A may be clever enough to get the advantage of B or C without their being able to retaliate. A sells wine worth £40 to B, and obtains from him in exchange corn to the value of j650. a has converted his £40 into £50, has made more money out of less, and has converted his commodities into capital. Let us examine this a little more closely. Before the exchange we had £40 worth of wine in the hands of A, and £50 worth of corn in those of B, a total value of £90. After the exchange we have still the same total value of £90. The value in circula- tion has not increased by one iota, it is only distributed differ- ently between A and B. What is a loss of value to B is surplus- value to A; what is " minus " to one is " plus " to the other. The same change would have taken place, if A, without the formality of an exchange, had directly stolen the £10 from B. The sum of the values in circulation can clearly not be aug- mented by any change in their distribution, any more than the quantity of the precious metals in a country by a Jew selling a Queen Ann's farthing for a guinea. The capitalist class, as a whole, in any country, cannot over-reach themselves.
Turn and twist then as we may, the fact remains unaltered. If equivalents arc exchanged, no surplus-value results, and if non-equivalents are exchanged, still no surplus- value.^ Circula- tion, or the exchange of commodities, begets no value.^ 1 Destutt de Tracy, although, or perhaps because, he was a member of the Institute, held the ojDposite view. He says, industrial capitalists make profits because "they all sell for more than it has cost to produce. And to whom do they sell? In the first instance to one another." (1. c, p. 239.)
2 " L'echange qui se fait de deux valeurs egales n'augmente ni ne diminue la masse des valeurs subsistantes dans la societ6. L'echange de deux valeurs inegales...ne change rien non jdIus d la somme des valeurs sociales, bien qu'il ajoute £i la fortune de I'un ce qu'il 6te de la fortune de I'autre. " (J. B. Say, 1. c, 1. 1., pp. 344, 345. ) Say, not in the least troubled as to the consequences of this statement, borrows it, almost word for word, from the Physiocrats. The following examj^le will shew how Monsieur Say turned to account the writings of the Physiocrats, in his day quite forgotten, for ihe purpose of expanding the *' value " of his own. His most celebrated saying, " On n'achdte des produits qu'avec des produits " (1. c, t. II., p. 438) runs as follows in the original i)hysiocratic work: "Les productions ne se j>aient qu'avec des productions."
3 " Exchange confers no value at all upon products. " (F. Way land: " The Elements of Political Economy." Boston, 1853, p. 168.)
142 Capitalist Production.
The reason is now therefore plain why, in analysing the standard form of capital, the form under which it determines the economical organisation of modern society, we entirely left out of consideration its most popular, and, so to say, ante- diluvian forms, merchants' capital and money-lenders' capital.
The circuit M — C — M', buying in order to sell dearer, is seen most clearly in genuine merchants' capital. But the movement takes place entirely within the sphere of circulation. Since, however, it is impossible, by circulation alone, to account for the conversion of money into capital, for the formation of surplus-value, it would appear, that merchants' capital is an impossibility, so long as equivalents are exchanged;^ that, there- fore, it can only have its origin in the twofold advantage gained, over both the selling and the buying producers, by the merchant who parasitically shoves himself in between them. It is in this sense that Franklin says, " war is robbery, commerce is generally cheating."^ If the transformation of merchants' money into capital is to be explained otherwise than by the producers being simply cheated, a long series of intermediate steps would be necessary, which, at present, when the simple circulation of commodities forms our only assump- tion, are entirely wanting.
What we have said with reference to merchants' capital, applies still more to money-lenders' capital. In merchants' capital, the two extremes, the money that is thrown upon the market, and the augmented money that is withdrawn from the market, are at least connected by a purchase and a sale, in other words by the movement of the circulation. In money- lenders' capital the form M — C — M' is reduced to the two ex- tremes without a mean, M — M', money exchanged for more money, a form that is incompatible with the nature of money, and therefore remains inexplicable from the standpoint of the circulation of commodities. Hence Aristotle: " since chrema- 1 Under the rule of invariable equivalents commerce would be imi^ossible. (G. Opdyke: " A Treatise on Polit. Economy." New York, 1851, p. 66-69.) " The difference between real value and exchange value is based upon this fact, namely, that the value of a thing is different from the so-called equivalent given for it in trade, i.e., that this equivalent is no equivalent." (F. Engels, 1. c. p. 96.)
