money. Even when the profit is reconverted into capital, it is not this definite form of surplus-value, not the profit, which is the source of the new capital. The surplus-value is merely changed from one form into another. But it is not this change of form which gives it the character of capi- tal. It is the commodity and its value, which now perform the function of capital. But that the value of the com- modity is not paid for — and only by this means does it become surplus-value — is quite immaterial for the material- ization of labor, for value itself.
The misunderstanding expresses itself in various forms. For instance, it is said that the commodities, of which the constant capital consists, also contain elements of wages, profit and rent. Or, that the thing, which is revenue for the one, is capital for some one else, and that these are but subjective relations. Thus the yam of the spinner contains a portion of value representing profit for him. If the weaver Analysis of Production. 991 buys the yarn, he realizes the profit of the spinner, but for himself this jam is merely a part of his constant capital.
Aside from the remarks made on this score concerning the relations between revenue and capital, we add the following observations: The value which passes with the yarn as a constituting element into the capital of the weaver, is the value of the yarn. In what manner the parts of this value have resolved themselves for the spinner into capital and revenue, or, in other words, into paid and unpaid labor, is immaterial for the determination of the value of the com- modity itself (aside from modifications by the average profit). Back of this lurks the idea that the profit, or the surplus-value in general, is a surplus above the value of the commodity, which can be made only by raising the price, by mutual cheating, by making a gain through sale. When the price of production is paid, or the value of the commodity, this pays, naturally, also for those portions of the value of commodities, which present themselves to the seller in the shape of revenue. Of course, we are not speaking of mo- nopoly prices here.
In the second place, it is quite correct to say that the component parts of a commodity which make up the con- stant capital, like any other value of commodities, may be reduced to parts of value, which resolve themselves for the producers and the owners of the means of production into wages, profit and rent. This is merely a capitalist form of expression for the fact that all value of commodities is but the measure of the socially necessary labor contained in the commodities. But avo have already shown in Volume I, that this does not prevent a separation of the produced com- modities of any capital into separate parts, of which the one represents exclusively the constant portion of capital, another the variable portion of capital, and a third one only surplus- value.
Storch expresses the opinion of many others, when he says: "The salable products, which make up the national revenue, must be considered in political economy in two ways. They must be considered in their relations to indi- 992 Capitalist Production.
viduals as values and in their relations to the nation as goods, For the revenue of a nation is not appreciated like that of an individual, by its value, but by its utility or by the wants which it can satisfy." {Considerations sur le revenu nor iional, p. 19.)
In the first place, it is a false abstraction to regard a nation, whose mode of production is based upon value and otherwise capitalistically organized, as an aggregate body working merely for the satisfaction of the national wants.
In the second place, after the abolition of the capitalist mode of production, but with social production still in vogue, the determination of value continues to prevail in such a way that the regulation of the labor time and the distribution of the social labor among the various groups of production, also the keeping of accounts, in connection with this, become more essential than ever CHAPTER L.
THE SEMBLANCE OF COMPETITION.
We have shown, that the value of commodities, or the price of production regulated by their total value, resolves itself into: 1) One portion of value replacing constant capital, or representing past labor, used up in the form of means of pro- duction in the making of the commodity. This, in brief, is the value, or price, which these means of production car- ried into the process of production of the commodities. We never speak of individual commodities in this case, but of commodity-capital, that is, of that form, in which the prod- uct of capital during a certain period of time, say of one year, presents itself, and of which the individual commodity forms one element, which, moreover, so far as its value is concerned, resolves itself into the same analogous constituents.
2) One portion of value representing variable capital.
The Semblance of Competition. 993 which measures the income of the laborer and converts itself into wages for him. The laborer has produced these wages in this variable portion of value. This, briefly, is that por- tion of value, which represents the paid portion of the new labor added to the above constant portion in the production of commodities.
