the mass of profit applies only to the total social capital and to the great capitalists who are firmly installed. The new additional capital, which enters upon its functions, does not enjoy any such compensating conditions. It must conquer them, for itself, and so the fall in the rate of profit calls forth the com.petitive struggle among capitalists, not vice versa. This competitive struggle is indeed accompanied by a tran- sient rise in. wages and a resulting further fall of the rate of profit for a short time. The same thing is seen in the over- production of commodities, the overstocking of markets. Since the aim of capital is not to minister to certain wants, but to produce profits, and since it accomplishes this purpose by methods which adapt the mass of production to the scale of production, not vice versa, conflict must continually en- sue between the limited conditions of consumption on a capi- talist basis and a production which forever tends to exceed its immanent barriers. Moreover, capital consists of commod- ities, and therefore the overproduction of capital implies an overproduction of commodities. Hence we meet with the pe- culiar phenomenon that the same economists, who deny the overproduction of commodities, admit that of capital. If it is said that there is no general overproduction, but that a dis- proportion grows up between various lines of production, then this is tantamount to saying that within capitalist production the proportionality of the individual lines of production is brought about through a continual process of disproportional- ity, that is, the interrelations of production as a whole enforce themselves as a blind law upon the agents of production in- stead of having brought the productive process under their common control as a law understood by the social mind. It amounts furthermore to demanding that countries, in which capitalist production is not yet developed, should consume and produce at the same rate as that adapted to countries with capitalist production. If it is said that overproduction is only relative, then the statement is correct; but the entire mode of production is only a relative one, whose barriers are not ab- solute, but have absoluteness only in so far as it is capitalistic. Otherwise, how could there be a lack of demand for the very 302 Copifalist Production.
comiiiodities which the mass of the people want, and how would it be possible that this demand must be sought in for- eign countries, in foreign markets, in order that the labor- ers at home might receive in payment the average amount of necessities of life? This is possible only because in this specific capitalist interrelation the surplus-product as- sumes a form, in which its owner cannot offer it for con- sumption, unless it first reconverts itself into capital for him. Finally, if it is said that the capitalists would only have to exchange and consume those commodities among themselves, then the nature of the capitalist mode of pro- duction is forgotten, it is forgotten, that the question is merely one of expanding the value of the capital, not of con- suming it. In short, all these objections to the obvious phe- nomena of overproduction (phenomena which do not pay any attention to these objections) amounts to this, that the bar- riers of capitalist production are not absolute barriers of pro- duction itself and therefore no barriers of this specific, capi- talistic, production. But the contradiction of this capitalist mode of production consists precisely in its tendency to an absolute development of productive forces, a development, which comes continually in conflict with the specific conditions of production in which capital moves and alone can move.
It is not a fact that too many necessities of life are pro- duced in proportion to the existing population. The reverse is true. JS^t enough is produced to satisfy the wants of the great mass decently and humanely.
It is not a fact that too many means of production are pro- duced to employ the able bodied portion of the population. The reverse is the case. In the first place, too large a portion of the population is produced consisting of people who are really not capable of working, who are dependent through force of circumstances on the exploitation of the labor of others, or compelled to perfonn certain kinds of labor which can be dignified with this name only under a miserable mode of production. In the second place, not enough means of pro- duction are produced to permit the employment of the entire able bodied population under the most productive conditions, Internal Contradictions. 303 3c that their absolute labor time would be shortened by the mass aud effectiveness of the constant capital employed during working hours.
On the other hand, there is periodically a production of too many means of production and necessities of life to permit of their serving as means for the exploitation of the laborers at a certain rate of profit. Too many commodities are pro- duced to permit of a realisation of the value and surplus- value contained in them under the conditions of distribution and consumption peculiar to capitalist production, that is, too many to permit of the continuation of this process without ever recurring explosions.
It is not a fact that too much wealth is produced. But it is true that there is periodical over-production of Avealth in » its capitalistic and self-contradictory form.
