III. Chapter on Capital - Section 2: Circulation process of Capital

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Continuation of Notebook I[edit source]

Transition from the process of the production of capital into the process of circulation. – Devaluation of capital itself owing to increase of productive forces. (Competition.) (Capital as unity and contradiction of production process and realization process.) Capital as barrier to production. – Overproduction. (Demand by the workers themselves.) – Barriers to capitalist production[edit source]

We have now seen how, in the realization process, capital has (1) maintained its value by means of exchange itself (exchange that is, with living labour); (2) increased, created a surplus value. There now appears, as the result of this unity of the process of production and the process of realization, the product of the process, i.e. capital itself, emerging as product from the process whose presupposition it was – as a product which is a value, or, value itself appears as the product of the process, and specifically a higher value, because it contains more objectified labour than the value which formed the point of departure. This value as such is money. However, this is the case only in itself; it is not posited as such; that which is posited at the outset, which is on hand, is a commodity with a certain (ideal) price, i.e. which exists only ideally [ideell] as a certain sum of money, and which first has to realize itself [sich realisieren] as such in the exchange process, hence has to re-enter the process of simple circulation in order to be posited as money. We now come therefore to the third side of the process in which capital is posited as such.

(3) Looked at precisely, that is, the realization process of capital – and money becomes capital only through the realization process – appears at the same time as its devaluation process [Entwertungsprozess], its demonetization. And this in two respects. First, to the extent that capital does not increase absolute labour time but rather decreases the relative, necessary labour time, by increasing the force of production, to that extent does it reduce the costs of its own production – in so far as it was presupposed as a certain sum of commodities, reduces its exchange value: one part of the capital on hand is constantly devalued owing to a decrease in the costs of production at which it can be reproduced; not because of a decrease in the amount of labour objectified in it, but because of a decrease in the amount of living labour which it is henceforth necessary to objectify in this specific product. This constant devaluation of the existing capital does not belong here, since it already presupposes capital as completed. It is merely to be noted here in order to indicate how later developments are already contained in the general concept of capital. Belongs in the doctrine of the concentration and competition of capitals. – The devaluation being dealt with here is this, that capital has made the transition from the form of money into the form of a commodity, of a product, which has a certain price, which is to be realized. In its money form it existed as value. It now exists as product, and only ideally as price; but not as value as such. In order to realize itself, i.e. to maintain and to multiply itself as value, it would first have to make the transition from the form of money into that of use values (raw material – instrument – wages); but it would thereby lose the form of value; and it now has to enter anew into circulation in order to posit this form of general wealth anew. The capitalist now enters the process of circulation not simply as one engaged in exchange, but as producer, and the others engaged in exchange are, relative to him, consumers. They must exchange money in order to obtain his commodity for their consumption, while he exchanges his product to obtain their money. Suppose that this process breaks down – and the separation by itself implies the possibility of such a miscarriage in the individual case – then the capitalist’s money has been transformed into a worthless product, and has not only not gained a new value, but also lost its original value. But whether this is so or not, in any case devaluation forms one moment of the realization process; which is already simply implied in the fact that the product of the process in its immediate form is not value, but first has to enter anew into circulation in order to be realized as such. Therefore, while capital is reproduced as value and new value in the production process, it is at the same time posited as not-value, as something which first has to be realized as value by means of exchange. The three processes of which capital forms the unity are external; they are separate in time and space. As such, the transition from one into the other, i.e. their unity as regards the individual capitalists, is accidental. Despite their inner unity, they exist independently alongside one another, each as the presupposition of the other. Regarded broadly and as a whole, this inner unity must necessarily maintain itself to the extent that the whole of production rests on capital, and it must therefore realize all the necessary moments of its self-formation, and must contain the determinants necessary to make these moments real. But at the point we have reached so far, capital still does not appear as the determinant of circulation (exchange) itself but merely as one moment of the latter, and it appears to stop being capital just at the point where it enters into circulation. As a commodity, capital now shares the fate of commodities in general; it is a matter of accident whether or not it is exchanged for money, whether its price is realized or not.

In the production process itself – where capital continued to be presupposed as value – its realization appeared totally dependent solely on the relation of itself as objectified labour to living labour; i.e. on the relation of capital to wage labour. But now, as a product, as a commodity, it appears dependent on circulation, which lies outside this process. (In fact, as we have seen, it returns into it as its ground, but also and equally emerges from it again.)[1] As a commodity, it must be (1) a use value and, as such, an object of need, object of consumption; (2) it must be exchanged for its equivalent – in money. The new value can be realized only through a sale.

If it contained objectified labour at a price of 100 thalers before, and now at a price of 110 (the price here merely an expression, in money, of the amount of objectified labour), then this has to be demonstrated through the exchange of the labour objectified in the newly produced commodity for 110 thalers. The product is devalued [entwertet] initially in so far as it must be exchanged for money at all, in order to obtain its form as value again. Inside the production process, realization appeared totally identical with the production of surplus labour (the objectification of surplus time), and hence appeared to have no bounds other than those partly presupposed and partly posited within this process itself, but which are always posited within it as barriers to be forcibly overcome. There now appear barriers to it which lie outside it. To begin with, even on an entirely superficial inspection, the commodity is an exchange value only in so far as it is at the same time a use value, i.e. an object of consumption (still entirely irrelevant here, what kind of consumption); it ceases to be an exchange value when it ceases to be a use value (since it does not yet exist as money again, but rather still in a specific mode of existence coinciding with its natural quality). Its first barrier, then, is consumption itself – the need for it. (Given the present presuppositions, there is no basis whatever for speaking of ineffective, non-paying needs; i.e. a need which does not itself possess a commodity or money to give in exchange.) Then, secondly, there has to be an equivalent for it, and, since circulation was presupposed at the outset as a constant magnitude – as having a given volume – but since, on the other hand, capital has created a new value in the production process, it seems indeed as if no equivalent were available for it. Thus, by emerging from the production process and re-entering circulation, capital (a) as production, appears to encounter a barrier in the available magnitude of consumption – of consumption capacity. As a specific use value, its quantity is irrelevant up to a certain point; then, however, at a certain level – since it satisfies only a specific need – it ceases to be required for consumption. As a specific, one-sided, qualitative use value, e.g. grain, its quantity itself is irrelevant only up to a certain level; it is required only in a specific quantity; i.e. in a certain measure. This measure, however, is given partly in its quality as use value – its specific usefulness, applicability – partly in the number of individuals engaged in exchange who have a need for this specific consumption. The number of consumers multiplied by the magnitude of their need for this specific product. Use value in itself does not have the boundlessness of value as such. Given objects can be consumed as objects of needs only up to a certain level. For example: No more than a certain amount of grain is consumed etc. Hence, as use value, the product contains a barrier – precisely the barrier consisting of the need for it – which, however, is measured not by the need of the producers but by the total need of all those engaged in exchange. Where the need for a certain use value ceases, it ceases to be a use value. It is measured as a use value by the need for it. But as soon is it ceases to be a use value, it ceases to be an object of circulation (in so far as it is not money). (b) As new value and as value as such, however, it seems to encounter a barrier in the magnitude of available equivalents, primarily money, not as medium of circulation but as money. The surplus value (distinct, obviously, from the original value) requires a surplus equivalent. This now appears as a second barrier.

(c) Money – i.e. wealth as such, i.e. wealth existing in and because of the exchange for alien objectified labour – originally appeared to collapse into itself [in sich zusammenzufallen] to the extent that it did not proceed to the exchange for alien living labour, i.e. to the production process. Circulation was incapable of renewing itself from within itself. At the same time, the production process now appears to be in a fix, in as much as it is not able to make the transition into the process of circulation. Capital, as production resting on wage labour, presupposes circulation as the necessary condition and moment of the entire motion. This specific form of production presupposes this specific form of exchange which finds its expression in the circulation of money. In order to renew itself, the entire product has to be transformed into money; not as in earlier stages of production, where exchange is by no means concerned with production in its totality, but only with superfluous production and superfluous products.

