But as for (Ig)s, department I g can always act as a buyer in this case. It throws its s in the shape of gold into circulation and withdraws from it in return articles of con- sumption of II c. The gold is there used in part as material, and thus serves as a real element of the constant portions c of productive capital II. And any portion of the gold not so employed becomes once more an element in the formation of a hoard in the role of that part of II s which retains the shape of money. We see, then, — aside from I c which we reserve for a later analysis — that even simple re- production, excluding accumulation strictly so called, namely reproduction, on an enlarged scale, inevitably in- cludes the accumulation, or hoarding, of money. 50 And as this is annually repeated, it explains the assumption from which we started in the analysis of capitalist produc- tion, namely that a supply of money corresponding to the exchange of commodities i* in the hands of the capitalists of departments I and II at the beginning of the reproduc- tion. Such an accumulation takes place even after deducting the amount of gold lost by the depreciation of money in circulation.
It is a matter of course, that the quantity of money accumulated on all sides increases in proportion to the ad- vancing age of capitalist production, and that the quantity annually added to this hoard by the production of new gold decreases proportionately, although the absolute quan- tity thus added may be considerable- We revert once more in general terms to the objection raised against Tooke and contained in the question: How is it possible that every capitalist draws a surplus-value in money out of the circula- tion, in other words, draws more money out of the circula- tion than he throws into it, seeing that the capitalist class must be the ultimate source which throws all money into circulation?
50 The analysis of the exchange of newly produced gold within the constant capital of department I is not contained in the manuscnot. — 552 Capital.
We reply by summarizing the statements made previously (in chapter XVII): (1 ) The only essential assumption, namely, that there is money enough available for the exchange of the various elements of annual reproduction, is not touched by the fact that a portion of the value of commodities consists of sur- plus-value. Take it that the entire production belonged to the laborers, so that their surplus-labor were done for them- selves, not for the capitalists, then the quantity of circulat- ing commodity-values would be the same and, other cir- cumstances remaining equal, would require the same amount of money for circulation. The question in either case is therefore only: Where does the money come from which serves as a medium of exchange for this quantity of commodity-values? It is not at all: Where does the money come from which monetizes the surplus-value?
It is true, to repeat it once more, that every individual commodity consists of c + v + s, and the circulation of the entire quantity of commodities therefore requires a certain quantity of money for the circulation of the capital c + v, and another for the circulation of s, the revenue of the capitalists. For the individual capitalist as well as for the entire capitalist class, the money in which they advance capital is distinct from the money in which they spend their revenue. Where does this last money come from? Simply from the entire quantity of money available in society, a portion of which circulates as the revenue of the capitalists. We have already seen in previous instances that every capi- talist establishing a new business recovers the money which he spent for his maintenance in the purchase of articles of consumption, by the process of converting his surplus-value into money, once that his business is fairly under way. But generally speaking the difficulty is due to two sources: In the first place, if we analyze only the circulation and the turn-over of capital, regarding the capitalist merely as a personification of capital, not as a capitalist consumer and sport, then we see indeed that he is continually thrf*w«i3r surplus-value into circulation as a part of his commodity- capital, but we never see money as a form of revenue in his Simple Reproduction. 553 hands. We never see him throwing money into circulation for the consumption of his surplus-value.
In the second place, if the capitalist class throw a certain amount of money into circulation in the shape of revenue, it seems as though they were paying an equivalent for this portion of the total annual product, so that this portion is then no longer surplus-value. But the surplus product in which the surplus value is incorporated does not cost the capi- talist anything. As a class, they possess and enjoy it gratu- itously, and the circulation of money cannot alter this fact. The alteration due to this circulation consists marely in the fact that every capitalist, instead of consuming his surplus- product in its natural form, a thing which is generally im- possible, draws commodities of all sorts up to the amount of his surplus-value out of the general stock of the annual surplus-product of society and appropriates them for his own use. But the mechanism of the circulation has shown that the capitalist class, while throwing money into the circulation for the purpose of spending their revenue, also recover this money from the circulation, so that they can continue the same process over and over; so that, as a class of capitalists, they always remain in possession of the amount of money necessary for the monetization of their surplus-value. Hence, seeing that the capitalist does not only withdraw his surplus-value from the market in the form of commodities for his individual consumption, but also the money which he has paid for these commodities, it is evident that he secures the commodities without paying an equivalent for them. They do not cost him anything, although he pays money for them. If I buy commodities for one pound sterling and recover this money from the seller by means of a surplus product which I got for nothing, it is obvious that I have received the commodities gratis- The continual repetition of this transaction does not alter the fact that I continually secure commodities and con- tinually remain in possession of my pound sterling, al- though I release it temporarily in the purchase of the com- modities. The capitalist continually retains this money as 554 Capital.
