone else’s capital. In which case it in no way constitutes surplus-value, but is merely a different distribution of existing wealth, vibration of the balance of wealth between parties, as in profit upon alienation. Excluding the latter case, when interest is not in any way a form of surplus-value (and excluding the case where it is a deduction from the wage or itself a form of profit; Adam Smith does not mention this latter case), interest is therefore only a secondary form of surplus-value, a mere part of profit or of rent (affecting merely their distribution), and therefore also is nothing but a part of unpaid surplus-Labour.
“The stock which is lent at interest is always considered as a capital by the lender. He expects that in due time it is to be restored to him, and that in the meantime the borrower is to pay him a certain annual rent for the use of it. The borrower may use it either as a capital, or as a stock reserved for immediate consumption. If he uses it as a capital, he employs it in the maintenance of productive labourers, who reproduce the value with a profit. He can, in this case, both restore the capital and pay the interest without alienating or encroaching upon any other source of revenue. If he uses it as a stock reserved for immediate consumption, he acts the part of a prodigal, and dissipates in the maintenance of the idle, what was destined for the support of the industrious. He can, in this case, neither restore the capital nor pay the interest, without either alienating or encroaching upon some other source of revenue, such as the property or […] rent of land” (Vol. II, b. II, ch. IV, p. 127 edit. McCulloch).
|255| Thus whoever borrows money, which here means capital, either uses it himself as capital, and makes a profit with it. In this case the interest which he pays to the lender is nothing but a part of the profit under a special name. Or he consumes the borrowed money. Then he increases the wealth of the lender by reducing his own. What takes place is only a different distribution of the wealth that passes from the hand of the spendthrift into that of the lender, but there is no generation of surplus-value. In so far therefore as interest in any way represents surplus-value, it is nothing but a part of profit, which itself is nothing but a definite form of surplus-value, that is, unpaid labour.
Finally, Adam Smith observes that in the same way all incomes of persons who live on the proceeds of taxes are paid either from wages, and are therefore a deduction from wages themselves; or have their source in profit and rent, thus representing only claims whereby various social strata share in the consumption of profit and rent, which themselves are nothing but different forms of surplus-value.
“All taxes, and all the revenue which is founded upon them, all salaries, pensions, and annuities of every kind, are ultimately derived from some one or other of those three original sources of revenue, and are paid either immediately or mediately from the wages of labour, the profits of stock, or the rent of land ([Wealth of Nations, O.U.P. edition, p. 53], [Garnier] I, ch. VI, p. 106).
Thus interest on money, along with taxes or revenues derived from taxes—in so far as they are not deductions from wages themselves —are merely shares in profit and rent, which are themselves in turn reducible to surplus-value, that is, unpaid labour-time.
This is Adam Smith’s general theory of surplus-value.
In yet another passage Adam Smith sums up his views on the whole question, making it all the more clear how far he is from even attempting in any way to prove that the value added by the labourer to the product (after deducting the costs of production, the value of raw materials and of the instruments of labour) is no longer determined by the labour-time contained in the product, because the labourer does not himself appropriate this value in full, but has to share it—the value or the product—with the capitalist and the landowner. The way in which the value of a commodity is distributed among the producers of this commodity naturally alters nothing in the nature of this value or in the relative value of commodities to one another.
“As soon as land becomes private property, the landlord demands a share of almost all the produce which the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land. It seldom happens that the person who tills the ground has wherewithal to maintain himself till he reaps the harvest. His maintenance is generally advanced to him from the stock of a master, the farmer who employs him, and who would have no interest to employ him, unless he was to share in the produce of his labour, or unless his stock was to be replaced to him with a profit. This profit makes a second deduction ||256| from the […] labour which is employed upon land, The produce of almost all other labour is liable to the like deduction of profit. la all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials of their work, and their wages and maintenance till it he completed. He shares in the produce of their labour, or in the value which it adds to the materials upon which it is bestowed; and in this share consists his profit” ( [McCulloch edition ] Vol. I, b. I, ch. VIII, pp. 109–10).
Here therefore Adam Smith in plain terms describes rent and profit on capital as mere deductions from the workman’s product or the value of his product, which is equal to the quantity of labour added by him to the material. This deduction however, as Adam Smith has himself previously explained, can only consist of that part of the labour which the workman adds to the materials, over and above the quantity of labour which only pays his wages, or which only provides an equivalent for his wages; that is, the surplus-labour, the unpaid part of his labour. (Therefore, incidentally, profit and rent or capital and landed property can never be a source of value.)
We see the great advance made by Adam Smith beyond the Physiocrats in the analysis of surplus-value and hence of capital. In their view, it is only one definite kind of concrete labour—agricultural labour —that creates surplus-value. Therefore what they examine is the use-value of labour, not labour-time, general social labour, which is the sole source of value. In this special kind of labour, however, it is nature, the land, which in fact creates the surplus-value, consisting in an increase of (organic) matter—the excess of the matter produced over the matter consumed. They see it, however, still in quite a restricted form and therefore distorted by fantastic ideas. But to Adam Smith, it is general social labour—no matter in what use-values it manifests itself—the mere quantity of necessary labour, which creates value. Surplus-value, whether it takes the form of profit, rent, or the secondary form of interest, is nothing but a part of this labour, appropriated by the owners of the material conditions of labour in the exchange with living labour. For the Physiocrats, therefore, surplus-value appears only in the form of rent of land. For Adam Smith, rent, profit and interest are only different forms of surplus-value.
When I speak of surplus-value, in relation to the total sum of capital advanced, as profit on capital, this is because the capitalist directly engaged in production directly appropriates the surplus-labour, no matter under what categories he has subsequently to share this surplus-value with the landowner or with the lender of capital. Thus the farmer pays the landowner directly. And the manufacturer, out of the surplus-value he has appropriated, pays rent to the owner of the land on which the factory stands, and interest to the capitalist who has advanced capital to him.
||257| <There are now still to be examined: 1. Adam Smith’s confusion of surplus-value with profit; 2. his views on productive labour; 3. how he makes rent and profit sources of value, and his false analysis of the “natural price” of commodities, in which the value of raw materials and instruments is not supposed to have a separate existence, and therefore not to be considered, apart from the price of the three sources of revenue.//
Wages or the equivalent with which the capitalist buys the temporary disposal of labour-power are not a commodity in its immediate form, but the commodity metamorphosed, money, the commodity in its independent form as exchange-value, as the direct materialisation of social labour, of labour-time in general. With this money the labourer naturally buys commodities at the same price as any other possessor of money <disregarding here such details as, for example, that he buys on less favourable conditions and in worse circumstances, etc.> He faces the seller of commodities as does every other possessor of money—as a buyer. He enters commodity circulation itself not as a labourer, but as pole Money facing pole Commodity, as possessor of commodity in its general, always exchangeable form. His money is once more transformed into commodities, which are to serve him as use-values, and in this process he buys commodities at the current market-price—generally speaking, at their value, In this transaction he carries through only the act M—C, which indicates a change of form, but, as a general rule, by no means a change in magnitude of value. Since however, by his labour materialised in the product, he has added not only as much labour-time as was contained in the money he received, he has paid not only an equivalent but has given surplus-labour gratis—which is precisely the source of the profit—he has thus in fact (the mediating process, the sale of his labour-power, is not relevant when we are dealing with the result) given a higher value than the value of the sum of money which forms his wages. In return, he has bought with more labour-time the quantity of labour realised in the money which comes to him as wages. It can therefore be said that in the same way he has indirectly bought all the commodities into which the money (which is only the independent expression of a definite quantity of social labour-time) he received is converted with more labour-time than they contain, although he buys them at the same price as any other buyer or possessor of a commodity in its first transformation. Conversely, the money with which the capitalist buys labour contains a smaller quantity of labour, less labour-time, than the quantity of labour or labour-time of the workman contained in the commodity produced by him. Besides the quantity of labour contained in this sum of money which forms the wage, the capitalist buys an additional quantity of labour for which he does not pay, an excess over the quantity of labour contained in the money he pays out. And it is precisely this additional quantity of labour which constitutes the surplus-value created by capital.
