440 Capital.
The money, which the laborer receives, is spent by him for the maintenance of his labor-power, or — looking upon the capitalist class and working class as an aggregate mass — is spent to preserve for the capitalist an instrument by means of which alone he can remain a capitalist.
The continuous purchase and sale of labor-power, then, perpetuates on one hand labor-power as an element of capi- tal, by the the grace of which it appears as the creator of commodities, use-values having an exchange-value, by means of which, furthermore, that portion of capital which buys labor-power is continually reproduced by its own product, so that the laborer himself creates the fund of capital out of which he is paid. On the other hand, the sale of labor- power becomes the ever renewed source for the maintenance of the laborer and makes of his labor-power that faculty through which he secures his revenue, by which he lives. Revenue in this case signifies nothing else but an appropri- ation of values by means of ever repeated sales of i* com- modity (labor-power), these values serving merely for the continual reproduction of the commodity to be sold. And to this extent Smith is right when he says that that portion of the value of the laborer's product, for which the capi- talist pays him an equivalent in the form of wages, becomes a source of revenue for the laborer. But this does not alter the nature or magnitude of this portion of value of the commodity any more than the value of the means of pro- duction is changed by the fact that they serve as capitalvalues, or the nature and magnitude of a straight line are changed by the fact that it serves as a basis for some tri- angle or as a diameter of some ellipse. The value of labor- power remains quite as independent as that of those means of production. This portion of the value of a commodity neither consists of a revenue as one of its independent con- stituent factors, nor does it resolve itself into revenue. Be- cause this value, ever renewed by the laborer, constitutes a source of revenue for him, that is no reason why his revenue, on the other hand, should be an element of the new values produced by him. The magnitude of his share in the new value created by him determines the volume of the value Former Discussions of the Subject. 441 of his revenue, not vice versa. The fact that this portion of the new value forms a revenue for him indicates merely what becomes of it, shows the character of its employment, and has no more to do with its formation than with that of any other value. The fact that my receipts are ten dol- lars a week changes nothing in the nature of the value of the ten dollars nor in the magnitude of their value. As in the case of every other commodity so in that of labor- power its value is determined by the labor necessary for its reproduction; that the quantity of this labor is determ- ined by the value of the necessary subsistence of the laborer, in other words, that it is equal to the labor required for the reproduction of his own life's conditions, is peculiar for this commodity (labor-power), but no more peculiar than the fact that the value of laboring cattle is determined by the subsistence necessary to produce this subsistence.
But it is this category of "revenue" which is to blame for all the confusion in Adam Smith over this question. The various kinds of revenue constitute with him the "com- ponent parts" of the annually produced new values of com- modities, while, vice versa, the two portions into which these values resolve themselves for the capitalist form sources of revenue — namely the equivalent of his variable capital advanced for the purchase of labor-power and the other portion of value, the surplus-value, which likewise belongs to him but did not cost him anything. The equiva- lent of the variable capital is once more advanced for labor- power and to that extent forms a revenue for the laborer in the shape of wages; the other portion, the surplus-value, which does not reproduce any advance of capital for the capitalist, may be spent by him in articles of consumption (whether necessary or luxuries), it may be consumed by him as a revenue, instead of forming capital-value of some kind. The first condition of this revenue is the value of the commodities itself, and its component parts differ from the point of view of the capitalist only to the extent that they are an equivalent for, or an excess over the variable portion of the value of the capital advanced by him. Both of them consist of nothing but labor expended and ma- 442 Capital.
terialized during the production of commodities. They con- sist of an expenditure, not of an income or revenue — an expenditure of labor.