an equivalent of surplus-value that has not cost him any- thing.
We have seen that with Adam Smith the entire value of the social product resolves itself into revenue, into v +s, so that the constant capital-value is set down as zero. It follows necessarily that the money required for the circula- tion of the yearly revenue must also suffice for the circula- tion of the entire annual product, so that, in our illustra- tion, the money of 3000 required for the circulation of the articles of consumption of the same value must also suf- fice for the circulation of the entire annual product valued at 9000. This is indeed the opinion of Adam Smith, and it is repeated by Th. Tooke. This erroneous conception of the ratio of the quantity of money required for the realiza- tion of the revenue to the quantity of money required for the circulation of the entire social product is a necessary result of misapprehending, thoughtlessly conceiving the manner in which the various elements of material and value of the total annual product are reproduced and annually re- newed. It has already been refuted by us.
Let us listen to Smith and Tooke themselves.
Smith says in Book II, chapter 2: "The circulation of every country may be divided into two parts: the circulation of the merchants among themselves and the circulation be- tween merchants and consumers. Although the same pieces of money, paper or metal, may be used now in the one, now in the other circulation, both of them nevertheless take place continually side by side, and each one of them requires therefore a certain quantity of money of this or that kind in order to keep moving. The value of the commodities circulating among the various merchants can never exceed the value of the commodities circulating between merchants and consumers; for whatever the merchants may buy must be sold ultimately to the consumers. As the circulation between the merchants is wholesale, it generally requires a rather large sum for every exchange. The circulation between merchants and consumers, on the other hand, is mostly retail and requires often but very small sums of monev: one shilling, or even half penny, suffices sometimes.
Simple Reproduction. 555 But small sums circulate much more rapidly than large ones. * * * * Although the annual purchases of all con- sumers are therefore at least" — this at least is rich — "equal in value to those of the merchants, they may nevertheless be effected, as a rule, with a much smaller quantity of money," etc.
Th. Tooke remarks to this passage of Adam Smith (in "An Inquiry into the Currency Principle," London, 1844, pages 34 to 36): "There cannot be any doubt that the distinction here made is essentially correct. * * * * The ex- change between merchants and consumers includes also the payment of wages, which are the principal means of the con- sumers. * * * * All transactions between merchant and mer- chant, that is to say, all sales from the producer or importer, through all gradations of intermediate processes of manu- facture, etc., down to the retail merchant or export mer- chant, may be dissolved into movements transferring capital. But transfers of capital do not necessarily imply, nor indeed carry actually with them, in the great number of exchanges, a real cession of bank notes or coin — I mean a substantial, not a fictitious, cession — at the time of transfer. * * * * The total amount of exchanges between merchants and mer- chants must in the last instance be determined and limited by the amount of exchanges between merchants and con- sumers."
If this last sentence stood by itself, one might think that Tooke stated simply the fact of a ratio between the ex- changes of merchants and merchants and those of mer- chants and consumers, in other words, a ratio between the value of the total annual revenue and the value of the capital with which it is produced. But this is not the case. He explicitly endorses the view of Adam Smith. A special criticism of his theory of circulation is therefore super- fluous.
(2) Every industrial capital, when beginning its career, throws at one single investment enough money into circula- tion to cover its entire fixed element, which it recovers but gradually in the course of years by the sale of its annual products. Thus it throws at first more money into circula- 556 Capital.
tion than it recovers from it. This is repeated at every re< newal of its entire capital in a natural form. It is repeated every year in a certain number of enterprises whose fixed capital must be renewed in its natural form. It is repeated in fragments at every repair, every partial renewal of fixed capital. While more money is on the one hand withdrawn from circulation than is thrown into it, the opposite takes place on the other hand.