But as the money ||258| with which the capitalist buys labour (in the actual result, even though mediated through exchange not with labour directly, but with labour-power) is nothing other than the transmuted form of all other commodities, their independent existence as exchange-value, it can equally well be said that all commodities in exchange with living labour buy more labour than they contain, It is precisely this more that constitutes surplus-value.
It is Adam Smith’s great merit that it is just in the chapters of Book I (chapters VI, VII, VIII) where he passes from simple commodity exchange and its law of value to exchange between materialised and living labour, to exchange between capital and wage-labour, to the consideration of profit and rent in general—in short, to the origin of surplus-value—that he feels some flaw has emerged. He senses that somehow—whatever the cause may be, and he does not grasp what it is—in the actual result the law is suspended: more labour is exchanged for less labour (from the labourer’s standpoint), less labour is exchanged for more labour (from the capitalist’s standpoint). His merit is that he emphasises—and it obviously perplexes him—that with the accumulation of capital and the appearance of property in land—that is, when the conditions of labour assume an independent existence over against labour itself—something new occurs, apparently (and actually, in the result) the law of value changes into its opposite. It is his theoretical strength that he feels and stresses this contradiction, just as it is his theoretical weakness that the contradiction shakes his confidence in the general law, even for simple commodity exchange; that he does not perceive how this contradiction arises, through labour-power itself becoming a commodity, and that in the case of this specific commodity its use-value—which therefore has nothing to do with its exchange-value—is precisely the energy which creates exchange-value. Ricardo is ahead of Adam Smith in that these apparent contradictions—in their result real contradictions—do not confuse him. But he is behind Adam Smith in that he does not even suspect that this presents a problem, and therefore the specific development which the law of value undergoes with the formation of capital does not for a moment puzzle him or even attract his attention. We shall see later how what was a stroke of genius with Adam Smith becomes reactionary with Malthus as against Ricardo’s standpoint.
Naturally, however, it is at the same time this deep insight of Adam Smith’s that makes him irresolute and uncertain, cuts the firm ground from under his feet, and prevents him—in contrast to Ricardo—from reaching a consistent and comprehensive theoretical view of the abstract, general foundations of the bourgeois system.
||259| The above-quoted statement by Adam Smith that the commodity buys more labour than it contains, or that labour pays a higher value for the commodity than the latter contains, is thus formulated by Hodgskin:
“Natural or necessary price* means […] the whole quantity of labour nature requires from man, that he may produce any commodity… Labour was the original, is now and ever will he the only purchase money in dealing with nature… .Whatever quantity of labour may he requisite to produce any commodity, the labourer must always, in the present state of society, give a great deal more labour to acquire and possess it than is requisite to buy it from nature. Natural price thus** increased to the labourer is social price … we must always attend to the difference between natural and social price***” (Thomas Hodgskin, Popular Political Economy, etc., London, 1827, pp. 219–20).
In this presentation Hodgskin reproduces both what is correct and what is confused and confusing in Adam Smith’s view.
We have seen how Adam Smith explains surplus-value in general, of which the rent of land and profit are only different forms and component parts. As he presents it, the part of capital which consists of raw material and means of production has nothing directly to do with the creation of surplus-value. The latter arises exclusively from the additional quantity of labour which the labourer gives over and above the part of his labour which forms only the equivalent for his wages. Therefore it is only that part of the capital advanced which consists in wages from which surplus-value directly arises, since it is the only part of capital which not only reproduces itself but produces an overplus. In profit, on the other hand, the surplus-value is calculated on the total amount of capital advanced, and besides this modification other new complications arise through the equalisation of profits in the various spheres of production of capital.
Because Adam makes what is in substance an analysis of surplus-value, but does not present it explicitly in the form of a definite category, distinct from its special forms; he subsequently mixes it up directly with the further developed form, profit. This error persists with Ricardo and all his disciples. Hence arise (particularly with Ricardo, all the more strikingly because he works out the fundamental law of value in more systematic unity and consistency, so that the inconsistencies and contradictions stand out more strikingly) a series of inconsistencies, unresolved contradictions and fatuities, which the Ricardians (as we shall see later in the section on profit) attempt to solve with phrases in a scholastic way. Crass empiricism turns into false metaphysics, scholasticism, which toils painfully to deduce undeniable empirical phenomena by simple formal abstraction directly from the general law, or to show by cunning argument that they are in accordance with that law. At this point where we discuss Adam Smith we will give an example, because the confusion creeps in immediately not when he is dealing specifically with profit or rent—those particular forms of surplus-value—but where he is thinking of them only as forms of surplus-value in general, as deductions from the labour bestowed by the labourers upon the materials.
||260| After Adam Smith has said, in Book I, Chapter VI, “The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced”, he continues: “He” (the entrepreneur) “could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him; and he could have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of his stock” [ibid., p. 53].
We note first: surplus-value, the overplus which the entrepreneur makes over and above the amount of value required to replace his stock, is reduced by Adam Smith to that part of the labour which the workmen add to the materials over and above the quantity that pays their wages—thus making this overplus arise purely from the part of the capital which is laid out in wages. Then, however, he immediately conceives this overplus in the form of profit—that is, he thinks of it not in relation to the part of the capital from which it arises, but as an overplus over the total value of the capital advanced, “upon the whole stock of materials and wages which he advanced”. (It is oversight that the means of production are here left out of account). He therefore conceives surplus-value directly in the form of profit. Hence the difficulties that soon appear.
The capitalist, Adam Smith says, “could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him”.
Once capitalist relations are assumed, this is quite correct. The capitalist does not produce in order to satisfy his needs with the product; he produces with absolutely no direct regard for consumption. He produces in order to produce surplus-value. But this premise—which amounts to no more than that, capitalist production being assumed, the capitalist produces for the sake of surplus-value—is not made use of by Adam Smith to explain surplus-value, as some of his silly disciples subsequently did; that is to say, he does not explain the existence of surplus-value by the interests of the capitalist, by his desire for surplus-value. On the contrary, he has already derived surplus-value from the value which the workmen add to the materials over and above the value which they add in exchange for the wages they have received. But then he goes on at once: the capitalist would have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of the stock advanced. Here profit is no longer explained by the nature of surplus-value, but by the “interest” of the capitalist. Which is downright silly.
Adam Smith does not sense that, by thus directly confusing surplus-value with profit and profit with surplus-value, he is upsetting the law of the origin of surplus-value which he has just established. ||261| If surplus-value is only the part of the value (or of the quantity of labour) added by the workman in excess of the part that he adds to the materials to replace the wages, why should that second part grow as the direct result of the value of the capital advanced being in one case greater than in the other? The contradiction becomes even clearer in the example which Adam Smith himself gives immediately following on this, in order to refute the view that profit is wages for the so-called labour of superintendence.
