As for the reconversion of the variable capital of depart- ment I into the form of money, this capital exists, after the capitalists of I have invested it in wages, first in the form of the commodities produced by the laborers. The capital- ists have paid this capital in the form of money to these Simple Reproduction. 465 laborers as the price of their labor-power. The capitalists have to this extent paU for that portion of the value of their commodities, whick is equal to the variable capital ex- pended in the form of money. They are, for this reason, the? owners of this portion of the commodity-product. But that portion of the working class which is employed by them does not buy the means of production created by it; these laborers buy articles of consumption produced by de- partment II. Hence the variable capital advanced by the capitalists of I in the payment of labor-power does not re- turn to these capitalists directly. It passes by means of the purchases of the laborers of I into the hands of the capital- ist producers of the requirements of life of the laborer, 01 of other commodities accessible to them; in other words, it passes into the hands of capitalists of II. And not until these expend this money in the purchase of means of pro- duction does it return by this circuitous route into the hands of the capitalists of department I.
It follows that, on the basis of simple reproduction, the sum of the values of v plus s of the commodity-capital of I (and therefore a corresponding proportional part of the total product in commodities of I) must be equal to the constant capital c of department II, which is likewise dis- posed of as a proportional part of the entire product in com- modities of department II; or I (v + s) = II c.
IV. TRANSACTIONS WITHIN DEPARTMENT II. NECESSITIES OP LIFE AND ARTICLES OF LUXURY.
It remains for us to analyze the portion v plus s of the value of the commodities of department II. This analysis has nothing to do with the most important question which occupies our attention in this chapter, namely the question, to what extent the separation of the value of every individ- ual capitalist product in commodities into c plus v plus s applies also to the value of the entire annual product in com- modities, even though this separation may be based on dif- 466 Capital.
ferent forms. This question is solved by the transaction between I (v + s) and II c, and, on the other hand, by the analysis of the reproduction of I c in the annual product in commodities of I, to be analyzed later on.
Since II (v + s) exists in the natural form of articles of consumption; since, furthermore, the variable capital ad- vanced in the payment of the labor-power of the laborers is mostly spent by them for articles of consumption; and since, finally, the s-portion of the value of commodities, on the basis of simple reproduction, is practically spent as rev- enue for articles of consumption, it is evident at the first glance that the laborers of II buy back, with the money received as wages from the capitalists of II, a portion of their own product, corresponding in value to the money- value represented by these wages. The capitalist class of II thereby reconvert the money-capital advanced by them in the payment of labor-power into the form of money. It is as though they had paid the laborers in mere checks on commodities. As soon as the laborers realize on these checks by the purchase of a portion of the commodi- ties produced by them, but belonging to the capital- ists, these checks return into the hands of the capital- ists. Only, these checks do not merely represent value, but they are actually embodied in gold or silver. We shall ana- lyze later on this sort of reflux of variable capital by means of a process in which the laborer appears as a purchaser and the capitalist as a seller. Here, however, it is a question of a different point, which must be discussed on the occasion of the return of this variable capital to its point of departure.
Department II of the annual production of commodities consists of a great variety of lines of production, which may, however, be divided into two great subdivisions according to their products.
(a) Articles of consumption required for the mainten- ance of the laboring class, and to the extent that they are material requirements of life, also forming a portion of the consumption of the capitalist class, although they are fre- quently different in quality and value. We may, for our purposes, comprise this entire subdivision under the name of Simple Reproduction. 467 necessary articles of consumption, regardless of whether a product of this class, such as tobacco, is really a necessary article of consumption from the physiological standpoint or not. It is sufficient that it may be habitually in demand.
(b) Articles of luxury, which are consumed only by the capitalist class, being purchased only with the surplus-value, which never falls to the share of the laborer.
It is obvious that the variable capital advanced in the production of the commodities of the class (a) must flow back directly to that portion of the capitalist class of II (in other words the capitalists of Ila) who have produced these mater- ial requirements of life. They sell them to their own labor- ers to the amount of the variable capital paid to them in wages. This reflux takes place in a direct way, so far as this entire subdivision (a) of the capitalist class of department II is concerned, no matter how numerous may be the transac- tions between the capitalists of the various lines of industry interested in this department, by means of which the return- ing variable capital is distributed pro rata. These transac- tions are processes of circulation, whose means of circulation are supplied directly by the money expended by the labor- ers- It is different with subdivision lib. The entire por- tion of the values produced in this subdivision, lib (v + s), exists in the natural form of articles of luxury; that is to say, articles which the laborer can buy no more than the value of the commodities Iv existing in the form of means of production, notwithstanding the fact that both articles of luxury and means of production are the products of the working class. Hence the reflux by which the variable cap- ital advanced in this subdivision restores to the capitalist pro- ducers its value in the form of money cannot take place directly, but must be promoted indirectly, similarly as in the case of Iv.