After this reversion of facts, by which a revenue becomes the source of the value of commodities instead of the value of commodities being the source of revenue, the value of commodities has the appearance of being "composed" of various kinds of revenue; these revenues are determined independently of one another, and the total value of commod- ities is determined by the addition of the values of these reve- nues. But now the question is: How is the value of each of these revenues determined, which arc supposed to be the sources of the values of commodities? In the case of wages it is done, for wages are the value of the commodity labor- power, and this is determined (the same as that of all other commodities) by the labor required for its reproduction. But surplus-value, or as Adam Smith has it, profit and ground rent, how are they determined? Here Adam Smith has but empty phrases to offer. He either represents wages and surplus-value (or wages and profit) as component parts of the value, or price, of commodities, or, sometimes in the same breath, as component parts into which the price of commodities resolves itself; but this means precisely the reverse of his contention and makes of the value of com- modities the primary thing, different parts of which fall as different revenues to the share of different persons en- gaged in the productive process. This is by no means identical with the composition of value of these three "com- ponent parts." If I determine the magnitude of three dif- ferent straight lines independently and then form a fourth straight line out of these three lines as "component parts" equal to their sum, it is by no means the same process as if I have some given straight line before me and "resolve" it, so to say, into three different parts for some purpose. In the first case, the magnitude of the line changes throughout with the magnitude of the three lines whose sum it is; in the second case, the magnitude of three parts of the line is from the outset limited by the fact that they are parts of a line of given magnitude.
Former Discussions of the Subject. 443 However, if we keep in mind that part of the analysis of Smith which is correct, namely, that the value newly created by the annual labor and contained in the annual social pro- duct in commodities (the same as in every individual com- modity, or every daily, weekly, etc., product) is equal to the value of the variable capital advanced (in other words, equal to the value intended for the purchase of new labor- power) plus the surplus-value which the capitalist can realize in means of his individual consumption — simple reproduction being assumed, and other circumstances re- maining the same, if we keep furthermore in mind that Adam Smith confounds labor which creates values and is an expenditure of labor-power with labor which creates articles of use and is expended in a useful, appropriate, manner, then the entire conception amounts to this: The value of every commodity is the product of labor; hence this is also true of the value of the product of annual labor, or of the value of the annual product of society in commodi- ties. But since all labor resolves itself, (1), into necessary labor time, in which the laborer reproduces merely an equivalent for the capital advanced in the purchase of his labor-power, and, (2), into surplus-labor, by which he supplies the capitalist with a value for which the latter does not give any equivalent, in other words, a surplus-value, it follows that all value of commodities can resolve itself only into these two component parts, so that ultimately it forms a revenue for the laboring class in the form of wages, and for the capitalist class in the form of surplus- value. As for the constant value of the capital, in other words, the value of the means of production consumed in the production of the annual product, it cannot be explained how this value gets into that of the new product (unless we accept the phrase that the capitalist charges the buyer with it in the sale of his goods), but ultimately, seeing that the means of pioduction are themselves products of labor, this portion of value can consist only of an equivalent for variable capital and surplus-value, of a product of necessary labor and surplus-labor. The fact that the values of these means of production serve in the hands of their employers 444 Capital.
as capital- values does not prevent them from resolving them- selves "originally," even though in some other hands, if we go to the bottom of the matter, and at some previous time, into the same two portions of value, hence into two different sources of revenue.
One point is correct in this conception, namely, that the matter has a different aspect from the point of view of the movement of social capital, in other words, of the totali- ty of individual capitals, that it has from the standpoint of the individual capital, considered by itself, or from the standpoint of each individual capitalist. For these, the value of commodities resolves itself, (1), into a constant element (a fourth one, as Adam Smith says), and (2), into the sum of wages and surplus-value, or wages, profit, and ground rent. But from the point of view of society, the fourth element of Adam Smith, the constant value of capital, disappears.
(5). Recapitulation.