For he says:
“They” (the profits of stock) “are, however, altogether different” (from wages), “are regulated by quite different principles, and bear no proportion to the quantity, the hardship, or the ingenuity of this supposed labour of inspection and direction. They are regulated altogether by the value of the stock employed, and are greater or smaller in proportion to the extent of this stock. Let us suppose, for example, that in some particular place, where the common annual profits of manufacturing stock are ten per cent there are two different manufactures, in each of which twenty workmen are employed, at the rate of fifteen pounds a year each, or at the expense of three hundred a year in each manufactory. Let us suppose, too, that the coarse materials annually wrought up in the one cost only seven hundred pounds, while the finer materials in the other cost seven thousand. The capital annually employed in the one will, in this case, amount only to one thousand pounds; whereas that employed in the other will amount to seven thousand three hundred pounds. At the rate of ten per cent, therefore, the undertaker of the one will expect a yearly profit of about one hundred pounds only; while that of the other will expect about seven hundred and thirty pounds. But though their profits are so very different, their labour of inspection and direction may be either altogether or very nearly the same” ([ibid., pp. 53–54], [Garnier] l.c.).
From surplus-value in its general form we come straight to a general rate of profit, which has nothing directly to do with it. But let us pass on! In both manufactories twenty workmen are employed; in both their wages are the same, £300. Proof therefore that it is not perhaps a case of a higher kind of labour being employed in one as compared with the other, so that one hour’s labour and therefore also one hour’s surplus-labour would in one be equal to several hours’ surplus-labour in the other. On the contrary, the same average labour is assumed in both, as the equality of their wages shows. How then can the surplus-labour which the workers add, beyond the price of their wages, be worth seven times as much in one factory as in the other? Or why should the workers in one factory, because the materials they work up in it are seven times as costly as in the other, provide seven times as much surplus-labour as in the other, although in both factories they receive the same wages, and therefore work the same time to reproduce ||262| their wages?
The seven times greater profit in the one manufactory as compared with the other—or in general the law of profit, that it is in proportion to the magnitude of the capital advanced—thus prima facie contradicts the law of surplus-value or of profit (since Adam Smith treats the two as identical) that it consists purely of the unpaid surplus-labour of the workmen. Adam Smith puts this down with quite naïve thoughtlessness, without the faintest suspicion of the contradiction it presents. All his disciples— since none of them considers surplus-value in general, as distinct from its determinate forms—followed him faithfully in this. With Ricardo, as already noted, it merely comes out even more strikingly.
As Adam Smith resolves surplus-value not only into profit but also into the rent of land—two particular kinds of surplus-value, whose movement is determined by quite different laws—he should certainly have seen from this that he ought not to treat general abstract form as directly identical with any of its particular forms. With all later bourgeois economists, as with Adam Smith, lack of theoretical understanding needed to distinguish the different forms of the economic relations remains the rule in their coarse grabbing at and interest in the empirically available material. Hence also their inability to form a correct conception of money, in which what is in question is only various changes in the form of exchange-value, while the magnitude of value remains unchanged.
Lauderdale, in Recherches sur la nature et l’origine de la richesse publique (traduit par Lagentie de Lavaïsse, Paris, 1808), raises the objection to Adam Smith’s exposition of surplus-value—which he says corresponds with the views already advanced by Locke—that according to it capital is not an original source of wealth, as Smith makes out, but only a derivative source. The relevant passages run:
“‘Above a century ago, Mr. Locke stated pretty nearly the same opinion” (as Adam Smith)… ‘“‘Money’, he said, ‘is a barren thing and produces nothing; but by compact transfers that profit that was the reward of one man’s labour into another man’s pocket’” (Lauderdale, p. 116).
“If this, however, was a just and accurate idea of the profit of capital, it would follow that the profit of stock must he a derivative, and not an original source of revenue; and capital could not therefore he considered as a source of wealth, its profit being only a transfer from the pocket of the labourer into that of the proprietor of stock” (pp. 157–58). (l.c., p. 116–17)* [Lauderdale, James Maitland, An Inquiry into the Nature and Origin of Public Wealth…, Edinburgh and London, 1804, pp. 157–58].
In so far as the value of the capital reappears in the product, it cannot he called a “source of wealth”. Here it is only as accumulated labour, as a definite quantity of materialised labour, that it adds its own value to the product.
Capital is productive of value only as a relation, in so far as it is a coercive force on wage-labour, compelling it to perform surplus-labour, or spurring on the productive power of labour to produce relative surplus-value. In both cases it only produces value as ||263| the power of labour’s own material conditions over labour when these are alienated from labour; only as one of the forms of wage—labour itself, as a condition of wage—labour. But in the sense commonly used by economists, as stored up labour existing in money or commodities, capital—like all conditions of labour, even the unpaid natural forces—functions productively in the labour-process, in the production of use-values, but it is never a source of value. It creates no new value, and only adds exchange-value to the product at all in so far as it has exchange-value, that is to say, only in so far as it itself consists in materialised labour-time, so that labour is the source of its value.
Lauderdale is right in this respect—that Adam Smith, after explaining the nature of surplus-value and of value, wrongly presents capital and land as independent sources of exchange-value. They are sources of revenue for their owners in so far as they are titles to a certain quantity of surplus-labour, which the labourer must perform over and above the labour-time required to replace his wages. Thus Adam Smith says for example:
“Wages, profit, and rent, are the three original sources of all revenue, as well as of all exchangeable value” ([Wealth of Nations, O.U.P. edition, p. 57], [Garnier], l. I, ch. VI).
Just as it is true that they are the three original sources of all revenue, so it is false that they also are the three original sources of all exchangeable value, since the value of a commodity is exclusively determined by the labour-time contained in it. After just presenting rent and profit as mere deductions from the value or from the labour added by the workman to the raw material, how can Adam Smith call them original sources of exchangeable value? (They can only be that in the sense that they set in motion the original source, that is to say, that they compel the workman to perform surplus-labour.) In so far as they are titles (conditions) for the appropriation of a part of the value, that is, of the labour materialised in the commodity, they are sources of income for their owners. But the distribution or appropriation of value is certainly not the source of the value that is appropriated. If this appropriation did not take place, and the workman received the whole product of his labour as his wage, the value of the commodities produced would be just the same as before, although it would not be shared with the landowner and the capitalist.
The fact that landed property and capital are sources of income for their owners, that is, give them the power to appropriate a part of the values created by labour, does not make them sources of the value which they appropriate. But it is equally wrong to say that wages are an original source of exchangeable value, although wages, or rather the continuous sale of labour-power, is a source of income for the labourer. It is the labour and not the wages of the labourer that creates value. Wages are only already existing value, or if we consider the whole of production, the part of the value created by the labourer which he himself appropriates; but this appropriation does not create value. His wages can therefore rise or fall without this affecting the value of the commodity produced by him. |263||
||265| <The following quotation should be added to what has been said above in regard to Adam Smith making the categories in which the value of the commodity is appropriated into sources of this value: After he has refuted the view that profit is only another name for the wages of the capitalist, or wages of labour of superintendence, he concludes:
“In the price of commodities, therefore, the profits of stock constitute a component part altogether different from the wages [of labour], and regulated by quite different principles” ([ibid., p. 54], [Garnier ] b. I, ch. VI, p. 99).