Let us assume, for instance, that v stands for 500 and s also for 500, as they did in the case of the entire class II; but let the division of the variable capital and of the corre- syonding surplus-value be as follows: 'Subdivision a) Necessities of Life: v equal to 400 and s 468 Capital.
equal to 400; hence a total quantity of necessities of life valued at 400 v plus 400 s, equal to 800, in other words, Ila (Subdivision b) Articles of Luxury: Valued at 100 v plus 100 s, equal to 200, or lib (100 v + 100 s).
The laborers of lib have received 100 in money as pay- ment of their labor-power, or say 100 pounds sterling. They buy with this money articles of consumption from the cap- italists of Ila to the same amount. This class of capitalists buys with the same money 100 p. st. worth of the commod- ities of lib, thereby returning to the capitalists of lib their variable capital in the form of money.
In Ila there are available once more 400 v in money, in the hands of the capitalists, obtained by exchange with their laborers. Furthermore, the fourth part of the product rep- resenting surplus-value has been transferred to the laborers of lib, and lib (lOOv) have been purchased in the form of articles of luxury.
Now, assuming that the capitalists of Ila and lib divide the expenditure of their revenue in the same proportion be- tween necessities of life and luxuries — for instance, three- fifths for necessities and two-fifths for luxuries — the capital- ists of Ila will spend their revenue from surplus-value, amounting to 400 s, three-fifths, or 240, for their own pro- duct of necessities of life, and two-fifths, or 160, for articles of luxury. The capitalists of subdivision lib will divide their surplus-value of 100 s in the same way: three-fifths, or 60, for necessities, and two-fifths, or 40, for articles of lux- ury, these being produced and exchanged in their own sub- division.
The 160 in articles of luxury received by Ila for its sur- plus-value, pass into the hands of the capitalists of Ila in the following manner: Of the 400 s of Ila, we have seen that 100 were exchanged in the form of necessities of life for an equal amount of articles of luxury of lib, and furthermore 60, consisting of necessities of life, for 60 s of lib, consist- ing of luxuries. The total calculation then stands as fol- lows: Simple Reproduction. 468 (1) 400 v of (a) are consumed by the laborers of Ila, a pari of whose product is represented by that amount in necessi- ties of life; the laborers buy these necessities from the cap- italist producers of their own subdivision. These capitalists thereby recover 400 p. st., in money, which is the value of the variable capital paid by them to these same laborers. They can now buy more labor-power with it.
(2) One portion of the 400 s of (a), equal to the 100 v of (b); in other words, one-quarter of the surplus-value of (a) is exchanged for luxuries in the following way: The laborers of (b) received from the capitalists of their subdivision 100 p. st. in wages. With this amount these laborers bought one- quarter of the surplus-value of (a), in other words, commod- ities consisting of necessities of life. The capitalists of (a) buy with this same money articles of luxury to the same amount, which equals 100 v of (b), or one-half of the entire product in luxuries of (b). In this way the capitalists of (b) recover their variable capital in the form of money and are enabled to resume reproduction after having invested this amount once more in labor-power, since the entire con- stant capital of the whole department II has been reproduced by the exchange between I (v+s) and lie. The labor-power of the laborers of lib, the producers of articles of luxury, is under these circumstances, only saleable because the product created by them as an equivalent for their own wages is con- sumed by the capitalists of Ila. (The same applies to the sale of the labor-power of I, since the lie for which I (v + s) is exchanged, consists of both articles of luxury and necessities of life, and that which is reproduced by means of I (v + s) consists of the means of production of both luxuries and necessities.)
(3) We now come to the exchange between a and b, to the extent that it is merely a transaction between the capitalists of these two subdivisions. So far we have disposed of the variable capital (400) v and of one portion of the surplus- value (100) s in (a), and of the variable capital (100) v in (b). We had furthermore assumed that the average propor- 470 Capital.
tion of the expenditure of the capitalist revenue was in both classes two-fifths for luxuries and three-fifths for necessities. Apart from the 100 thus expended for luxuries, the entire department therefore still has to spend 60 for luxuries in (a) and the same proportion, or 40, in (b).