These are, then, the contradictions which present themselves of their own accord to a simple, objective, non-partisan view. How they are constantly suspended in the system of production resting on capital, but also constantly created again – and are suspended only by force (although this suspension appears up to a certain point merely as a quiet equilibration) – this is another question. The important thing at present is to take note of the existence of these contradictions. All the contradictions of circulation come to life again in a new form. The product as use value is in contradiction with itself as value; i.e. in as much as it exists in a specific quality, as a specific thing, as a product of specific natural properties, as a substance of need in contradiction with its substance as value, which it possesses exclusively on account of its being objectified labour. But this time, this contradiction is posited not merely as it was in circulation, as a merely formal difference; rather the quality of being measured by use value is here firmly determined as the quality of being measured by the total requirement for this product by all those engaged in exchange – i.e. by the amount of total consumption. The latter here appears as measure for it as use value and hence also as exchange value. In simple circulation it had simply to be transposed from the form of a particular use value into the form of exchange value. Its barrier then appeared only in the fact that, [coming] from circulation, it existed in a particular form owing to its natural composition, rather than in the value form in which it could be exchanged for all other commodities directly. What is posited now is that the measure of its availability is given in its natural composition itself. In order to be transposed into the general form, the use value has to be present in a limited and specific quantity; a quantity whose measure does not lie in the amount of labour objectified in it, but arises from its nature as use value, in particular, use value for others. At the same time, the previous contradiction, that money for-itself [das für sich seiende Geld] had to proceed to exchange itself for living labour, now appears even greater, in as much as the surplus money, in order to exist as such, or the surplus value, has to exchange itself for surplus value. Hence, as value, it encounters its barrier in alien production, just as, as use value, its barrier is alien consumption; in the latter, its measure is the amount of need for the specific product, in the former, the amount of objectified labour existing in circulation. The indifference of value as such towards use value is thereby brought into just as false a position [Position] as are, on the other side, the substance of value and its measure as objectified labour in general.[2]

The main point here – where we are concerned with the general concept of capital – is that it is this unity of production and realization, not immediately but only as a process, which is linked to certain conditions, and, as it appeared, external conditions.[3]

The creation by capital of absolute surplus value – more objectified labour – is conditional upon an expansion, specifically a constant expansion, of the sphere of circulation. The surplus value created at one point requires the creation of surplus value at another point, for which it may be exchanged; if only, initially, the production of more gold and silver, more money, so that, if surplus value cannot directly become capital again, it may exist in the form of money as the possibility of new capital. A precondition of production based on capital is therefore the production of a constantly widening sphere of circulation, whether the sphere itself is directly expanded or whether more points within it are created as points of production. While circulation appeared at first as a constant magnitude, it here appears as a moving magnitude, being expanded by production itself. Accordingly, it already appears as a moment of production itself. Hence, just as capital has the tendency on one side to create ever more surplus labour, so it has the complementary tendency to create more points of exchange; i.e., here, seen from the standpoint of absolute surplus value or surplus labour, to summon up more surplus labour as complement to itself; i.e. at bottom, to propagate production based on capital, or the mode of production corresponding to it. The tendency to create the world market is directly given in the concept of capital itself. Every limit appears as a barrier to be overcome. Initially, to subjugate every moment of production itself to exchange and to suspend the production of direct use values not entering into exchange, i.e. precisely to posit production based on capital in place of earlier modes of production, which appear primitive [naturwüchsig] from its standpoint. Commerce no longer appears here as a function taking place between independent productions for the exchange of their excess, but rather as an essentially all-embracing presupposition and moment of production itself.[4]

On the other side, the production of relative surplus value, i.e. production of surplus value based on the increase and development of the productive forces, requires the production of new consumption; requires that the consuming circle within circulation expands as did the productive circle previously. Firstly quantitative expansion of existing consumption; secondly: creation of new needs by propagating existing ones in a wide circle; thirdly: production of new needs and discovery and creation of new use values. In other words, so that the surplus labour gained does not remain a merely quantitative surplus, but rather constantly increases the circle of qualitative differences within labour (hence of surplus labour), makes it more diverse, more internally differentiated. For example, if, through a doubling of productive force, a capital of 50 can now do what a capital of 100 did before, so that a capital of 50 and the necessary labour corresponding to it become free, then, for the capital and labour which have been set free, a new, qualitatively different branch of production must be created, which satisfies and brings forth a new need. The value of the old industry is preserved by the creation of the fund for a new one in which the relation of capital and labour posits itself in a new form. Hence exploration of all of nature in order to discover new, useful qualities in things; universal exchange of the products of all alien climates and lands; new (artificial) preparation of natural objects, by which they are given new use values.[5] The exploration of the earth in all directions, to discover new things of use as well as new useful qualities of the old; such as new qualities of them as raw materials etc.; the development, hence, of the natural sciences to their highest point; likewise the discovery, creation and satisfaction of new needs arising from society itself; the cultivation of all the qualities of the social human being, production of the same in a form as rich as possible in needs, because rich in qualities and relations – production of this being as the most total and universal possible social product, for, in order to take gratification in a many-sided way, he must be capable of many pleasures [genussfähig], hence cultured to a high degree – is likewise a condition of production founded on capital. This creation of new branches of production, i.e. of qualitatively new surplus time, is not merely the division of labour, but is rather the creation, separate from a given production, of labour with a new use value; the development of a constantly expanding and more comprehensive system of different kinds of labour, different kinds of production, to which a constantly expanding and constantly enriched system of needs corresponds.

Thus, just as production founded on capital creates universal industriousness on one side – i.e. surplus labour, value-creating labour – so does it create on the other side a system of general exploitation of the natural and human qualities, a system of general utility, utilizing science itself just as much as all the physical and mental qualities, while there appears nothing higher in itself, nothing legitimate for itself, outside this circle of social production and exchange. Thus capital creates the bourgeois society, and the universal appropriation of nature as well as of the social bond itself by the members of society. Hence the great civilizing influence of capital; its production of a stage of society in comparison to which all earlier ones appear as mere local developments of humanity and as nature-idolatry. For the first time, nature becomes purely an object for humankind, purely a matter of utility; ceases to be recognized as a power for itself; and the theoretical discovery of its autonomous laws appears merely as a ruse so as to subjugate it under human needs, whether as an object of consumption or as a means of production. In accord with this tendency, capital drives beyond national barriers and prejudices as much as beyond nature worship, as well as all traditional, confined, complacent, encrusted satisfactions of present needs, and reproductions of old ways of life. It is destructive towards all of this, and constantly revolutionizes it, tearing down all the barriers which hem in the development of the forces of production, the expansion of needs, the all-sided development of production, and the exploitation and exchange of natural and mental forces.

But from the fact that capital posits every such limit as a barrier and hence gets ideally beyond it, it does not by any means follow that it has really overcome it, and, since every such barrier contradicts its character, its production moves in contradictions which are constantly overcome but just as constantly posited. Furthermore. The universality towards which it irresistibly strives encounters barriers in its own nature, which will, at a certain stage of its development, allow it to be recognized as being itself the greatest barrier to this tendency, and hence will drive towards its own suspension.

Those economists who, like Ricardo, conceived production as directly identical with the self-realization of capital – and hence were heedless of the barriers to consumption or of the existing barriers of circulation itself, to the extent that it must represent counter-values at all points, having in view only the development of the forces of production and the growth of the industrial population – supply without regard to demand – have therefore grasped the positive essence of capital more correctly and deeply than those who, like Sismondi, emphasized the barriers of consumption and of the available circle of counter-values, although the latter has better grasped the limited nature of production based on capital, its negative one-sidedness. The former more its universal tendency, the latter its particular restrictedness. The whole dispute as to whether overproduction is possible and necessary in capitalist production revolves around the point whether the process of the realization of capital within production directly posits its realization in circulation; whether its realization posited in the production process is its real realization. Ricardo himself, of course, has a suspicion that the exchange value of a commodity is not a value apart from exchange, and that it proves itself as a value only in exchange; but he regards the barriers which production thereby encounters as accidental, as barriers which are overcome. He therefore conceives the overcoming of such barriers as being in the essence of capital, although he often becomes absurd in the exposition of that view; while Sismondi, by contrast, emphasizes not only the encounter with the barriers, but their creation by capital itself, and has a vague intuition that they must lead to its breakdown. He therefore wants to put up barriers to production, from the outside, through custom, law etc., which of course, as merely external and artificial barriers, would necessarily be demolished by capital. On the other side, Ricardo and his entire school never understood the really modern crises, in which this contradiction of capital discharges itself in great thunderstorms which increasingly threaten it as the foundation of society and of production itself.

