Sismondi, who occupies himself especially with the rela- tion of capital and revenue, and makes the peculiar formu- lation of this relation the specific difference of his Nouveaux Principes, did not say one scientific word, did not contrib- ute one atom toward a clarification of this problem.
Barton, Ramsay and Cherbuliez attempted to surpass the formulation of Smith. They failed, because they conceive the problem in a onesided way, by not making clear the distinction of constant and variable capital-value from fixed and circulating capital.
John Stuart Mill likewise reproduces, with his usual pom- posity, the doctrine handed down by Adam Smith to his followers.
As a result, the Smithian confusion of thought persists to this hour, and his dogma is one of the orthodox articles of faith of political economy.
Simple Reproduction 453 CHAPTER XX SIMPLE REPRODUCTION, I. THE FORMULATION OF THE QlT£STIOW.
If we study the annual function of social capital47^ -of the total capital whose fractional parts are the individual capi- tals, the movements of which are simultaneously their indi- vidual movements and links in the movements of the total capital — and its results, that is to say, if we study the prod- uct in commodities put forth by society during the year, then it must become apparent how the process of reproduc- tion of the social capital proceeds, what characteristics dis- tinguish this process of reproduction from that of an indi- vidual capital, and what characteristics are common to both. The annual product includes those portions of the social product which reproduce capital, the social reproduction, as well as those which go to the fund for consumption, which are consumed by capitalists and laborers, in other words, productive and individual consumption. It comprises the reproduction (maintenance) of the capitalist and working classes, and thus the reproduction of the capitalist character of the entire process of production.
It is evidently the circulation formula which we have to analyze, and the consumption necessarily plays a role in it. For the point of departure, C equal to C plus c, the commodity-capital, comprises the constant and variable capital as well as the surplus-value. Its movements, therefore, include both the individual and productive con- sumption. In the cycles M— C...P...C— M', and P...C— M' — C...P, the movement of the capital is the starting and fin- ishing point. And this implies consumption, for the com- modity, the product, must be sold. When these premises 37 From manuscript TT.
454 Capital.
are accepted, it is immaterial for the movement of the indi vidual capitals, what becomes of these commodities subse- quently. On the other hand, in the movement of C...C' the conditions of social reproduction are precisely different in this point, since it must be shown what becomes of every portion of value of this total product of C\ In this case, the total process of reproduction includes the process of con- sumption by way of the circulation quite as much as the process of reproduction of the capital itself.
This process of reproduction, now, must be considered for the purposes of our study both from the point of view of the reproduction of the value and of the substance of the indi- vidual component parts of C\ We cannot rest satisfied any longer, as we did in the analysis of the value of the product of the individual capital, with the assumption that the indi- vidual capitalist must first convert the component parts of his capital into money by the sale of his commodities, before he is able to reconvert it into productive capital by renewed purchase of the elements of production in the commodity market. Those elements of production, so far as they consist of things, constitute as much a portion of the social capital as the individual finished product, which is exchanged for them and reproduced by them. On the other hand, the movement of that portion of the social product in commodi- ties, which is consumed by the laborer in the expenditure of his labor-power, and by the capitalist in spending his sur- plus-value, does not only form an integral part of the move- ment of the total product, but also intermingles with the movements of the individual capitals, and this process can- not be explained by merely assuming it.
The question which we have to face immediately, is this: How is the value of the capital consumed in production re- produced out of the annual product, and how does the move- ment of this reproduction intermingle with the consumption of surplus-value by the capitalists and of wages by the labor- ers? We are dealing, then, first with reproduction on a sim- ple scale. It is furthermore assumed that products are ex- changed at their value, and that no revolution in the value of the elements of productive capital takes place. Should Simple Reproduction. 455 there be any divergence of prices from values, this would not exert any influence on the movements of social capital. On the whole, there is the same exchange of the same quantity of products, although the individual capitalists would be taking shares in it which would no longer be proportional to their respective advances and to the quantities of value pro- duced by each one. As for revolutions of value, they do not alter anything in the proportions of the elements of value of the various component parts of the total annual product, provided they are universally and uniformly dis- tributed. To the extent that they are limited and unevenly distributed, they are disturbances, which, in the first place, can be understood only as divergences from equal propor- tions of value; and, in the second place, given the law ac- cording to which one portion of the annual product repro- duces constant, and another variable capital, a revolution either in the value of the constant or variable capital would not alter this law. It would change merely the relative mag- nitude of the portions of value which serve in the one or the other capacity, seeing that other values would have taken the places of the original ones.