3) Surplus- Value, which is that portion of the value of the produced commodities, in which the unpaid, or surplus la- bor is incorporated. This last portion of the value in its turn assumes the independent forms, which are at the same time forms of revenue, namely the forms of profit on capi- tal (interest on capital as such and profit of enterprise on capital in productive work) and ground-rent, which is claimed by the owner of the land participating in the proc- ess of production. The parts mentioned under 2) and 3), that is, that portion of value, Avhich always assumes the reve- nue forms of wages (but only after having first gone through the form of variable capital), profit and rent, is dis- tinguished from the constant portion mentioned under 1) by the fact that in it that entire portion of value is dis- solved, in which the additional labor added to that constant part, to the means of production of the commodities, is ma- terialized. Xow, if we leave aside the constant portion, then it is correct to say that the value- of a commodity, to the extent that it represents newly added labor, continually re- solves itself into three parts, which form three forms of reve- nue, namely wages, profit and rent,^^*' in which the respective "" In separating the value added to the constant portion of value into wages, profit and ground rent, it is a matter of course that these are portions of value. One may, indeed conceive them as existing in the direct product created by laborers and capitalists in some particular sphere of production, for instance, yarn pioduced in a spinnery. But in fact they do not materialize in this product any more or any less than in any other commodity, in any other part of the material wealth having the same value. And in practice wages are paid in money, that is, in the pure form of value; likewise interest and rent. For the capitalist, the transformation of his product into the pure expression of value is indeed very important; in the distribution itself its existence is already assumed. Whether these values are reconverted into the same product, out of whose production they arose, whether the laborer buys back a part of the product directly produced by himself or the product of some other labor of a different kind, has nothing to do with the matter itself. Mr. Rodbertus quite unnecessarily goes into a passion about this.
3K 994 Capitalist Production magnitudes of value, that is the aliquot portions, which they constitute in the total value, are determined by various pecul- iar laws, which we have analysed previously. But on the other hand, it would be a mistake to say that the value of wages, the rate of profit, and the rate of rent form inde- pendent constituent elements of value, whose composition gives rise to the value of commodities, leaving aside the con- stant part; in other words, it would be a mistake to say that they are constituent elements of the value of commodities, or di the price of production. ^^^ The difference is easily seen.
Take it that the value of the product of a capital of 500 h equal to 400 c + 100 v + 150 s = 650; let tlie 150 a be divided into 75 profit -|- 75 rent. We will also assume, in order to forestall useless difficulties, that this is a capital of average composition, so that its price of production and its value coincide; this coincidence always takes place, when- ever the product of such an individual capital may be con- sidered as the product of some portion of the total capital corresponding to the same magnitude.
Here the wages, measured by the variable capital, form 20% of the advanced capital; the surplus-value, calculated on the total capital, forms 30%, namely 15% profit and 15% rent. The entire portion of value of the commodity representing the newly added labor is equal to 100 v -f" 150 s =.250. Its magnitude does not depend upon its di- vision into wages, profit and rent. We see by the propor- tion of these parts to each other that a labor-power, which is paid with 100 in money, say 100 pounds sterling, has supplied a quantity of labor represented by money to the amount of 250 pounds sterling. We see from this that the laborer performed one and a half times as much surplus labor as he did labor for himself. If the working day con- tained 10 hours, then he worked 4 hours for himself and 6 *" " It will be sufficient to remark that the same general rule, which regulates the value of raw produce and manufactured commodities, is applicable also to the metals; their value depending not on the rate of profits, nor on the rate of wages, aor on the rent paid for mines, hut on the total quantity of labor necessary to ob- tain the metal and to bring it to market." (Ricardo Principles, Chapter III, p. 77.)
TJie Semblance of Comfetition. 995 hours for the capitalist. Therefore the labor of the laborers paid with 100 pounds sterling is expressed in money to the amount of 250 pounds sterling. Outside of this value of 250 pounds sterling there is nothing to divide between la- borer and capitalist, between capitalist and landlord. It is the total value newly added to the value of 400, which is the value of the means of production. The value of 250 thus produced and determined by the quantity of labor material- ized by it in the commodities forms the limit of the divi- dend, which the laborer, the capitalist and the landlord will be able to draw out of this value in the shape of the revenues, wages, profit and rent.
