the objective materials of commerce). Its production ap- pears as a specific business, or at least as a part of the busi- ness, of some industrial capitalists, who play a similar role as those, who supply the constant capital for the producers of necessities of life. The merchant recovers this constant cap- ital and his profit on it. Both things reduce the profit of the industrial capitalist to that extent. But owing to the econo- mies and concentration which come with a division of labor, he loses less profits than he would, if he had to advance his own capital for this purpose. The reduction of the rate of profit is smaller, because the advanced capital is smaller.
So far, then, the selling price is made up of B + K -f- profits on B -j- K. This portion of the selling price offers no further difficulties. But now b, the variable capital ad- vanced by the merchant, enters into this consideration.
The selling price is then made up of B + K + b + profits on B + K -f- profits on b.
B makes good merely the purchase price and adds nothing to this price but the profit on B. K adds K itself plus a profit on K; but K + profit on K, the circulation cost ad- vanced in the form of constant capital plus a corresponding average profit, would be larger in the hands of the industrial capitalist than it is in those of the merchant. The reduction of the average profit assumes this form: It is as though the full average profit had been calculated, after deducting B -}- K from the advanced industrial capital, but the deduction from this average profit for B + K paid to the merchant, so that this deduction appears as the profit of a particular class of capital, of merchant's capital.
But it is different with b + profits on b, or in the present case, where we have assumed a rate of profit of 10%, with b 4" Yo'b. Here lies the real difficulty.
What the merchant buys with b, is according to our assump- tion nothing but commercial labor, in other words, labor re- quired for the promotion of the functions of circulating the capital, of performing the acts C — M and M — C But this commercial labor is that labor, which is generally neces- sary, in order that any capital may perform the functions of Commercial Profit. 351 commercial capital, the conversion of commodity-capital into money and money into commodities. It is labor which real- ises values, but does not create any. And only to the extent that a capital performs this function — that a capitalist per- forms these operations Avith his capital — ■ does this capital serve as commercial capital and participate in the regulation of the general rate of profit, that is, draw its dividend out of the total profit. But in b + profit on b, it looks as though labor were being paid, in the first place (for it makes no differ- ence, whether the industrial capitalist pays the merchant for his own labor or the clerk employed by the merchant for his), and in the second place, as though it contained a profit on labor, which the merchant himself has to perform. The mer- chant's capital gets in the first place its b refunded, and in the second place a profit on it. This arises from the fact that it demands pay, in the first place, for work, which it per- forms in its capacity as merchant's capital, and that it re- ceives, in the second place, a profit in its capacity of capital^ for performing work, which is remunerated in the profit as the function of capital. This, then, is the question which we have to solve.
Let us assume that B = 100, b =. 10, and the rate of profit = 10%. We place K=. O, in order to leave this element of the purchase price, which does not belong here and has already been accounted for, out of consideration. In that case, the selling price would beB + P + b + p (or B + Bp' + b -f- bp''); where p' stands for the rate of profit. This means in figures 100 + 10 + 10 + 1 = 121.
Now, if b would not be invested by the merchant in wages — since b is paid only for commercial labor, for labor re- quired for the realisation of the value of commodity-capital thrown on the market by industrial capital — then the condi- tion of the matter would be the following: In order to buy or sell anything for B = 100, the merchant would spend his time, and we will assume, that this is the only time at his disposal. The commercial labor represented by b, or 10, if paid for by a profit instead of wages, would presuppose an- other commercial capital of 100, which, at 10%, would be 352 Capitalist Production.
equal to b = 10. This second B of 100 would not be added to the price of commodities, but the 10% would. We should then have two operations with 100, making 200, that would buy commodities at 200 + 20 = 220.
Since merchant's capital is nothing but an independent form of a portion of industrial capital engaged in the process of circulation, all questions referring to it must be solved by representing the problem at first in that fonn, in which the phenomena peculiar to merchant's capital do not yet appear in an independent shape, but still in direct connection with industrial capital as one of its subdivsions. As an office separate from the workshop, the mercantile capital serves continually in the process of circulation. It is here that we must first analyse the b under consideration — in the office of the industrial capitalist himself.