So long as we looked upon the production of value and the value of products from the point of view of individual capital, it was immaterial for the analysis which was the natural form of the product in commodities, whether it was, for instance that of a machine, of corn, or of looking glasses. It was always but a matter of illustration, and any line of production could serve that purpose. What we had to consider was the immediate process of production itself, which presented itself at every point as the process of some individual capital. So far as reproduction was concerned, it was sufficient to assume that that portion of the product in commodities, which represented capital in the sphere of cir- culation, found an opportunity to reconvert itself into its elements of production and thus into its form of productive capital. It likewise sufficed to assume that both the laborer and the capitalist found in the market those commodities for which they spend their wages and surplus-value. This merely formal manner of presentation does not suffice in the 456 Capital.
456 Capital.
study of the total social capital and of the value of its prod- ucts. The reconversion of one portion of the value of the product into capital, the passing of another portion into the individual consumption of the capitalist and working classes, form a movement within the value of the product itself which is created by the total capital; and this move- ment is not only a reproduction of value, but also of mate- rial, and is, therefore, as much conditioned on the relative proportions of the elements of value of the total social prod- uct as on its use-value, its material substance.38 Simple reproduction on the same scale appears as an ab- straction, inasmuch as the absence of all accumulation or reproduction on an enlarged scale is an irrelevant assump- tion in capitalist society, and, on the other hand, conditions of production do not remain exactly the same in different years (as was assumed). The assumption is that a social capital of a given magnitude produces the same quantity of value in commodities this year as last, and supplies the same quantity of wants, although the forms of the commodities may be changed in the process of reproduction. However, while accumulation does take place, simple reproduction is always a part of it and may, therefore, be studied in itself, being an actual factor in accumulation. The value of the annual product may decrease, although the quantity of use- values may remain the same; or, the value may remain the same, although the quantity of the use-values may decrease; or, the quantity of value and of use-values may decrease simultaneously. All this amounts to saying that reproduc- tion takes place either under more favorable conditions than before, or under more difficult ones, which may result in an imperfect reproduction. But all this can refer only to the quantitative side of the various elements of reproduction, not to the role which they are playing as a reproducing capi- tal, or as a reproduced revenue, in the entire process.
38 From manuscript VIII.
Simple Reproduction. 457 II. THE TWO DEPARTMENTS OF SOCIAL PRODUCTION.39 The total product, and therefore the total production, of society, is divided into two great sections: I. Means of Production, commodities having a form in which they must, or at least may, pass over into productive consumption.
II. Means of Consumption, commodities having a form in which they pass into the individual consumption of the capitalist and working classes.
In each of these two departments, all the various lines of production belonging to them form one single great line of production, the one that of the means of production, the other that of articles of consumption. The aggregate capital invested in each of these two departments of production con- stitutes a separate section of the entire social capital.
In each department, the capital consists of two parts: (1) Variable Capital. This capital, so far as its value is concerned, is equal to the value of the social labor-power employed in this line of production, in other words equal to the sum of the wages paid for this labor-power. So far as its substance is concerned, it consists of the active labor-power itself, that is to say, of the living labor set in motion by this value of capital.
(2) Constant Capital. This is the value of all the means of production employed in this line. These, again, are di- vided into fixed capital, such as machines, instruments of labor, buildings, laboring animals, etc., and circulating capital, such as materials of production, raw and auxiliary materials, half-wrought articles, etc.
The value of the total annual product created with the capital of each of the two great departments of production consists of one portion representing the constant capital c consumed in the process of production and transferred to the product, and of another portion added by the entire labor of the year. This latter portion, again, consists of one part re- producing the advanced variable capital v, and of another 39 Mainly taken from manuscript II; the diagrams from manuscript VIII.
458 Capital.
representing an excess over the variable capital, the surplus- value s. And just as the value of every individual commod- ity, so that of the entire annual product of each department consists of c plus v plus s.
The portion c of the value, representing the constant capi- tal consumed in production, is not identical with the value of the constant capital invested in production. It is time that the materials of production are entirely consumed and their values completely transferred to the product. But of the in- vested fixed capital, only a portion is consumed and its value transferred to the product. Another portion of the fixed capital, such as machines, buildings, etc., continues to exist and serve the same as before, merely depreciating to the extent of the annual wear and tear. This persistent portion of the fixed capital does not exist for us, when we consider the value of the product. It is a portion of the value of capi- tal existing independently beside the new value in com- modities produced by this capital. This was shown previ- ously in the analysis of the value of the product of some in- dividual capital (volume I, chapter VI). However, for the present we must leave aside the method of analysis em- ployed there. We saw in the study of the value of the prod- uct of individual capital that the value withdrawn from the fixed capital by wear and tear was transferred to the product in commodities created during the time of wear, no matter whether any portion of this fixed capital is reproduced in its natural form out of the value thus transferred or not. At this point, however, in the study of the social product as a whole and of its value, we must for the present leave out of consideration that portion of value which is transferred from the fixed capital to the annual product by wear and tear, unless this fixed capital is reproduced in natura during the year. In one of the following sections of this chapter we shall return to this point.