The barrier of the capitalist mode of production becomes apparent: 1) In the fact that the development of the productive power of labor creates in the falling rate of profit a law which turns into an antagonism of this mode of production at a certain point and requires for its defeat periodical crises.
2) In the fact that the expansion or contraction of pro- duction is determined by the appropriation of unpaid labor, and by the proportion of this unpaid labor to materialised labor in general, or, to speak the language of the capitalists, is determined by profit and by the proportion of this profit to the emjiloyed capital, by a definite rate of profit, instead of being determined by the relations of production to social wants to the wants of socially developed human beings. The capital- ist mode of production, for this reason, meets with barriers at a certain scale of production which would be inadequate under different conditions. It comes to a standstill at a point de- termined by the production and realisation of profit, not by the satisfaction of social needs.
If the rate of profit falls, there follows on one hand an ex- ertion of capital, in order that the capitalist may be enabled to depress the individual value of his commodities beiow the social average level and thereby realise an extra profit at the 304 Capitalist Production.
prevailing market prices. On the other hand, there follows swindle and a general promotion of swindle by frenzied at- tempts at new methods of production, new investments of capital, new adventures, for the sake of securing some shred of extra profit, which shall be independent of the general aver- age and above it.
The rate of profit, that is, tlie relative increment of capital, is above all important for all new oftshoots of capital seeking an independent location. And as soon as the formation of capital were to fall into the hands of a few established great capitals, which are compensated by the mass of profits for the loss through a fall in the rate of profits, the vital fire of production would be extinguished. It would fall into a dor- mant state. The rate of profit is the compelling power of capitalist production, and only such things are produced as yield a profit. Hence the fright of the English economists over the decline of the rate of profit. That the bare possi- bility of such a thing should worry Ricardo, shows his pro- found understanding of the conditions of cfl.()italist produc- tion. The reproach moved against him, thy,t he has an eye only to the development of the productive forces regardless of " human beings," regardless of the sacrifices; in human beings and capital values incurred, strikes precisely his strong point. The development of the productive forces of social labor is the historical task and privilege of capital. It is precisely in this way that it unconsciously creates the material require- ments of a higher mode of production. What worries Ricardo is the fact that the rate of profit, the stimulating prin- ciple of capitalist production, the fundamental premise and driving force of accumulation, should be endangered by the development of production itself. And the quantitative pro- portion means everything here. There is indeed something deeper than this hidden at this point, which he vaguely feels. It is here demonstrated in a purely economic way, that is, from a bourgeois point of view, within the confines of capi- talist understanding, from the standpoint of capitalist produc- tion itself, that it has a barrier, that it is relative, that it is not an absolute, but only a historical mode of productiors Internal Contradictions. 305 lorresponding to a definite and limited epoch in the develop- jnent of the material conditions of production.
IV. Supplementary Remarks.
Seeing that the development of the productive power of labor proceeds very disproportionately in the various lines of industry, not only in degree, but also in at times in oppo- site directions, it follows that the mass of the average profit (== surplus-value)- must be considerably below that level, which one would naturally assume according to the develop- ment of the productive forces in the most advanced lines of industry. The fact that the develoj^ment of the productive forces in different lines of industry proceeds in considerably different rates, or even in opposite directions, is not due merely to the anarchy of competition and the peculiarity of the bour- geois mode of production. The productivity of labor is also conditioned on natural premises, which frequently become less productive to the extent that productivity, so far as it de- pends on social conditions, increases. This leads to opposite movements in these different spheres, progress here, retrogres- sion there. Consider, for instance, the mere influence of the seasons, on which the gTeater part of the raw materials de- pends for its mass, the exhaustion of forests, coal and iron mines, etc.
