Interest itself expresses precisely the existence of the con- ditions of labor in the form of capital, in their social an- tagonism to labor, and in their transformation into personal powers in opposition to labor and dominating it. Interest represents the mere ownership of capital as a means of appro- priating the products of the labor of others. But it represents this character of capital as something, which belongs to it outside of the process of production, and which is not by any means a result of the specifically capitalist nature of this process of production itself. Interest places this process in such a light, that it does not seem opposed to labor, but rather without any relation to labor and simply the relation of one capitalist toward another. It thus assumes a form which places it outside of the relation of capital toward labor, and renders it indifferent toward this relation. In interest, then, which is that specific form of profit, in which the antagonistic character of capital assumes an independent form, this is done in such a way, that the antagonism here appears com- ae 45^ Capitalist Production.
pletely obliterated and left out of consideration. Interest is a relation between two capitalists, not between a capitalist and a laborer.
On the other hand, this form of interest bestows upon the other portion of profit the qualitative form of profit of enter- prise, and, further on, of wages of superintendence. The specific functions, which the capitalist as such has to per- form, and which precisely differentiate him from the laborer and bring him into opposition to the laborer, are presented as mere functions of labor. He creates surplus-value, not because he performs the work of a capitalist^ but because he also works aside from his capacity as a capitalist. This por- tion of surplus-value is thus no longer surplus-value, but its opposite, an equivalent for labor performed. Owing to the fact that the estranged character of capital, its antagonism to labor, has been relegated to a place outside of the actual process of exploitation, namely to the interest-bearing capital, this process of exploitation itself appears as a simple labor process, in which the exploiting capitalist performs merely a different kind of labor than the laborer. In this way the labor of exploitation and the exploited labor both appear as labor, as identical. The labor of exploitation is labor just as well as the labor wdiich is exploited. It is the interest which represents the social form of capital, but it does so in a neutral and indifferent way. It is the profit of enterprise which represents the economic function of capital, but it does so in a way, which takes no cognizance of the definite capital- ist character of this function.
In the present case, what passes in the consciousness of the capitalist is quite similar to what passes in the case of the fluctuations for wliich the capitalist makes allowance in the equalisation of the average profits, as indicated in part II of this volume. These compensating causes, which exert a determining influence on the distribution of the surplus- value, are distorted by the capitalist conception into originat- ing causes and subjective justifications of profit itself.
The conception of profit of enterprise in the shape of wages of superintendence of labor, arising from the antagonism of J Interest and Profit. 451 profit of enterprise to interest, is further strengthened bj the fact, that a portion of the profit may indeed be separated, and is sej)a rated in reality, as wages, or rather the reverse, that a portion of the wages appear under capitalist produc- tion as a separate portion of the profit. Already Adam Smith indicated, that this portion assumes its pure form, independ- ently of profit and wholly separated from it (as the sum of interest and profit of enterprise), and likewise separated from that portion of the profit, which remains in the shape of profit of enterprise after the deduction of the interest, in the salary of the superintendent in those lines of business, whose size, etc., permits a sufficient division of labor to justify a special salary for the labor of a superintendent.
The labor of superintendence and management will nat- urally be required whenever the direct process of production assumes the fonn of a combined social process, and does not rest on the isolated labor of independent producers.'^'* It has, however, a double nature.
On one side, all labors, in which many individuals co- operate, necessarily require for the connection and unity of the process one commanding will, and this performs a func- tion, which does not refer to fragmentary operations, but to the combined labor of the workshop, in the same way as does that of a director of an orchestra. This is a kind of produc- tive labor, which must be performed in every mode of pro- duction requiring a combination of labors.
On the other side, quite apart from any commercial de- partment, this labor of superintendence necessarily arises in all modes of production, which are based on the antagonism between the laborer as a direct producer and the owner of the means of production. To the extent that this antagonism becomes pronounced, the role played by superintendence in- creases in importance. Hence it reaches its maximum in the slave system. '^^ But it is indispensable also under the " " Superintendence is here (in the case of the farm owner) completely dis- pensed with." (J. E. Cairnes, The Slave Power, London, 1862, p. 48.)
