and II, when we made up our diagram, eliminating mer- chants, money-changers, and bankers, and all merely con suming and not directly producing classes, it follows that the formation of supplies of commodities in the hands of their respective producers is here indispensable in order to keep the machinery of reproduction in motion. The 500 II c now held in stock by the capitalists of II therefore rep- resent the supply of articles of consumption by which the continuity of the process of consumption included in the process of reproduction is promoted. This means in the present case the transition from this year into next. The fund for consumption, which is as yet in the hands of its sellers and producers cannot fall to the point of zero and begin with zero next year, any more than such a thing can take place in the transition from to-day to to-morrow. Since new supplies of commodities must be continually accumu- lated, even though their volume may differ, our capitalist producers of department II must have a reserve capital, which enables them to continue their process of produc- tion, although one portion of their productive capital is temporarily tied up in the shape of commodities. Our assumption is all the time that they combine the business of a merchant with that of a producer. Hence they must also have at their disposal an additional money-capital, which would be in the hands of merchants, if the various functions in the process of reproduction were distributed among independent capitalists.
But we would reply to this argument: (1) That the forming of such supplies and the necessity for it applies to all capitalists, those of I as well as of II. Considering them in their capacity as sellers of commodities, they differ only by the fact that they sell different kinds of commodities. A supply of commodities of II implies a previous supply of commodities of I. If we neglect this supply on one side, we must also do so on the other. But if we count them in on both sides, the problem is not altered in any way. (2) Just as this year closes on the side of II with a supply of com- modities for next year, so it was opened by a supply of commodities on the same side- taken over from last year.
Accumulation and Reproduction. 591 In the analysis of annual reproduction, reduced to its ab- stract form, we must therefore strike it out at both ends. By leaving this year in possession of its entire production, including the supply held for next year, we take from it the supply of commodities transferred from last year, and thus we have actually to deal with the aggregate product of an average year as the object of our analysis. (3) The sim- ple circumstance that the difficulty which must be overcome did not show itself in the analysis of simple reproduction proves that it is a specific phenomenon due merely to the different arrangement of the elements of department I with a view to reproduction, an arrangement without which re- production on an expanded scale cannot take place at all.
III. DIAGRAMMATIC PRESENTATION OF ACCUMU- LATION.
We now study reproduction by means of the following diagram: We note in the first place that the total volume of the annual product is smaller than that of the first diagram, being 8252 instead of 9000. We might just as well assume a much larger sum, for instance one ten times larger. We have chosen a smaller sum than in our first diagram, in order to demonstrate, that reproduction on an enlarged scale (which is here regarded merely as a production car- ried on with a larger investment of capital) has nothing to do with the absolute volume of the product, and that it implies merely a different arrangement, a different dis- tribution of functions to the various elements of a certain product, so that it is but a simple reproduction so far as the value of the product is concerned. It is not the quantity^ but the destination of the given elements of simple repro- 592 Capital.
592 Capital.
duction which is changed, and this change is the material basis of a subsequent reproduction on an enlarged scale.52 We might vary the diagram by changing the proportions between the variable and constant capital. For instance this way: In this case, the diagram would be arranged for repro- duction on a simple scale, so that the surplus-value would be entirely consumed as revenue, instead of being accumu- lated. In either case, that of (a) as well as (b), we have an annual product of the same value. Only (b) has the functions of its elements arranged in such a way that repro- duction is resumed on the same scale, while in the case of (a) the arrangement forms the material basis of reproduc- tion on an enlarged scale. For in the case of (b), the fac- tors (875 v + 875 s) I, equal to 1750 I(v + s), are ex- changed without any remainder for 1750 II c, while in the case of (a), the exchange of (1000 v + 1000 s)I, equal to 2000 (v + s)I, for 1500 II c leaves a surplus of 500 Is for accumulation in department I.
Now let us analyze diagram (a) closer. Let us assume that both I and II accumulate one half of their surplus- value, that is to say, convert it into an additional element of capital instead of spending it as revenue. When one half of 1000 I s, or 500, are accumulated in one form or an- other, that is to say, invested as additional money-capital, converted into additional productive capital, then only (1000 v + 500 s)I are spent as revenue. Hence 1500 is here inserted as the normal size of II c. We need not ex- amine the exchange between 1500 I(v + s) and 1500 He any more, because this has already been done under the head of simple reproduction. Nor does 4000 I c require any attention, since its re-arrangement was likewise discussed 52 This puts an end, once for all, to the feud over the accumulation of capital between James Mill and S. Bailey, which we have discussed from our point of view in volume I, chapter XXIV, section 5, foot notes on pages 622 and 623, namely the feud concerning the extensibility of the effects of industrial capital without changing its magnitude. We shall revert to this later.
