it is that the value of the product of each individual capital can be equal to the sum of the values of the three revenues ])lus C, the constant capital, whereas the sum of the values of the products of all capitals can be equal to the sum of the values of the three revenues plus zero. And the riddle must be solved bj declaring that any analysis is incapable of find- ing out the simple elements of price, and must be satisfied with the faulty cycle and the progress into infinity. So that the thing which appears as constant capital may be re- solved into wages, profit and rent, whereas the values of the commodities, in which wages, profit and rent are material- ized, are determined in their turn by wages, profit and rent, and so forth to infinity. ^^^ The entirely false dogma to the effect that the value of commodities resolves itself in the last analysis into wages plus profits plus rent expresses itself in the assertion that the consumer must ultimately pay for the total value of the total product, or that the money circulation between pro- ducers and consumers must ultimately be equal to the money circulation between the producers themselves (Tooke). All these assertions are as false as the axiom upon which they are founded.
The difficulties, which lead to this false and prima facie absurd analysis, are briefly the following: 1) The first difficulty is that the fundamental relation- ship of constant and variable capital, hence also the nature "' " In every society the price of every commodity finally resolves itself into some one or the other, or all of those three parts (viz. wages, profits, rent)...A fourth part, it may perhaps be thought, is necessary for replacing the stock of the farmer or for compensating the wear and tear of his laboring cattle, and other instruments of husbandry. But it must be considered that the price of any instrument of husbandry, such as a labouring horse, is itself made up of the same three parts: the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer, who advances both the rent of his land and the wages of his labour. Though the price of corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself either immediately or ultimately into the same three parts of rent, labour (meaning wages) and profit." (Adam Smith.) — We shall show later on, that Adam Smith himself felt the inconsistency and insufficiency of this subter- fuge, for it is nothing but a subterfuge on his part to send us from Pontius to PJ'ate while he nowhere indicates the real investment of capital, in the case of wh:ch the price of the product resolves itself ultimately into these three parts, without any remainder and any further progression.
982 Capitalist Production.
of surplus-value, and with them the entire basis of the capi- talist mode of production, are not understood. The value of each portion of any product of capital contains a certain portion of value equal to the constant capital, another por- tion of value equal to the variable capital (converted into wages for the laborer), and another portion of value equal to surplus-value (which later on becomes profit and rent). How is it possible that the laborer with his wages, the capi- talist with his profit, the landlord with his rent, should be able to buy commodities, each one of which contains not only one of these elements, but all three of them, and how is it possible that the sum of the values of wages, profit and rent, that is, of the three sources of revenue together, should be able to buy the commodities passing over into the total consumption of the recipients of these incomes, since these commodities contain another portion of value, namely con- stant capital, outside of the other portions of value? How can they buy a value of four with a value of three? ^^^ We have given our analysis in Volume II, Part III.
2) The second difficulty is that the way, in which labor, by adding a new value, preserves old value in a new form without producing this old value anew, is not understood.
3) The third difficulty is that the connections of the proc- ess of reproduction are not understood, as it presents itself, not from the point of view of individual capital, but from that of the total capital. The difficulty is to explain how it ^^•'' Proudhon, incapable of grasping this, exposes his incapableness in the formula: The laborer cannot buy back his own product, because the interest is contained in it, which is added to the purchase price. But how does Mr. Eugene Forcade teach him to know better? " If Proudhon's objection were true, it would strike not only the profits of capital, but would annihilate the possibility of all industry. If the laborer is compelled to pay 100 for each article for which he has received only 80, if his wages can buy back only the value which he has put into it, it would be as well to say that the laborer cannot buy back anything, that wages cannot pay for anything. In fact, there is always something more than the wages of the laborer contained in the purchase price, and always more than the profits of enterprise in the selling price, for instance, the price of the raw materials, which often goes to foreign countries...Proudhon forgot about the con- tinual increase of the national capital; he forgot that this increase refers to all laborers, the enterprising industrials as well as the hand laborers." {Revue des deux Mondes, 1848, tome, 24, p. 99.) Here we have the optimism of bourgeois thoughtlessness in the form of wisdom corresponding to it. First Mr. Forcade believes that the laborer could not live, if he did not receive a higher value than that which Analysis of Production. 983 is that the product, in which wages and surplus-value, in short the entire value produced by all the labor newly added during the current year, can be converted into money, can reproduce the constant part of its value and yet at the same time resolve itself into a value confined within the limits of the revenues; and how it is that the constant capital con- sumed in production can be replaced by the substance and value of new capital, although the total sum of the newly added labor is realized only in wages and surplus-value, and is fully represented by the sum of the values of both. It it here where the main difficulty lies, in the analysis of re- production and of the proportions of its various component parts, both as concerns their material substance and the pro- portions of their value.