Take it that a capital of the same organic composition, that is, of the same proportion between the employed living labor-power and the constant capital set in motion by it, should be compelled to pay 150 pounds sterling instead of 100 pounds sterling for the same labor-power which sets in motion the constant capital of 400. And let us further as- sume that profit and rent should share the surplus-value in a different proportion. As we have assumed that the vari- able capital of 150 pounds sterling sets the same quantity of labor in motion as the variable capital of 100 did, the newly added value would be 250 as before, and the total value of the product would be 650, also as before. But the formula would then read: 400 c + 150 v -f 100 s, and these 100 s would be divided, say, into 45 profit and 55 rent. The pro- portion^ in which the newly produced total value would now be divided among wages, profit and rent, would now be very different. The magnitude of the advanced total capital would also be very different, although it would set only the same total quantity of labor in motion. The wages would amount to 27^%, the profit to 8^%, and the rent to 10% of the ad- vanced capital. The total surplus-value would, therefore, amount to a little over 18%.
In consequence of the raise in wages the unpaid portion of the total labor would be changed and with it the surplus- value. If the working day contained 10 hours, the laborer would work 6 hours for himself and 4 hours for the capital- Capitalist Production.
ist. The proportion of profit and rent would also be changed, the reduced surplus-value would be divided in a different pro- portion between the capitalist and the landlord. Finally, since the value of the constant capital would have remained the same, while the value of the advanced variable capital would have risen, the reduced surplus-value would express itself in a still more reduced rate of gross profit, by which we mean here the proportion between the total surplus-value and the advanced total capital.
The change in the value of wages, in the rate of profit, and in the rate of rent, whatever might be the effect of the laws regulating the proportion of these parts, could move only within the limits set by the newly produced value of com- modities amounting to 250. An exception could take place only, if rent should rest upon a monopoly price. This would not alter the law itself, but merely complicate its analysis. For if we consider only the product itself in this case, then merely the division of the surplus-value would be different. But if we consider its relative value as compared to other commodities, then we should find no other difference but that a portion of the surplus-value had been transferred from them to this particular commodity.
Let us sum up: I Value of Product New Value Rate of Surplus-Value Rate of Gross-Profit In the first place, the surplus-value falls by one-third from its former figure, it falls from 150 to 100. The rate of profit falls by a little more than one-third, from 30% to 18%, be- cause the reduced surplus-value must be calculated on an in- creased advance of total capital. But it does not fall in the same proportion as the rate of surplus-value. This last falls from ^f|to|oo^ ^j^a^ jg^ f^.^^^ -^50^^ to 66f %, whereas the rate of profit falls only from ^f |- to |f|or from 30% to 18 3^%. The rate of profit, then, falls proportionately more than the mass of surplus-value, but less than the rate of surplus-value. We find, furthermore, that the values as well as the masses of products remain the same, so long as the same quantity of TJic Semblance of Competition. 997 labor is employed, although the advanced capital has increased by the augmentation of its variable portion. This increase of the advanced capital would indeed make itself felt for a capitalist who would start out in business. But looking upon reproduction as a whole, the augmentation of the variable capital means merely that a larger portion of the new value added by newly performed labor is converted into wages, and thus at first into variable capital instead of into surplus-value and surplus products. The value of the product thus remains the same, because it is bounded on the one hand by the value of the constant capital, 400, and on the other hand by the figure 250, in which the newly added labor is represented. Both of these values remain unaltered. The product would represent the same amount of use-value in the same quantity of exchange-value, to the extent that it would return into the constant capital, so that the same mass of elements of con- stant capital w^ould retain the same value. The matter would be different, if the wages should rise, not because the laborer would receive a larger share of his own labor, but if he should receive a larger portion of his own labor, because the produc- tivity of labor would have decreased. In this case, the total value, in which this same labor, paid and unpaid, would be incorporated, would remain the same. But the mass of prod- ucts, in which this quantity of labor would be incorporated, would be less, so that the price of each aliquot portion of this product would rise, because each portion would con- tain more labor. The increased wages of 150 would not rep- resent any more labor than the wages of 100 did before; the reduced surplus-value of 100 would represent merely two- thirds of the product which it did previously, only 66f% of the mass of use-values, which were formerly represented by 100. In this case the constant capital would also become dearer to the extent that this product would go back into it. But this would not be the result of the increase in wages. This increase in wages would rather be a result of the in- crease in the price of commodities and a result of the dimin- ished productivity of the same quantity of labor. Here the impression is given that the raise in wages made the product 998 Capitalist Production.