Accumulation and Reproduction. 593 under the head of simple reproduction, although this re- arrangement is now preparing for a new reproduction on an enlarged scale.
The only thing which remains for us to examine is 500 I s and (376 v + 376 s)II, both as regards the internal con- ditions of the two departments and the movements between them. Since we have assumed that department II is like- wise accumulating one half of its surplus-value, 188 are to be converted into capital, of which one fourth, or 47, or, to round it off, 48, are variable capital, so that 140 remain to be converted into constant capital.
Here we come across a new problem, whose very existence must appear strange to the current idea that commodities of one kind are exchanged for commodities of another kind, or commodities for money and the same money for com- modities of another kind. The 140 II c can be converted into productive capital only by exchanging them for com- modities of I s of the same value. It is a matter of course that that portion of I s which must be exchanged for II s must consist of means of production, which may either be fit for service in the production of both I and II, or ex- clusively adapted to the production of II. This change of place can be made only by means of a onesided purchase on the part of II, as the entire remaining surplus-product of 500 I s, which we shall presently examine, is reserved for accumulation in department I and cannot be exchanged for commodities of II; in other words, it cannot be simul- taneously accumulated and consumed by I. Therefore de- partment II must buy 140 I s for cash without recovering this money by a subsequent sale of its commodities to I. And this is a process which is continually repeated in every new annual production, so far as it is reproduction on an enlarged scale. Where does II get the money for this?
It rather seems as though department II were a very un- profitable field for the formation of new money-capital, by means of simple hoarding, which accompanies actual ac- cumulation and is its basis under capitalist production.
We have first 376 II v. The money-capital of 376, ad- vanced for labor-power, returns through the purchase of 594 Capital.
commodities of II continually as variable capital to the capitalists of II. This continually repeated departure from and return to the starting point, the pocket of the capital- ist, does not add in any way to the money moving in this cycle. This, then, is not a source of the accumulation of money. Nor can this money be withdrawn from circula- tion in order to form a hoard, or virtual new money-capital.
But stop! Isn't there a chance to make a little profit?
We must not forget that class II has the advantage over class I that its laborers must buy back from it the com- modities produced by themselves. Department II is a buyer of labor-power and at the same time a seller of the com- modities to the owners of the labor-power employed by it. Department II, then, may do two things.
(1) It may depress the wages below its average level, and this privilege it shares with department I. By this means a portion of the money serving in the function of variable capital is released, and if this process is continu- ally repeated, it may become a normal source of hoarding, and thus of virtual additional money-capital in department II. Of course we are not referring to a casual stolen profit here, since we are speaking of a normal formation of capi- tal. But it must not be forgotten that the wages actually paid (which determine the magnitude of the variable capi tal under normal conditions) do not depend on the benevo- lence of the capitalists, but must be paid under certain con- ditions. This does away with this expedient as a source of additional money. If we assume that 376 v is the variable capital at the disposal of department II, we cannot suddenly substitute the hypothesis that the capitalists pay only 350 v instead of 376 v, merely because we are confronted by a new problem.
(2) On the other hand, department II, taken as a whole, has the above mentioned advantage over I that it is at the same time a buyer of labor-power and a seller of commodi- ties to its own laborers. Every industrial country furnishes the most tangible proofs to what extent this may be ex- ploited, by paying nominally the normal wages, but grab- bing, or in plain words, stealing back a large portion with- Accumulation and Reproduction. 595 out a corresponding equivalent in wages; by accomplishing the same thing either through the truck system, or through a falsification of the medium of circulation (perhaps in a way that cannot be punished by law). England and Amer- ica furnish such instances. (Illustrate this by some strik- ing examples). This is the same operation as under (1), only disguised and carried out by a detour. Therefore it must likewise be rejected as an explanation of the present problem. The question is here of actually paid, not of nominal wages.