The attempts made from the orthodox economic standpoint to deny that there is general overproduction at any given moment are indeed childish. Either, in order to rescue production based on capital (see e.g. MacCulloch),[6] all its specific qualities are ignored and their specific character as forms omitted, and capital is conceived as its inverse, as simple production for immediate use value. Totally abstracts away the essential relations. In fact, in order to cleanse it of contradictions, it is virtually dropped and negated.[7] – Or, like e.g. Mill, more perceptively (copied from the dull Say): supply and demand are allegedly identical, and should therefore necessarily correspond.[8] Supply, namely, is allegedly a demand measured by its own amount. Here a great confusion: (1) This identity of supply, so that it is a demand measured by its own amount, is true only to the extent that it is exchange value = to a certain amount of objectified labour. To that extent it is the measure of its own demand – as far as value is concerned. But, as such a value, it first has to be realized through the exchange for money, and as object of exchange for money it depends (2) on its use value, but as use value it depends on the mass of needs present for it, the demand for it. But as use value it is absolutely not measured by the labour time objectified in it, but rather a measuring rod is applied to it which lies outside its nature as exchange value. Or, it is further said: Supply itself is demand for a certain product of a certain value (which expresses itself in the demanded amount of the product). Then, if the supplied product is unsaleable, it proves that too much has been produced of the supplied commodity and too little of what the supplier demands. Thus allegedly there is no general overproduction, but merely overproduction of one or a few articles, as against underproduction of others. This again forgets that what the producing capital demands is not a specific use value, but value for itself, i.e. money – money not in the role of medium of circulation, but as a general form of wealth, or a form of the realization of capital in one regard, a return to its original dormant state in the other. But the assertion that too little money is produced means indeed nothing else than what is being asserted, that production is not identical with realization, i.e. that it is overproduction, or, what is the same, that it is production which cannot be transformed into money, into value; production which does not pass the test of circulation. Hence the illusion of the money-artists (including Proudhon etc.), that it is a case of lack of means of circulation – on account of the high cost of money – and that more money has to be created artificially.[9] (See also the Birminghamites, e.g. the Gemini.)[10] Or it is said that production and consumption are the same from the social standpoint, that hence an excess or disproportion between the two can never take place. Social standpoint here means the abstraction which ignores precisely the specific social structure and relations and hence also the contradictions which emerge from it. Storch, for example, remarked quite correctly against Say that a great part of consumption is not consumption for immediate use, but consumption in the production process, e.g. consumption of machines, coal, oil, required buildings etc.[11] This consumption is in no way identical with that at issue here. Malthus and Sismondi have likewise correctly remarked that e.g. the workers’ consumption is in no way in itself a sufficient consumption for the capitalist.[12] The moment of realization is here simply thrown out entirely, and production and consumption are simply equated, i.e. not production based on capital but production based directly on use value is presupposed. Or, expressed socialistically:[13] labour and the exchange of labour, i.e. production and its exchange (circulation), are allegedly the entire process; how then could a disproportion arise except by oversight, miscalculation? Labour is here regarded not as wage labour, nor capital as capital. On one side, the consequences of production based on capital are accepted, on the other side the presuppositions and conditions of these consequences are denied – necessary labour as posited by and for surplus labour. Or – e.g. Ricardo – since production is itself regulated by the costs of production, it allegedly regulates itself, and if one branch of production does not realize itself then capital withdraws from it to a certain degree and throws itself on another point where it is needed.[14] But apart from the fact that this necessity of evening-up already presupposes the unevenness, the disharmony and hence the contradiction – in a general crisis of overproduction the contradiction is not between the different kinds of productive capital, but between industrial and loanable capital – between capital as directly involved in the production process and capital as money existing (relatively) outside of it. Finally: proportionate production (this is already in Ricardo also, etc.) only when it is capital’s tendency to distribute itself in correct proportions, but equally its necessary tendency – since it strives limitlessly for surplus labour, surplus productivity, surplus consumption etc. – to drive beyond the proportion. (In competition this inner tendency of capital appears as a compulsion exercised over it by alien capital, which drives it forward beyond the correct proportion with a constant march, march! Free competition, as Mr Wakefield correctly sniffs out in his commentary on Smith, has never yet been developed by the economists, no matter how much they prattle about it, and [no matter] how much it is the basis of the entirety of bourgeois production, production resting on capital.[15] It has been understood only negatively: i.e. as negation of monopolies, the guild system, legal regulations etc. As negation of feudal production. But it also has to be something for itself, after all, since a mere 0 is an empty negation, abstraction, from a barrier which immediately arises again e.g. in the form of monopoly, natural monopolies etc. Conceptually, competition is nothing other than the inner nature of capital, its essential character, appearing in and realized as the reciprocal interaction of many capitals with one another, the inner tendency as external necessity.) (Capital exists and can only exist as many capitals, and its self-determination therefore appears as their reciprocal interaction with one another.) Capital is just as much the constant positing as the suspension of proportionate production. The existing proportion always has to be suspended by the creation of surplus values and the increase of productive forces. But this demand, that production should be expanded simultaneously and at once in the same proportion, makes external demands upon capital which in no way arise out of it itself; at the same time, the departure from the given proportion in one branch of production drives all of them out of it, and in unequal proportions. So far (for we have not yet reached the aspect of capital in which it is circulating capital, and still have circulation on one side and capital on the other, or production as its presupposition, or ground from which it arises), even from the standpoint of production alone, circulation contains the relation to consumption and production – in other words, surplus labour as counter value [Gegenwert], and differentiation of labour in an ever richer form.

The simple concept of capital has to contain its civilizing tendencies etc. in themselves; they must not, as in the economics books until now, appear merely as external consequences. Likewise the contradictions which are later released, demonstrated as already latent within it.

So far in the realization process, we have only the indifference of the individual moments towards one another; that they determine each other internally and search for each other externally; but that they may or may not find each other, balance each other, correspond to each other. The inner necessity of moments which belong together, and their indifferent, independent existence towards one another, are already a foundation of contradictions.

Still, we are by no means finished. The contradiction between production and realization – of which capital, by its concept, is the unity – has to be grasped more intrinsically than merely as the indifferent, seemingly reciprocally independent appearance of the individual moments of the process, or rather of the totality of processes.

To approach the matter more closely: First of all, there is a limit, not inherent to production generally, but to production founded on capital. This limit is double, or rather the same regarded from two directions. It is enough here to demonstrate that capital contains a particular restriction of production – which contradicts its general tendency to drive beyond every barrier to production – in order to have uncovered the foundation of overproduction, the fundamental contradiction of developed capital; in order to have uncovered, more generally, the fact that capital is not, as the economists believe, the absolute form for the development of the forces of production – not the absolute form for that, nor the form of wealth which absolutely coincides with the development of the forces of production. The stages of production which precede capital appear, regarded from its standpoint, as so many fetters upon the productive forces. It itself, however, correctly understood, appears as the condition of the development of the forces of production as long as they require an external spur, which appears at the same time as their bridle. It is a discipline over them, which becomes superfluous and burdensome at a certain level of their development, just like the guilds etc. These inherent limits have to coincide with the nature of capital, with the essential character of its very concept. These necessary limits are:

(1) Necessary labour as limit on the exchange value of living labour capacity or of the woes of the industrial population;

(2) Surplus value as limit on surplus labour time; and, in regard to relative surplus labour time, as barrier to the development of the forces of production;

(3) What is the same, the transformation into money, exchange value as such, as limit of production; or exchange founded on value, or value founded on exchange, as limit of production. This is:

(4) again the same as restriction of the production of use values by exchange value; or that real wealth has to take on a specific form distinct from itself, a form not absolutely identical with it, in order to become an object of production at all.

However, these limits come up against the general tendency of capital (which showed itself in simple circulation, where money as medium of circulation appeared as merely vanishing, without independent necessity, and hence not as limit and barrier) to forget and abstract from:

(1) necessary labour as limit of the exchange value of living labour capacity; (2) surplus value as the limit of surplus labour and development of the forces of production; (3) money as the limit of production; (4) the restriction of the production of use values by exchange value.

Hence overproduction: i.e. the sudden recall of all these necessary moments of production founded on capital; hence general devaluation in consequence of forgetting them. Capital, at the same time, [is] thereby faced with the task of launching its attempt anew from a higher level of the development of productive forces, with each time greater collapse as capital. Clear, therefore, that the higher the development of capital, the more it appears as barrier to production – hence also to consumption – besides the other contradictions which make it appear as burdensome barrier to production and intercourse.