Adam Smith has just shown that the value added by the workmen to the materials is divided between them and the capitalists in the form of wages and profit; labour is therefore the only source of value, and the price of wages and the price of profits arise out of this source of value. But these prices themselves are not a source of value.// |265||
||263| Here we will leave entirely out of account how far Adam Smith regards rent as a constituent element of the price of commodities. For our present inquiry this question is all the more unimportant because he treats rent just as he treats profit, as a mere part of surplus-value, a deduction from the labour added by the labourer to the raw material, and consequently ||264| in fact also as a deduction from profit, inasmuch as the total unpaid surplus-labour is directly appropriated by the capitalist in his relations with labour; it does not matter under what categories he may later have to share this surplus-value with owners of the conditions of production—the landowner or the lender of capital. For the sake of simplicity we shall therefore speak only of wages and profit as the two categories into which newly-created value is divided.
Let us assume that twelve hours of labour-time are materialised in a commodity (leaving out of account the value of the raw material and instruments of labour consumed in it.) We can express its value as such only in money. Let us therefore assume that twelve hours of labour-time are likewise materialised in five shillings. Thus the value of the commodity is five shillings. By the natural price of commodities Adam Smith understands nothing but their value expressed in money. (The market-price of the commodity, of course, stands either above or below its value. Indeed, as I shall show later, even the average price of commodities is always different from their value. Adam Smith, however, does not deal with this in his discussion of natural price. Moreover, neither the market-price nor still less the fluctuations in the average price of commodities can be comprehended except on the basis of an understanding of the nature of value.)
If the surplus-value contained in the commodity is twenty per cent of its total value, or what amounts to the same thing, twenty-five per cent of the necessary labour contained in it, then this value of five shillings, the natural price of the commodity, can be resolved into four shillings wages and one shilling surplus-value (which here we will call profit, following Adam Smith). It would be correct to say that the magnitude of value of the commodity determined independently of wages and profit, or its natural price, can be resolved into four shillings wages (the price of the labour) and one shilling profit (the price of the profit). But it would he wrong to say that the value of the commodity arises from adding together or combining the price of the wages and the price of the profit which are regulated independently of the value of the commodity. If this were the case there would be absolutely no reason why the total value of the commodity should not be 8 shillings, 10 shillings, etc., according to whether one assumes the wages to be 5 shillings and the profit 3 shillings, and so on.
When Adam Smith is examining the “natural rate” of wages or the “natural price” of wages, what guides his investigation? The natural price of the means of subsistence required for the reproduction of labour-power. But by what does he determine the natural price of these means of subsistence? In so far as he determines it at all, he comes back to the correct determination of value, namely, the labour-time required for the production of these means of subsistence. But when he abandons this correct course, he falls into a vicious circle. By what is the natural price of the means of subsistence determined, which determine the natural price of wages? By the natural price of “wages”, of “profit”, of “rent”, which constitute the natural price of those means of subsistence as of all commodities. And so in infinitum. The twaddle about the law of demand and supply of course does not help us out of this vicious circle. For the “natural price” or the price corresponding to the value of the commodity is supposed to exist just when demand meets supply, that is, when the price of the commodity does not stand above or below its value as a result of fluctuations in demand and supply; when, in other words, the cost-price of the commodity (or the value of the commodity supplied by the seller) is also the price which the demand pays.
||265| But as we have said: In investigating the natural price of wages Adam Smith in fact falls back—at least in certain passages—on the correct determination of the value of the commodity. On the other hand, in the chapter dealing with the natural rate or the natural price of profit he gets bogged down, so far as the real problem is concerned, in meaningless commonplaces and tautologies. In fact, at first it was the value of the commodity which he saw as regulating wages and profit and rent. Then however he sets to work the other way round (which was closer to what empirical observation showed and to everyday ideas), and now the natural price of commodities is supposed to be calculated and discovered by adding together the natural prices of wages, profit and rent. It is one of Ricardo’s chief merits that he put an end to this confusion. We shall return to this point briefly when we are dealing with him.
Here there is only this further point to be noted: the given magnitude of value of the commodity, serving as a fund for the payment of wages and profit, appears empirically to the industrialist in the form that a definite market-price for the commodity holds good for a shorter or longer time, in spite of all fluctuations in wages.
It is necessary therefore to call attention to this peculiar train of thought in Adam Smith’s book: first the value of the commodity is examined, and in some passages correctly determined—so correctly determined that he traces out in general form the origin of surplus-value and of its specific forms, hence deriving wages and profit from this value. But then he takes the opposite course, and seeks on the contrary to deduce the value of commodities (from which he has deduced wages and profit) by adding together the natural prices of wages, profit and rent. It is this latter circumstance that is responsible for the fact that he nowhere correctly explains the influence of oscillations of wages, profit, etc., on the price of commodities—since he lacks the basis [for such an explanation]. |VI-265||
|VIII-364|| <Adam Smith, Value and Its Component Parts. Smith’s erroneous conception, see above, which he [develops] in spite of his originally correct view, is shown also in the following passage:
“Rent … enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit are the causes of high or low price; high or low rent is the effect of it” ( Wealth of Notions, b. I, ch. XI, [O.U.P. edition, p. 165]).// |VIII-364||
||VI-265| We come to another point, which is linked with the analysis of the price or value of the commodity (since the two are here still assumed to be identical). Let us assume that Adam Smith has calculated correctly—that is to say, the value of the commodity being given, he has correctly resolved it into the constituent parts in which this value is distributed among the various agents of production—but has not on the contrary tried to deduce value from the price of these constituent parts. Thus we shall leave this aside and also the one-sided way in which wages and profit are presented only as forms of distribution, and hence both as revenues in the same sense that their owners can consume. Apart from all this, Adam Smith himself raises a question, and this again shows his superiority over Ricardo—not that he finds the right solution to the question he raises, but that he raises it at all. ||266| What Adam Smith says is:
“These three parts” (wages, profit and rent) “seem either immediately or ultimately to make up the whole price of corn.”
(Of all commodities, Adam Smith here takes corn, because in some commodities rent does not enter into the price as a constituent part.)
“A fourth part, it may he thought, is necessary for replacing the stock of the farmer, or for compensating the wear and tear of his labouring cattle, and other instruments of husbandry. But it must be considered, that the price of an instrument of husbandry, such as a labouring horse, is itself made u p of the same three p arts; the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer, who advances both the rent of this land, and the wages of this labour.”
<Here profit appears as the primary form, which also includes rent.//
“Though the price of the corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself, either immediately or ultimately, into the same three parts of rent, labour and profit” ([Wealth of Nations, O.U.P. edition, p. 56], [Garnier] b. I, ch.VI).
(Here it is perfectly preposterous that all of a sudden he says labour instead of wages, while he does not put landed property or capital for rent and profit.)