The absurd formula that the three revenues, wages, profit, and ground rent, form the three "component parts" of the value of commodities, is due in the case of Adam Smith to the more plausible idea that the value of commodities re- solves itself into these three parts. However, this is like- wise incorrect, even granted that the value of commodities is only divisible into an equivalent of the consumed labor- power and surplus-value created by it. But the mistake rests here again on a deeper and truer basis. The capitalist mode of production is conditioned on the fact that the pro- ductive laborer sells his own labor-power, as a commodity, to the capitalist, in whose hands it then serves merely as an element of his productive capital. This transaction, taking place in the circulation, — the sale and purchase of labor-power — does not only inaugurate the process of pro- duction, but also determines implicitly its specific character. The production of a use-value, and even that of a commodi- ty (for this can be done eventually by independent produc- tive laborers), is here only a means of producing absolute Former Discussions of the Subject. 445 or relative surplus-value for a capitalist. For this reason we have seen in the analysis of the process of production, that the production of absolute and relative surplus-value determines, (1), the duration of the daily labor-process, (2), the entire social and technical formation of the capitalist process of production. Within this process, there is realized the distinction between the mere conservation of value (the value of the constant capital), the actual reproduction of advanced value (an equivalent of labor-power), and the production of surplus-value, that is to say, of value for which the capitalist has neither advanced an equivalent nor will advance one subsequently.
The appropriation of surplus-value — a value in excess of the equivalent advanced by the 'capitalist — although it is inaugurated by the purchase and sale of labor-power, is a transaction taking place within the process of production itself, and forms an essential part of it.
The introductory transaction taking place in the circu- lation, the purchase and sale of labor-power, is itself con- ditioned on a distribution of the elements of production, which is the premise and prelude of the distribution of the social products, and implies the separation of labor-power, as >a commodity of the laborer, from the means of produc- tion, as the property of non-laborers.
However, this appropriation of surplus-value, or this sepa- ration of the production of values into a reproduction of advanced values 'and a production of new values (surplus- values) which do not offset any equivalent, does not alter in any way the substance of value itself nor the nature of the production of values. The substance of value is and remains nothing but expended labor-power — labor inde- pendent of the specific, useful, character of this labor — and the production of values is nothing but the process of this expenditure. A serf, for instance, expends his labor-power for six days, labors for six days, and the fact of this expendi- ture is not altered by the circumstances, that he may be working three days for himself, on his' own field, and three days for his lord, on the field of the latter. Both his volun- tary labor for himself and his compulsory labor for his lord 446 Capital.
446 Capital.
are equally labor; so far as this labor is considered with reference to the values, or even the useful articles, created by it, there is no difference in his six days of labor. The difference refers merely to the distinct conditions by which the expenditure of his labor-power during each half of his labor-time of six days is affected. The same applies to the necessary and surplus-labor of the wage worker.
The process of production ends in a commodity. The fact that labor-power has been expended in its creation now is manifest in its attribute of value; the magnitude of this value is measured by the quantity of labor expended in it; the value of a commodity resolves itself into nothing else and is not composed of anything else. If I have drawn a straight line of definite length, I have "produced" a straight line (true, only symbolically, as I know before- hand) by means of a certain mode of drawing which is determined by certain laws independent of myself. If I divide this line into three sections (which may correspond to a certain problem), every one of these sections remains a straight line, and the entire line, whose sections they are, does not resolve itself, by this division, into anything differ- ent from a straight line, for instance, a curve of some kind. Neither can I divide a line of a given magnitude in such a way, that the sum of its divisions is greater than the un- divided line itself; hence the magnitude of the undivided line is not determined by any arbitrary division of its parts. Vice versa, the relative magnitudes of these divisions are limited from the outset by the size of the line whose parts they are.
A commodity produced by a capitalist does not differ in itself from that produced by an independent laborer, or by a laboring commune, or by slaves. But in the present case, the entire product of labor as well as its value belong to the capitalist. Like every other producer, he has to convert his commodity by sale into money, before he can manipu- late it further; he must convert it into the form of the universal equivalent.* Let us look at the product in commodities before it is converted into money. It belongs wholly to the capitalist.
Former Discussions of the Subject. 447 On the other hand, as a useful product of labor, a use-value, it is entirely the product of a past labor-process. Not so its value. One portion of this value is but the value of means of production consumed in the production of the commodities and re-appearing in a new form; this value has not. been produced during the process of production of this commodity; for the means of production possessed this value before this process of production, independently of it; they entered into this process as the bearers of their value; it is only the external form of this value which has been renewed and changed. This portion of the value of the commodity serves the capitalist as an equivalent of the constant value of the capital advanced by him and con- sumed in the production of the commodity. It existed previously in the form of means of production; it exists now as a component part of the value of the newly-produced commodity. As soon as this commodity has been turned into money, the value then existing in the form of money must be reconverted into means of production, into its origi- nal form determined by the process of production and its function in it. Nothing is altered in the character of the value of a commodity by the function of this value as capital.