<The entire credit system, and the over-trading, over-speculation etc. connected with it, rests on the necessity of expanding and leaping over the barrier to circulation and the sphere of exchange. This appears more colossally, classically, in the relations between peoples than in the relations between individuals. Thus e.g. the English forced to lend to foreign nations, in order to have them as customers. At bottom, the English capitalist exchanges doubly with productive English capital, (1) as himself, (2) as Yankee etc. or in whatever other form he has placed his money.>

<Capital as barrier to production is pointed out: e.g. Hodgskin:[16] ‘In the present state, every accumulation of capital adds to the amount of profit demanded from the labourer, and extinguishes all that labour which would only procure the labourer his comfortable existence … Profit the limitation of production.’ (H[odgskin, Notebook,] p. 46.)[17] Through foreign trade, the barrier of the sphere of exchange [is] expanded, and [it is] made possible for the capitalist to consume more surplus labour: ‘In a series of years the world can take no more from us than we can take from the world. Even the profits made by our merchants in their foreign trade are paid by the consumer of the return goods here. Foreign trade mere barter, and as such exchange for the convenience and enjoyment of the capitalist. But he can consume commodities to a certain degree only. He exchanges cottons etc. for the wines and silks of foreign countries. But these represent only the surplus labour of our own population as much as the clothes and cottons, and in this way the destructive power of the capitalist is increased beyond all bounds. Thus nature is outwitted.’ (Source and Remedy etc., pp. 27, 28.)[18] How the glut is connected with the barrier of necessary labour: ‘The very meaning of an increased demand by the labourers is, a disposition to take less themselves, and leave a larger share for their employers; and if it be said that this, by diminishing consumption, increases glut, I can only say that glut then is synonymous with high profits.’ (Enquiry, London, 1821, p. 12.)[19] Herein the one side of the contradiction completely expressed. ‘The practice of stopping labour at that point where it can produce, in addition to the subsistence of the labourer, a profit for the capitalist, opposed to the natural law which regulates production.’ (H[odgskin, Notebook,] 41, IX.)[20] ‘The more the capital accumulates, the more the whole amount of profit demanded does so; so there arises an artificial check to production and population.’ (H[odgskin, Notebook,] 46.)[21] The contradictions between capital as instrument of production in general and as instrument of production of value, developed as follows by Malthus (X, 40 seq.): ‘Profits are invariably measured by value and never by quantity … The wealth of a country depends partly upon the quantity of produce obtained by its labour, and partly upon such an adaptation of this quantity to the wants and powers of the existing population as is calculated to give it value. Nothing can be more certain than that it is not determined by either of them alone. But where wealth and value are perhaps the most nearly connected, is in the necessity of the latter to the production of the former. The value set upon commodities, that is the sacrifice of labour which people are willing to make in order to sustain them, in the actual state of things may be said to be almost the sole cause of the existence of wealth … The consumptive demand occasioned only by the workmen employed in productive labour can never alone furnish a motive to the accumulation and employment of capital … the powers of production alone do not secure the creation of a proportionate degree of wealth, as little as the increase of population. What it requires in addition is such a distribution of produce, and such an adaptation of this produce to the wants of those who are to consume it, as constantly to increase the exchangeable value of the whole mass, i.e. the powers of production are only called fully into motion by the unchecked demand for all that is produced …[22] This is however brought about on the one hand by constantly new branches of industry (and reciprocal expansion of the old), by means of which the old obtain new markets etc. Production indeed itself creates demand, in that it employs more workers in the same branch of business, and creates new branches of business, where new capitalists again employ new workers and at the same time alternately become market for the old; but the demand created by the productive labourer himself can never be an adequate demand, because it does not go to the full extent of what he produces. If it did, there would be no profit, consequently no motive to employ him. The very existence of a profit upon any commodity presupposes a demand exterior to that of the labourer who has produced it.’ ‘Both labourers and capital may be redundant compared with the means of employing them profitably.’>[23]

<To be noted for (3), to which we shall soon proceed, that the provisional accumulation, as which capital appears vis-à-vis labour, and by means of which it is the command over labour, is at first nothing else but surplus labour itself in the form of surplus produce, at the same time claim on alien co-existing labour.>

The point here, of course, is not yet to develop overproduction specifically, but only the predisposition to it, such as it is posited in primitive form in the capital relation itself. We must also, therefore, omit here any regard for the other possessing and consuming etc. classes, which do not produce but live from their revenue, hence exchange with capital; form centres of exchange for it. We can consider them only partly (but better, along with accumulation), in so far as they are most important for the historic formation of capital.

In production based on slavery, as well as in patriarchal agricultural-industrial production, where the greatest part of the population directly satisfies the greatest part of its needs directly by its labour, the sphere of circulation and exchange is still very narrow; and more particularly in the former, the slave does not come into consideration as engaged in exchange at all. But in production based on capital, consumption is mediated at all points by exchange, and labour never has a direct use value for those who are working. Its entire basis is labour as exchange value and as the creation of exchange value.

Well. First of all

the wage worker as distinct from the slave is himself an independent centre of circulation, someone who exchanges, posits exchange value, and maintains exchange value through exchange. Firstly: in the exchange between that part of capital which is specified as wages, and living labour capacity, the exchange value of this part of capital is posited immediately, before capital again emerges from the production process to enter into circulation, or this can be conceived as itself still an act of circulation. Secondly: To each capitalist, the total mass of all workers, with the exception of his own workers, appear not as workers, but as consumers, possessors of exchange values (wages), money, which they exchange for his commodity. They are so many centres of circulation with whom the act of exchange begins and by whom the exchange value of capital is maintained. They form a proportionally very great part – although not quite so great as is generally imagined, if one focuses on the industrial worker proper – of all consumers. The greater their number – the number of the industrial population – and the mass of money at their disposal, the greater the sphere of exchange for capital. We have seen that it is the tendency of capital to increase the industrial population as much as possible.

Actually, the relation of one capitalist to the workers of another capitalist is none of our concern here. It only shows every capitalist’s illusion, but alters nothing in the relation of capital in general to labour. Every capitalist knows this about his worker, that he does not relate to him as producer to consumer, and [he therefore] wishes to restrict his consumption, i.e. his ability to exchange, his wage, as much as possible. Of course he would like the workers of other capitalists to be the greatest consumers possible of his own commodity. But the relation of every capitalist to his own workers is the relation as such of capital and labour, the essential relation. But this is just how the illusion arises – true for the individual capitalist as distinct from all the others – that apart from his workers the whole remaining working class confronts him as consumer and participant in exchange, as money-spender, and not as worker. It is forgotten that, as Malthus says, ‘the very existence of a profit upon any commodity pre-supposes a demand exterior to that of the labourer who has produced it’,[24] and hence the demand of the labourer himself can never be an adequate demand. Since one production sets the other into motion and hence creates consumers for itself in the alien capital’s workers, it seems to each individual capital that the demand of the working class posited by production itself is an ‘adequate demand’. On one side, this demand which production itself posits drives it forward, and must drive it forward beyond the proportion in which it would have to produce with regard to the workers; on the other side, if the demand exterior to the demand of the labourer himself disappears or shrinks up, then the collapse occurs. Capital itself then regards demand by the worker – i.e. the payment of the wages on which this demand rests – not as a gain but as a loss. I.e. the immanent relation between capital and labour asserts itself. Here again it is the competition among capitals, their indifference to and independence of one another, which brings it about that the individual capital relates to the workers of the entire remaining capital not as to workers: hence is driven beyond the right proportion. What precisely distinguishes capital from the master-servant relation is that the worker confronts him as consumer and possessor of exchange values, and that in the form of the possessor of money, in the form of money he becomes a simple centre of circulation – one of its infinitely many centres, in which his specificity as worker is extinguished.[25]

To begin with: capital forces the workers beyond necessary labour to surplus labour. Only in this way does it realize itself, and create surplus value. But on the other hand, it posits necessary labour only to the extent and in so far as it is surplus labour and the latter is realizable as surplus value. It posits surplus labour, then, as the condition of the necessary, and surplus value as the limit of objectified labour, of value as such. As soon as it cannot posit value, it does not posit necessary labour; and, given its foundation, it cannot be otherwise. It therefore restricts labour and the creation of value – by an artificial check, as the English express it – and it does so on the same grounds as and to the same extent that it posits surplus labour and surplus value. By its nature, therefore, it posits a barrier to labour and value-creation, in contradiction to its tendency to expand them boundlessly. And in as much as it both posits a barrier specific to itself, and on the other side equally drives over and beyond every barrier, it is the living contradiction.[26]

While capital thus, on one side, makes surplus labour and its exchange for surplus labour into the precondition of necessary labour and hence of the positing of labour capacity [Arbeitsvermögen] as a centre of exchange – hence already narrows and attaches conditions to the sphere of exchange from this side – it is just as essential to it, on the other side, to restrict the worker’s consumption to the amount necessary to reproduce his labour capacity – to make the value which expresses necessary labour the barrier to the realization of labour capacity and hence of the worker’s exchange capacity, and to strive to reduce the relation of this necessary labour to surplus labour to the minimum. [Thus we have] a new barrier to the sphere of exchange, which is, however, at the same time identical, as is the first, with the tendency of capital to relate to every limit on its self-realization as to a barrier. The boundless enlargement of its value – boundless creation of value – therefore absolutely identical here with the positing of barriers to the sphere of exchange, i.e. the possibility of realization – the realization of the value posited in the production process.