4) To these difficulties is added another one, which is in- tensified still more as soon as the various component parts of the surplus-value appear in the form of revenues in- dependent of each other. This is the difficulty that the fixed marks of revenue and capital are interchanged and occupy difi^erent places, so that they seem to be merely relative de- terminations from the point of view of the individual capi- talist and to disajipear as soon as the total process of pro- duction is viewed as a whole. For instance, the revenue of the laborers and capitalists of Class I, which produces con- stant capital, replaces the value and the substance of the con- stant capital of the capitalists of Class II, which produces he produces, whereas the capitalist mode of production, on the contrary, could not exist, if he received all the value which he really produces. In the second place he correctly generalizes the diffictilty, which Proudhon expressed only under a more narrow point of view. The price of the commodities contains not only more than the wages, but also more than the profit, namely the constant portion of value. According to Proudhon's reasoning then, the capitalist could not buy back the commodities with his profit. And how does Forcade solve this riddle? By means of a meaningless phrase: The increase of capital. The continual increase of capital is supposed to manifest itself, among other things, also in the fact that the analysis of the price of commodities, which is impossible for the political economist in the case of a capital of loo, becomes superfluous in the case of a capital of io,qoo. What would he say of a chemist, who, on being asked: How is it that the product of the soil contains more carbon than the soil? would answer: It comes from the continual increase of the product of the soil. The well-meaning good will to discover in the bourgeois world the best of all worlds takes the place, in vulgar economy, of any necessity to cultivate love of truth and scientific methods of research.
g84 Capitalist Production.
articles of consumption. One may, therefore, get around the difficulty by means of the conception that the thing which is revenue for one is capital for another. This promotes the idea that these functions have nothing to do with the actual peculiarities of the component parts of value in the commodities. Furthermore: Commodities which are ulti- mately intended for the purpose of forming the substantial elements in the expenditure of revenue, in other words, articles of consumption, pass through various stages during the year, such as woolen yam, cloth. In the one stage they form a portion of the constant capital, in the other they are consumed individually, and thus pass wholly into the reve- nue. One may, therefore, imagine with Adam Smith that the constant capital is but seemingly an element of the value of commodities, which disappears in the total interrelation. Furthermore, a similar exchange takes place between vari- able capital and revenue. The laborer buys with his wages that portion of the commodities which form his revenue. In this way he creates at the same time for the capitalist the money form of the variable capital. Finally: One portion of the products, which form constant capital, is replaced in its natural form or by means of exchange by the producers of the constant capital themselves. The consumers have nothing to do with this process. When this is overlooked the im- pression is created that the revenue of the consumers replaces the entire product, even the constant portion of its value. 5) Aside from the confusion created by the transforma- tion of the values into prices of production, another con- fusion is due to the transformation of surplus-value into dif- ferent, separate, independent forms of revenue traced back to different elements of production, into profit and rent. It is forgotten that the values of commodities are the basis, and that the division of the values of commodities into separate portions, and the further development of these portions of value into forms of revenue, their transmutation into rela- tions of the various owners of the different agencies in pro- duction to these parts of value, their distribution among these owners according to definite categories and titles, does not [, Analysis of Production. 985 11 alter anything in the detennination of value or in its law. Neither is the law of value changed by the fact that the equalization of profit, that is, the distribution of the total value among the various capitals, and the obstacles, which ~ private land to some extent puts in the way of this equaliza- tion (in absolute rent), makes the regulating average prices different from the individual values of the commodities. This again affects merely the addition of the surplus-value to the different prices of commodities, but does not abolish the surplus-value itself, nor the total value of commodities in its capacity as the source of these different constituents of value.