We shall base our analysis of simple reproduction on the following diagram, in which c stands for constant capital, Simple Reproduction. 459 v for variable capital, and s for surplus-value, the rate of surplus-value between v and s being assumed at 100 per cent. The figures may indicate millions of francs, marks, pounds sterling, or dollars.
I. Production of Means of Production.
Product in Commodities..4000 c+1000 v+1000 s=6000. These exist in the form of means of production.
II. Production of Means of Consumption.
These exist in articles of consumption.
Recapitulation: Total annual product in commodities: I. 4000 c+1000 v+1000 s=6000 means of production. II. 2000 c+ 500 v+ 500 s=3000 articles of consumption. Total value 9000, exclusive of the fixed capital persisting in its natural form, according to our assumption.
Now, if we examine the transactions required on the basis of simple reproduction, where the entire surplus-value is un- productively consumed, leaving aside for the present the me- diation of the money circulation, we obtain at the outset three great points of vantage.
(1) The 500 v, representing wages of the laborers, and 500 s, representing surplus-value of the capitalists, in depart- ment II, must be spent for articles of consumption. But their value exists in the articles of consumption to the amount of 1000, held by the capitalists of department II, which reproduce the, 500 v and represent the 500 s. The wages and surplus-value of department II, then, are ex- changed within this department for products of this same department. By this means, a quantity of articles of con- sumption equal to 1000 (500 v plus 500 s) disappear out of the total product of department II.
(2) The 1000 v and 1000 s of department I must likewise be spent for articles of consumption, in other words, for some of the products of department II. Hence they must be exchanged for the remaining 2000 c of constant value, which is equal in amount to them. Department II receives in re- 460 Capital.
turn an equal quantity of means of production, the product of I, in which the value of 1000 v and 1000 s of I is in- corporated. By this means, 2000 c of II and (1000 v + 1000 s) of I disappear out of the calculation.
(3) Nothing remains now but 4000 c of I. These consist of means of production which can be used up only in de- partment I. They serve for the reproduction of its consumed constant capital, and are disposed of by the mutual exchange between the individual capitalists of I, just as are the (500 v + 500 s) in II by an exchange between the capitalists and laborers, or between the individual capitalists, of II.
This may serve for the present to render easier the under- standing of the following statements.
III. THE TRANSACTIONS BETWEEN THE TWO DEPARTMENTS.
We begin with the great exchange between the two de- partments. The values of (1000 v + 1000 s), consisting of the natural form of means of production in the hands of their producers, are exchanged for 2000 c of II, for values consisting of articles of consumption in their natural form. The capitalist class of II thereby recon- verts its constant capital of 2000 from the form of articles of consumption into that of means of production of articles of consumption. In this form it may serve once more as a fac- tor in the labor-process as the value of constant capital in the process of self -expansion. On the other hand, the equiva- lent of the labor-power of I (1000 v) and of the surplus- value of the capitalists of I (1000 s) is realized in articles of consumption; both of them are converted from their nat- ural form of means of production into a natural form in which they may be consumed as revenue.
Now, this mutual transaction is accomplished by means of a circulation of money, which facilitates it as much as it renders its understanding difficult, but which is of funda- 40 Here manuscript VIII is resumed.
Simple Reproduction. 461 mental importance, because the variable portion of capital must ever resume the form of money, of money-capital con- verting itself from the form of money into labor-power. The variable capital must be advanced in the form of money in all lines of production carried on simul- taneously, regardless of whether they belong to depart- ment I or II. The capitalist buys the labor-power before it enters into the process of production, but does not pay for it except at stipulated terms, after it has been expended in the production of use-values. He owns, with the remainder of the value of the product, also that portion of it which is an equivalent for the money expended in the payment of labor-power, in other words, that portion of the value of the product which represents variable capital. By this portion of value the laborer has supplied the capital- ist with the equivalent for his own wages. But it is the recon- version of. commodities into money by their sale wThich re- stores to the capitalist his variable capital in the form of money-capital, which he may advance once more for the purchase of labor-power.
In department I, then, the aggregate capitalist has paid 1000 pounds sterling (I use the term pounds sterling merely to indicate that it is value in the form of money), equal to 1000 v, for the v-portion of the already existing value of product I, that is to say, of the means of production created by him. The laborers buy with these 1000 pounds sterling articles of consumption of the same value from the capital- ists II, thereby converting one-half of the constant capital II into money; the capitalists II, in their turn, buy with thestf 1000 pounds sterling means of production, valued at 1000, from the capitalists I; the variable capital-value of 1000 v, which consisted, in the natural form of the product of capi- talists I, of means of production, is thus reconverted for them into money and may serve anew in their hands as money- capital, which is transformed into labor-power, the most es- sential element of productive capital. In this way, their variable capital returns to them in the form of money, as a result of the realization on some of their commodity-capital.