The same with the productive force. On the one hand, the necessary tendency of capital to raise it to the utmost, in order to increase relative surplus time. On the other hand, thereby decreases necessary labour time, hence the worker’s exchange capacity. Further, as we have seen, relative surplus value rises much more slowly than the force of production, and moreover this proportion grows ever smaller as the magnitude reached by the productive forces is greater. But the mass of products grows in a similar proportion – if not, then new capital would be set free – as well as labour – which did not enter into circulation. But to the same degree as the mass of products grows, so grows the difficulty of realizing the labour time contained in them – because the demands made on consumption rise. (We are still concerned here only with the way in which the capital realization process is its devaluation process. Out of place here would be the question how, while it has the tendency to heighten the productive forces boundlessly, it also and equally makes one-sided, limits etc. the main force of production, the human being himself, and has the tendency in general to restrict the forces of production.)

Capital, then, posits necessary labour time as the barrier to the exchange value of living labour capacity; surplus labour time as the barrier to necessary labour time; and surplus value as the barrier to surplus labour time; while at the same time it drives over and beyond all these barriers, to the extent that it posits labour capacity opposite itself as something simply engaged in exchange, as money, and surplus labour time as the only barrier, because creatrix of surplus value. (Or, from the first aspect, it posits the exchange of surplus values as the barrier to the exchange of the necessary values.)

In one and the same moment, it posits the values on hand in circulation – or, what is the same, the proportion of values posited by it to the values contained in it and presupposed in circulation – as the barrier, the necessary barrier to its value-creation; on the other hand, its productivity as the only barrier and creatrix of values. It therefore drives constantly on one side towards its own devaluation, on the other side towards the obstruction of the productive forces, and of labour which objectifies itself in values.

Overproduction. – Proudhon (How is it possible that in the price of the commodity which the worker buys, he pays the profit etc. and still obtains his necessary wages). – Price of the commodity and labour time. Surplus etc. (Price and value etc.) – Capitalist does not sell too dear; but still above what the thing costs him. – Price (fractional). Bastiat. Decline of the fractional price. – Price can fall below value without damage to capital. Number and unit (measure) important in the multiplication of prices[edit source]

<This nonsense about the impossibility of overproduction (in other words, the assertion of the immediate identity of capital’s process of production and its process of realization) has been expressed in a manner which is at least sophistical, i.e. ingenious, as mentioned above,[27] by James Mill, in the formula that supply = its own demand, that supply and demand therefore balance, which means in other words the same thing as that value is determined by labour time, and hence that exchange adds nothing to it, and which forgets only that exchange does have to take place and that this depends (in the final instance) on the use value. Mill says, then, that if demand and supply do not balance, this comes about because too much has been produced of one specific product (the supplied product) and too little of the other (the one in demand). This too much and too little concerns not the exchange value, but the use value. More of the supplied product exists than is ‘needed’; this is what it boils down to. Hence that overproduction comes from use value and therefore from exchange itself. This in stultified form in Say – products are exchanged only for products;[28] therefore, at most, too much has been produced of one and too little of another. Forgetting: (1) that values are exchanged for values, and a product exchanges for another only to the extent that it is value; i.e. that it is or becomes money; (2) it exchanges for labour. The good gentleman adopts the standpoint of simple exchange, in which indeed no overproduction is possible, for it is indeed concerned not with exchange value but with use value. Overproduction takes place in connection with realization, not otherwise.[29]>

Proudhon, who certainly hears the bells ringing but never knows where, therefore sees the origin of overproduction in the fact ‘that the worker cannot buy back his product’.[30] By this he understands that interest and profit are added on to it; or that the price of the product is an overcharge on top of its real value. This demonstrates first of all that he understands nothing about the determination of value, which, generally speaking, can include no overcharge. In practical commerce, capitalist A can screw capitalist B. The one pockets what the other loses. If we add them both together, then the sum of their exchange = the sum of the labour time objectified in it, of which capitalist A has merely pocketed more than his share in relation to B. From all the profits made by capital, i.e. the total mass of capitalists, there is deducted (1) the constant part of capital; (2) the wage, or, the amount of objectified labour time necessary in order to reproduce living labour capacity. They can therefore divide nothing among themselves other than the surplus value. The proportion – just or unjust – in which they distribute this surplus value among themselves alters absolutely nothing about exchange or about the exchange relation between capital and labour.

It might be said that necessary labour time (i.e. the wage), which therefore excludes profit, and is rather to be deducted from it, is itself again determined by the prices of products which already include profit. Where else could the profit come from which the capitalist who does not directly employ this worker makes in the exchange with him? For example, the spinner’s worker exchanges his wages for so many bushels of grain. But in the price of each bushel, the profit of the farmer, i.e. of capital, is already included. So that the price of the consumption goods which are bought by necessary labour itself already includes surplus labour time. It is clear, first of all, that the wage paid by the spinner to his workmen must be high enough to buy the necessary bushel of wheat, regardless of what profit for the farmer may be included in the price of the bushel of wheat; but that, likewise, on the other side, the wage which the farmer pays his workers must be high enough to procure for them the necessary quantity of clothing, regardless of what profit for the weaver and the spinner may be included in the price of these articles of clothing.

The puzzle arises simply because (1) price and value are being mixed up; (2) relations are brought in which are irrelevant to the determination of value of such. Suppose initially – and this is the conceptual relation – that capitalist A himself produces all the consumption goods which the worker needs, or which represent the sum of use values in which his necessary labour objectifies itself. Then, with the money which he obtains from the capitalist – money appears in this transaction only as medium of circulation – the worker would have to buy back from the capitalist, with that money, a fractional part – the part representing his necessary labour – of his product. The price of a fractional part of capitalist A’s product is of course the same for the worker as for everyone else engaged in exchange. From the moment he buys from the capitalist, his specific quality as worker is extinguished; the money contains no trace of the relation in which, or of the operation by which, it was obtained; in circulation he confronts the capitalist simply as M, and the capitalist confronts him as C; as realizer of the price of C, which is hence presupposed for him just as for every other representative of M, i.e. buyer. Good. But in the price of the fractional part of the commodity which he buys, the profit is included in which the surplus value going to the capitalist appears. If his necessary labour time, therefore, represents 20 thalers = a certain fractional part of the product, it follows that, if the profit is 10%, the capitalist sells him the commodity for 22 thalers.

That is what Proudhon thinks, and concludes from it that the worker cannot buy back his product, i.e. the fractional part of the total product which objectifies his necessary labour. (We will come back directly to his other conclusion, that therefore capital cannot adequately exchange, hence overproduction.) To make the matter tangible, say that the worker’s 20 thalers = 4 bushels of grain. Consequently – if 20 thalers is the value of the 4 bushels expressed in money – if the capitalist sells them for 22, then the worker could not buy back the 4 bushels, or rather he could buy only 3 7/11 bushels. In other words, he imagines that the monetary transaction distorts the relation. 20 thalers is the price of necessary labour = 4 bushels; and the capitalist pays this to the worker; but as soon as the latter presents his 20 thalers and asks for the 4 bushels, he gets only 3 7/11. Since he would thereby receive less than the necessary wage, he could not live at all, and thus Mr Proudhon proves more than he intends.[31]

