that are necessary to existence, and useful either to a household or the sta,te. *' True wealth (0 dXn^ivos ^kovroi) consists of such values in use; for the quantity of pos- sessions of this kind, capable of making life pleasant, is not unlimited. There is, however, a second mode of acquiring things, to which we may by preference and with correctness give the name of Chrematistic, and in this case there appear to be no limits to riches and possessions. Trade {h xacr»jX/x« is literally retail trade, and Aristotle takes this kind because in it values in use predominate) does not in its natm-e belong to Chrematistic, for here the exchange has reference only to what is necessary to themselves (the buyer or seller)." Therefore, as he goes on to show, the original form of trade was barter, but with the extension of the latter, there arose the necessity for money. On the discovery of money, barter of necessity de- veloped into xwrnXixhf into trading in commodities, and this again, in opposition to its original tendency, grew into Chrematistic, into the art of making money. Now Chrematistic is distinguishable from (Economic in this way, that " in the case of Chrematistic, circulation is the source of riches {-roLtiTixh;^prif/.ciTa>v...'hia XpvfcdTcuv ltaP>o\ris). And it appears to revolve about money, for money is the be- ginning and end of this kind of exchange (to yap vofjuffjia o-roix'-'tov xai -r'tpai rrj: tkWayTJs IffTiv). Therefore also riches, such as Chrematistic strives for, are un- limited. Just as every art that is not a means to an end, but an end in itself, has no limit to its aims, because it seeks constantly to approach nearer and nearer to that end, while those arts that pursue means to an end, are not boundless, since the goal itself imposes a limit upon them, so with Chrematistic, there are no bounds to its aims, these aims being absolute wealth. (Economic not Chrematistic has a limit...the object of the former is something different from money, of the latter the augmentation of money...By confounding these two forms, which overlap each other, some people have been led to look upon the preservation and increase of money ad infinitum as the end and aim of (Economic. " (Aristoteles De Rep. edit. Bekker. lib. I. c. 8, 9. passim.)
1 "Commodities (here used in the sense of use-values) are not the terminating object of the trading capitalist, money is his terminating object." (Th. Chalmers, On Pol, Econ. &c., 2nd Ed., Glasgow, 1832, p. 165, 16G.)
"II mercante non conta quasi per niente il lucro fatto, ma mira sempre al futuro.' (A. Genovesi, Lezioni di Economia Civile (1765), Custodi's edit, of Italian Economists. Parte Moderna t. viii. p. 139.)
The Geiteral FormiUa for Capital, 1 3 1 This boundless greed after riches, this passionate chase after exchange- value,! is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The never-ending augmentation of exchange-value, which the miser strives after, by seeking to save^ his money from circulation, is attained by the more acute capitalist, by constantly throwing it afresh into circulation.^ The independent form, i.e.y the money-form, which the value of commodities assumes in the case of simple circulation, serves only one purpose, namely, their exchange, and vanishes in the final result of the movement. On the other hand, in the circula- tion M — C — M, both the money and the commodity represent only different modes of existence of value itself, the money its general mode, and the commodity its particular, or, so to say, disguised mode.^ It is constantly changing from one form to the other without thereby becoming lost, and thus assumes an automatically active character. If now we take in turn each of the two different forms which self-expanding value suc- cessively assumes in the course of its life, we then arrive at these two propositions: Capital is money: Capital is com- modities.'^ In truth, however, value is here the active factor in a process, in which, while constantly assuming the form in turn of money and commodities, it at the same time changes in magnitude, differentiates itself by throwing off surplus- value from itself; the original value, in other words, expands spon- taneously. For the movement, in the course of which it adds surplus value, is its own movement, its expansion, therefore, is 1 " The inextinguishable passion for gain, the auri sacra fames, will always lead capitalists." (MacCuUoch: " The principles of Polit. Econ." London, 1830, p. 179.) This view, of course, does not prevent the same MacCulloch and others of his kidney, when in theoretical difficulties, such, for example, as the question of over-production, from transforming the same capitalist into a moral citizen, whose sole concern is for use-values, and who even developes an insatiable hunger for boots, hats, eggs, calico, and other extremely familiar sorts of use-values.
2 ^oZ,iiv is a characteristic Greek expression for hoarding. So in English to save has the same two meanings: sauver and epargner.
3 " Questo infinito che le cose non hanno in progresso, hanno in giro." (Galiani.)
4 *' Ce n'est pas la matiere qui fait le capital, mais la valgur de ces matieres." (J. B. Say: "Traite de I'Econ. Polit." 3 erne. ed. Paris, 1817, t. 1., p. 428.)