462 Capital As for the money which is required for the exchange of the s portion of commodity-capital I for the second half of constant capital II, it may be advanced in various ways. In reality, this circulation implies innumerable small purchases and sales of the individual capitals of both departments, the money coming under all circumstances from these capital- ists, since we have already disposed of the money thrown into circulation by the laborers. It may be that one of the capitalists of department II buys, with the money-capital he has aside from his productive capital, means of production from capitalists of department I, or that, vice versa, one of the capitalists of department I buys, with funds reserved for individual expenses, not for capital investment, articles of consumption from capitalists of department II. A certain supply of money, to be used either for investment as capital or for expenditure as revenue, must be assumed to exist be- side the productive capital in the hands of the. capitalists, under all circumstances, as we have shown in section I and II. Let us assume — it is immaterial what proportion we se- lect for our purpose — that one-half of the money is advanced by the capitalists of department II in the purchase of means of production intended for the reproduction of their constant capital, while the other half is spent by the capitalists of de- partment I for articles of consumption. For instance, let department II advance 500 pounds sterling for the purchase of means of production from department I, thereby repro- ducing (inclusive of the 1000 pounds sterling coming from the laborers of department I) three-quarters of its constant capital in its natural form; department I buys with the 500 pounds sterling so obtained articles of consumption from II, thus completing for one-half of the s-portion of its commod- ity-capital the circulation c — m — c and realizing on its prod- uct in a supply of articles of consumption. By means of this second transaction, the 500 pounds sterling return to the hands of the capitalists of department II, in the form of money-capital existing beside its productive capital. On the other hand, department I expends money to the amount of 500 pounds sterling, in anticipation of the realization on the other half of the s-portion of its still unsold commodity- Simple Reproduction. 463 capital, for the purchase of articles of consumption from de- partment II. With the same 500 pounds sterling, depart- ment II buys from I means of production, thereby reproduc- ing in natural form its entire constant capital (1000 + 500 + 500 = 2000), while I realizes its entire surplus-value in articles of consumption. The entire transaction would rep- resent a transfer of commodities valued at 4000 pounds ster- ling with a circulation of 2000 pounds sterling in money. This last amount is sufficient only because we have assumed that the entire annual product is sold in bulk in a few large transactions. The important point is here that department II has not only reconverted its constant capital, which had been reproduced in the form of articles of consumption, into the form of means of production, but has also recovered the 500 pounds sterling which it had thrown into circula-i tion for the purchase of means of production; and that in the same way department I possesses once more not only its variable capital, which it had produced in the form of means of production, in the form of money-capital, readily convertible into labor-power, but also the 500 pounds ster- ling expended in the purchase of articles of consumption previously to the sale of the s-portion of its capital in anticipation of its realization. It recovers these 500 pounds ster- ling, not by this expenditure, but by the subsequent sale of one-half of the s-portion of its commodity-capital.
In both cases, it is not merely the constant capital of department II which is reconverted from the form of a pro- duct into the natural form of means of production, in which it can alone serve as capital; nor is it merely the variable portion of the capital of I which is reconverted into its money-form, nor the surplus-portion of the means of pro- duction of I which is transformed into its consumable form of revenue. It is also the 500 pounds sterling of money-capital, advanced by department II in the purchase of means of production previously to the sale of the corresponding por- tion of the value of its constant capital, which return to il; and the 500 pounds sterling expended by I for means of consumption previously to the realization of its surplus- 464 Capita!.
value. The fact that the money advanced by II at the ex- pense of the constant portion of its commodities, and by I at the expense of the surplus-portion of its commodities, returns to them is due to the circumstance that one class of capitalists throws 500 pounds sterling into circulation over and above the constant capital existing in the form of commodities in department II, and another class a like amount over and above the surplus-value existing in the form of commodities in department I. In the last analysis, the two departments have mutually paid one another in full by the exchange of equivalents in the form of their respective commodities. The money thrown into circula- tion by each department in excess of the value of their commodities, as a means of transacting the exchange of these commodities, returns to each one of them out of the circulation at the same rate in which they had contributed to it. Neither has grown any richer thereby. Department II possessed a constant capital of 2000 in the form of articles of consumption plus 500 pounds sterling in money; now it possesses 2000 in means of production plus 500 pounds sterling in money, the same as before; in the same way, department I possesses, as before, a surplus-value of 1000 (consisting of commodities in the form of means of production, now converted into a supply of articles of consumption) plus 500 pounds sterling. The general conclusion is this: The money which the industrial capitalists throw into circulation for the purpose of accomplishing the mutual exchange of their commodities, either in account with the constant value of the commodities, or in account with the surplus- value existing in the commodities, to the extent that it is spent as revenue, returns into the hands of the respective capitalists in proportion to the amount advanced by them for the circulation of money.