While the circulating part of constant capital, such as raw material, etc., continually increases in mass to the extent that the productivity of labor grows, it is not so with the fixed capital, such as buildings, machinery, apparatus for lighting, heating, etc. Although a machine becomes absolutely dearer with the growth of its bodily mass, it becomes relatively cheaper. If five laborers produce ten times as many com- modities as formerly, this does not increase the outlay for fixed capital tenfold; although the value of this part of the constant capital increases with the development of the produc- tive forces, it does not increase by any means in the same proportion with them. We have frequently pointed out the difference in the proportions of the constant to the variable capital, as it expresses itself in the fall of the rate of profit, 3o6 Capitalist Production.
and the difference in the same proportions as expressed with the development of the productivity of labor with reference to the individual commodity and its price.
[The value of a commodity is determined by the total labor- time, whether past or living, incorporated in it. The increase in the productivity of labor consists precisely in this that the share of the living labor is reduced while that of the past labor is increased, but in such a way that the total quantity of labor incorporated in that commodity declines, so that the living labor decreases more than the past labor increases. The past labor — the constant part of capital — materialised in the value of a certain commodity consists partly of wear and tear of fixed, partly of circulating constant capital entirely consumed by that commodity, such as raw and auxiliary ma- terials. That portion of value which comes from raw and aux- iliary materials must decrease with the productivity of labor, because this productivity seeks expression through these mate- rials by reducing their value. On the other hand, it is precisely characteristic of the rising productivity of labor, that the fixed part of the constant capital is strongly augmented and with it that portion of value which, is transferred by wear and tear to the commodities. In order that a new method of produc- tion may turn out to be a real increase in productivity, it must transfer in wear and tear a smaller portion of the value of fixed capital than is deducted from it through a saving of living labor, in short, it must reduce the value of the com- modity. It must do so as a matter of course, even if an ad- ditional value is transferred to the commodity through an in- crease in the quantity or value of raw and auxiliary materials, as may sometimes happen. All additions of value must be more than compensated by the reduction in value resulting from a decrease in living labor.
This reduction of the total quantity of labor incorporated in a certain commodity seems to be the essential mark of an increase in the productive power of labor, no matter under what sort of social conditions production is carried on. There is no doubt that the productivity of labor would be measured by this standard in a society, in which the pro- Internal Contradictions. 307 diicers would regulate their production according to a pre- conceived plan, or even under a simple production of com- modities. But how is this under capitalist production?
Take it, for instance, that a certain line of capitalist indus- try produces an average normal commodity of its sphere under the following conditions: The wear and tear of fixed capital amounts to | shilling per piece; raw and auxiliary materials are transferred into it at the rate of 17^ shillings per piece; in wages, 2 shillings, and surplus-value 2 shillings, the rate of surplus-value heing 100%. Total value 22 shillings. We assume for the sake of simplicity that the capital in this line of production has the composition of the average social capital, so that the price of production of the commodities is identical with the value and the profit of the capitalist with the created surplus-value. In that case the cost-price of the commodity is ^ + 17| -f 2 = 20 sh., the average rate of profit -^-^ = 10%, and the price of production of one individual commod- ity 22 sh., equal to its value.
ISTow let us assume that a machine is invented, which re- duces the living labor required for each individual commodity by one-half, but at the same time trebles that portion of the commodity's value which is due to the wear and tear of fixed capital. In that case, the calculation is modified in this way: Wear and tear 1^ sh., raw and auxiliary materials the same as before, 17| sh., wages 1 sh., surplus-value 1 sh., together 21 sh. The commodity has then fallen 1 sh. in value: The new machine has certainly increased the productivity of labor. From the point of view of the capitalist, the matter has now the following aspect: His cost-price is now 1^ sh. for wear, 17| sh. for raw and auxiliary materials, 1 sh. for wages, total 20 sh., as before. Since the rate of profit is not at once al- tered by the new machine, he will receive 10% more than his cost-price, that is, 2 sh. The price of production, then, re- mains unaltered at 22 sh., as before, but it is 1 sh. above the value of these commodities. So far as a society produc- ing under capitalist conditions is concerned, the commodity has not become any cheaper, the new machine signifies no im- provement. The capitalist is therefore not interested in the 3o8 Capitalist Production.
introduction of this new machine. And since its introduction would make his present and not yet worn-out machinery sim- ply worthless, would make old iron of it, Avould mean a posi- tive loss for him, he takes good care not to commit such a Utopian mistake.