In all lines of industry whose period of production — as distinguished from the working period — extends over a long term, money is continually thrown into circulation during this period by the capitalist producers, either in payment for labor-power employed, or in the purchase of means of production to be consumed. Means of production are thus directly withdrawn from the commodity market, and articles of consumption jither indirectly by the laborers spending their wages, or directly by the capitalists, who do not by any means stop consuming, although they do not immediately throw any equivalent on the market, in the shape of com- modities. During this period, the money thrown by them into circulation serves for the conversion of the value of com- modities, including the surplus value embodied in them, into money. This element becomes very important in an advanced stage of capitalist production in the case of lengthy enterprises, such as are undertaken by stock companies, for instance the construction of railways, canals, docks, large municipal buildings, iron ships, drainage of land on a large scale, etc.
(3) While the other capitalists, aside from the invest- ment of fixed capital, draw more money out of the circula- tion than they threw into it in the purchase of labor-power and the circulating elements of capital, the gold and silver producing capitalists, on the other hand throw only money into the circulation, aside from the precious metals which serve as raw material, while they withdraw only commod- ities from it. The constant capital, with the exception of the depreciated portion, furthermore the greater portion of the variable capital and the entire surplus-value, with the exception of the hoard which is eventually accumulated in Simple Reproduction. 557 the hands of these capitalists, is thrown into the circulation as money.
(4) On one side, various things circulate as commodities which were not produced during the current year, such as real estate, houses, etc., furthermore products whose period of production extends over more than one year, such as cattle, wood, wine, etc. It is important to emphasize in this respect that aside from the quantity of money required for the immediate circulation, there is always a certain quantity in a latent state which may enter into service when so re- quired. Furthermore, the value of such products circulates often in fractions and gradually, for instance, the value of houses in the rents of a number of years.
On the other hand, not all movements of the process of reproduction are promoted by the circulation of money. The entire process of production, once that its elements have oeen purchased, is excluded from it. Furthermore all prod- ucts, which the producer consumed directly in his own individual or productive consumption- Under this head be- longs also the board of agricultural laborers.
The quantity of money, then, which circulates the annual product, exists in society, having been gradually accumu- lated. It does not belong to the values produced during the current year, with the exception of the gold used for making good the loss of depreciated money.
This presentation of the matter assumes the exclusive circulation of precious metals as money, and the simplest form of cash purchases and sales, although even plain met- als, as a basis of circulation, may serve as money, and have actually so served in history and have been the fundament for the development of a credit system and of certain por- tions of its mechanism.
This assumption is not made from mere considerations of method, although these are important enough, as demon- strated by the fact that Tooke and his school as well as his adversaries were continually compelled in their controversies concerning the circulation of bank notes to revert to the hypothesis of a purely metallic circulation. They were com- pelled to do so subsequently, and did so very superficially, 558 Capital.
because they thus reduced to an incidental point what should have been the point of departure of their analysis.
But the simplest study of the circulation of money in its primitive form, which is the immanent factor of the pro- cess of annual reproduction, demonstrates: (a) Assuming capitalist production to be developed to the point where the wage system predominates, money-cap- ital evidently plays a prominent role, seeing that it is the form in which the variable capital is advanced. To the ex- tent that the wage system develops, all products are con- verted into commodities and must, therefore, pass through the stage of money as one phase of their metamorphoses, with a few important exceptions. The quantity of circulat- ing money must suffice for this conversion of commodities into money, and the greater part of this quantity is fur- nished in the form of wages, in that money, which is the money-form of the variable capital advanced by the in- dustrial capitalists in payment for labor-power, and which serves in the hands of the laborers overwhelmingly as a medium of circulation (of purchase). It is quite the reverse undsr a system of natural economy such as was predom- inant under every form of vassalage (including serfdom), and still more in more or less primitive communities, whether they are infected by conditions of vassalage or slavery, or not.