The office is from the outset always infinitesimally small compared to the industrial workshop. For the rest, it is clear that the commercial operations increase to the extent that the scale of production is enlarged. These are operations, which must be continually performed for the circulation of the industrial capital, in order to sell the product existing in the shape of commodities, to convert the money so received once more into means of production, and to keep account of the whole. The calculation of prices, bookkeeping, managing funds, carrying on the correspondence, all these belong under this head. The more developed the scale of production is, the greater, if not in proportion, Avill be the commercial oper- ations of industrial capital, and consequently the labor and other costs of circulation for the realisation of value and sur- plus-value. This necessitates the employment of commercial wage workers, who form the office staff. The expenses for these, although incurred for wages, differ from the variable capital invested in the purchase of productive labor. It in- creases the expenses of the industrial capitalist, the mass of capital to be advanced, without increasing the direct surplus- value. For these expenses are made for labor, which is employed only for the realisation of already created values. Like every expense of this kind, these expenses reduce the Commercial Profit. 353 rate of profit, because the advanced capital increases, but not the surplus-value. If the surplus-value s remains constant, while the advanced capital C increases to C + -^ ^) then the place of the rate of profit -§- is taken by the smaller rate of profit r 4-^A c • ^^^ ^^^^ reason, the industrial capitalist en= deavors to limit these expenses of circulation to a minimum, just as he does with his expenses for constant capital. Hence industrial capital does not maintain the same relations to its commercial wage laborers tliat it does to its productive wage la- borers. The greater the number of productive wages laborers employed under otherwise equal circumstances, the more volu- minous is production, the greater the surplus-value or profit. On the other hand, the larger the scale of production, the' greater the quantity of value and surplus-value to be realised, the greater, in other words, the produced commodity-capital, the larger grow the absolute oSice expenses, even if they do not grow relatively, and give rise to some kind of division of labor. To what extent profit is the first condition for these expenses, is shown among other things by the fact, that with the in- crease of commercial salaries a part of them is frequently paid by a share in the profits. It is in the nature of things that labor consisting merely of intermediary operations, which are connected either with a calculation of values, or with their realisation, or with the reconversion of the realised money into means of production, a labor whose amount depends on the quantity of produced values about to be realised, should not act as cause of the respective magnitudes and masses of these values, as directly productive labor does, but as their re- sult. The case of the other costs of circulation is similar. In order that plenty may be measured, weighed, wrapped, transported, plenty must be supplied. The amount of labor consumed in packing, transporting, etc., depends on the quan- tity of the commodities which are the objects of its activity, not vice versa.
The commercial laborer does not produce any surplus-value directly. But the value of his labor is determined by the value of his labor-power, that is, of its costs of production, while the application of this labor-power, its exertion, exw 354 Capitalist Production.
pression, and consumption, the same as in the case of every other Avage laborer, is hj no means limited by the value of his labor-power. His wages are therefore not necessarily in proportion to the mass of profits, which he helps the capitalist to realise. What he costs the capitalist and what he makes for him are two different things. He adds to the income of the capitalist, not by creating any direct surplus-value, but by helping him to reduce the costs of the realisation of sur- plus-value. In so doing, he performs partly unpaid labor. The commercial laborer, in the strict meaning of the term, belongs to the better paid classes of wage Avorkers, he belongs to the class of skilled laborers, which is above the average. However, wages have a tendency to fall, even in proportion to the average labor, with the advance of the capitalist mode of production. This is due to the fact that in the first place, division of labor in the office is introduced; this means that only a onesided development of the laboring capacity is re- quired, and that the cost of this development does not fall entirely on the capitalist, since the ability of the laborer is developed through the exercise of his function and increases so much faster, the more onesidedly the division of labor de- velops. In the second place, the necessary preparation, such as the learning of commercial details, languages, etc., is more and more rapidly, easily, generally, cheaply reproduced with the progress of science and popular education, to the extent that the capitalist mode of production organises the methods of teaching, etc., in a practical manner. The generalisation of public education makes it possible to recruit this line of laborers from classes that had formerly no access to such educa- tion and that were accustomed to a lower scale of living. At the same time this generalisation of education in- creases the supply and thus competition. With a few exceptions, the labor-power of this line of laborers is therefore depreciated with the progress of capitalist development. Their wages fall, while their ability increases. The capital- ist increases the number of these laborers, whenever he has more value and profits to realise. The increase of this labor Commercial Profit. 355 is always a result, never a cause of the augmentation of sur- plus-value.'*'^ We see, then, that a duplication takes place here. On the one hand, the functions of commodity-capital and money- capital (which later become merchant's capital) are general forms assumed by industrial capital. On the other hand, particular capitals, and iherefore a particular series of cap- italists, are exclusively devoted to these functions. And these functions develoj) into sjDCcific spheres of enhancing the value of capital.