We see that some extraordinary disfigurations on the face of capitalism cannot be used in an objective analysis of the mechanism of capitalism as an excuse to get over some theoretical difficulties. But strange to say, the great major- ity of my bourgeois critics score me as though I had wronged the capitalists by assuming in volume I of this work that they really pay labor-power at its value, a thing which they rarely do! (Here I may exercise some of the magnanimity attributed to me by quoting Schaeffle.)
In short, we cannot accomplish anything with 376 II v for the solution of this question.
But it seems to be still more impossible to do anything with 376 II s. Here the capitalists of the same department are standing face to face, mutually buying and selling their articles of consumption. The money required for these transactions serves only as a medium of circulation and must flow back to the interested parties in the normal course of things, to the extent that they have advanced it to the circulation, in order to pass again and again over the same course.
There seem to be only two ways by which this money can be withdrawn from circulation for the purpose of form- ing virtual additional money-capital. Either one portion of the capitalists of II cheats the others and thus robs them of their money. We know that no preliminary expansion of the circulating medium is necessary for the formation of new money-capital. All that is necessary is that money should be withdrawn from circulation by certain parties and hoarded. It would not alter the case, if this money were 596 Capital.
stolen, so that the formation of additional money-capital on the part of a portion of the capitalists of II would be ac- companied by a positive loss of money on the part of oth- ers. The cheated capitalists would have to live a little less gaily, that would be all.
Or, a certain portion of II s, represented by necessities of life, might be directly converted into new variable capital of department II. How that is done, we shall examine at the close of this chapter (in section IV).
(1) First Illustration.
A. Diagram of Simple Reproduction.
B. Initial Diagram for Accumulation on an Expanded Scale.
Assuming that in diagram B one half of the surplus- value of I, amounting to 500, is accumulated, we have first to accomplish the change of place between (1000 v + 500 s)I, or 1500 I(v + s), and 1500 He. Department I then keeps 4000 c and 500 s, the last sum being accumulated. The exchange between (1000 v + 1000 s)I and 1500 II c is a process of simple reproduction, which has been examined previously.
Let us now assume that 400 of the 500 I s are to be con- verted into constant capital, and 100 into variable capital. The transactions within the 400 s of I, which are to be capi- talized, have already been discussed. They can be immedi- ately annexed to I c, and in that case we get in depart- ment I 4400 c +1000 v+100 s (these last to be converted into Department II buys from I for the purpose of accumu- Accumulation and Reproduction. 597 lation the 100 Is (existing in means of production), which thus become additional constant capital in department II, while the 100 in money, which this department pays for them, are converted into the money-form of the additional variable capital of I. We then have for I a capital of 4400 c + 1100 v (these last in money), a total of 5500.
Department II has now 1600 c for its constant capital. In order to be able to operate this, it must advance 50 v in money for the purchase of new labor-power, so that its vari- able capital grows from 750 to 800. This expansion of the constant and variable capital of II by a total of 150 is sup- plied out of its surplus-value. Hence only 600 of the 750 II s remain for the consumption of the capitalists of II, whose annual product is now distributed as follows: II. 1600 c + 800 v + 600 s (fund for consumption), a total of 3000. The 150 s, produced in articles of consump- tion, which have been converted into (100 c + 50 v)II, pass entirely into the consumption of the laborers in this form. 100 being consumed by the laborers of 1(100 Iv), and 50 by the laborers of 11(50 II v), as explained above. Depart- ment II, where the total product is prepared in a form suit- able for accumulation, must indeed reproduce surplus-value in the form of necessary articles of consumption exceeding the other portions by 100. If reproduction really starts on an expanded scale, then the 100 of variable money-capital of I flow back to II through the hands of the laborers of I, while II transfers 100 s in commodities to I and at the same time 50 in commodities to its own laborers.
The change made in the arrangement for the purpose of accumulation now presents the following aspect: Total, as before, 9000 Of these amounts, the following are capital: 598 • Capital.
while production started out with Now, if actual accumulation takes place on this basis, that is to say, if reproduction is actually undertaken with this increased capital, we obtain at the end of next year: Then let department I continue accumulation at the same atio, so that 550 s are spent as revenue, and 550 s accumu- lvted. In that case, 1100 Iv are first replaced by 1100 I c, and 550 Is must be realized in an equal amount of com- modities of II, making a total of 1650 I(v + s). But the constant capital of II, which is to be replaced, amounts only to 1600, and the remaining 50 must be made up out of 800 II i). Leaving aside the money aspect of the matter, we have as a result of this transaction: I. 4400 c + 550 s (to be capitalized); furthermore, real- ized in commodities of II for the fund for consumption of the capitalists and laborers of I, 1650 (v + s).