In a slave system, the money-capital invested in the pur- chase of slaves plays the role of the fixed capital in money- form, which is but gradually replaced after the expiration of the active life period of the slaves. Among the Athenians, therefore, the gain realized by a slave owner through the industrial employment of his slaves, or indirectly by hiring them out to other industrial employers (for instance mine owners), was regarded merely as an interest (with sinking fund) on the advanced money-capital, just as the industrial capitalist under capitalist production places a portion of the surplus^value plus the depreciation of his fixed capital to the account of interest and renewal of his fixed capital- This is also the rule in the case of capitalists offering fixed capital, such as houses, machinery, etc., for rent. Mere household Simple Reproduction. 559 slaves, who perform the necessary services or are kept as luxuries are not considered here. They correspond to the modern servant class. But the slave system — so long as it is the dominant form of productive labor in agriculture, manufacture, navigation, etc., as it was in the advanced states of Greece and Rome — preserves an element of natural economy. The slave market maintains its supply of labor-power by war, piracy, etc., and this rape is not promoted by a process of circulation, but by the natural appropriation of the labor-power of others by physical force. Even in the United States, after the con- version of the neutral territory between the wage labor states of the North and the slave labor states of the South into a slave breeding region for the South, where the slave thus raised for the market had become an element of annual reproduction, this method did not suffice for a long time, so that the African slave trade was continued as long as possible for the purpose of supplying the market.
(b) The natural flux and reflux of money by the ex- change of the annual products on the basis of capitalist pro- duction; the advances of fixed capital in one bulk to the full value and the gradual and prolonged recovery of this outlay from the circulation in the course of successive years, in other words, the gradual reconstitution of fixed capital in money by the annual formation of a hoard, which is dif- ferent from the simultaneous accumulation of a hoard based on the annual production of new gold; the different length of time in which money is advanced according to the dura- tion of the periods of reproduction of commodities, and in which money must, therefore, be accumulated anew, before it can be recovered from the circulation by the sale of com- modities; the different length of time for which money must be advanced, resulting even from the different dis- tances of the places of production from their selling market; furthermore the differences in the magnitude and period of the reflux according to the relative size or condition of the productive supplies in the various lines of business and in the individual businesses of the same line, and with them the terms at which the elements of constant capital are 560 Capital.
560 Capital.
bought — all this taking place during the year of reproduc- tion, it was necessary that all these different factors should be noted and brought home by experience in order to give rise to a systematization of the mechanical aids of the credit- system and to an actual discovery of whatever capital was available for lending.
This is further complicated by a difference between lines of business whose production proceeds continuously under normal conditions on the same scale, and those which are carried on at different scales at different periods of the year, such as agriculture.
XIII. DESTUTT DE TRACY S THEORY OF REPRODUCTION.
As an illustration of the confused and at the same time boastful thoughtlessness of political economists - analyzing social reproduction, the great logician Destutt de Tracy may serve (compare volume I, page 181, footnote 1), whom even Ricardo took seriously, calling him a very distinguished writer.
This distinguished writer makes the following revelations concerning the entire process of social reproduction and circulation: "One may ask me how these industrial capitalists can make such large profits and out of whom they can draw them. I reply that they do so by selling everything which they produce for more than it has cost to produce; and that they sell (1) to one another to the extent of the entire share of their consumption, intended for the satisfaction of their needs, which they pay with a portion of their profits; (2) to the wage workers, both those whom they pay and those whom the idle capitalists pay; from these wage workers they recover the entire wages in this way, except what little they may save; (3) to the idle capitalist, whom they pay with a por- tion of their revenue which they have not spent for the wages of the laborers employed by them directly; so that the Simple Reproduction. 561 entire rent, which they pay them annually, flows back to them in this way." (Destutt de Tracy, Traite de la volonte et de ses effets. Paris, 1821. Page 239.)