5 " Currency (!) employed in iDroducing articles...is capital." (MacLeod: "The Theory and Practice of Banking. " London, 1855, v. 1., ch. i., p. 55. ) " Capital is com- modities." (James Mill: " Elements of Pol. Econ." Lond., 1821, p. 74.)
132 Capitalist ProdtLctioii.
automatic expansion. Because it is value, it has acquired the occult quality of being able to add value to itself. It brings forth living offspring, or, at the least, lays golden eggs.
Value, therefore, being the active factor in such a process, and assuming at one time the form of money, at another that of commodities, but through all these changes preserving itself and expanding, it requires some independent form, by means of which its identity may at any time be established. And this form it possesses only in the shape of money. It is under the form of money that value begins and ends, and begins again, every act of its own spontaneous generation. It began by being £100, it is now £110, and so on. But the money itself is only one of the two forms of value. Unless it takes the form of some commodity, it does not become capital. There is here no antagonism, as in the case of hoarding, between the mone}^ and commodities. The capitalist knows that all commodities, however scurvy they may look, or however badly they may smell, are in faith and in truth money, inwardly circumcised Jews, and what is more, a wonderful means whereby out of money to make more money.
In simple circulation, C — M — C, the value of commodities attained at the most a form independent of their use-values, i.e., the form of money; but that same value now in the circulation M — C — M, or the circulation of capital, suddenly presents itself as an independent substance, endowed with a motion of its own, passing through a life- process of its own, in which money and commodities are mere forms which it assumes and casts off in turn. Nay, more: instead of simply representing the relations of commodities, it enters now, so to say, into private relations with itself. It differentiates itself as original value from itself as surplus- value; as the father differentiates himself from himself qua the son, yet both are one and of one age: for only by the surplus value of £10 does the £100 originally advanced become capital, and so soon as this takes place, so soon as the son, and by the son, the father, is begotten, so soon does their difference vanish, and they again become one, £110.
Value therefore now becomes value in process, money in pro- cess, and, as such, capital. It comes out of circulation, enters Contradictions in the Formula of Capital, 133 into it again, preserves and multiplies itself within its circuit, comes back out of it with expanded bulk, and begins the same round ever afresh.^ M — M', money which begets money, such is the description of Capital from the mouths of its first interpreters, the Mercantilists.
Buying in order to sell, or, more accurately, buying in order to sell dearer, M — C — M', appears certainly to be a form peculiar to one kind of capital alone, namely, merchants' capital. But industrial capital too is money, that is changed into com- modities, and by the sale of these commodities, is re-converted into more money. The events that take place outside the sphere of circulation, in the interval between the buying and selling, do not affect the form of this movement. Lastly, in the case of interest-bearing capital, the circulation M — C — M' appears abridged. We have its result without the intermediate stage, in the form M — M', " en style lapidaire " so to say, money that is worth more money, value that is greater than itself.
M — C — M' is therefore in reality the general formula of capital as it appears prima facie within the sphere of circulation.
CHAPTER V.
CONTRADICTIONS IN THE GENERAL FORMULA OF CAPITAL.
The form which circulation takes when money becomes capital, is opposed to all the laws we have hitherto investigated bearing on the nature of commodities, value and money, and even of circulation itself. What distinguishes this form from that of the simple circulation of commodities, is the inverted order of succession of the two antithetical processes, sale and purchase. How can this purely formal distinction between these processes change their character as it were by magic?
But that is not all. This inversion has no existence for two out of the three persons who transact business together. As capitalist, I buy commodities from A and sell them again to B, 1 Capital: " portion fructifiante de la richesse accumulee...valeur permanente, multipliante." (Sismondi: "Nouveaux principes de I'econ, polit.," t. 1., p. 88, 89.)
134 Capitalist Production.
but as a simple owner of commodities, I sell them to B and then purchase fresh ones from A. A and B see no difference between the two sets of transactions. They are merely buyers or sellers. And I on each occasion meet them as a mere owner of either money or commodities, as a buyer or a seller, and, what is more, in both sets of transactions, I am opposed to A only as a buyer and to B only as a seller, to the one only as (money, to the other only as commodities, and to neither of I them as capital or a capitalist, or as representative of anything I that is more than money or commodities, or that can produce | any effect beyond what money and commodities can. For me the purchase from A and the sale to B are part of a series. But the connexion between the two acts exists for me alone. A does not trouble himself about my transaction with B, nor does B about my business with A. And if I offered to explain to them the meritorious nature of my action in inverting the order of succession, they would probably point out to me that I was mistaken as to that order of succession, and that the whole transaction, instead of beginning with a purchase and ending with a sale, began, on the contrary, with a sale and was concluded with a purchase. In truth, my first act, the purchase, was from the standpoint of A, a sale, and my second act, the sale, was from the standpoint of B, a purchase. Not content f with that, A and B would declare that the whole series was I superfluous and nothing but Hokus Pokus; that for the future ( A would buy direct from B, and B sell direct to A. Thus the whole transaction would be reduced to a single act forming an isolated, non-complemented phase in the ordinary circulation of commodities, a mere sale from A's point of view, and from B's, a mere purchase. The inversion, therefore, of the order of succession, does not take us outside the sphere of the simple circulation of commodities, and we must rather look, whether there is in this simple circulation anything permitting an ex- pansion ' of the value that enters into circulation, and, con- sequently, a creation of surplus- value.