This is the confusion, which we shall consider in our next chapter, and which is necessarily connected with the illusion that the value arises out of its own component parts. First the various component parts of value receive independent forms in the revenues, and in their capacity as revenues they are referred back to the particular substantial elements of production as their alleged sources instead of to the values of commodities, which are their real source. They are ac- tually referred back to those sources, not as components of value, but as revenues, as components of value falling to the share of definite classes of agents in production, the laborer, the capitalist and the landlord. But one might imagine that these parts of value, instead of arising out of the dis- tribution of the value of commodities, rather form it by their composition, and this leads to that nice and faulty circle, which makes the value of commodities arise out of the sum of the values of wages, profit, rent, and the value of wages, profit and rent, in their turn, is to be determined by the value of commodities, etc.^"*^ 140 " fjjg circulating capital invested in materials, raw products and machinery is itself composed of merchandise, the necessary price of which is formed of the same elements; so that, viewing the total merchandise in a certain country, it would mean using the same thing twice to count this portion of the circulating capital among the elements of the necessary price." (Storch, Cours d'Economie Politique, II, page 140.) — By these elements of circulating capital Storch means the constant capital (the fixed capital is for him merely a different form of the circulating). " It is true that the wages of the laborer, the same as that portion of the profits of enterprise which stands for wages, provided we consider them as a part of the means of subsistence, also consist of merchandise bought at current 986 Capitalist Production.
Considering reproduction in its normal condition, only a part of the newly added labor is employed for production and thus for the reproduction of the constant capital. This is precisely the portion which replaces the constant capital used up in the production of articles of consumption, of substantial parts of the revenue. This is balanced by the fact that this constant portion does not require any ad- ditional labor on the part of Class II. Looking upon the total process of reproduction as a whole, in which this equal- ising exchange between Classes I and II is included, this constant capital is not a product of newly added labor, although the product of this labor could not be created with- out that capital. This constant capital, looking upon it from the point of view of substance, is exposed to certain ac- cidents and dangers in the process of reproduction. (Furthermore, considering it from the point of view of value, it may be depreciated through a change in the productive power of labor; but this refers only to the individual capitalist.) Accordingly a portion of the profit, of surplus-value and of the surplus-product, in which only newly added labor is represented, so far as its value is concerned, serves as an insurance fund. In this case it does not matter, whether prices and comprise likewise wages, interest on capital ground rent and profit of enterprise...But this observation merely proves that it is impossible to resolve the necessary price into its simplest elements." (Ibidem note.) — In his Considerations sur la nature du revenu national (Paris, 1824). Storch realizes in hie controversy with Say to what absurdity the false analysis of the value of commodities leads, when it resolves value into mere revenues. He points out the folly of such results, not from the point of view of the individual capitalist, but from that of a nation, but he does not go a step further himself in his analysis of the " prix necessaire," saying in his " Cours " that it is impossible to resolve it into its simplest elements and tracing it back into an endless progression. " It is evident that the value of the annual product is distributed partly among capital and partly among profits, and that each one of these parts of the value of the annual product buys regularly the products needed by a nation, as much for the purpose of pre- serving its capital as for the purpose of renewing its consumable fund (pages 134, 135)...Can a self-employing peasant's family live in its barns or its stables, eat its seed and forage, clothe itself with its laboring cattle, dispense with its agricultural implements? According to the thesis of Mr. Say all these questions would have to be answered in the aflfirmative (pages 135, 136)...If it is admitted that the revenue of a nation is equal to its gross product, that is, if no capital has to be deducted from it, then it must also be admitted that a na- tion can spend the entire value of its annual product unproductively without im- pairing its future income in the least (147). The products which constitute the capital of a nation cannot be consumed." (p. 150.)
Analysis of Production. 987 this insurance fund is managed bv separate insurance com- panies or not. This is the only part of the revenue which is neither consumed as such nor serves necessarily as a fund for accumulation. Whether it actually serves in the accumulation, or covers merely a shortage in reproduction, depends upon accident. This is also the only portion of the sur])lus-value and surplus-product, and thus of surplus-lalwr, which would continue to exist, outside of that portion which serves for accumulation and for the expansion of the process of reproduction, even after the abolition of the capitalist system. This, of course, is conditioned upon the premise that the portion regularly consumed by the direct producers does not remain limited to its present minimum. Out- side of the surplus-labor for those, who on account of age can not yet or no longer take part in production, all surplus labor for non-workers would disappear. If we transport ourselves back to the beginnings of society, we find no produced means of production, hence no constant capital, the value of which could pass into the product, and which would have to be replaced in its natural form out of the product in reproduction on the same scale, and to a degree measured by its value. But nature there supplies immediately the means of subsistence, which do not have to be produced. For this reason nature gives to the savage having but few wants the time, not to use non-existing means of production in new production, but to transform, outside of the labor required for the appropriation of naturally ex- isting means of production, other products of nature into means of production, bows, stone knives, boats, etc. This process among savages, considered merely from the side of its substance, corresponds to the reconversion of surplus- labor into new capital. In the process of accumulation, this conversion of the prodxict of surplus labor into capital takes place continually; and the fact that all new capital arises out of profit, rent, or other forms of revenue, that is, out of surplus labor, leads to the mistaken idea that all value of commodities arises from some revenue. On the other hand, this reconversion of profit into capital rather shows 988 Capitalist Production.
on closer analysis, that the additional lahor, which is always represented in the form of revenue, does not serve for the conser\'ation, or reproduction, of the old capital, but for the creation of new surplus capital to the extent that it is not consumed as revenue.