II. 1650 c (50 added from II s as indicated above) + 800 v ■+■ 750 s (fund for the consumption of the capitalists).
But if the old proportion is maintained in II between v and c, then 25 v additional must be advanced for 50 c, and these must be taken from 750 s. Then we have In department I, 550 s must be capitalized. If the former proportion is maintained, 440 of this amount form constant capital, and 110 variable capital. These 110 must be eventu- ally taken out of 725 II s, that is to say, articles of con- sumption to the value of 110 are consumed by the laborers of I instead of the capitalists of II, so that the latter are compelled to capitalize these 110 s which they cannot con- sume. This baves 615 II s of the 725 II s. But if II thus converts these 110 into additional constant capital, it requires an additional variable capital of 55. This again must be taken out of '\ts surplus value. Subtracting this amount from 615 II & we find that only 560 II s remain for the Accumulation and Reproduction. 599 consumption of the capitalists of II, and we obtain the fol- lowing values of capital after accomplishing all actual and potential transfers: Total 8690 If things are to proceed normally, accumulation in II must take place more rapidly than in I, because that por- tion of I (v + s) which must be converted into commodi- ties of II c, would otherwise grow more rapidly than II c, for which it can alone be exchanged.
If reproduction is continued on this basis and with other- wise unchanged conditions, then we obtain at the end of the following year: If the rate of division of the surplus-value remains un- changed, then the capitalists of I have first to spend as rev- enue 1210 v and one-half of s, or 605, a total of 1815. This revenue fund is again larger than II c by 55. These 55 must be taken from 880 s, leaving 825. Furthermore, the con- version of 55 II s into II c implies another deduction from II s for a corresponding variable capital of 27.5, leaving for consumption 797.5 II s.
Department I has now to capitalize 605 s. Of these 484 are constant, and 121 variable capital. The last named sum, deducted from 797.5 II s, leaves 676.5 II s. Depart- ment II, then, converts another 121 into constant capital and requires another variable capital of 60.5 for it, which likewise comes out of 676.5 II s, leaving for consumption Then we have the following capitals: 600 Capital.
And at the end of the year the product is Repeating the same calculation and rounding off the frac- tions, we get at the end of the following year the product: And at the end of the following year: In the course of four years of reproduction on an ex- panded scale the aggregate capital of I and II has risen from 5400 c + 1750 v = 7150 to 8784 c + 2782 v = 11,566, in other words at the rate of 100: 160. The total surplus- value was originally 1750, it is now 2782. The consumed surplus-value was originally 500 for I and 535 for II, a to- tal of 1035. In the last year it was 732 for I and 985 for II, a total of 1690. It has therefore grown at the rate of (2). Second Illustration.
Now take the annual product of 9000, which is alto- gether a commodity-capital in the hands of the industrial capitalist class, a form in which the average ratio of the variable to the constant capital is that of 1: 5. This pre- supposes a considerable development of capitalist produc- tion and accordingly of the productivity of social labor, a previous expansion of the scale of production to a consid- erable extent, and finally a development of all circumstances which bring about a relative overpopulation among the working class. The annual product will then be divided as follows, after rounding off the various fractions: Now take it that the capitalist class of I consumes one- half of its surplus-value, or 500, and accumulates the other Accumulation and Reproduction. 601 half. In that case (1000 v+500 s) I, or 1500, must be con- verted into 1500 II c. Since II c amounts to only 1430, it is necessary to take 70 from the surplus-value. Subtracting this sum from 285 II s leaves 215 II s. Then we have: I. 5000 c + 500 s (to be capitalized) + 1500 (v + s) in the fund set aside for consumption by capitalists and labor- ers.
of 70-5, or 14, is required to set this additional constant capi- tal in motion. These 14 must come out of the 215 s, so that only 201 remain, and we have: The disposal of 1500 I (v + V2 s) is a process of simple reproduction, and this has been dealt with. However, a few peculiarities remain to be noted here, which arise from the fact that in reproduction on an expanding scale I (v + y% s) is not made up solely by way of II c, but by II c plus a portion of II s.