But was it not equally obviously necessary to consider that just as the farmer included the price of the horse and the plough in the price of the corn, the horse breeder or the plough maker from whom the farmer bought the horse and the plough, would include in the price of the horse and the plough the price of the instruments of production (in the case of the former, perhaps another horse) and of raw materials such as feeding stuffs and iron, whereas the fund from which the horse breeder and plough maker paid wages and profit (and rent) consisted only in the new labour which they added in their sphere of production to the amount of value present in their constant capital? Since therefore Adam Smith admits, in relation to the farmer, that the price of his corn includes, besides the wages, profit and rent paid by him to himself and others, also a fourth constituent part which is different from these—the value of the constant capital he has used up, such as horses, agricultural implements, etc.—this must also hold good for the horse breeder and the manufacturer of agricultural implements; and it is of no avail for Adam Smith to send us from pillar to post. Incidentally, the example of the farmer is peculiarly unhappily chosen for sending us from pillar to post, for in this case the items of constant capital include one that does not at all need to be bought from somebody else, namely the seed; and does this constituent part of the value resolve itself into wages, profit or rent for anybody?
But for the present let us proceed, and see whether Smith sticks to his view that the value of every commodity is resolvable into one or all of the sources of revenue: wages, profit, rent; and can therefore, being destined for consumption, be devoured or at any rate used up in one way or another for personal use (not industrial consumption). First ||267| another preliminary point. In the case for example of gathering berries and such like it can be assumed that their value consists entirely of wages, although here also as a rule some appliances, such as baskets and so on, are required as means of labour. But examples of this kind are quite irrelevant here, where we are dealing with capitalist production.
To start with, once more the repetition of the view expressed in Book I, Chapter VI; Book II, Chapter II, (b. II, Garnier pp. 212–13) states:
“It has been shown … that the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land” [Wealth of Nations, O.U.P. edition, p. 313].
According to this, the whole value of any commodity resolves itself into revenue, and therefore falls to the share of one or another of the classes which live on this revenue, as a fund for consumption. Now since the total production of a country, each year for example, consists solely of the total of the values of the commodities produced, and since the value of each single one of these commodities is resolved into revenues, so also must their sum, the annual product of labour, the gross revenue, be consumable annually in this form. And so immediately after this passage Smith himself raises the point:
“Since this is the case, it has been observed, with regard to every particular ‘commodity, taken separately, it must he so with regard to all the commodities which compose the whole annual produce of the land and labour of every country, taken complexly. The whole price or exchangeable value of the annual produce, must resolve itself into the same three parts, and he parcelled out among the different inhabitants of the country, either as the wages of their labour, the profits of their stock, or the rent of their land” ([ibid., p. 313], [Garnier] l.c., p. 243).
This is in fact the necessary consequence. What is true of the individual commodity is necessarily true of the total sum of commodities. But quod non,* says Adam. He goes on:
“But though the whole value of the annual produce of the land and labour of every country is thus divided among, and constitutes a revenue to, ‘its different inhabitants; yet, as in the rent of a private estate, we distinguish between the gross rent and the neat rent, so may we likewise in the revenue of oil the inhabitants of a great country” ([ibid., p. 313], [Garnier] l.c., p. 213).
(But stop! Above he told us the direct opposite: in the case of the individual farmer we can distinguish a fourth part into which the value of his wheat for example resolves itself, namely the part which merely replaces the constant capital used up. This is directly true for the individual farmer. But when we go further into it, what is constant capital for him resolves itself at an earlier point, in another person’s hand before it became capital in his, into wages, profit, etc., in a word, into revenue. Therefore if it is true that commodities, considered in the hands of an individual producer, contain one part of the value which does not form revenue, then it is untrue for “all the inhabitants of a great country”, because what in one person’s hand is constant capital derives its value from the fact that it came from another person’s hand as the aggregate price of wages, profit and rent. Now he says the direct opposite.)
Adam Smith continues:
||268| “The gross rent of a private estate comprehends whatever is paid by the farmer; the neat rent, what remains free to the landlord, after deducting the expense of management, of repairs, and all other necessary charges; or what, without hurting his estate, he can afford to place in his stock reserved for immediate consumption, or to spend upon his table,” etc. … “His real wealth is in proportion, not to his gross, but to his neat rent” [ibid., pp. 313–14].
(In the first place, Smith brings in here something improper. What the farmer pays as rent to the landowner, just as what he pays as wages to the labourers, is like his own profit, part of the value or price of the commodity, which resolves itself into revenue. The question is however whether the commodity contains yet another constituent part of its value. He admits this here, As he should admit it in the case of the farmer, but that should not pre-vent the latter’s corn (i.e., the price or exchange-value of his corn) from being resolvable merely into revenue. Secondly, .a note in passing. The real wealth of which an individual farmer, considered as a farmer, can dispose, depends on his profit. But on the other hand, as owner of commodities he can sell the whole farm, or if the laud does not belong to him, he can sell all constant capital there is on it such as draught cattle, agricultural implements, etc. The value which he can realise in this way, therefore the wealth at his disposal, is conditioned by the value, that is the size of the constant capital belonging to him. However, he can only sell this again to another farmer, in whose hands it is not disposable wealth but constant capital. So we are still just where we were.)
“The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour” (previously we were told that this total—that is its value—resolves itself into wages, profits and rents, nothing but different forms of net revenue); “the neat revenue, what remains free to them, after deducting the expense of maintaining, first, their fixed, and, secondly, their circulating capital”; (so he now deducts instruments of labour and raw materials); “or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption.” (So now we learn that the price ox exchangeable value of the total stock of commodities, just as in the case of the individual capitalist, so also for the whole country, is resolvable into a fourth part which does not form a revenue fox anyone and cannot be resolved into wages, profit or rent.)
“The whole expense of maintaining the fixed capitol must evidently be excluded from the neat revenue of the society. Neither the materials necessary for supporting their useful machines and instruments of trade, their profitable buildings, etc., nor the produce of the labour necessary for fashioning those materials into the proper form, can ever make any pant of it. The price of that labour may indeed make a part of it; as the workmen so employed may place the whole value ||269| of their wages in their stock reserved for immediate consumption. But in other sorts of labour, both the price and the produce go to this stock; the price to that of the workmen, the produce to that of other people, whose subsistence, conveniences, and amusements, are augmented by the labour of those workmen” ([Wealth of Nations, O.U.P. edition, p. 314], [Garnier] l.c., pp. 214–15).*
Here Adam Smith once more shies away from the question which he has to answer—the question concerning the fourth part of the total price of the commodity, which is not resolved into either wages, profit or rent. First something that is quite wrong: with makers of machinery, as with all other industrial capitalists, the labour which fashions the raw materials of the machine, etc., into the proper form in fact consists of necessary and surplus-labour, and therefore resolves itself not only into the wages of the workmen, but also into the profit of the capitalist. But the value of the materials and the value of the instruments with which they are fashioned by the workmen into the proper form, is resolvable into neither the one nor the other. That products which are destined by their nature not for individual consumption but for industrial consumption do not enter into the stock reserved for immediate consumption, has nothing at all to do with it. Seed, for example (that portion of the corn which serves for sowing), by its nature could also enter into the stock for consumption; but by its economic function it must enter into the stock for production. But furthermore it is quite wrong to say with regard to the products destined for individual consumption that both the full price and the product enter into the stock for consumption. Linen, for example, when not used for sail-cloth or other productive purposes, all goes as a product into consumption. But not its price, for one part of this price replaces the Linen yarn, another part looms and so on, and only a part of the price of the linen is converted into revenue of any kind.