2 Benjamin Franklin: Works, Vol. II. edit. Sparks in "Positions to be examined concerning National Wealth," p. 376.
Contradictions in the Formida of Capital. 143 tistic is a double science, one part belonging to commerce, the other to economic, the latter being necessary and praiseworthy, the former based on circulation and with justice disapproved (for it is not based on Nature, but on mutual cheating), there- fore the usurer is most rightly hated, because money itself is the source of his gain, and is not used for the purposes for which it was invented. For it originated for the exchange of commodities, but interest makes out of money, more money. Hence its name {roxoi interest and offspring). For the be- gotten are like those who beget them. But interest is money of money, so that of all modes of making a living, this is the most contrary to nature."^ In the course of our investigation, we shall find that both merchants' capital and interest-bearing capital are derivative forms, and at the same time it will become clear, why these two forms appear in the course of history before the modern standard form of capital.
We have shown that surplus-value cannot be created by circulation, and, therefore, that in its formation, something must take place in the background, which is not apparent in the circulation itself^ But can surplus- value possibly originate ■anywhere else than in circulation, which is the sum total of all the mutual relations of commodity-owners, as far as they are determined by their commodities? Apart from circulation, the commodity-owner is in relation only with his own com- modity. So far as regards value, that relation is limited to this, that the commodity contains a quantity of his own labour, that quantity being measured by a definite social standard. This quantity is expressed by the value of the commodity, and since the value is reckoned in money of account, this quantity is also expressed by the price, which we will suppose to be £10. But his labour is not represented both by the value of the commodity, and by a surplus over that value, not by a price of 10 that is also a price of 11, not by a value that is greater than itself. The commodity owner can, by his labour, create value, ^" Profit, in the usual condition of the market, is not made by exchanging. Had it not existed before, neither could it after that transaction," (Eamsay, 1. c, p, 184.
144 Capitalist Production.
but not self-expanding value. He can increase the value of his commodity, by adding fresh labour, and therefore more value to the value in hand, by making, for instance, leather into boots. The same material has now more value, because it contains a greater quantity of labour. The boots have there- fore more value than the leather, but the value of the leather remains what it was; it has not expanded itself, has not, during the making of the boots, annexed surplus value. It is therefore impossible that outside the sphere of circulation, a producer of commodities can, without coming into contact with other commodity owners, expand value, and consequently con- vert money or commodities into capital.
It is therefore impossible for capital to be produced by cir- culation, and it is equally impossible for it to originate apart from circulation. It must have its origin both in circulation and yet not in circulation.
We have, therefore, got a double result.
The conversion of money into capital has to be explained on the basis of the laws that regulate the exchange of commodities, in such a way that the starting point is the exchange of equivalents.^ Our friend. Moneybags, who as yet is only an embryo capitalist, must buy his commodities at their value, must sell them at their value, and yet at the end of the pro- cess must withdraw more value from circulation than he threw 1 From the foregoing investigation, the reader will see that this statement only means that the formation of capital must be possible even though the price and value of a commodity be the same; for its formation cannot be attributed to any deviation of the one from the other. If prices actually differ from values, we must, first of all, reduce the former to the latter, in other words, treat the difference as accidental in order that the phenomena may be observed in their purity, and our observations not interfered with by disturbing circumstances that have nothing to do with the process in question. We know, moreover, that this reduction is no mere scientific i^rocess. The continual oscillations in prices, their rising and falling, compensate each other, and reduce themselves to an average price, which is their hidden regulator. It forms the guiding star of the merchant or the manufacturer in every undertaking that re- quires time. He knows that when a long period of time is taken, commodities are sold neither over nor under, but at their average price. If therefore he thought about the matter at all, he would formulate the problem of the formation of capital as follows: How can we account for the origin of capital on the supposition that prices are regulated by the average j)rice, i.e., ultimately by the value of the commodities? I say " ultimately," because average prices do not directly coincide with the values of commodities, as Adam Smith, Kicardo, and others believe.
The Buying and Selling of Labour-Power, 145 into it at starting. His development into a full-grown capi- talist must take place, both within the sphere of circulation and without it. These are the conditions of the problem. Hie Rhodus, hie salta!
CHAPTER VI.
THE BUYING AND SELLING OF LABOUR-POWER.