It goes without saying that as soon as we assume a pro- cess of accumulation, I (v + s) is greater than II c, not equal to II c, as it is in simple reproduction. For in the first place, department I incorporates a portion of its own surplus-product in its productive capital, and converts five- sixths of it into constant capital, so that it cannot exchange these five-sixths simultaneously for articles of consump- tion of department II. In the second place, department I has to supply out of its surplus-product the material for the accumulation of the constant capital of II, just as II has to supply I with the material for the variable capital, which sets in motion a portion of the surplus-product of I used as additional constant capital. We know that the ac- tual variable capital consists of labor-power, and therefore the additional must consist of the same thing. It is not the capitalist of I who among other things buys from II a sup- ply of necessities of life for his laborers, or accumulates them for this purpose, as the slaveholder had to do. It is the laborers themselves who trade with II. But this does not prevent the capitalist from regarding the articles of con- 602 Capital.
602 Capital.
sumption of his eventual additional labor-power as so many means of production and maintenance of that labor-power, or the natural form of his variable capital. His own imme- diate operation, in the present case that of department I, consists in merely storing up the new money-capital re- quired for the purchase of additional labor-power. As soon as he has incorporated this labor-power in his productive capital, the money becomes a medium for the purchase of commodities of II on the part of this labor-power, which must find these articles of consumption at hand.
By the way, the capitalist and his press are often dis- satisfied with the way in which the laborer spends his money and with the commodities of II for which he spends it. On such occasions the capitalist philosophizes, babbles of culture, and dabbles in philanthropical talk, for instance after the manner of Mr. Drummond, the Secretary of the British Legation in Washington. According to him, "The Nation" (a journal) contained on the last of October, 1879, an interesting article, which contained the following pas- sages "The laborers have not kept step in their civilization with the progress of inventions; a mass of objects have be- come accessible to them which they do not know how to make use of, and for which they do not create a market." (Every capitalist naturally wants the laborer to buy his commodities.) "There is no reason why the laborer should not desire as much comfort as the clergyman, the lawyer, and the physician, who earn the same amount as he." (This class of clergymen, lawyers, and physicians have in- deed to be satisfied with wishing for a good many com- forts!) "But he does not do so. The question is still, how he may be raised as a consumer by a rational and healthy method; not an easy question, since his whole ambition does not reach beyond a reduction of his hours of labor, and the demagogue incites him to this rather than to elevating his condition by an improvement of his intellectual and moral qualities." (Reports of H. M.'s Secretaries of Embassy and Legation on the Manufactures, Commerce, etc., of the countries in which they reside. London, 1879, page 404.)
Long hours of labor seem to be the secret of the rational Accumulation and Reproduction. 603 and healthy method, which is to elevate the condition of the laborer by an improvement of his - intellectual and moral faculties and to make a rational consumer of him. In order to become a rational consumer of the commodities of the capitalist, he should above all begin to let the capitalist con- sume his labor-power irrationally and unhygienically — but the demagogue prevents him! What the capitalist means by a rational consumption, is evident wherever he is con- descending enough to engage directly in the trade with his own laborers, in the truck system, which includes also among other lines the supplying of homes to the laborers, so that the capitalist is at the same time a landlord.
The same Drummond, whose beautiful soul is enamored of the capitalist attempts to elevate the working class, tells in the same report among other things of the cotton goods manufacture in the Lowell and Lawrence Mills. The board- ing and lodging houses for the factory girls belong to the company that owns the factories. The landladies of these houses are in the pay of the same company and act ac- cording to its instructions. No girl is permitted to stay out after 10 p. m. Then comes a gem: The special police of the company patrol the surrounding country, in order to prevent a violation of this rule. After 10 p. m., no girl can leave or enter any of these houses. No girl can live any- where but on the land of the company, and every house on this land brings about 10 dollars per week in rent. And now we see the rational consumer in his full glory: "But since the omnipresent piano is found in many of the best lodging houses of the working girls, music, singing, and dancing play a prominent role at least among those, who after ten hours of unremitting labor at the loom need a change after this monotony rather than actual rest." (Page 412) But the main secret of making a rational consumer of the laborer is yet to be told. Mr. Drummond visits the