The commercial functions and expenses of circulation be- come independent only in the case of the mercantile capital. That side of industrial capital, which is devoted to the circu- lation, exists not only in its continuous shape of commodity- capital and money-capital, but also in the office alongside of the workshop. But it assumes an independent existence in the mercantile capital. For this capital, its office is its only workshop. The portion of capital employed in the form of expenses of circulation appears much larger in the business of the large merchant than in that of the industrial capitalist, because the offices connected with every industrial workshop are concentrated in the hands of a few merchants, and so is at the same time that portion of the capital, which would have to be invested for this purpose by the entire class of indus- trial capitalists. These merchants take care of the circula- tion and provide for the expenses incidental to its continua- tion.
For the industrial capital, the expenses of circulation ap- pear as dead expenses, and so they are. For the merchant they appear as a source of his profit, which is proportional to *" How well this prognosis of the fate of the commercial proletariat, written in 1865, has stood the test can be corroborated by hundreds of German clerks, who, trained in all commercial operations and acquainted with three or four lan- guages, in vain offer their services in London City at 25 shillings per week, far below the wages of a good machine maker. A blank of two pages in the manuscript indicates, that this point was to be further elaborated. For the rest, we refer the reader to volume II, chapter VI (.The Expenses of Circulation), where various things belonging under this head have already been discussed. — F. E.
356 Capitalist Production.
the level of tlie average rate of profit, whose existence is as- sumed. The investment to be made by the mercantile capital for these expenses of circulation is, therefore, a productive in- vestment. And for this reason the commercial labor which it buys is likewise immediately productive for it.
CHAPTEK XVIIT.
THE TURN-OVER, OF MERCHANT'S CAPITAL. THE PRICES.
The turn-over of industrial capital is the combination of it» time of production and time of circulation. It comprises, therefore, the process of production as a whole. The turn- over of merchant's capital, on the other hand; being in reality nothing but a movement of commodity-capital in an inde- pendent form, represents merely the first jjhase in the meta- morphosis of commodities, C — M, as a movement of some capital returning to itself. M — C, C — M, is the turn- over of merchant's capital from the mercantile point of view. The merchant buys, converts his money into commodities, then sells, converts the same commodities back into money. And so forth in continuous repetitions. Within the circula- ti(jn, the metamorphosis of industrial capital always presents itself in the form of C — M — C''; the money realised by the sale of the produced commodities C is used for the pur- chase of new means of production C". This amounts to a practical exchange of C for C', and the same money thus changes hands twice. Its movement acts as an intennediary between two different kinds of commodities C and C. But in the case of the merchant, it is the same commodity, which changes hands twice in the process M — C — M'. It merely promotes the reflux of his money to him.
For instance, if a certain merchant's capital is 100 p.st., and the merchant buys for these 100 p.st. commodities and sells these commodities for 110 p.st., then his capital of 100 p.st. has completed one turn-over, and the number of its turn- overs in one year depends on the number of times which it can repeat this movement M — C — M'.
We leave entirely out of consideration at this point those expenses, which may be concealed in the difference between the purchase price and the selling price, since these expenses do not alter in any way the form, which we are now analys- ing.
The number of turn-overs of a certain merchant's capital shows evidently some analogy to the repeated cycles of money in its capacity as a mere medium of circulation. Just as the same dollar, which circulates ten times, buys ten times its value in commodities, so the same money-capital of the mer- chant, when turned over ten times, buys ten times its value in commodities, or realises a total commodity-capital of ten times its value, for instance a merchant's capital of 100 a value of 1,000. But there is this difference: In the circulation of money as a medium of circulation, it is the same piece of money, which passes through different hands and performs repeatedly the same function, thereby making up for the lim- ited number of the circulating pieces of money by the velocity of its circulation. But in the case of the merchant it is the same money-capital, the same money-value regardless of the pieces of money of which it may be composed, which repeatedly buys and sells the amount of its value, thereby returning re- peatedly to the same hands from which it departed as M + A M, value plus surplus-value. This is characteristic of its turn-over as a turn-over of capital. It always withdraws more money from circulation than it threw into it. By the way, it is a matter of course that an accelerated turn-over of mer- chant's capital (in which the function of money as a means of payment likewise predominates whenever the credit system is developed) is accompanied by a more rapid circulation of the same quantity of money.