The whole difficulty arises from the fact that all newly added labor, to the extent that the value created by it is not dissolved into wages, appears as profit, that is, as a value which does not cost the capitalist anything and therefore cannot make good some capital advanced by him. This value rather exists in the form of available additional wealth, or, from the point of view of the individual capitalist, in the form of his revenue. But this newly created value can just as well be consumed productively as individually, equally well as capital and as revenue. In view of its natural form, some of it must be productively consumed. It is, therefore, evident that the annually added labor creates capital as well as revenue; this becomes evident in the process of accumula- tion. That portion of the labor-power, which is employed in the creation of new capital (analagous to that portion of the working day of a savage employed, not for the appropria- tion of subsistence, but for the manufacture of tools by which to appropriate subsistence), becomes evident in the fact that the entire product of surplus labor presents itself at first in the shape of profit; this use of it has indeed nothing to do with this surplus-product itself, but refers merely to the private relation of the capitalist to the surplus-value pocketed by him. In fact, the surplus-value created by the capitalist is divided into revenue and capital, that is, into articles of consumption and additional means of production. But the old constant capital, which was handed over from last year (outside of the portion that was injured and to that extent destroyed, in short, the old constant. capital that does not have to be reproduced, and so far as there is any break in the process of reproduction, the insurance covers that), so far as its value is concerned, is not reproduced by the newly added labor.
We see, furthermore, that a portion of the newly added Analysis of Production. 989 labor is continually absorbed in the reproduction and re- placement of consumed constant capital, although this newly added labor resolves itself altogether in revenues, in wages, profit and rent. But it is always overlooked, 1) that one portion of the value of this new labor is not a product of this new labor, but previously existing and consumed con- stant capital; that the portion of the product, in which this part of value presents itself, cannot be converted into reve- nue, but replaces the means of production of this constant capital in their natural form. 2) It is overlooked that the poiition of value, in which this newly added labor is actually represented, is not consumed as revenue in its natural form, but replaces the constant capital in another sphere, where it is moulded into a natural form, in which it may be con- sumed as revenue, but which in its turn is not wholly a prod- uct of newly added labor.
To the extent that reproduction takes place on the same scale, every consumed element of the constant capital must be replaced by a new natural specimen of the same kind, if not in quantity and form, then at least in natural ef- fectiveness. If the productive power of labor remains the same, then this natural replacement implies the reproduction of the same value, which the constant capital had in its old form. But if the productive power of labor is increased, so that the same substantial elements may be reproduced with less labor, then a smaller portion of value of this prod- uct can completely replace the constant part in its natural shape. The surplus may then be employed in the formation of additional capital, or a larger portion of the product may be given the form of articles of consumption, or the surplus labor may be reduced. On the other hand, if the produc- tive power of labor decreases, then a larger portion of the product must be used for the replacement of the old capital; the surplus product decreases.
The reconversion of profit, or of any form of surplus- value, into capital shows — without considering the historic ally defined economic form and looking upon it merely at a simple formation of new means of production — that the 990 Capitalist Production.
condition still continues, in which the laborer performs sur- plus labor for the purpose of producing means of produc- tion, outside of the labor by which he acquires his means of subsistence. Transformation of profit into capital signifies merely the employment of a portion of the surplus labor in the formation of new, additional, means of production. That this takes place in the shape of a conversion of profit into capital, signifies merely that not the laborer, but the capitalist has control of the surplus labor. That this sur- plus labor must first pass through a stage, in which it ap- pears as revenue (whereas in the case of a savage it appear^: as surplus labor aiming directly at the manufacture of means of production), means simply that this labor, or its prod- uct, is appropriated by the non-laborer. But what is actually converted into capital, is not the profit as such. Transfor- mation of surplus-value into capital signifies "merely that the surplus-value and the surplus-product are not consumed in- dividually as revenue of the capitalist. What is actually so converted is the value, the materialized labor, that is, the product in which this value directly presents itself, or for which it is exchanged after having been converted into