Just now Adam told us that the materials necessary for machines, profitable buildings, etc. “can never make any part of this neat revenue”, any more than the machines and so on fashioned from them can; presumably, therefore, they form a part of the gross revenue. Shortly afterwards, [Garnier] l. c., Chapter II of Book II, p. 220, he says on the contrary:
“The machines and instruments of trade, etc., which compose the fixed capital either of an individual or of a society, make no part either of the gross or of the neat revenue of either: so money…” [ibid., p. 317].
Adam’s twistings and turnings, his contradictions and wanderings from the point, prove that, once he had made wages, profit and rent the constituent component parts of exchangeable value or of the total price of the product, he had got himself stuck in the mud and had to get stuck.
Say, who tries to hide his dull superficiality by repeating in absolute general phrases Smith’s inconsistencies and blunders, says:
“If we consider a nation as a whole, it has no net product; for since the products have only a value equal to the costs of their production, when these costs are deducted, the whole value of the products is deducted… The annual revenue is the gross revenue” [Jean-Baptiste Say]. (Traité d’économie politique…, Troisième édition, Paris, 4811, t. II, p. 469.)
The value of the total annual products is equal to the quantity of labour-time materialised in them. ||270| If this aggregate value is deducted from the annual product, then in fact, so far as value is concerned, there remains no value, and by this deduction both the net revenue and the gross revenue have come to a final end But Say thinks that the annually produced values are annually consumed. Hence for the whole nation there is no net product but only a gross product. In the first place, it is not true that the annually produced values are annually consumed. This is not the case for a large part of the fixed capital. A large part of the annually produced values enters into the labour-process without entering into the process of the formation of value, that is to say without their total value being annually consumed. But in the second place: a part of the annual consumption of values consists of values that are used not as the stock for consumption, but as means of production, and which are returned to production (either in the same form or in the form of an equivalent), just as they originated in production. The second part consists of the va1ues which can enter into individual consumption over and above the first part. These form the net product.
Storch says of this trash of Say’s:
“It is […] evident that the value of the annual product is divided partly into capital and partly into profits, and that each of these parts of the value of the annual product goes regularly to purchase the product needed by the nation, as much for the purpose of preserving its capital as for renewing its consumable stock” (Storch, Cours d’économie politique, t. V: Considérations sur la nature du revenu national, Paris, 1824, pp. 134–35). “Let us then imagine a family which through its own labour is self-sufficing in all its needs, such as there are so many examples of in Russia .., is the revenue of such a family equal to the gross product coming from its land, its capital and its industry? Can it live in its barns or its stables, eat its seed and forage, clothe itself with its labouring cattle, amuse itself with its agricultural implements? According to Mr. Say’s thesis, all these questions would have to be answered in the affirmative” (l.c., pp. 135–36). “Mr. Say […] regards the gross product as the revenue of society; and from this he concludes that society can consume a value equal to this product” (l.c., p. 145). “The (net) revenue of a nation is not the excess of values produced over the totality of values consumed (as Say, the author, imagines it to be), but only [the excess of values produced] over the values consumed in order to produce.” Therefore, “if a nation consumes all this excess in the year it is produced, it consumes all its (net) revenue “ (l.c., p. 146). “If it is admitted that the revenue of a nation is equal to its gross product, so that no capital is to he deducted, then it must also he admitted that this nation may consume unproductively the entire value of its annual product, without in the least reducing its future revenue” (l.c., p. 147). “… the products which represent the [constant] capital of a nation are not consumable” (l.c., p. 150).
Ramsay (George)—An Essay on the Distribution of Wealth (Edinburgh, 1836)—remarks on the same subject, namely, Adam Smith’s fourth part of the total price, or what I call constant capital as distinct from the capital laid out in wages:
||271| “Mr. Ricardo,” he says, “[…seems to…] consider the whole produce as divided between wages and profits, forgetting the part necessary for replacing fixed capital” (p. 174, note).
By “fixed capital” Ramsay in fact means not only instruments of production, etc., but also the raw material—in short, what I call constant capital within each sphere of production. When Ricardo speaks of the division of the product into profit and wages, he always assumes that the capital advanced to production itself and consumed in it has been deducted. Nevertheless, on the main issue Ramsay is right. Because Ricardo does not make any further examination at all of the constant part of capital, and pays no attention to it, he makes gross errors and in particular confuses profit with surplus-value, besides errors in investigating oscillations in the rate of profit and so on.
Let us hear now what Ramsay himself says:
“In what manner is a comparison to be instituted between the product and * the stock expended upon it?…**. With regard to a whole nation … it is evident that all the various elements of the stock expended must he reproduced in some employment or another, otherwise the industry of the country could not go on as formerly. The raw material of manufactures, the implements used in them, as also in agriculture, the extensive machinery engaged in the former, the buildings necessary for fabricating or storing the produce, must all he parts of the total return of a country, as well as of the advances of*** […] its master-capitalists. Therefore, the quantity of the former may he compared with that of the latter, each article being supposed placed as it were beside that of a similar kind” (l.c., pp. 137–39). Now as regards the individual capitalist, since he does net replace his outgoings in kind, “by far the greater number must be obtained by exchange, a certain portion of the product being necessary for this purpose. Hence each individual master-capitalist comes to look much more to the exchangeable value of his**** product than to its quantity” (l.c., pp. 145–46). “The more the value of the product exceeds the value of the capital advanced, the greater will be his**** profit. Thus, then, will he estimate it, by comparing value with value, not quantity with quantity… Profit […] must rise or fall exactly as the proportion of the gross produce, or of its value, required to replace necessary advances, falls or rises […] the rate of profit must depend immediately upon two circumstances*****; first, the proportion of the whole produce which’ goes to the labourers; secondly, the proportion which must he set apart for replacing, either in kind or by exchange, the fixed capital” (l.c., pp. 146–48, passim).
<What Ramsay here says on the rate of profit has to be considered in Chapter III, on profit. It is important that he rightly lays stress on this element. On the one hand what Ricardo says is correct—that the cheapening of commodities which form constant capital (which Ramsay calls fixed capital) always depreciates a part of the existing capital. This is especially true of fixed capital proper—machinery, etc. It is of no advantage to the individual capitalist that the surplus-value rises in relation to the total capital, if the rise in this rate has been due to a fall in the total value of his constant capital (which he already had before the depreciation). But this is true only to a very small extent for that part of the capital which consists of raw materials or completed commodities (which do not form part of the fixed capital). The existing amount of these that can be depreciated in this way is always only an insignificant magnitude compared with the total production. It holds good for each capitalist only to a slight extent for that part of his capital expended as circulating capital. On the other hand—since the profit is equal to the proportion of the surplus-value to the total advanced capital, and since the quantity of labour that can be absorbed depends not on the value but on the quantity of raw materials and on the efficiency of the means of production—not on their exchange-value but on their use-value—it is clear that the greater the productivity of industry in the branches whose ||272| product enters into the formation of constant capital, the smaller the outlay of constant capital required to produce a given quantity of surplus-value; consequently the greater the proportion of this surplus-value to the whole advanced capital, and therefore the higher the rate of profit for a given amount of surplus-value.//
(What Ramsay considers doubly—replacement of product by product in the process of reproduction for the whole country, and replacement of value by value for the individual capitalist —are two aspects, both of which, in relation to the individual capital, must be taken into account in the circulation process of capital, which is at the same time its reproduction process.)