Let us take the process of circulation in a form under which it presents itself as a simple and direct exchange of commodities. This is always the case when two owners of commodities buy Contradictions in the Formida of Capital. 135 from each other, and on the settling day the amounts mutually owing are equal and cancel each other. The money in this case is money of account and serves to express the value of the commodities by their prices, but is not, itself, in the shape of hard cash, confronted with them. So far as regards use-values, it is clear that both parties may gain some advantage. Both part with goods that, as use-values, are of no service to them, and receive others that they can make use of. And there may also be a further gain. A, who sells wine and buys corn, possibly produces more wine, with given labour time, than \^ farmer B could, and B, on the other hand, more corn than.^J wine-grower A could. A, therefore, may get, for the same x ^ exchange value, more corn, and B more wine, than each w^ould ^v^ respectively get without any exchange by producing his own ' corn and wine. With reference, therefore, to use- value, there is good ground for saying that " exchange is a transaction by ] ^ ^ which both sides gain." ^ It is otherwise with exchange-value. ^^Vi " A man who has plenty of wine and no corn treats with a man who has plenty of corn and no wine; an exchange takes place between them of com to the value of 50, for wine of the same value. This act produces no increase of exchange-value either for the one or the other; for each of them already possessed, before the exchange, a value equal to that which he acquired by means of that operation." ^ The result is not altered by introducing money, as a medium of circulation, between the commodities, and making the sale and the purchase two distinct acts.^ The value of a commodity is expressed in its price before it goes into circulation, and is therefore a precedent condition of circulation, not its result.* Abstractedly considered, that is, apart from circu instances not immediately flowing from the laws of the simple circulation of commodities, there is in an exchange nothing (if we except "i "L'echange est une transaction admirable dans laquelle les deux contractants gagnent — toujours (!) " (Destutt de Tracy: "Traite de la Volonte et de ses effets." Paris, 182G, p. 68.) This work appeared afterwards as " Traite de I'Econ. Polit."
s " Que I'une de ces deux valeurs soit argent, ou qu'elles soient toutes deux mar. cbandises usuelles, rien de plus indifferent en soi." ("Mercier de la Eiviere," 1. c. p. 543. ) 4 " Ce ne sont pas les contractants qui prononcent sur la valeur; elle est decidee avant la convention." (" Le Trosne," p. 906.)
N V Capitalist Pi'od action, the replacing of one use-value by another) but a metamorphosis, NJa mere change in the form of the commodity. The same ; exchange value, i.e., the same quantity of incorporated social labour, remains throughout in the hands of the owner of the commodity, first in the shape of his own commodity, then in ^ the form of the money for which he exchanged it, and lastly, /'' in the shape of the commodity he buys with that money. ^^This change of form does not imply a change in the magnitude of the value. But the change, which the value of the commodity undergoes in this process, is limited to a change in its money form. This form exists first as the price of the com- modity offered for sale, then as an actual sum of money, which, however, was already expressed in the price, and lastly, as the price of an equivalent commodity. This change of form no more implies, taken alone, a change in the quantity of value, than does the change of a £5 note into sovereigns, half sove- reigns and shillings. So far therefore as the circulation of commodities effects a change in the form alone of their values, and is free from disturbing influences, it must be the exchange of equivalents. Little as Vulgar-Economy knows about the nature of value, yet whenever it wishes to consider the phenomena of circulation in their purity, it assumes that supply and demand are equal, which amounts to this, that their effect J is nil. If therefore, as regards the use- values exchanged, both buyer and seller may possibly gain something, this is not the case as regards the exchange values. Here we must rather say* " Where equality exists there can be no gain." ^ It is true, commodities may be sold at prices deviating from their values, but these deviations are to be considered as infractions of the laws of the exchange of commodities," which in its normal state is an exchange of equivalents, consequently, no method for increasing value.^ Hence, we see that behind all attempts to represent the 1 "Dove d egualit^ non d lucro." (Galiani, "Delia Moneta in Custodi, Parte 2 " L'ccliange devient d^savautageux pour I'une des parties, lorsque quelque chose efcrangere vient diminuer ou exagerer le i)rix; alors I'cgalite est bless6e, mais la lesion precede de cette cause et non de I'echange." (" Le Trosne," 1. c. p. 904.)