But the presupposition, if you please, is wrong. If 5 thalers expresses the value of a bushel, i.e. the labour time objectified in it, and if 4 bushels express the necessary wages of labour, then capitalist A sells these 4 bushels not, as Proudhon thinks, for 22 but for 20 thalers. But the thing is this: let the total product (including necessary and surplus labour time) equal 110 thalers = 22 bushels; let 16 of these bushels = 80 thalers, represent the capital invested in seed, machinery etc.; 4 bushels = 20 thalers for necessary labour time; 2 bushels = 10 thalers, surplus labour time. The capitalist sells each bushel at 5 thalers, the necessary value of the bushel, and nevertheless he makes a gain of 10% on each bushel, or 5/10 of a thaler, 1/2 a thaler = 15 silver groschen. How? Because he sells 22 × 5 instead of 20 × 5. We can here equate to 0 the additional capital he would have to lay out in order to produce 2 additional bushels, since these can dissolve in pure surplus labour, more thorough ploughing, elimination of weeds, procurement of mineral fertilizer which, say, costs him nothing, etc. The value contained in the 2 surplus bushels has cost him nothing, hence makes up a surplus above his expenditures. If he sells 20 of the 22 bushels for what they cost him, for 100 thalers, plus 2, which cost him nothing – but whose value = the labour contained in them – for 10 thalers, then it is the same for him as if he sold all of them, each bushel for 15 silver groschen more than it cost him. (For 1/2 a thaler or 10% of 5 thalers = 5/10.) Therefore, although he makes 2 thalers on the 4 bushels he sells to the worker, the worker obtains each bushel at its necessary value. The capitalist makes 2 thalers on them only because, beside these 4 bushels, he sells 18 additional ones at the identical price. If he sold only 16, he would make nothing; for then he would sell a total of: 5 × 20 =100, his invested capital.

Indeed, in manufacturing, too, it is possible that the capital’s outlays do not increase, while a surplus value is sold nevertheless; i.e. it is not necessary that the outlay in raw material and machinery should grow. Assume that the same product obtains a higher finish through labour by hand – the mass of required raw material and instrument held constant – and hence its use value, therefore the use value of the product, increases, not in quantity, but in quality, owing to the increased hand labour employed on it. Its exchange value – the labour objectified in it – simply grows in relation to this labour. If the capitalist then sells for 10% more, then the worker gets paid the fractional part of the product, expressed in money, which represents necessary labour; and if the product could be divided, then the worker could buy this fractional part. The capitalist’s profit would come not from overcharging the worker for this fractional part, but from the fact that in the whole of the product he sells a fractional part which he has not paid for, and which represents, precisely, surplus labour time. The product is always divisible as value; in its natural form, it need not be so. Profit here always comes from the fact that the whole value contains a fractional part which is not paid, and hence a fractional part of surplus labour is paid in each fractional part of the whole. So in the above example. When the capitalist sells 22 bushels, i.e. 2 which represent surplus labour, it is the same as if he sold an extra 1/10 of a bushel per bushel, i.e. 1/10 surplus value. If e.g. only one clock has been produced, where the relation of labour, capital and surplus value is the same, then the quality of the clock has been raised 1/10 in value by 1/10 labour time which costs the capitalist nothing.

Third case, that the capitalist, as is usual in manufacturing (but not in extractive industry), needs more raw material (let the instrument remain constant; however, nothing is changed if it, too, is variable) in which the surplus labour time objectifies itself. (Actually this does not belong here yet, for capital here can or must just as well be assumed as having also produced the raw material, e.g. the cotton, and surplus production at any point has to reduce itself to mere surplus labour, or, what is rather the reality, presupposes simultaneous surplus labour at all points of circulation.) Assume that he spins up 25 lb. of cotton, which cost him 50 thalers, and for which he requires machinery (which we will assume to be entirely consumed in the production process) at 30 thalers, and wages 20 thalers, for 25 lb. of twist, which he sells at 110. He sells each pound of twist, then, for 4 2/5 thalers, or 4 thalers 12 silver groschen. The worker thus obtains 4 6/11 lb. of twist, if he wants to buy it again. If the worker were working for himself, he would likewise sell the pound for 4 thalers 12 silver groschen and make no profit – presupposing that he performs only the necessary labour; but he would spin up less cotton.

As we know, the value of a pound of twist consists exclusively of the amount of labour time objectified in it. Now suppose that the value of the pound of twist = 5 thalers. Given that 4/5, i.e. 4 thalers, represent cotton, instrument etc.; then 1 thaler represents the labour realized in the cotton by means of the instrument. If the worker, in order to live from spinning, needs say 20 thalers per month, then – since he earns 1 thaler for spinning 1 lb. of twist, but needs 20 – he would have to spin 20 lb. of twist. If he himself owned the cotton, material etc., and were working for himself, hence were his own master, then he would have to sell 20 lb. of twist; since he would earn only 1/5 on each, one thaler, and 1 × 20 = 20. If he works for the capitalist, then the labour which spins up 20 lb. of cotton only represents the necessary labour; for, by presupposition, of the 20 lb. of twist or 20 × 5 = 100 thalers, 80 thalers only represent the already purchased cotton and instrument, and the newly reproduced value represents nothing but necessary labour. Of the 20 lb. of twist, 4 lb. = 20 thalers would represent necessary labour, and 16 nothing more than the constant part of capital. 16 × 5 = 80 thalers. Each additional pound which the capitalist orders to be produced over and above the 20 contains 1/5 surplus labour, surplus value for him. (Objectified labour which he has sold without having paid for it.) If he orders 1 more pound spun, he gains 1 thaler; 10 lb, more, 10 thalers. Out of 10 lb. or 50 thalers, the capitalist would have 40 thalers to replace his investment and 10 thalers of surplus labour; or 8 lb. of twist with which to buy the material for 10 (machinery and cotton), and 2 lb. of twist, or their value, which have cost him nothing. If we now summarize the capitalist’s accounts, we find that he has invested, in thalers

WagesSurplus value
80 + 40 =120 (raw material, instrument, etc.)2010
1202010 = 150

Altogether he has produced 30 lb. of twist (30 × 5 = 150); the pound at 5 thalers, the exact value of the pound, i.e. purely determined by the labour objectified in it, and deriving value only from the latter. Of this 30 lb., 24 represent constant capital, 4 lb. go for wages, and 2 form the surplus value. Calculating it on the basis of his total investment, 140 thalers or 28 lb., as the capitalist himself does, this surplus value forms 1/14 = 7 1/7% (although, in the example given, the surplus value amounts to 50% on labour).

Now assume that the productivity of labour grows to the extent that he is capable of spinning 40 lb. with the same wage cost. According to our assumption he would sell these 40 lb. at their real value, i.e. the pound at 5 thalers, of which 4 thalers is labour objectified in cotton etc., 1 thaler is newly added labour. He would then sell:

40 lb. - the lb. @ 5 thalers = 40 × 5 = 200; from these 40 lb., deduct

20 lb. for necessary labour= 100
100On the first 20 lb. he would have made not a farthing;

of the remaining hundred, take off 4/5 = 4 × 20 = 80.

80for material, etc.

On an investment of 200 thalers the capitalist would have earned 20, or 10%. 10% on total investment; but in fact 20 on the second hundred thalers or second 20 lb., in which he did not pay the objectified labour. Now assume that he is capable of making double that, say

80400Of this, take off 20 lb. for [necessary labour]
20 for necessary labour etc. =100
Leaves:300Of these, take off 4/5 for material
Leaves:60A profit of 60 on 400 is = 6 on 40 = 15%.

In fact in the above example the capitalist’s investment is only 180; on this he makes 20, or 11 1/9%.

Value of 1 pound =5thalers
of 40 pounds =200thalers; from which take off costs:
20Leaves 20.