The law of increased productive power, then, does not ap- ply absolutely to capital. So far as capital is concerned, the productive power is not increased by the enhancement of pro- ductive labor in general, but only by saving more in the unpaid portion of living labor than is expended in past labor, as we have already indicated in volume I, chapter XV, 2. Here the capitalist mode of production falls into another contra- diction. Its historical mission is the ruthless development in geometrical progression, of the productivity of human labor. It becomes disloyal to its mission, whenever it puts a check upon the development of productivity, as it does here. Thus it demonstrates once again that it is becoming weak with age and more and more outliving its usefulness. ]^^ Under competition, the increase in the minimum of capital required for the successful operation of an independent in- dustrial establishment in keeping with the increase in pro- ductivity assumes the following aspect: As soon as the new and more expensive equipment has become universally estab- lished, smaller capitals are henceforth excluded from these enterprises. Smaller capitals can carry on an independent activity in such lines only during the incipient stage of me- chanical inventions. On the other hand, very large enter- prises, such as railroads, with an extraordinarily high rela- tive proportion of constant capital, do not yield any average rate of profit, but only a portion of it, interest. Otherwise the rate of profit would fall still lower. At the same time, this offers direct employment to large aggregations of capital in the form of stocks.
An increase of capital, or accumulation of capital, does not imply a fall in the rate of profit, unless this growth is accom- panied by the aforementioned alterations in the proportions " The foregoing is placed between brackets, because it passes in some points beyond the scope of the original material, which I found in a note of the original manuscript, a revision of which I undertook.
I Internal Contradictions. 309 of the organic constituents of capital. IS'ow it so happens that in spite of the continual and daily revolutions in the mode of production, now this, now that, greater or smaller portion of the total capital continues for certain periods to accumulate on the basis of a given average proportion of those constituents, so that its growth does not imply any organic change, and con- sequently no fall in the rate of profit. This continual ex- pansion of capital, and consequently expansion of production on the basis of the old method of production, which proceeds quietly while the new methods are already developing by its side, is another reason, why the rate of profit does not decrease in the same degree in which the total capital of society grows.
The increase of the absolute number of laborers, in spite of the relative decrease of the variable as compared to the con- stant capital, does not take place in all lines of production, and not uniformly in those in which it does proceed. In agricul- ture, the decrease of the element of living labor may be ab- solute.
By the way, it is but a requirement of the capitalist mode of production that the number of wage workers should increase absolutely, in spite of its relative decrease. Under this mode, labor-powers become superfluous as soon as it is no longer com- pelled to employ them for 12 to 15 hours per day. A develop- ment of the productive forces which would diminish the ab- solute number of laborers, that is, which would enable the en- tire nation to accomplish its total production in a shorter time, would cause a revolution, because it would put the ma- jority of the population upon the shelf. In this the specific barrier of capitalist production shows itself once more, prov- ing that capitalist production is not an absolute form for the development of the productive powers and creation of wealth, but rather comes in collision with this development at a cer- tain point. This collision expresses itself partly through pe- riodical crises, which arise from the circumstance that now this, now that, portion of the laboring population is rendered superfluous in its old mode of employment. The barrier of capitalist production is the superfluous time of the laborers. The absolute spare time gained by society does not concern 3IO Capitalist Production.
Capitalism. The development of the productive powers con- cerns it only to the extent that it increases the surplus labor time of the working class, not to the extent that it decreases the labor time for material production in general. Thus cap- italist production moves in contradictions.