dearer; however, this raise is not the cause, but rather a re- sult of a change in the value of the commodities, due to the decreased productivity of labor.
On the other hand, so long as all other circumstances re- main the same, so long as the same quantity of employed la- bor is represented by 250, and the value of the means of pro- duction handled by it should then rise or fall, then the value of the same quantity of products would rise or fall by the same magnitude. 450 c + 100 v + 150 s make the value of the product equal to 700. But 350 c + 100 v + 150 s would make the value of the same quantity of products only equal to 600, as against a former 650. Hence, if the advanced capital should increase or decrease, while it sets the same quantity of labor in motion, the value of its product would rise or fall, other circumstances remaining the same, if the increase or decrease of the advanced capital is due to a change in the value of the constant portion of capital. On the other hand, the value of the product remains unchanged, if the increase or decrease of the advanced capital is caused by a change in the value of the variable portion of capital, provided that the productivity of labor remains the same. In the case of the constant capital, the increase or decrease of its value is not balanced by any opposite movement. But in the case of the variable capital, so long as the productivity of labor remains the same, an increase or decrease of its value is balanced by the oj^posite movement on the part of the sur- plus-value, so that the value of the variable capital plus the surplus-value, that is, the new value added by new labor to the means of production and newly incorporated in the prod- uct, remains the same.
But if the increase or decrease of the value of the vari- able capital is due to a rise or fall in the price of commodi- ties, that is, to an increase or decrease of the productivity of the labor employed by this investment of capital, then the value of the product is affected. Only, the rise or fall of wages in this case is not a cause, but an effect.
On the other hand, if the constant capital in the above illustration should remain at 400 c, and if the change from The Semblance of Competition. 999 100 V -f- 150 s to 150 v^ -(- 100 s, that is, an increase of the variable capital, should be due to a decrease in the produc- tivity of labor, not in this same particular line of industry, say in cotton spinning, but perhaps in agriculture, so that it would be a result of a rise in the price of foodstuffs, then the value of the product would remain unchanged. The value of 650 would still be represented by the same quantity of cotton yarn.
The foregoing leads furthermore to the folloAving conclu- sions: If a decrease in the expenditure of constant capital is due to economies, etc., in such lines of production as sup- ply agi'iculture with their products, then this, like a direct improvement in the productivity of the employed labor it- self, may lead to a reduction of wages, because it would lead to a cheapening of the subsistence of the laborer, and this would imply an increase of the surplus-value; so that the rate of profit in this case would grow for two reasons, namely on the one hand, because the value of the constant capital would decrease, and on the other hand, because the surplus- value would increase. In our analysis of the conversion of surplus-value into profit we assumed that the wages would not fall, but remain constant, because there we had to inves- tigate the fluctuations of the rate of profit, independent of the changes in the rate of surplus-value. Moreover, the laws which we developed in that case are general ones, and apply also to investments of capital, the products of which do not pass over into the consumption of the laborer, and in that case changes in the value of the product are without influence upon the wages.