3 "L'echange est de sa nature un contrat d'egalite qui se fait de valeur pour valeur egale. II n'est done pas un moyen de s'enrichir, isuisque I'on donne autant que Ton resoit." C" Le Trosne," L c. p. 903.)
Contradictions in the Foi^mula of Capital, 137 1 Condillac: " Le Commerce et le Gouveriiemeut " (1776). Edit, Daire et Molinari in the "Melanges d'Econ. Polit." Paris, 1847, p. 267, etc.
2 LeTrosne, therefore, answers his friend Condillac with justice as follows: "Dans vine...society formee il n'y a pas de surabondant en aucun genre." At the same time, in a bantering way, he remarks: "If both the persons who exchange receive more to an equal amount, and part with less to an equal amount, they both get the same." It is because Condillac has not the remotest idea of the nature of exchange -value that he has been chosen by Herr Professor Wilhelm Koscher as a proper person to answer for the soundness of his own childish notions. See Roscher's "Die Grund- lagen der Nationalokonomie, Dritte Auflage," J 858.
T ^ circulation of commodities as a source of surplus-value, there lurks a quid pro quo, a mixing up of use-value and exchange- value. For instance, Condillac says: " It is not true that on an exchange of commodities we give value for value. On the contrary, each of the two contracting parties in every case, gives a less for a greater value...If we really exchanged equal values, neither party could make a profit. And yet, they both gain, or ought to gain. Why? The value of a thing consists solely in its relation to our wants. What is more to the one is less to the other, and vice versd...It is not to be assumed that we oficr for sale articles required for our own consumption...We wish to part with a useless thing, in order to get one that we need; we want to give less for more...It was natural to think that, in an exchange, value was given for value, whenever each of the articles exchanged was of equal value with the same quantity of gold...But there is another point to be considered in our calculation. The question is, whether we both exchange something superfluous for something necessary." ^ We see in this passage, how Con- dillac not only confuses use-value with exchange-value, but in a really childish manner assumes, that in a society, in which the production of commodities is well developed, each producer produces his own means of subsistence, and throws into circu- lation only the excess over his own requirements.^ Still, Condillac's argument is frequently used by modern economists, more especially when the point is to show, that the exchange of commodities in its developed form, commerce, is productive * V of surplus- value. For instance, " Commerce...adds value to ^ products, for the same products in the hands of consumers, are ja worth more than in the hands of producers, and it may strictly p nJ ^ ^ 138 Capitalist Production, be considered an act of production." ^ But commodities are not paid for twice over, once on account of their use- value, and again on account of their value. And though the use-value of a commodity is more serviceable to the buyer than to the seller, its money form is more serviceable to the seller. Would he otherwise sell it? We might therefore just as well say that the buyer performs " strictly an act of production," by converting stockings, for example, into money.
If commodities, or commodities and money, of equal exchange- value, and consequently equivalents, are exchanged, it is plain that no one abstracts more value from, than he throws into, circulation. There is no creation of surplus-value. And, in its normal form, the circulation of commodities demands the exchange of equivalents. But in actual practice, the process does not retain its normal form. Let us, therefore, assume an exchange of non-equivalents.
In any case the market for commodities is only frequented by owners of commodities, and the power which these persons! exercise over each other, is no other than the power of their] commodities. The material variety of these commodities is the material incentive to the act of exchange, and makes buyers and sellers mutually dependent, because none of them possesses the object of his own wants, and each holds in his hand the object of another's wants. Besides these material differences of their use- values, there is only one other difference between commodities, namely, that between their bodily form and the form into which they are converted by sale, the differ- ence between commodities and money. And consequently the owners of commodities are distinguishable only as sellers, those who own commodities, and buyers, those who own money.
Suppose then, that by some inexplicable privilege, the seller is enabled to sell his commodities above their value, what is worth 100 for 110, in which case the price is nominally raised 10%. The seller therefore pockets a surplus value of 10. But after he has sold he becomes a buyer. A third owner of commodities comes to him now as seller, who in this capacity also enjoys the privilege of selling his commodities 10% too 1 S. p. Newman: "Elements of Polit. Econ." Andover and New York, 1835, p. 175.