We have seen that the growing accumulation of capital im- plies its growing concentration. Thus the power of capital, the personification of the conditions of social production in the capitalist, grows over the heads of the real producers. Cap- ital shows itself more and more as a social power, w^hose agent the capitalist is, and which stands no longer in any possible relation to the things which the labor of any single individual can create. Capital becomes a strange, independent, social power, which stands opposed to society as a thing, and as the power of capitalists by means of this thing. The contradic- tion betw^een capital as a general social power and as a power of private capitalists over the social conditions of production develops into an ever more irreconcilable clash, which im- plies the dissolution of these relations and the elaboration of the conditions of production into universal, common, social conditions. This elaboration is performed by the development of the productive powers under capitalist production, and by the course which this development pursues.
No capitalist voluntarily introduces a new method of pro- duction, no matter how much more productive it may be, and how much it may increase the rate of surplus-value, so long as it reduces the rate of profit. But every new method of produc- tion of this sort cheapens the commodities. Hence the capi- talist sells them originally above their prices of production, or, perhaps, above their value. He pockets the difference, which exists between these prices of production and the mar- ket-prices of the other commodities produced at higher prices of production. He can do this, because the average labor time required socially for the production of these other commodities is higher than the labor time required under the new methods of production. His method of production is above the social average. But competition generalises it and subjects it to the Internal Contradictions, 311 general law. Then follows a fall in the rate of profit — per- haps first in this sphere of production, which gradually brings the others to its level — which is, therefore, wholly independ- ent of the will of the capitalist It must be noted here, that this same law rules also those spheres of production, whose product passes neither directly nor indirectly into the consumption of the laborers or into the conditions under which their necessities are produced; it ap- plies, therefore, also to those spheres of production, in which no cheapening of commodities can increase the relative sur- plus-value or cheapen labor-power. (It is true that a cheap- ening of constant capital may increase the rate of profit in all these lines while the exploitation of the laborer remains the same.) As soon as the new mode of production begins to ex- pand, and thereby to furnish the tangible proof that these com- modities can actually be produced more cheaply, the capitalists working under the old methods of production must sell their product below their full prices of production, because the value of these commodities has fallen, because the labor time re- quired by these capitalists for the production of these com- modities is longer than the social average. In one word — this appears as the effect of competition — these capitalists are compelled to introduce the new method of production, under which the proportion of the variable to the constant capital has been reduced.
All circumstances, which bring about the cheapening of commodities by the employment of improved machinery amount in the last analysis to a reduction of the quantity of labor absorbed by the individual commodities; in the second place, to a reduction of the wear and tear portion of machinery transferred to the value of the individual commodity. To the extent that the wear and tear of machinery is less rapid, it is distributed over more commodities and displaces more living labor during its period of reproduction. In both cases the quantity and value of the fixed constant capital are increased over those of the variable capital.
" All other things being equal, the power of a nation to save from its profits varies with the rate of profits, is great 312 Capitalist Production.
when they are high, less, when low; but as the rate of profit declines, all otlier things do not remain equal...A low rate of profit is ordinarily accompanied by a rapid rate of accumulation, relatively to the numbers of the people, as in England...a high rate of profit by a slower rate of accumulation, relatively to the numbers of the people." Ex- amples: Poland, Russia, India, etc. (Richard Jones, An Introductory Lecture on Political Economy, London, 1833, p. 50ff.) Jones emphasises correctly that in spite of the falling rate of profit the inducements and faculties to accumulate are augmented; first, on account of the growing relative overpop- ulation; secondly, because the growing productivity of labor is accompanied by an increase in the mass of use-values produced by the same exchange value, that is, an increase in the mate- rial elements of capital, thirdly, because the lines of produc- tion become more varied; fourthly, because the credit system, stock companies, etc., are developed, and with them the facility of converting money into capital without becoming an indus- trial capitalist; fifthly, because the wants and the greed for wealth increase; sixthly, because the mass of investments in fixed capital grows; etc.