A second portion of the value of a commodity is the value of the labor-^power which the wage-worker sells to the capi- talist. It is determined, the same as that of the means of production, independently of the process of production into which labor-power is to enter, and it is fixed in a transaction of the circulation, the purchase and sale of labor-power, be- fore it goes to the process of production. By means of his function — the expenditure of labor-power — the wage-laborer produces a value of the commodity equal to the value which the capitalist has to pay him for the use of his labor-power. He gives this value to the capitalist in commodities, and is paid for it in money. The fact that this portion of the value of commodities is for the capitalist but an equivalent for the capital which he has to advance in wages does not alter in any way the truth that it is a value of commodities 448 Capital.
448 Capital.
newly created during the process of production and consist- ing of nothing but past expenditure of labor, the same as the surplus-value. Neither is this truth affected by the fact that the value paid by the capitalist to the laborer assumes the form of a revenue for the laborer, and that not only labor-power is continually reproduced thereby, but also the class of wage-laborers itself, and thus the basis of the entire capitalist production.
However, the sum of these two portions of value does not constitute all there is to the value of commodities. There re- mains an excess over both of them, the surplus-value. This, like that portion of value which reproduces the variable cap- ital advanced in wages, is a value newly created by the labor- er during the process of production — materialized labor. But it does not cost the owner of the entire product, the capitalist, anything. This circumstance permits the capitalist to con- sume the surplus-value entirely as his revenue, unless he has to give up some portions of it to other claimants — such as ground rent to land owners, in which case such portions constitute 'a revenue of third persons. This same circum- stance was also the compelling motive, which induced the capitalist to engage in the first place in the manufacture of commodities. But neither his original benevolent intention of securing some surplus-value, nor its subsequent expendi- ture as revenue, by him or others, 'affect the surplus-value as such. They do not impair the fact that it is coagulated, un- paid, labor, nor the magnitude of this surplus-value, things which are determined by entirely different conditions.
However, if Adam Smith wanted to occupy himself, as he did, with an analysis of the role of different constituent parts of value in the total process of reproduction, even while he was investigating the question of the value of com- modities, then it was evident that, while some particular portions of value served as n revenue, others served just as continually as capital — and, according to his logic, these would likewise have to be regarded as constituent parts of the value of commodities, or parts into which this value resolves itself.
Adam Smith identifies the production of commodities in Former Discussions of the Subject. 449 general with capitalist production; the means of production are to him from the outset "capital," labor is wage-labor, and therefore "the number of the useful and productive la- borers is always proportional to the quantity of capital stock which is employed in setting them to work." (Intro- duction, page 12.) In short, the various elements of the productive process — both objective and subjective ones — ap- pear from the first with the masks characteristic of the pro- cess of capitalist production. The analysis of the value of commodities, therefore, coincides with the reflection, to what extent this value is, on the one hand, a mere equivalent for invested capital, and, on the other, to what extent it forms "free" value, that is to say, value not reproducing any ad- vance of capital, or surplus-value. The proportions of value compared from this point of view transform themselves clandestinely into its independent "component parts," and finally into the "sources of all value." A further conse- quence of this method is the alternate composition or disso- lution of the value of commodities into revenues of various kinds, so that the revenues do not consist of values of com- modities, but rather the value of commodities consists of revenues. But the fact that the value of a 'commodity may serve as a revenue for this or that man does not change the nature of value as such any more than the fact that the value of a commodity as such, or of money as such, may serve as capital changes their nature. The commodity with which Adam Smith is dealing represents from the outset a com- modity-capital (which consists of the value of the capital, consumed in production plus a surplus-value), it is a com- modity produced by capitalist methods, a result of the capi- talist process of production. It would have been necessary, then, to analyze first this process, and this would have im- plied an analysis of the process of self-expansion and of the formation of value, which it includes. Since this process is in its turn conditioned on the circulation of commodities, its description requires also a previous and independent analysis of a commodity. However, even where Adam Smith hits "esoterically" upon the correct thing in a haphazard way, he refers to the formation of values only in the analy- 450 Capital.
sis of commodities, that is to say, in the analysis of commodity-capital.