(Ha) is then divided into 240 for necessities and 160 for (lib) s is divided into 60 for necessities and 40 for lux- uries; 60 + 40 = 100s (lib). The last 40 are consumed by this class out of its own product (two-fifths of its surplus- value); the 60 for necessities are obtained by this class through the exchange of 60 of its surplus-value for 60 s of a.
We have, then, for the entire capitalist class of II, the fol- lowing situation (v plus s in subdivision (a) consisting of necessities, in subdivision (b) of luxuries): Considering a and b, each by itself, we have the transac- tion: If we retain, for the sake of simplicity, the same propor- tion between the variable and constant capital of each sub- division (which, by the way, is not at all necessary), we ob- tain for 400 v (a) a constant capital of 1600, and for 100 v (b) a constant capital of 400, and we have the following two subdivisions a and b in department II: Accordingly, 1600 of the 2000 He in articles of consump- Simple Reproduction. 471 tion, which are exchanged for 2000 I (v + s), are disposed of for means of production of necessities of life, and 400 for means of production of luxuries.
The 2000 I (v + s)., then, would be divided into (800 v + 800 s) I, for the 1600 means of production of necessities of life in section a, and (200 v + 200 s) I, for the 400 means of production of luxuries in b.
A considerable part of the instruments of labor, strictly so called, as well as of the raw and auxiliary materials, etc., is homogeneous for both departments. But so far as the transaction of the exchanges of the various portions of value of the total product I (v + s) are concerned, such a division would be immaterial. Both the above named 800 v of I and 200 v of I are realized by the spending of wages for articles of consumption 1000 c of II, and the money-capital advanced for this purpose is uniformly distributed, on its re- turn, among the capitalist producers of I, reproducing their variable capital in money at the rate advanced by them. On the other hand, so far as the realization of the 1000 s of I is concerned, the capitalists will likewise draw uniformly, in proportion to the magnitude of their sur- plus-value, 600 Ila and 400 lib out of the entire second half of He, equal to 1000; in other words, those who make up for the constant capital of Ila will draw 480, or three- fifths, out of 600 c of Ila, and 320, or two-fifths, out of 400 c of lib, a total of 800; while those who make up for the constant capital of lib will draw 120, or three-fifths out of 600 c of Ila and 80, or two-fifths out of 400 c of lib, a total That which is arbitrary in this case is the proportion of the variable to the constant capital of both I and II and so is the uniformity of this proportion for I and II and their subdivisions. As for this uniformity, it has been as- sumed merely for the sake of simplifying the matter, and it would not alter in any way the fundamental conditions of the problem and its solution, if we had assumed different proportions. However, the necessary result of all this, on the basis of simple reproduction, is the following: 472 Capital.
(1) That the new product in values created by the labor of one year in the natural form of means of production, divisible into v plus s, must be equal to the value of the constant capital c of the product in values created by the other part of annual labor, reproduced in the form of arti- cles of consumption. If it were smaller than lie, it would be impossible for II to reproduce its entire constant cap- ital; if it were greater, a surplus would remain unused. In either case, the assumption of simple reproduction would be violated.
(2) That in the case of annual product which is repro- duced in the form of articles of consumption, the variable capital v advanced in the form of money can be realized by its recipients, to the extent that they are laborers pro- ducing luxuries, only in that portion of the necessities of life which embodies for its capitalist producers primarily their surplus-value; so that v, invested in the production of luxuries, is equal in value to a corresponding portion of s produced in the form of necessities, and must be smaller than the whole of this s, which is s of Ila; and that, finally, the variable capital of the capitalist producers of luxuries returns to them in the form of money only by means of the realization of that v in this portion of s. This phenom- enon is quite analogous to the realization of I (v +s) in lie; only that in the second case, it is the v of lib which is realized in a portion of s of Ila of the same value. These conditions determine the proportions of the various quan- tities in every distribution of the total annual product, to the extent that it actually enters into the process of the an- nual reproduction promoted by circulation. I (v+s) can be realized only in lie, and lie can renew its function as a component part of productive capital only by means of this realization; in the same way, the v of lib can be realized only in a portion of s of Ila, and v of lib can only thus be reconverted into the form of money-capital. Of course, all this applies only to the extent that it is a result of the proc- ess of reproduction itself, so that the capitalists of ITb do not, for instance, take up money-capital for v by Simple Reproduction. 473 credit from others. So far as mere quantity is concerned, the transactions for the exchange of the various portions of the annual product can take place only in the way indicated above, so long as the scale and the conditions determining value remain stationary, and so long as these strict condi- tions are not altered by the commerce with foreign countries.