In other words, the capitalists enrich themselves by mutually getting the best of one another in the exchange of that portion of their surplus-value which they reserve for their individual consumption, or consume as revenue. For instance, if this portion of their surplus-value, or of their profits, is 400 p. st., this sum is supposed to be increased to, say, 500 p. st. by mutually selling their respective shares at an excess of 25% over the normal. Bat if all do the same, the result will be just what it would have been if they had mutually sold their shares at their normal values. They merely need in that case 500 p. st. in money for the circula- tion of commodities valued at 400 p. st., and this would seem to be rather a method of impoverishing than of en- riching themselves, since it means that they are compelled to reserve a large portion of their total wealth unproduc- tively in the state of a medium of circulation. The out- come is simply that the capitalist class can divide only 400 p. st.'s worth of commodities among themselves for their individual consumption, after nominally raising prices all around, but that they do one another the favor of circulat- ing 400 p. st.'s worth of commodities by means of a quantity of money which would just as well circulate 500 p. st.'s worth of commodities.
And this is saying nothing about the fact that the as- sumption deals here only with a "portion of their profits," or any supply of commodities representing profits. But Destutt undertook precisely to tell us where these profits come from. The quantity of money required to circulate it represents a very subordinate question. It seems that the quantity of commodities, in which the profit is incorporated, is produced by the circumstance that the capitalists do not only sell these commodities to one another (an assumption which is quite fine and profound), but also mutually sell them too dearly. Thus we are acquainted with the secret of the wealth of the capitalists. It is on a par with the 562 Capital.
secret of Reuter's funny "Inspector Braesig" who discovered that the great poverty is due to the great "pauvrete."
(2) The same capitalists, furthermore, sell "to the wage workers, both those whom they pay and those whom the idle capitalists pay; from these wage workers they recover the entire wages in this way, except what little they may save."
According to Destutt, then, the reflux of the money-capi- tal advanced to the laborers as wages, is the second source of the wealth of the capitalists.
For instance, if the capitalists have paid 100 p. st. to their laborers as wages, and if these same laborers buy from the same capitalists commodities of this same value of 100 p. st., so that what the capitalists have advanced to the laborers as wages returns to the capitalists when the laborers spend it for commodities, then the capitalists get richer- A com- mon mortal would think that the capitalists recover only their 100 p. st., which they possessed before this transac- tion. At the beginning of the transaction they have 100 p. st. They buy labor-power valued at 100 p. st. This labor- power, so bought, produces commodities of a certain value, which, so far as we know, amounts to 100 p. st. By selling these commodities for 100 p. st. to their laborers, the capital- ists recover 100 p. st. in money. The capitalists then have once more 100 p. st., the same as before, and the laborers have 100 p- st.'s worth of commodities which they have themselves produced. It is hard to understand how that can make the capitalists any richer. If they did not recover the 100 p. st., then they would have to pay first 100 p. st. to the laborers in wages and then to give them their product for nothing, although it is also worth 100 p. st. The reflux of this money might therefore at best explain, why the capitalists do not get any poorer by this transaction, but not, why they get richer by it.
It is another question, how the capitalists got possession of the 100 p. st., and why the laborers, instead of working for their own account, are compelled to exchange their labor-power for this money. But this is a fact which is self- explanatory for a thinker of Destutt's caliber.
Simple Reproduction. 563 However, Destutt himself is not quite satisfied with his solution. He did not simply tell us that the capitalists get richer by spending a sum of 100 p. st. in money and then recovering the same amount He had not plainly spoken of a reflux of 100 p. st. which merely explains why this money is not lost. He had told us that the capitalists get richer "by selling everything which they produce for more than it has cost to produce."
Consequently the capitalists must also get richer by their transaction with the laborers by selling too dearly to them. Very well! "They pay wages * * * * and all this flows back to them by the expenditures of all these people who pay them more" (for the products) "than they cost the capital- ists in wages." (Page 240.) In other words, the capitalists pay 100 p. st. in wages to the laborers, and then they sell to these laborers their own product at 120 p. st., so that they not only recover their 100 p. st., but also gain 20 p. st. That is impossible. The laborers can pay for the commodities only with the money which they receive in the form of wages. If they get only 100 p. st. in wages, they can buy only 100 p. st.'s worth, not 120 p. st.'s worth. This is there- fore impracticable. But there is still another way. The laborers buy from the capitalists commodities for 100 p. st., but receive only 80 p. st.'s worth. They are cheated out of 20 p. st. Then the capitalists have certainly gained 20 p. st., because he practically pays 20% less than the actual value for labor-power. This is equivalent to cutting wages 20% by a circuitous route.