III. THE ECONOMISTS AFTER SMITH.36 Ricardo reproduces the theory of Smith almost verbatim: "It is agreed that all products of a certain country are con- sumed, but it makes the greatest imaginable difference, whether they are consumed by those who reproduce another value, or by those who do not. When we say that revenue is saved up and added to the capital, we mean that the portion of revenue added to the capital is consumed by productive laborers, instead of unproductive ones." (Principles, Page In fact, Ricardo fully accepted the theory of Adam Smith concerning the separation of the price of commodities into wages and surplus-value (or variable capital and sur- plus-value). The points in which he differs from him are, 1) the composition of the surplus-value; Ricardo eliminates ground rent as one of its necessary elements; 2), Ricardo starts out from the price of commodities and dissects it into these component parts. In other words, the magnitude of value is his point of departure. The sum of its parts is as- sumed as given, it is the starting point, while Adam Smith frequently subverts this order and proceeds contrary to his deeper insight, by producing the quantity of value subse- quently by an addition of its component parts. . Ramsay makes the following remark against Ricardo: "Ricardo forgets that the total product is not only divided into wages and profits, but that a portion is also required for the reproduction of the fixed capital." (An Essay on the Distribution of Wealth. Edinburgh, 1836, page 174.) Ramsay means by fixed capital the same thing which I call constant capital, for he says on page 53: "Fixed capital exists in a form in which it contributes toward the produc- tion of the commodity in process of formation, but not toward the maintenance of laborers."
36 From here to the end of the chapter, an extract from manuscript II is presented.
Former Discussions of the Subject. 451 Adam Smith refuses to accept the logical outcome of his dissolution of the value of commodities, and therefore of the value of the annual product of social labor, into wages and surplus-value, or into mere revenue. This logical outcome would be that the entire annual product might be consumed in that case. It is never the original thinkers that draw the ebsurd conclusions. They leave that to the Says and Mac- Cullochs.
Say takes the matter indeed easy enough. That which is an advance of capital for one, is, or was, a revenue and net product for another. The difference between the gross and the net product is purely subjective, "and thus the total value of all products in a society is divided as revenue." (Say, Traite d'Economie Politique, 1817, II, page 69.) "The total value of every product is composed of the profits of the land owners, the capitalists, and the industrious peo- ple (wages figure here as profits des industrieux!) who have contributed toward its production. This makes the revenue of society equal to the gross value produced, not equal to the net products of the soil, as was claimed by a sect of economists" (the physiocrats). (Page 63.)
Among ethers, Proudhon has appropriated this discovery of Say.
Storch, however, who likewise accepts the doctrine of Smith in principle, finds that Say's application of it does not hold water. "If it is admitted, that the revenue of a nation is equal to its gross product, so that no capital" (that is to say, no constant capital) "is to be deducted, then it must also be admitted that this nation may consume unproduc- tively the entire value of its annual product, without in the least reducing its future revenue...The products which represent the" (constant) "capital of a nation are not consumable." (Storch, Considerations sur la nature du rev- enu national. Paris, 1824, page 150.)
However, Storch forgot to tell us how the existence of this constant portion of capital agrees with the analysis of prices by Smith, which he has accepted, and according to which the value of commodities consists only of wages and surplus- value, but not of any constant capital. He realizes only 452 Capital.
through Say that this analysis of prices leads to absurd re- sults, and his own opinion of it is "that it is impossible to dissolve the necessary price into its simplest elements." (Cours d' Economie Politique, Petersburg, 1815, II, page