Ramsay did not solve the real difficulty which occupied Adam Smith’s attention and entangled him in all kinds of contradictions. Put plainly, it is this: The whole capital (as value) resolves itself into labour, is nothing but a certain quantity of materialised labour. The paid labour, however, is equal to the wages of the labourers, the unpaid labour is equal to the capitalists’ profit. So the whole capital must be resolvable, directly or indirectly, into wages and profit. Or is labour somewhere performed which consists neither of wages nor profit, and merely has the purpose of replacing the values used up in production which are, however, the conditions of reproduction? But who performs this labour, since all labour performed by the labourer is resolved into two quantities, one which maintains his own power to produce, and the other which forms the profit of capital?
To rid the problem of any spurious admixture, there is one more point to mention at the outset. When the capitalist transforms a part of his profit, of his revenue, into capital—into means of labour and materials of labour—both are paid for by that part of the labour which the labourer has performed gratis for the capitalist. Here we have a new quantity of labour forming the equivalent for a new quantity of commodities, commodities which as use-values consist of means of labour and materials of labour. This therefore enters into the accumulation of capital and presents no difficulty; we have here the growth of the constant capital beyond its previous limits, or the formation of new constant capital in excess of the amount of constant capital that already exists and must be replaced. The difficulty is the reproduction of the existing constant capital, not the formation of new constant capital in excess of what has to be reproduced. The new constant capital obviously originates in profit, and has existed for a moment in the form of revenue which is later transformed into capital. This part of the profit consists of the surplus labour-time, which, even without the existence of capital, must constantly be performed by society, in order to have at its disposal, so to speak, a fund for development, which the very increase of population makes necessary.
<There is a good explanation of constant capital, but only in so far as concerns its use-value, in Ramsay’s work, p. 166, which runs:
“… be the amount* of the gross return” (of the farmer, for example) “small or great, the quantity of it required for replacing what has been consumed in these different forms, can undergo no alteration whatsoever.** This quantity must he considered as constant, so long as production is carried on the same scale.”//
So we must first start from the fact: new formation of constant capital—as distinct from the reproduction of the existing constant capital—flows from profit as its source; that is, assuming on the one hand that the wages only suffice for the reproduction of labour-power, and on the other that the whole surplus-value is embraced under the category “profit”, since it is the industrial capitalist who directly appropriates the whole surplus-value, [irrespective of] to whom and where he has to surrender some of it later.
<“… the master* […] is the general distributor of the national revenue** […] who undertakes to pay […] to the labourers, the wages […]—to the” (moneyed) “capitalist, the interest […]—to the proprietor, the rent of his land” (Ramsay, [l.c. I, pp. 218–19).
In calling the whole surplus-value profit, we regard the capitalist: 1. as the person who immediately appropriates the whole surplus-value created; 2. as the distributor of that surplus-value between himself, the moneyed capitalist, and the proprietor of the soil.//
||VII-273| That this new constant capital arises from profit however means nothing but that it is due to a part of the surplus-labour of the labourers. Just as the savage, in addition to the time he needs for hunting, must necessarily use some time for making his bow; or just as in patriarchal agriculture, the peasant, in addition to the time spent in tilling the soil, must use a certain quantity of labour-time in producing most of his implements.
But the question here is: Who is it that labours in order to replace the equivalent of the constant capital already expended in production? The part of the labour which the labourer performs for himself replaces his wages, or, considered in relation to the whole of production, creates his wages. On the other hand, his surplus-labour which forms the profit is in part a consumption fund for the capitalist, and in part is transformed into additional capital. But the capitalist does not replace the capital already used up in his own production out of this surplus-labour or profit. <Were this the case, the surplus-value would not be a fund for new capital formation, but for the maintenance of the old capital.// But the necessary labour which forms the wages and the surplus-labour which forms the profit make up the whole working-day, and no other labour is performed in addition to these. (The contingency of the capitalist’s labour of superintendence is included in wages. In this aspect he is the wage-worker, even though not of another capitalist, yet of his own capital.) What then is the source, the labour, that replaces the constant capital?
The part of the capital expended in wages is replaced (leaving surplus-labour out of account) by new production. The labourer consumes the wages, but he adds as much new labour as he has destroyed of old labour; and if we consider the whole working class, without allowing the division of labour to confuse us, he reproduces not only the same value but the same use-values, so that, according to the productivity of his labour, the same value, the same quantity of labour, is reproduced in a greater or smaller quantity of these same use-values.
If we take society at any one moment, there exists simultaneously in all spheres of production, even though in very different proportions, a definite constant capital—presupposed as a necessary condition of production—that once for all belongs to production and must be given back to it, as seed must be given back to the land, It is true that the value of this constant part can fall or rise, depending on whether the commodities of which it is composed have to be reproduced at less or greater cost. This change in value, however, never alters the fact that in the process of production, into which it enters as a condition of production, it is a postulated value which must reappear in the value of the product. Therefore this change of value of the constant capital can here be ignored. In all circumstances it is a definite quantity of past, materialised labour, which passes into the value of the product as a determining factor. In order to bring out more clearly the nature of the problem, let us therefore assume that the production costs or the value of the constant part of the capital similarly remain unchanged, remain constant. It also makes no difference that for example the whole value of the constant capital may not pass into the products in a single year, but, as is the case with fixed capital, only passes into the aggregate products of a series of years. For the question here centres on that part of the constant capital which is actually consumed within the year, and therefore also must be replaced within the year.
The question of the reproduction of the constant capital clearly belongs to the section on the reproduction process or circulation process of capital—which however is no reason why the kernel of the matter should not be examined here.
||274| Let us first take the labourer’s wages. He receives, then, a certain sum of money in which say ten hours’ labour are materialised, if he works 12 hours for the capitalist. These wages are converted into means of subsistence. These means of subsistence are all commodities. Assume that the price of these commodities is equal to their value, But in the value of these commodities there is one component part which covers the value of the raw materials they contain and the means of production used up in them. All the component parts of the value of these commodities taken together, contain, however, like the wages spent by the labourer, only ten hours’ labour. Let us assume that two-thirds of the value of these commodities consists of the value of the constant capital they contain, and one-third, on the other hand, of the labour which has finally made the product into a finished article for consumption. Thus the labourer, with his ten hours of living labour, replaces two-thirds of constant capital and one-third of living labour (added to the article in the course of the year). If there were no constant capital in the means of subsistence, the commodities, which he buys, the raw material in them would have cost nothing, and no instrument of labour would have been required to make them. In that case there are two possibilities. Either the commodities, as before, would contain ten hours’ labour; then the labourer replaces ten hours’ living labour by ten hours’ living labour. Or the same quantity of use-values into which his wages are converted and which he needed for the reproduction of his. labour-power would have cost only 3 1/3 hours’ labour (with no instrument of labour and no raw material which is itself a product of labour). In this case the labourer has only to perform 3 1/3 hours’ necessary labour, and his wages would in fact fall to 3 1/3 [hours’] materialised labour-time.