'^ " If the nature of the work requires that the workmen (namely the slaves) should be dispersed over an extended area, the number of overseers, and, there- fore, the cost of the labor which requires this supervision, will be proportionateir increased." (Cairnes, 1. c, p. 44.)
452 Capitalist Prodiiciion.
capitalist mode of production since then the process of pro- duction is at the same time the process bj which the capital- ist consumes the labor-power of the laborer. In like manner, the labor of superintendence and universal interference by the government in despotic states comprises both the per- formance of the common operations arising from the nature of all communities and the specific functions arising from the antagonism between the government and the mass of the people.
In the works of ancient writers, who have the slave system under their eyes, both sides of the labor of superintendence are as inseparably combined in theory as they were in prac- tice. So it is also in the works of the modem economists, who regard the capitalist mode of production as the absolute mode of production. On the other hand, as I shall show immediately by an example, the apologists of the modern slave system utilise the labor of superintendence quite as much to justify slaveiy, as the other economists do to justify the wage system.
The vilUcus in Gate's time: "At the head of the rural slave community (familia rustica) stood the manager {villicus, derived from villa), who took receipts and made expenditures, bought and sold, received instructions from the master, gave orders and meted out punishment in his absence. The manager occupied naturally a freer position than the other slaves; the Magonian books advise to permit him to marry, raise children, and have his own funds, and Cato recommends that he be married with the female manager; he alone probably had any prospects of being liberated by the master for good behavior. For the rest, all of them formed one common economy...Every slave, including the manager himself, was supplied with his necessities at the expense of his master, in definite periods according to fixed rates, and he had to get along on that. The quantity varied according to labor, and for this reason the manager, whose work was lighter than that of the other slaves, received a smaller ration than the others." (Mommsen, Romische GescUcMe, second edition, 1856, I, p. 808-810.)
Interest and Profit. 453 Aristotle: " For the master proves himself such not in the huying, but in the employing of slaves." (The capitalist proves himself such, not by the ownership of capital, which gives him the power to buy labor-power, but in the employ- ment of laborers, nowadays of wage laborers in the process of production. ) " But there is nothing great about this knowledge. Tor whatever the slave must be able to perform, the master must be able to order. Whenever the masters are not compelled to drudge at superintendence, the manager assumes tliis honor, while the masters attend to affairs of state or study philosophy." (Aristotle, Repuhllc, Bekker edition, Book I, Y.)
Aristotle says in plain words, that rulership on the political and economic field imposes upon the powers that be the func- tions of government, and that they must understand the art of consuming labor-power. And he adds, that this labor of superintendence is not a matter of great moment, and that for this reason the master, who is wealthy enough, leaves tlie " honor " of this drudgery to an overseer.
The labor of management and superintendence arising out of the servitude of the direct producers has often been quoted in justification of this relation, not because it is a function due to the nature of all combined social labor, but because it is due to the antagonism between the owmer of means of production and the owner of mere labor-power, regardless of whether this labor-power is bought by buying the laborer him- self, as it is under the slave system, or whether the laborer himself sells his labor-power, so that the process of produc- tion is the process by which capital consumes his labor-power. And exploitation, the appropriation of the unpaid labor of others, has quite as often been represented as the reward justly due to the owner of capital for his labor. But it was never better defended than it was by a champion of slavery in the United States, a certain lawyer O'Connor, at a meeting held in ISTew York, on December 19th, 1859, under the slogan of 'Mustice for the South." " ISTow, Gentlemen," he said amid great applause, " nature itself has assigned this condition of servitude to the negro. He has the strength and is fit to work; 454 Capitalist Production.
but nature, which gave him this strength, denied him both the intelligence to rule and the will to work. (Applause.) Both are denied to him! And the same nature, which denied him the will to work, gave him a master, wdio should enforce this will, and make a useful servant of him in a climate, to which he is well adapted, for his own benefit and that of the master who rules him. I assert that it is no injustice to leave the negro in the position, into which nature placed him; to put a master over him; and he is not robbed of any right, if he is compelled to labor in return for this, and to supply a just compensation for his master in return for the labor and the talents devoted to ruling him and to making him useful to himself and to society."