The change of value that occurs in the case of money intended to be converted into capital, cannot take place in the money itself, since in its function of means of purchase and of pay- ment, it does no more than realise the price of the commodity it buys or pays for; and, as hard cash, it is value petrified, never varying.^ Just as little can it originate in the second act of circulation, the re-sale of the commodity, which does no more than transform the article from its bodily form back again into its money-form. The change must, therefore, take place in the commodity bought by the first act, M — C, but not in its value, for equivalents are exchanged, and the commodity is paid for at its full value. We are, therefore, forced to the conclusion that the change originates in the use-value, as such, of the commodity, i.e., in its consumption. In order to be able to extract value from the consumption of a commodity, our friend, Moneybags, must be so lucky as to find, within the sphere of circulation, in the market, a commodity, whose use- value possesses the peculiar property of being a source of value, whose actual consumption, therefore, is itself an em- bodiment of labour, and, consequently, a creation of value.
The possessor of money does find on the market such a special commodity in capacity for labour or labour-power.
By labour-power or capacity for labour is to be understood the aggregate of those mental and physical capabilities exist- ing in a human being, which he exercises whenever he produces a use-value of any description.
1 " In the form of money capital is productive of no profit." (Ricardo:.
K 14^ Capitalist Production.
But in order that our owner of money may be able to find labour-power offered for sale as a commodity, various conditions must first be fulfilled. The exchange of commodities of itself implies no other relations of dependence than those which result from its own nature. On this assumption, labour-power can appear upon the market as a commodity, only if, and so far as, its possessor, the individual whose labour-power it is, offers it for sale, or sells it, as a commodity. In order that he may be able to do this, he must have it at his disposal, must be the untrammelled owner of his capacity for labour, i.e., of his person.^ He and the owner of money meet in the market, and deal with each other as on the basis of equal rights, with this difierence alone, that one is buyer, the other seller; both, therefore, equal in the eyes of the law. The continuance of this relation demands that the owner of the labour-power should sell it only for a definite period, for if he were to sell it rump and stump, once for all, he would be selling himself, converting himself from a free man into a slave, from an owner of a commodity into a commodity. He must constantly look upon his labour-power as his own property, his own commodity, and this he can only do by placing it at the disposal of the buyer temporarily, for a definite period of time. By this means alone can he avoid renouncing his rights of ownership over it.^ 1 In encyclopaedias of classical antiquities we find such nonsense as this — that in the ancient world capital was fuUy developed, " except that the free labourer and a system of credit was wanting." Mommsen also, in his "History of B-ome," commits, in this respect, one blunder after another.
2 Hence legislation in various countries fixes a maximum for labour-contracts. Wherever free labour is the rule, the laws regulate the mode of terminating this con- tract. In some States, particularly in Mexico (before the American Civil War, also in the territories taken from Mexico, and also, as a matter of fact, in the Danubian provinces till the revolution effected by Kusa), slavery is hidden \mder the form of jpeonage. By means of advances, repayable in labour, which are handed down from generation to generation, not only the individual labourer, but his family, Ijecome, de facto, the property of other persons and their families. Juarez abolished peonage. The so-called Emperor Maximilian re-established it by a decree, which, in the House of Eepresentativ^es at Washington, was aptly denounced as a decree for the re-introduction of slavery into Mexico. " I may make over to another the use, for a limited time, of my particular bodily and mental aptitudes and cajjabilities; because, in consequence of this restriction, they are impressed with a character of alienation with regard to me as a whole. But by the alienation of all my labour- time and the whole of my work, I should be converting the substance itself, in other words, my general activity and reality, my person, into the property of another. " (Hegel, " Philosophie des Rechts." Berlin, 1840, p. 104 § 67.)
The Buying and Selling of Labour- Power, 147 The second essential condition to the owner of money finding labour-power in the market as a commodity is this — that the labourer instead of being in the position to sell com- modities in which his labour is incorporated, must be obliged to offer for sale as a commodity that very labour-power, which exists only in his living self.
In order that a man may be able to sell commodities other than labour-power, he must of course have the means of production, as raw material, implements, &c. No boots can be made without leather. He requires also the means of subsistence. Nobody — not even " a musician of the future " — can live upon future products, or upon use-values in an un- finished state; and ever since the first moment of his appearance on the world's stage, man always has been, and must still be a consumer, both before and while he is producing. In a society where all products assume the form of commodities, these commodities must be sold after they have been produced; it is only after their sale that they can serve in satisfying the requirements of their producer. The time necessary for their sale is superadded to that necessary for their production.
For the conversion of his money into capital, therefore, the owner of money must meet in the market with the free labourer, free in the double sense, that as a free man he can dispose of his labour-power as his own commodity, and that on the other hand he has no other commodity for sale, is short of everything necessary for the realisation of his labour- power.