Let us assume that the commodity is linen: 12 yards (the actual price does not matter here)=36 shillings or £1.16.0. Of this, let one-third be labour added, two-thirds for raw material (yarn) and wear and tear of machinery, Let the necessary labour-time= 0 hours; the surplus-labour therefore=2. Let one hour’s labour, expressed in money,= 1 shilling. In this case the 12 hours’ labour =12 shillings, wages=10 shillings, profit=2 shillings. Let us assume that labourer and capitalist spent the whole of their wages and profit, that is 12 shillings (the total value that has been added to the raw material and machinery, the whole quantity of new labour-time materialised in the transformation of yarn into linen), on linen itself as a consumption article. (And it is possible that subsequently more than one labour day will be spent on their own product.) A yard of linen costs 3 shillings. With the 12 shillings labourer and capitalist together—adding wages and profit together—can only buy four yards of linen. These four yards of linen contain 12 hours’ labour, of which however only 4 are newly-added labour, 8 representing the labour realised in the constant capital. With the 12 hours’ labour wages and profit together buy only one-third of their total product, because two-thirds of this total product consist of constant capital. The 12 hours’ labour are divisible into 4+8, of which 4 replace themselves, while 8—independently of the labour added in the weaving process—replace such labour as entered into the weaving process in already materialised form, as yarn and machinery.
In regard to that part of the product, of the commodity, which exchanges against or is bought by wages and profit as an article of consumption (or for any other purpose, even reproduction, for the purpose for which the commodity is bought makes no difference to the transaction), it is therefore clear that the part of the value of the product which is formed by the constant capital is paid for from the fund of newly-added labour, which is resolved into wages and profit. How much or how little of constant capital and how much or how little of the labour added in the last production process is bought by wages and profit combined, in what proportions the labour last added and in what proportions the labour realised in constant capital is paid for, depends on the original proportions in which they entered as component parts of value into the finished commodity. To simplify matters we assume the proportion of two-thirds labour realised in constant capital to one-third newly-added labour.
||275| Now two things are clear:
First. The proportion we have assumed in the case of the linen—that is, in the case where labourer and capitalist realise wages and profit in the commodities they have themselves produced, when they buy back a part of their product—this proportion remains the same when they expend the same quantity of value on other products. On the assumption that every commodity contains two-thirds of constant capital and one-third newly-added labour, wages and profit together could always only purchase one-third of the product. The 12 hours’ labour=four yards of linen. If these four yards of linen are transformed into money, then they exist as 12 shillings. If these 12 shillings are retransformed into some commodity other than linen, they buy a commodity of the value of 12 hours’ labour, of which 4 are newly-added labour, 8 labour realised in constant capital. Consequently, this proportion holds good generally provided the other commodities contain the same original proportion of labour last added and of labour realised in constant capital as linen.
Secondly. If the daily newly-added labour= 12 hours, of these 12 hours only 4 replace themselves—that is, the living, newly-added labour; while 8 pay for the labour realised in the constant capital. But who pays for the 8 hours of living labour which are not replaced by living labour? It is precisely the 8 hours of realised labour contained in the constant capital that are exchanged for the 8 hours of living labour.
There is not the slightest doubt, therefore, that the part of the finished commodity which is bought by wages and profit combined—which together however are nothing but the total quantity of labour newly added to the constant capital—is replaced in all its elements: the newly-added labour contained in this part as well as the quantity of labour contained in the constant capital. Further, there is not the slightest doubt that the labour contained in the constant capital has here received its equivalent from the fund of living labour newly added to it.
But now comes the difficulty. The total product of the 12 hours of weaving labour—and this product is absolutely different from what this weaving labour has itself produced—is 12 yards of linen, of the value of 36 hours’ labour or 36s. But wages and profit together, or the total labour-time of 12 hours can buy back only 12 of these 36 hours’ labour, or of the total product only 4 yards, not a piece more. What happens to the other 8 yards? (Forcade, Proudhon.)
First we note that the 8 yards represent nothing but the constant capital advanced. It has however been given a changed form of use-value. It exists as a new product, no longer as yarn, loom, etc., but as linen. These 8 yards of linen, just like the 4 others which have been bought by wages and profit, contain—considered as value—one-third labour added in the weaving process, and two-thirds pre-existing labour materialised in the constant capital. In the case of the 4 yards previously discussed one-third of the newly-added labour covered the weaving labour contained in these 4 yards, that is, covered itself; two-thirds of the weaving labour on the other hand covered the constant capital the 4 yards contained. But now we have it the other way round: in the 8 yards of linen, two-thirds of the constant capital covers the constant capital they contain, and one-third of the constant capital covers the newly-added labour.
What then happens to the 8 yards of linen, which have absorbed the value of the whole constant capital which has been maintained during the 12 hours’ weaving labour, or which went into the production process, but is now in the form of a product destined for direct, individual (not industrial) consumption?
The 8 yards belong to the capitalist. Were he to consume them himself, besides the two-thirds of a yard representing his profit, ||276| then he could not reproduce the constant capital contained in the 12 hours’ weaving process; in general—with regard to the capital contained in this 12 hours’ process—he is no longer able to function as a capitalist. He therefore sells the 8 yards of linen, transforming them into money to the amount of 24 shillings, or 24 hours’ labour. But here we come to the difficulty. To whom does he sell them? Into whose money does he transform them? But we shall return to this in a moment. Let us first have a look at the further process.
When he has transformed into money, sold, converted into the form of exchange-value, the 8 yards of linen—that is to say, the part of the value of his product which is equal to the constant capital he advanced—he buys again with it commodities of the same kind (with regard to their use-value) as those which originally composed his constant capital. He buys yarn and looms and so on. He divides the 24 shillings between raw materials and means of production, in the proportions in which these are required for the manufacture of new linen.
His constant capital is therefore, as a use-value, replaced by new products of the same labour as that of which it originally consisted. The capitalist has reproduced the constant capital. This new yarn, looms, etc., however (on the assumption with which we began) likewise consist of two-thirds of constant capital and one-third of newly-added labour. While the first 4 yards of linen (newly-added labour and constant capital) have thus been paid for exclusively by newly-added labour, these 8 yards of linen are replaced by their own newly-produced elements of production, which consist partly of newly-added labour and partly of constant capital. Hence it seems that at least a part of the constant capital exchanges for constant capital in another form. The replacement of the products is real, because at the same time as the yarn is being worked up into linen, flax is being worked up into yarn and flax seed into flax; in the same way, while the loom is wearing out, a new loom is being made; and similarly, while the latter is being manufactured, new wood and iron is being produced. The elements are produced in one sphere of production at the same time as they are being worked up in the others. But in all these simultaneous processes of production, although each of them represents a higher stage of the product, constant capital is simultaneously being used up in varying proportions.
The value of the finished product, the linen, therefore resolves itself into two parts, of which one repurchases the simultaneously produced elements of constant capital, while the other is expended on articles of consumption. For the sake of simplification no account is here taken of the retransformation of part of the profit into capital; that is, as throughout this inquiry, it is assumed that wages plus profit, or the total of the labour added to the constant capital, are consumed as revenue.
The only question left is: Who buys the part of the total product with whose value the elements of constant capital that have meanwhile been newly produced are again bought? Who buys the 8 yards of linen? We assume, in order to leave no loopholes, that it is a type of linen specially intended for individual consumption, and is not, like perhaps sail-cloth, for industrial consumption. Here also the purely intermediary operations of commerce—so far as they are only mediatory—must be left completely out of account. For example, if the 8 yards of linen were sold to a merchant, and even if they pass through the hands of not one but twenty merchants and are twenty times bought and resold, then at the twentiet