Now, if we were to say after the manner of Adam Smith that I(v + s) resolves itself in He, and He resolves itself into I(v + s), or, as he says more frequently and more ab- surdly, I(v + s) constitutes the component parts of the price (or value in exchange, as he has it) of He, and He consti- tutes the entire component part of the value of I(v + s), then we could and should say that the v of lib resolves itself into s of Ha, or the s of Ha into the v of lib, or the v of lib forms a component part of the s of Ila, or, vice versa, the surplus-value thus resolves itself into wages, or into variable capital, and the variable capital forms a component part of the surplus-value. This absurdity is indeed found in Adam Smith, since according to him wages are determined by the value of the necessities of life, and the values of these commodities in their turn by the value of the wages (variable capital) and surplus-value contained in them. He is so absorbed in the fractional parts, into which the product in values of one working day is divided on the basis of capitalist production — namely into v plus s — that he quite forgets that it is immaterial in the simple exchange of commodities, whether the equivalents existing in various natural forms consist of paid or unpaid labor, since their production costs in either case the same amount of labor; and that it is also immaterial, whether the commodity of A is a means of production and that of B an article of con- sumption, and whether one commodity has to serve as a component part of capital after its sale, while another passes into the fund for consumption and is consumed, according to Adam, as revenue. The use to which the buyer puts his commodity does not fall within the scope of the exchange of commodities, does not concern the circulation, and does 474 Capital.
not affect the value of the commodity. This fact is no! in the least affected by the truth that, in the analysis of the circulation of the annual social product as a whole, the definite use for which it is intended, the mode of consump- tion of the various component parts of that product, must be taken into consideration.
In mentioning the fact that the conversion of the v of lib into a portion of the s of Ila of the same value, and the further transactions between the s of Ila and the s of lib, it is by no means assumed that either the individual capi- talists of Ila and lib or their respective totalities divide their surplus-value in the same proportion between necessities of life and articles of luxury. The one may spend more in this consumption, the other more in that. On the basis of sim- ple reproduction we have merely assumed that a sum of values equal to the entire surplus-value is realized in a fund for consumption. The limits are thus given. Within each department, the one may do more in a, the other in b. But this may compensate itself mutually, so that the capitalist classes of a and b, each taken as a whole, each participate in the same proportion in both of them. The proportions of value — the proportional share of the two classes of pro- ducers, a and b, in the total value of the product of II — and with them a definite quantitative proportion between the departments of production supplying those products, are necessarily given in any concrete case; only a proportion chosen as an illustration is a hypothetical one. It does not alter the qualitative elements of the proposition, if we select another illustration; only the quantitative determinations would be altered. But if any circumstances cause an actual change in the proportional magnitude of a and b, then the conditions of simple reproduction would likewise be changed correspondingly.
Since the v of lib is realized in an equivalent portion of the s of Ila, it follows that to the extent that the portion of the annual product consisting of luxuries grows, absorb- ing an increasing share of the labor-power in the production Simple Reproduction: 475 of luxuries, to the same extent is the reconversion of variable capital advanced by lib into money conditioned on the prodigality of the capitalist class, who spend a considerable portion of their surplus-value in articles of luxury. It is by this means that the reconversion of this variable capital into money is promoted, and thereby the existence and reproduc- tion of the laborers employed in lib, by supplying them with the articles of consumption necessary for their life.
Every crisis momentarily lessens the consumption of lux- uries. It retards and checks the reconversion of the v of lib into money-capital, permitting it only partially and thus throwing a certain number of the laborers employed in the production of luxuries out of employment, while it on the other hand clogs by this means the sale of the necessary articles of consumption and reduces it. And there are, be- sides, the unproductive laborers who are dismissed at the same time, laborers who receive for their services a portion of the funds spent by the capitalists for luxuries (these laborers are themselves luxuries), and who take part to a very considerable extent in the consumption of necessities of life, etc. The reverse takes place in periods of prosperity, particularly during the times of bogus prosperity, in which the relative value of money, expressed in commodities, de- creases primarily for other reasons (without any other actual revolution in values), so that the price of commodities rises independently of their own value. It is not alone the con- sumption of necessities of life which increases at such times. The working class, actively re-inforced by its entire reserve army, also enjoys momentarily articles of luxury ordinarily out of its reach, articles which at other times constitute for the greater part "necessities" only for the capitalist class. This contributes to a rise in prices from this quarter.
It is purely a tautology to say that crises are caused by the scarcity of solvent consumers, or of a paying consump- tion. The capitalist system does not know any other modes of consumption but a paying one, except that of the pauper or of the "thief." If any commodities are unsaleable, it means that no solvent purchasers have been found for them, 476 Capital.