]Srow, the wage-laborer, like the slave, must have a master, wdio shall put him to work and rule him. And assmning this relation of master and servant to exist, it is quite proper to compel the wage-laborer to produce his own wages and also the wages of superintendence, a compensation for the labor of ruling and superintending him, " a just compensation for his master in return for the labor and talents devoted to rul- ing him and to making him useful to himself and to society." The labor of superintendence and management arising out of the antagonistic character and rule of capital over labor, which all modes of production based on class antagonisms have in common wdth the capitalist mode, is directly and in- separably connected, also under the capitalist system, with those productive functions, which all combined social labor assigns to individuals as their special tasks. The wages of an epitropos, or regisseur, as he used to be called in feudal France, are entirely differentiated from the profit and as- sumes the form of wages for skilled hj^bor, wdienever the busi- ness is operated on a sufficiently large scale to warrant pay- ing such a manager, although our industrial capitalists do not " attend to affairs of state or study philosophy " for all that.
That not the industrial capitalists, but the industrial man- agers are " the soul of our industrial system," has already A Interest and Profit. 455 been remarked by Mr. Ure.^*^ So far as the commercial part of the business is concerned, we have said as much as was necessary in the preceding j)art of this volume.
The capitalist mode of production itself has brought mat- ters to such a point, that the labor of superintendence, en- tirely separated from the ownership of capital, walks the streets. It is, therefore, no longer necessary for the capitalist to perform the labor of superintendence himself. A director of an orchestra need not be the owner of tlie instruments of its members, nor is it a part of his function as a director, that he should have anything to do with the wages of the other musicians. The co-operative factories furnish the proof, that the capitalist has become just as superfluous as a functionary in production as he himself, in his highest developed form, finds the great real estate owner superfluous. To the extent that the labor of the capitalist is not the purely capitalistic one arising from the process of production and ceasing with capital itself, to the extent that it is not limited to the func- tion of exploiting the labor of others, to the extent that it rather arises from the social form of the labor-process as a combination and co-operation of many for the purpose of bringing about a common result, to that extent it is just as independent of capital as that form itself, as soon as it has burst its capitalistic shell. To say that this labor as a capitalistic one, as a function of the capitalist is necessary, amounts merely to saying that the vulgar economist cannot conceive of the forms developed in the womb of capitalist production separated and freed from their antagonistic capitalist char- acter. Compared to the money-capitalist the industrial cap- italist is a laborer, but a laboring capitalist, an exploiter of the labor of others. The wages which he claims and pockets for this labor amount exactly to the appropriated quantity of another's labor and depend directly upon the rate of ex- ploitation of this labor, so far as he takes the trouble to assume the necessary burdens of exploitation. They do not depend ■'^ A. Ure, Philosofhy of Manufactures, French translation, 1836, I, p. 68, where this Pindarus of the manufacturers at the same time testifies that most of the manufacturers have not the slightest understanding of the mechanism, which they set in motion.