What he calculates is not that he gains 20 thalers out of the second 100 thalers, but that he gains 20 on his entire investment of … 180 thalers. This gives him a profit of 11 1/9%, instead of 20. He calculates further that, in order to make this profit, he has to sell 40 lb. 40 lb. at 5 thalers gives him not 1/5, or 20%, but 20 thalers distributed over 40 lb., or 1/2 a thaler per pound. At the price for which he sells the pound, he makes 1/2 a thaler out of 5 thalers; or 1 out of 10 thalers; 10% of the selling price. The price is determined by the price of the fractional unit (1 pound) multiplied by the number to be sold; here 1 pound at 5 thalers × 40. While this determination of price is correct for the capitalist’s pocket, it is equally liable to lead one astray theoretically, in as much as it now seems as if an overcharge above the real value took place in each individual pound, and the origin of the surplus value in each individual pound has become invisible. This determination of price by the multiplication of the value of the unit (measure) of the use value (pound, yard, ton etc.) with the number of these units produced is important later in the theory of prices. There follows from it among other things that a decline in the price of the unit and an increase in the number of units – brought about by growth of the productive forces – shows that profit increases in relation with labour, or that the proportion [Verhältnis] of necessary labour declines in relation [im Verhältnis] to surplus labour – and not the opposite, as is the opinion of Mr Bastiat etc.[32] E.g. if labour grew, owing to productivity, to the point where the worker was producing twice as many pounds in the same time as before – presupposing that 1 lb. of twist renders him entirely the same service, regardless of its cost, and that twist, clothing, is all he needs to live – then the value added by labour to 20 lb. of twist would no longer amount to 1/5 but now only to 1/10, because he would be transforming the 20 lb. cotton into twist in 1/2 the time. To the 80 thalers which the raw material cost, there would then be added not 20 thalers but only 10. The 20 lb. would cost 90 thalers and each pound 90/20 or 4 10/20 thalers. But if the total labour time remained the same, then labour would now transform 80 lb. of cotton into twist, instead of 40. 80 lb. twist, the pound at 4 9/20 thalers, = 356 thalers.[33] The capitalist’s account would be –

Total receipts356thalers;deduct for labour
266Of which, take off for investment etc.
The capitalist’s gain thus 26 72/89 instead of

20. Say 27 (which a little too high (17/89 too

high)). His total outlays etc. 330; over

12%, although he would make less on

the individual pound.

The capitalist’s gain from the value of the measure (unit) of use value – pound, yard, quarter etc. – decreases in proportion as the relation of living labour to raw material etc. – of newly added labour – decreases; i.e. the less labour time is necessary to give the raw material the form which the unit expresses. Yard of cloth etc. But on the other side, – since this identical with the increased productivity of labour, or the growth of surplus labour time – the number of these units grows, units in which surplus labour time is contained, i.e. labour time not paid for.

It further follows from the above that the price can fall below the value, and capital can still make a gain; he must sell, however, a number multiplied by the unit large enough to form a surplus over the number multiplied by the unit which forms the necessary price of labour. If the relation of labour to raw material etc. is 1/5, then he can sell at e.g. only 1/10 above the constant value, since the surplus labour costs him nothing. He then makes a present of 1/10 of the surplus labour to the consumer and realizes only 1/10 for himself. This very important in competition; overlooked in particular by Ricardo. The determination of prices is founded on the determination of values, but new elements enter in. The price, which originally appeared only as the value expressed in money, becomes further determined as itself a specific magnitude. If 5 thalers is the value of a pound of twist, i.e. the same labour time as is contained in 5 thalers is contained in 1 pound of twist, then this remains its value regardless of whether 4 or 4 million lb. of twist are being appraised. The moment of the NUMBER OF POUNDS, because it expresses the relation of surplus labour to necessary labour in another form, becomes decisively important in the determination of price. This matter brought to popular awareness in the question of the ten hours’ bill etc.

Specific accumulation of capital (transformation of surplus labour (revenue) into capital). – Proudhon. Value- and price- determination. In antiquity (slaves) not overproduction but over-consumption[edit source]

It follows further from the above:

If the worker were to restrict himself to necessary labour, he would spin no more than 20 lb. of twist, and realize no more raw material, machinery etc. than would have a value of 80 thalers monthly. Apart from the raw material, machinery etc. which are required for the workers reproduction, self-maintenance, the capitalist must necessarily lay out capital in raw material (and machinery, even if not in the same proportion) for the objectification of surplus labour. (In agriculture, fishery, in short, the extractive industries, this is not absolutely necessary; it becomes so, however, when they are conducted on a large scale, i.e. industrially; it appears then as surplus outlay not in raw material itself, but in the instruments to take it out with.) These surplus outlays – i.e. the tendering of the material for surplus labour – of the objective elements of its realization [Verwirklichung] are actually what forms the specific so-called provisional accumulation of capital: the accumulation of the stock (let us say for the time being) specifically of capital. For it is stupid, as we shall see more closely, to regard it as a quality specific to capital – that the objective conditions of living labour must be present, as such – whether they are furnished by nature or produced in history. These specific advances which capital makes signify nothing more than that it realizes objectified surplus labour – surplus product – in new living surplus labour, instead of investing (spending) it, like, say, Egyptian kings or Etruscan priest-nobles for pyramids etc.

Into the determination of prices (as we shall also see with profit) there also enters – fraud, reciprocal chicanery. One party can win in exchange what the other loses; all they can distribute among themselves is the surplus value – capital as a class. But these proportions open a field for individual deception etc. (apart from supply and demand) which has nothing to do with the determination of value as such.

Thus, out the window goes Mr Proudhon’s discovery that the worker cannot buy back his product. The basis on which this rests is that he (Proudhon) understands nothing, either about value-determination or about price-determination. But, furthermore and regardless of that, his conclusion that this is why there is over production is false in this abstraction. In the slave relation, the masters are not troubled by the fact that the workers do not compete with them as consumers. (Nevertheless, production for luxury as it presents itself in antiquity is a necessary result of the slave relation. Not overproduction, but over-consumption and insane consumption, signifying, by its turn towards the monstrous and the bizarre, the downfall of the old system of states.)

After capital steps out of the production process as product, it must be transformed into money again. The money which previously appeared merely as realized commodity etc., now appears as realized capital, or, realized capital as money. This an aspect of money (as of capital). The mass of money as medium of circulation has nothing to do with the difficulty of making capital into a reality [realisieren], i.e. of realizing it [verwerten]. This can already be seen from the above development.

The general rate of profit. – If the capitalist merely sells at his own cost of production, then it is a transfer to another capitalist. Worker gains almost nothing thereby[edit source]

In the above example, where the capitalist, if he sells the pound of twist at 5 thalers – i.e. 40 lb. at 5 thalers each – hence sells the pound of twist at its real value and thereby gains 1/2 a thaler out of 5 (the selling price), 10% on the selling price, or 1/2 on 4 1/2, i.e. 11 1/9% of his outlay, if he sells at only 10% – assume now a profit of merely 9/20 of a thaler on 4 1/2 thalers (this is a 1/20 difference from 1/2 on 4 1/2 thalers; a difference of just 1 1/9%). He then sells the pound at 4 1/2 thalers + 9/20 of a thaler; i.e. at 4 19/20 thalers or the 40 lb. at 198 thalers. Now various cases are possible. The capitalist with whom he exchanges – to whom he sells his 40 lb. – assume him to be the owner of a silver mine, i.e. silver producer – pays him only 198 thalers – hence gives him 2 thalers too little objectified labour in silver for the labour objectified in 40 lb. of cotton. Posit that with this capitalist B, the proportions of the outlay are exactly the same, etc. If capitalist B also takes only 10 instead of 11 1/9, then for 200 thalers he could not demand 40 lb. twist, but only 39 3/5. It is therefore impossible that both capitalists at the same time sell at 1 1/9% too little, or that the one offered 40 lb. for 198 thalers and the other offered 200 thalers for 39 3/5 lb., a case that cannot occur. In the previously assumed case, capitalist B would have paid 1 1/9% too little in his purchase of 40 lb. twist, i.e. apart from the profit which he does not obtain from exchange, but which exchange merely confirms, i.e. a profit of 11 1/9, he would also have gained the 1 1/9% lost by the other capitalist, for a total of 12 2/9%. From his own workers – the labour set into motion by his own capital – he would have gained 11 1/9%; the additional 1 1/9% are surplus labour by the workers of capitalist A, which he appropriates for himself. The general rate of profit can therefore fall in one or another branch of business if competition etc. forces the capitalist to sell below the value, i.e. to realize a part of the surplus labour not for himself, but for those who buy from him. But the general rate cannot fall in this way; it can fall only if the proportion of surplus labour to necessary labour falls relatively, and this, as we saw earlier, takes place if the proportion is already very large, or, expressed differently, if the proportion of living labour set into motion by capital is very small – if the part of capital which exchanges for living labour is very small compared to that which exchanges for machinery and raw material. The general rate of profit can fall in that case, even though absolute surplus labour rises.