We know, then, that the separation and distribution of the new value added by new labor annually to the means of production, or to the constant part of capital, among the various forms of revenue, namely wages, profit and rent, do not alter the limits of this value itself, do not alter the sum of value to be so distributed; neither can a change in the proportions of these different parts alter their sum, which looo Capitalist Production.
makes up this given magnitude of value. A given figure of 100 always remains the same, whether it is divided into 50 + 50, or into 20 + 70 + 10, or into 40 + 30 + 30. That portion of the value of the product, which is divided into these revenues, is determined, like the constant portion of the value of capital, by the value of commodities, that is, by the quantity of the labor incorporated in them from case to case. In the first place, then, the quantity of value of the commodi- ties to be distributed among wages, profit and rent is given; in other words, the absolute limit of the sum of the portions of value of these commodities. In the second place, as con- cerns the individual categories themselves, their average and regulating limits are likewise given. The wages form the basis in this limitation. The wages are regulated on the one side by a natural law; their minimum is determined by the physical minimum required by the laborer for the conserva- tion of his labor-power and for its reproduction; this means a minimum quantity of commodities. The value of these commodities is determined by the labor time required for their reproduction; it is determined by that portion of the new labor added to the means of production, or by that portion of each working day, which the laborer must have for the production and reproduction of an equivalent for the value of these necessary means of subsistence. For instance, if his average daily food requirements have the value of six hours of average labor, then he must work on an average six hours per day for himself. The actual value of his labor- power differs from this physical minimum; it differs accord- ing to climate and condition of social development; it de- pends not merely upon the physical, but also upon the histor- ically developed social needs, which become second nature. But in every country and at any given period this regulating average wage is a given magnitude. The value of all other revenues thus has its limit. It is always equal to the value, in which the total working day (which coincides in the pres- ent case with the average working day, since it comprises the total quantity of labor set in motion by the total social cap- ital) is incorporated, minus that portion of this working day, The Semblance of Competition. looi which is incorporated in wages. Its limit is therefore de- termined by the limit of that value, in which the unpaid la- bor is expressed, that is, by the quantity of this unpaid labor. While that portion of the working day, which is required by the laborer for the reproduction of the value of his wages, finds its ultimate limit in the physical minimum of wages, the other portion of the working day, in which surplus labor is incorporated, and with it that portion of value which stands for surplus-value, finds its limit in the physical max- imum of the working day, that is, in the total quantity of daily labor time, during which the laborer can be active al- together and still preserve and reproduce his labor-power. As we are here concerned in the distribution of that value, which represents the total labor newly added per year, the working day may here be regarded as a constant magnitude, and is taken for granted as such, no matter how much or how little it may differ from its physical maximum. The ab- solute limit of that portion of value, which forms surplus- value, and which resolves itself into profit and ground-rent, is thus given. It is determined by the excess of the unpaid portion of the working day over its paid portion, which means by that portion of the value of the total product, in which this surplus labor is realized. If we call the surplus- value thus limited and calculated on the advanced total cap- ital the profit, as I have done, then this profit, so far as its absolute magnitude is concerned, is equal to the surplus-value and, therefore, determined in its boundaries by the same laws as it. On the other hand, the level of the rate of profit is likewise a magnitude inclosed within certain limits by the value of commodities. This rate is the proportion of the total surplus-value to the total social capital advanced in pro- duction. If this capital is equal to 500 (say millions) and the surplus-value equal to 100, then 20% form the absolute limit of the rate of profit. The distribution of the social profit at this rate among the various capitals invested in the different spheres of production creates prices of production, which swerve from the values of commodities, and these prices of production are the real regulating average market 1002 Capitalist Production.
lyriees. But this deviation of prices of production from val- ues abolishes neither the determination of prices by values nor the lawful limits of profit. Instead of the value of a commodity being equal to the capital consumed in it plus the surplus-value contained in it, its price of production is i then equal to the capital, k, consumed in it plus the surplus- value falling to its share as a result of the average rate of profit, for instance 20% of the capital advanced in its pro- duction, counting both the consumed and the merely em- ployed capital. But this addition of 20% is itself deter- mined by the surplus-value created by the total social capital, and by its proportion to the value of this capital; and for this reason it is 20% and not 10% or 100%. The trans- formation of the values into prices of production, then, does not abolish the limits of profit, but merely alters its distribu- tion among the various particular capitals, which make up the total social capital, distributes it uniformly among them in the proportion in which they form parts of the value of this total capital. The market prices fall below or rise above these regulating prices of production, but these fluc- tuations balance each other. If one studies price lists dur-