456 Capitalist Production.
upon the degree of his exertions in carrying on this exploita- ^ tion. He can easily shift this burden to the shoulders of a superintendent for moderate pay. After every crisis one may see plenty of ex-manufacturers in the English factory dis- tricts, who for low wages superintend their own former fac- tories as managers of the new owners, who are frequently their creditors.''^^ The wages of superintendence, both for the commercial and the industrial manager, appear completely separated from the profits of enterprise in the co-operative factories of the laborers as well as in capitalistic stock companies. The sep- aration of the wages of superintendence from the profits of enterprise, Avhich is at other times accidental, is here con- stant. In the co-operative factory the antagonistic character of the labor of superintendence disappears, since the manager is paid by the laborers instead of representing capital again-t them. Stock companies in general, developed with the credit system, have a tendency to separate this labor of management as a function more and more from the ownership of capital, whether it be self-owned or borrowed. In the same way the development of bourgeois society separates the functions of judges and administrators from feudal property, whose pre- rogatives they were in feudal times. Since the mere owner of capital, the money-capitalist, has to face the investing capitalist, while money-capital itself assumes a social char- acter with the advance of credit, being concentrated in banks and loaned by them instead of by its original owners, and since, on the other hand, the mere manager, who has no title whatever to the capital, whether by borrowing or otherwise, performs all real functions pertaining to the investing capital- ist as such, only the functipnary remains and the capitalist disappears from the process of production as a superfluous person.
From the public accounts of the co-operative factories in '''' In one case known to me, after the crisis of 1868, a bankrupt manufacturer became the paid wage-laborer of his own former employes. This factory was operated after the bankruptcy of its owner by a laborers' co-operative, and its former owner was employed as manager. — F. E.
4 Interest and Profit. 457 England "'^ it is manifest, that the profit, after the deduc- tion of the wages of the superintendent, which form a part of the invested capital the same as the wages of the other laborers, was higher than the average profit, although they paid occasionally a much higher interest than the private factories. The cause of the greater profit was in all these cases a greater economy in the use of constant capital. What interests us particularly here is the fact that here the average profit (= interest + profit of enterprise) presents itself actually and palpably as a magnitude, which is wholly sep- arated from the wages of superintendence. Since the profit was here higher than the average profit, the profit of enter- prise was also higher than the current one.
The same fact is revealed by some capitalist stock com- panies, such as joint stock banks. The London and West- minster Bank paid in 1863 annual dividends of 30%, the Union Bank of London and others 15%. Aside from the salary of the director, the interest paid for deposits is here deducted from the gross profit. The high profit is explained in this case by the small proportion of the paid-up capital to the deposits. For instance, in the case of the London and Westminster Bank, it was in 1863: Paid-up Capital 1,000,- 000 pounds sterling; deposits 14,540,275 pounds sterling. In that of the Union Bank of London, 1863: Paid-up capital 600,000 pounds sterling; deposits 12,384,173 pounds sterling.
The confounding of the profit of enterprise with the w^ages of superintendence or management was due originally to the antagonistic form assumed toward interest by the surplus over the interest. It was further promoted by the apologetic intention to represent profit, not as a surplus-value derived from unpaid labor, but as wages of the capitalist himself for labor performed by him. This was met on the part of the socialists by the demand, that profit should actually be re- duced to what it pretended to be theoretically, namely mere wages of superintendence. And this demand was all the more disagreeable to the apologists of the capitalists, as these wages '* The accounts qvioted here go no farther than 1864, since the above was written 458 Capitalist Production.
of superintendence, like all other wages, found on one hand their level and fixed market-price to the extent that a numer- ous class of industrial and commercial superintendents was formed/^ while on the other hand these wages fell;, like all wages for skilled lahor, with the general development, which reduces the cost of production of specifically trained labor- jj power.^*^ With the development of co-operation on the part! of the laborers, of stock enterprises on the part of the bour- geoisie, even the last pretext for the confusion in matters of profit of enterprise and wages of management was removed, and profit aj^peared also in practice what it was undeniably in theory, mere surplus-value, a value for which no equiva-, lent was paid, realised unpaid labor. It was then seen that the investing capitalist really exploits labor, and that the fruit of his exploitation, when he worked witli a borrowed capital, was divided into interest and profit of enterprise, a surplus of profit over interest.