The question why this free labourer confronts him in the market, has no interest for the owner of money, who regards the labour market as a branch of the general market for com- modities. And for the present it interests us just as little. We cling to the fact theoretically, as he does practically. One thing, however, is clear — nature does not produce on the one side owners of money or commodities, and on the other men possessing nothing but their own labour-power. This relation has no natural basis, neither is its social basis one that is common to all Listorical periods. It is clearly the result of past historical development, the product of many economical 148 Capitalist Production.
revolutions, of the extinction of a whole series of older forms of social production.
So, too, the economical categories, already discussed by us, bear the stamp of history. Definite historical conditions are necessary that a product may become a commodity. It must not be produced as the immediate means of subsistence of the producer himself. Had we gone further, and inquired under what circumstances all, or even the majority of products take the form of commodities, we should have found that this can only happen with production of a very specific kind, capitalist production. Such an inquiry, however, would have been foreign to the analysis of commodities. Production and circulation of commodities can take place, although the great mass of the objects produced are intended for the immediate requirements of their producers, are not turned into commodi- ties, and consequently social production is not yet by a long way dominated in its length and breadth by exchange-value. The appearance of products as commodities presupposes such a development of the social division of labour, that the separation of use-value from exchange-value, a separation which first begins with barter, must already have been completed. But such a degree of development is common to many forms of society, which in other respects present the most varying historical features. On the other hand, if we consider money, its existence implies a definite stage in the exchange of commodities. The particular functions of money which it performs, either as the mere equivalent of commodities, or as means of circulation, or means of payment, as hoard or as universal money, point, according to the extent and relative preponderance of the one function or the other, to ver}^ different stages in the process of social production. Yet we know by experience that a circulation of commodities relatively primitive, suflfices for the production of all these forms. Other- wise with capital. The historical conditions of its existence are by no means given with the mere circulation of money and commodities. It can spring into life, only when the owner of the means of production and subsistence meets in the market with the free labourer selling his labour-power. And this one The Buying and Selling of Labour-Power, 149 historical condition comprises a world's history. Capital, therefore, announces from its first appearance a new epoch in the process of social production. ^ We must now examine more closely this peculiar commodity, labour-power. Like all others it has a value. ^ How is that value determined?
The value of labour-power is determined, as in the case of every other commodity, by the labour-time necessary for the production, and consequently also the reproduction, of this special article. So far as it has value, it represents no more than a definite quantity of the average labour of society incorporated in it. Labour-power exists only as a capacity, 5r power of the living individual. Its production consequently presupposes his existence. Given the individual, the produc- tion of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour- time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the mainten- ance of the labourer. Labour-power, however, becomes a reality only by its exercise; it sets itself in action only by working. But thereby a definite quantity of human muscle, nerve, brain, &c., is wasted, and these require to be restored. This increased expenditure demands a larger income. ^ If the owner of labour-power works to-day, to-morrow he must again be able to repeat the same process in the same conditions as regards health and strength. His means of subsistence must therefore be sufficient to maintain him in his normal state as 1 The capitalist epoch is therefore characterised by this, that labour-power takes in the eyes of the labourer himself the form of a commodity which is his property; his labour consequently becomes wage labour. On the other hand, it is only from this moment that the produce of labour universally becomes a commodity.
2 " The value or worth of a man, is as of all other things his price — that is to say, so much as would be given for the use of his power. " (Th. Hobbes: " Leviathan " in Works, Ed. Molesworth. Lond. 1839-44, v. iii., p. 76.)
3 Hence the Roman Villicus, as oveilooker of the agricultural slaves, received "more meagre fare than working slaves, because his work was lighter." (Th. Mommsen Rom. Geschichte, 1856, p. 810.)
150 Capitalist Production, a labouring individual. His natural wants, such as food, clothing, fuel, and housing, vary according to the climatic and other physical conditions of his country. On the other hand, the number and extent of his so-called necessary wants, as also the modes of satisfying them, are themselves the product of historical development, and depend therefore to a great extent on the degree of civilisation of a country, more particularly on the conditions under which, and consequently on the habits and degree of comfort in which, the class of free labourers has been formed. ^ In contradistinction therefore to the case of other commodities, there enters into the determination of the value of labour-power a historical and moral element. Nevertheless, in a given country, at a given period, the average quantity of the means of subsistence necessary for the labourer is practically known.