Contradictions in the Fornnula of Capital, 139 dear. Our friend gained 10 as a seller onl}?- to lose it again as a buyer.^ The nett result is, that all owners of commodities sell their goods to one another at 10% above their value, which comes precisely to the same as if they sold them at their true value. Such a general and nominal rise of prices has the same effect as if the values had been expressed in weight of silver instead of in weight of gold. The nominal prices of com- modities would rise, but the real relation between their values would remain unchanged.
Let us make the opposite assumption, that the buyer has the privilege of purchasing commodities under their value. In this case it is no longer necessary to bear in mind that he in his turn will become a seller. He was so before he became buyer; he had already lost 10% in selling before he gained 10% as buyer.^ Everything is just as it was.
The creation of surplus- value, and therefore the conversion of money into capital, can consequently be explained neither on the assumption that commodities are sold above their value, nor that they are bought below their value.^ The problem is in no way simplified by introducing irrele- vant matters after the manner of Col. Torrens: " Effectual demand consists in the power and inclination (!), on the part of consumers, to give for commodities, either by immediate or circuitous barter, some greater portion of...capital than their production costs." ^ In relation to circulation, producers and consumers meet only as buyers and sellers. To assert that the surplus-value acquired by the producer has its origin in the fact that consumers pay for commodities more than their value, 1 "By the augmentation of the nominal value of the produce...sellers not en. riched...since what they gain as sellers, they precisely expend in the quality of buyers." (" The Essential Principles of the Wealth of Nations," &c., London, 1797, 2 " Si I'on est force de donner pour 18 livres une quantit6 de telle production qui en valait 24, lorsqu'on employera ce m6me argent ^ acheter, on aura 6galement pour 18 1. ce que I'on payait 24." (" Le Trosne," 1. c. p. 897.)
8 " Chaque vendeur ne peut done parvenir h. rencherir habituellement ses marchan- dises, qu'en se soumettant aussi si payer habituellement plus cher les marchandises des autres vendeurs; et par la meme raison, chaque consommateur ne peut payer habituellement moins cher ce qu'il achete, qu'en se soumettant aussi ^ une diminu- tion semblable sur le prix des choses qu'il vend." (" Mercier de la Kividre, " 1. c. p. 555.)
4 K. Torrens: *' An Essay on the Production of Wealth." London, 1821, p. 349.
140 Capitalist Production, is only to say in other words: Tiie owner of commodities pos- sesses, as a seller, the privilege of selling too dear. The seller has himself produced the commodities or represents their pro- ducer, but the buyer has to no less extent produced the com- modities represented by his money, or represents their pro- ducer. The distinction between them is, that one buys and the other sells. The fact that the owner of the commodities, under the designation of producer, sells them over their value, and under the designation of consumer, pays too much for them, does not carry us a single step further.^ To be consistent therefore, the upholders of the delusion that surplus- value has its origin in a nominal rise of prices or in the privilege which the seller has of selling too dear, must assume the existence of a class that only buys and does not sell, i.e., only consumes and does not produce. The existence of such a class is inexplicable from the standpoint we have so far reached, viz., that of simple circulation. But let us anticipate. The money with which such a class is constantly making purchases, must constantly flow into their pockets, without any exchange, gratis, by might or right, from the pockets of the commodity- owners themselves. To sell commodities above their value to such a class, is only to crib back again a part of the money previously given to it.^ The towns of Asia Minor thus paid a 3^early money tribute to ancient Rome. With this money Rome purchased from them commodities, and purchased them too dear. The provincials cheated the Romans, and thus got back from their conquerors, in the course of trade, a portion of the tribute. Yet, for all that, the conquered were the really cheated. Their goods were still paid for with their own money. That is not the way to get rich or to create surplus-value.
Let us therefore keep within the bounds of exchange where 1 "The idea of profits being paid by the consumers, is, assuredly, very absurd. Who are the consumers? " (G.Ramsay: "AnEssay on the Distribution of Wealth." Edin- 2 " When a man is in want of a demand, does Mr. Malthus recommend him to pay some other person to take off his goods?" is a question put by an angry disciple of Ricardo to Malthus, who, like his disciple. Parson Chalmers, economically glorifies this class of simple buyers or consumers. (See ' ' An Inquiry into those principles re- specting the Nature of Demand and the necessity of Consumption, lately advocated by Mr. Malthus," &c. Lond., 1821, p. 55.)
Contradictions in the Formula of Capital, 141 sellers are also buyers, and buyers, sellers. Our difficulty may perhaps have arisen from treating the actors as personifications instead of as individuals.