On the basis of capitalist production, a new swindle de- velops in stock enterprises with the wages of management. It consists in placing above the actual director a board of managers or directors, for whom superintendence and man- agement serve in reality only as a pretext for plundering stockholders and amassing wealth. Very interesting details concerning this are found in '' The City or the Physiology of London Business; ivilh Sketches on 'Change, and the Cof- fee Houses, London. 1845." Here is a sample: "What bankers and merchants gain by being on the boards of eight or nine different companies, may be seen from the following illustration: The private account of Mr. Timothy Abraham Curtis, handed in by the court of bankruptcy on his failure, " " Masters are laborers as well as their journeymen. In this character their interest is precisely the same as of their men. But they are also either capitalists, or the agents of capitalists, and in this respect their interest is decidedly opposed to the interest of the workmen." (P. 27.) " The wide spread of education among the journeymen mechanics of this country diminishes daily the value of the labor and skill of almost all masters and employers by increasing the num- ber of persons who possess their peculiar knowledge." (P. 30, Hodgskin, Labor defended against the Claims of Capital, etc., London, 1825.)
^ " The general relaxation of conventional barriers, the increased facilities of education tend to bring down the wages of skilled labor instead of raising those of the unskilled." (J. St. Mill, Principles of Political Economy, 2nd ed., London, Interest and Profit. 459 showed an income of 8,900 pounds sterling per year under the head of directorships. Since Mr. Curtis had been a direc- tor of the Bank of England and of the East Indian Company, every stock company was happy to secure him as a director." (P. 82.) — The remuneration of the directors of such com- panies for each weekly meeting is at least one guinea. The proceedings of the court of bankruptcy show, that these wages of superintendence are as a rule inversely proportioned to the actual superintenderce performed by these nominal direc- tors.
CHAPTEK XXIV.
EXTEENALISATION OF THE RELATIONS OF CAPITAL IN THE FORM OF INTEREST-BEARING CAPITAL.
In the interest-bearing capital, the relations of capital as- sume their most externalised and most fetish-like form. We have here M — M' money creating more money, self -expend- ing value, without the process intermediate between these two extremes. In the merchants' capital, M — C — M', there is at least the general form of the capitalistic process, although it clings to the sphere of circulation, so that profit appears merely as profit from selling; but it is at least seen to be the product of a social relation^ not the product of a mere tiling. The form of merchants' capital presents at least the aspect of a process, of a unity of antagonistic phases, of a movement divided into two transactions, namely into the pur- chase and sale of commodities. This is obliterated in M — M', the form of interest-bearing capital. For instance, if 1,000 pounds sterling are loaned by some capitalist, when the rate of interest is 5%, then the value of 1,000 pounds sterling as a capital for one year is C -(- Ci', C standing for the capital and i' for the rate of interest. In the present case this would mean 5%, or Yf"oOi"To ' ^^^ 1,000 -f- 1,000 times T^ ^1,050 pounds sterling. The value of 1,000 pounds sterling as capital is 1,050 pounds sterling, that is, capital is not a simple magnitude. It is a relation of mag- 460 Capitalist Production.
nitudes, a relation of principal sum, as a given value, to it- self as a self-expanding value, as a principal sum having produced a surplus-value. And we have seen that capital as- sumes this form of a directly self-expanding value for all in- vesting capitalists, whether thej work with their own or with a borrowed capital.
M — M'. We have here the original starting point of capital, we have money in the fonnula M — C — M' reduced to its two extremes M — M', in which M' stands for M -}- in- crement of M, money creating more money. It is the primal and general formula of capital concentrated into a meaning- less summary. It is caj^ital perfected, a unity of the process of production and process of circulation, yielding a certain surplus-value in a certain period of time. In tlie form of interest-bearing capital this appears spontaneously without any intervention of the processes of production and circula- tion. Capital appears as a mysterious and self-creating source cf interest, a thing increasing itself. The Thing (money, commodity, value) is now capital even as a mere thing, and capital appears as a mere thing. The result of the entire proc- ess of reproduction appears as a faculty iidierent in the thing itself. It depends on the owner of the money, which rep- resents the universal exchange-form of commodities, whether he wants to spend it as money or loan it as capital. In the interest-bearing capital, therefore, this automatic fetish is elaborated in its pure state, it is self-expanding value, money generating money, and in this form it does not carry any