A repeated turn-over of commercial capital, however, never expresses anything else but a repetition of buying and selling; while a repeated turn-over of industrial capital expresses the periodicity and renovation of the entire process of reproduc- tion (which includes the process of consumption). For the merchant's capital, this appears merely as an outward condi- tion. The industrial capital must continually throw com- 358 Capitalist Production.
modities on the market and withdraw others from it, in order that the turn-over of merchant's capital may continue rapidly. If the process of reproduction proceeds slowly in general, then the turn-over of merchant's capital does likewise. jS^ow, it is true that the merchant's capital promotes the turn-over of the productive capital, but only in so far as it shortens the time of circulation of the latter. It has no direct influence on the time of production, which is also one of the limits of the time of turn-over of industrial capital. This is the first barrier for the turn-over of merchant's capital. In the second place, aside from the barrier fonned by reproductive consumption, the tui'n-over of the merchant's capital is ulti- mately limited 1^ che velocity and volume of individual con- sumption, since the entire part of commodity-capital which passes into the fund for consumption depends on that.
However, aside from the turn-overs in the world of mer- chants, in which one merchant always sells the same commod- ity to another, whereby this sort of circulation may assume the aspect of great prosperity during times of speculation, the merchant's capital abbreviates in the first place the phase C — M for the productive capital. In the second place, under the modern credit system, it disposes of a large portion of the total capital of society, so that it can repeat its pur- chases, even before it has definitely sold its previous pur- chases. And it is immaterial in this case, whether the mer- chant sells directly to the ultimate consumer, or whether a dozen other merchant's intervene between the first merchant and the ultimate consumer. Owing to the immense elasticity of the process of reproduction, which at any time may be driven beyond all bounds, this process finds no obstacle in pro- duction itself, or at best a very elastic one. Aside from the separation of C — M and M — C, which follows from the nature of commodities, a fictitious demand is here created. In spite of its independent status, the movement of merchant's capital is never anything else but the movement of industrial capital within the sphere of circulation. But thanks to its individualisation it moves within certain limits independentlj of the bounds of the process of reproduction, and thereby drives this process itself beyond its boundaries. The internal dependence and the external independence drive mer- chant's capital to a point, where the internal connection is violently restored by a crisis.
Hence we note the phenomenon that crises do not show themselves, nor break forth, first in the retail business, which deals with direct consumption, but in the spheres of whole- sale business and banking, by which the money-capital of so- ciety is placed at the disposal of wholesale business.
The manufacturer may actually sell to the exporter, and the exporter may in his turn sell to his forGigT> ^Aistomer, the im- porter may sell his raw materials to the manufacturer, and the manufacturer his products to the wholesale dealer, etc. But at some particular and unseen point, the goods may lie unsold. On some other occasion, again, the supplies of all producers and middle men may become gradually overstocked. Consumption is then generally at its best either because one industrial capitalist sets a succession of others in motion, or because the laborers employed by them are fully employed and spend more than ordinarily. With the growing income of the capitalists their expenditures increase likewise. Besides, we have seen in volume II, Part III, that a continuous circulation takes place between constant capital and constant capital (even without considering any accelerated accumulation), which is in so far independent of individual consumption, as it never enters into such consumption, but which is nevertheless defi- nitely limited by it, because the production of constant capi- tal never takes place for its own sake, but solely because more of this capital is needed in those spheres of production whose products pass into individual consumption. However, this may proceed undisturbed for a while, stimulated by prospec- tive demand, and in such lines the business of merchants and industrial capitalists prospers exceedingly. A crisis occurs whenever the returns of those merchants, who sell at long range, or whose supplies have accumulated also on the home market, become so slow and meager, that the banks press for payment, or the notes for the purchased commodities become 360 Capitalist Production.
due before they have been resold. It is then that forced sales take place, sales made in order to be able to meet pay- ments. And then we have the crash, which brings the decep- tive prosperity to a speedy end.
But the superficiality and meaninglessness of the turn-over of merchant's capital are still greater, because the turn-over of one and the same merchant's capital may promote simul- taneously or successively the turn-overs of several productive capitals.
JSTow, the turn-over of merchant's capital may not only promote the turn-overs of several industrial capitals, but also the opposite phase of the metamorphosis of commodity-capi- tal. For instance, the merchant buys linen from the manu- facturer and sells it to the bleacher. In this case, the turn- over of the same merchant's capital — in fact, the same C — M, a realisation on the linen — represents two opposite phases for two different industrial capitals. So far as the merchant sells at all for productive consumption, his C — M always means M — C for some industrial capitalist, and his M — C always C — M for some other industrial capitalist.