With that, we come to another point. A general rate of profit as such is possible only if the rate of profit in one branch of business is too high and in another too low; i.e. that a part of the surplus value – which corresponds to surplus labour – is transferred from one capitalist to the other. If in 5 branches of business, for example, the respective rate of profit is


then the average rate is 10%; but, in order for this to exist in reality, capitalist A and B have to give up 7% to D and E – more particularly, 2 to D and 5 to E – while C remains as it was. It is impossible for rates of profit on the same capital of 100 to be equal, since the relations of surplus labour are altogether different, depending on the productivity of labour and on the relation between raw material, machinery and wages, and on the overall volume in which production takes place. But suppose that a given branch of business, E, is necessary, say, the bakery trade, then the average 10% has to be paid to it. But this can happen only if A and B credit E with a part of their surplus labour. The capitalist class thus to a certain extent distributes the total surplus value so that, to a certain degree, it [shares in it] evenly in accordance with the size of its capital, instead of in accordance with the surplus values actually created by the capitals in the various branches of business. The larger profit – arising from the real surplus labour within a branch of production, the really created surplus value – is pushed down to the average level by competition, and the deficit of surplus value in the other branch of business raised up to the average level by withdrawal of capitals from it, i.e. a favourable relation of demand and supply. Competition cannot lower this level itself, but merely has the tendency to create such a level. Further developments belong in the section on competition. This is realized [realisiert] by means of the relation of prices in the different branches of business, which fall below the value in some, rise above it in others. This makes it seem as if an equal sum of capital in unequal branches of business created equal surplus labour or surplus value.

Now in the above example, where capitalist A is forced, say by competition, to sell at a profit of 10% instead of 11 1/9%, and hence sells the pound of twist at 1/20 of a thaler too cheaply, the worker would continue to obtain 20 thalers as before, in money, his necessary wages; but in twist, he would obtain 4 4/90 lb. instead of 4 lb. If his wages were in twist, he would have obtained 4/20 of a thaler = 1/5 of a thaler or 6 silver groschen, i.e. 1% more than his necessary wages. If the worker works in a branch of business whose product lies entirely outside the sphere of his consumption, then he gains not a farthing in this operation; rather, for him it is a matter of performing a part of his surplus labour indirectly for capitalist B, instead of directly for capitalist A; i.e. through the mediation of capitalist A. He can gain from the fact that capitalist A lets go of a part of the labour objectified in his product for nothing, only if he is himself a consumer of this product, and only to the extent that he is such a consumer. Thus, if his consumption of twist makes up 1/10 of his expenditure, then he gains exactly 1/50 of a thaler from the operation (2/100 of a thaler out of 2 thalers, 1/100 of 1, exactly 1% of the 2 thalers), i.e. 1/10% of his total wages of 20 thalers, or, 7 1/5 pfennigs. This would be the proportion – 7 1/5 pfennigs – in which he would participate in his own surplus labour of 20 thalers. Such are the proportions of the surplus wages which the worker makes at best, when the price in the branch of business where he is occupied falls below the necessary value. In the best case – and this is impossible – the limit (in the instance given) is 6 silver groschen or 1%, i.e. if he could live exclusively on twist; i.e. in the best case his surplus wages are determined by the relation of necessary labour time to surplus labour time. In the luxury-goods industries proper, from whose consumption he is himself excluded, it is always = 0.

Now let us assume that capitalists A, B, C exchange among one another; the total product of each = 200 thalers. Let A produce twist, B grain and C silver; let the relations of surplus and necessary labour, and of outlays and profit be just the same. A sells 40 lb. twist at 198, instead of at 200 thalers, and loses 1 1/9% of his gains; ditto B his, say 40 bushels wheat, at 198 instead of 200; but C exchanges the labour objectified in his 200 thalers in full. Between A and B the relation is such that neither of them loses in the exchange with the other. A would obtain 40 bushels wheat, B 40 lb. twist; but each of them a value of only 198. C obtains 40 lb. twist or 40 bushels wheat for 198 thalers and in both cases pays 2 thalers too little, or obtains 2/3 lb. twist or 2/5 bushel wheat too much. But now assume that the relation takes the form that A sells his 40 lb. to the silver man, C, for 200 thalers, but C has to pay 202 to the grain man, B, or 2 thalers above its value. Between twist A and silver C everything is all right; both exchange at value with each other; but because B’s price has risen above its value, the 40 lb. twist and the 200 thalers silver, when expressed in grain, have fallen by 1 1/9%, or, neither of them could in fact any longer buy 40 bushels grain for 200 thalers, but only 39 2/5. 39 2/5 bushels wheat would cost 200 thalers, or the single bushel wheat,[34] instead of 5 thalers, 5 1/20 thalers; 5 thalers 1 1/4 silver groschen. Now, in this last relation, assume that the worker’s consumption consists 1/2 of wheat; his twist consumption was 1/10 of his income; his wheat consumption 5/10. On the 1/10 he had gained 1/10% on his total wages; on the wheat, he loses 5/10; thus on the whole he loses 4/10% instead of gaining. Although the capitalist would have paid him his necessary labour, his wages would fall beneath the necessary pay as a consequence of grain man B’s overcharging. If this continued on, then his necessary wages would have to rise. Thus if the sale of twist by capitalist A is due to a rise above value in the price of grain or of other use values which form the most essential part of the worker’s consumption – then capitalist A’s worker would lose in the same relation as his consumption of the now more expensive product is greater than the cheaper product he himself produces. But if A had sold twist at 1 1/9% above its value, and B sold grain at 1 1/9% below, then, in the best case, if the worker consumed nothing but grain, he could gain at most 6 silver groschen, or, since we presupposed half in grain, only 3 silver groschen, or 3% on his wages of 20 thalers. Thus the worker may experience all three cases: his gain or loss from the operation = 0; it may depreciate his necessary wages, so that they no longer suffice, hence make him fall below the necessary minimum; it can thirdly bring him a surplus wage, which is resolved into a very small share of his own surplus labour.

We saw above that if the relation of necessary labour to the other conditions of production = 2/5 (20 out of 100 total outlay) or = 40% of the total value (in 20 lb. twist = 4 lb. twist) (or of 100 thalers, 80 raw material and instrument, 20 labour) and the relation of surplus labour to necessary labour is 100% (i.e. the same quantity), then the capitalist makes 11 1/9% on his outlay.

If he took only 10% and made a gift of the 1 1/9 or 2 thalers (transferred surplus value), then the worker, in so far as he is a consumer, would likewise gain, and in the best (impossible) case, if he lived only from the products of his master, it would [be], as we saw:

Suppose the capitalist sold the pound of twist at 4 15/20 (4 3/4) instead of at 5 thalers, then the worker would gain 5/20 on the pound, and 20/20 = 1 on 4 lb.; but 1 out of 20 = 1/20 = 5% (1 thaler out of 20); the capitalist would sell the 40 lb. at 4 15/20 thalers = 95/20 of a thaler × 40 = 190 thalers; his outlays 180, his gain = 10 = 5 6/9[%], his minus-gain = 5 6/9; if he, the capitalist, sold at 4 12/20, then the worker would gain 8/20 thalers per pound, 32/20 per 4 lb., 1 thaler 12/20 or 1 3/5 thalers on his total wages, i.e. 8 48/119%, while the capitalist would lose 16 thalers of the surplus gain, or would only keep altogether 184 thalers, or 4 thalers gain on 180 = 1/45 of 180 = 2 2/9%; would lose 8 8/9; assume finally the capitalist sold the pound of twist at 4 1/2 thalers; the 40 lb. at 180; his profit = 0; he would make the consumer a present of the worker’s surplus value or surplus labour time, then the worker’s gain = 1/2 of a thaler per lb., = 4/2 of a thaler = 2 thalers, or 2 thalers out of 20 = 10%.1 1/9% loss on the capitalist’s side:=1% = 6 silver groschen on 20 thalers (= 1/5 of a thaler out of 20) gain above wages for the worker: = 1 thaler
5 6/9; (= 10 thalers)= 5% (1 thaler out of 20)
= 8 8/9% (= 16)= 8 48/119% (1 thaler 18 silver groschen)
Gain = 0 (loss = 11 1/9%)
= 10% (2 thalers)

(less than 1/2 pound)

If on the other hand the capitalist had raised wages by 10% from 20 to 22 thalers, because, say, the demand for labour in his branch of business had risen above the supply – while he continued to sell the pound of twist at its value, i.e. at 5 thalers as before, then his profit would have fallen by only 2 thalers, from 200 to 198, i.e. by 1 1/9%, and would still have been 10%.

It follows from this that if the capitalist, say, out of consideration for Mr Proudhon, sold his commodities at the production costs they cost him, and if his total profit = 0, this would be merely a transfer of the surplus value or surplus labour time from capitalist A to B, C, D etc., and as regards his worker, his gain at best – i.e. his share of his own surplus labour – would be limited to that part of the wage which he consumed in the depreciated commodity; and if he spent his entire wages on it, the gain could not be greater than the proportion of necessary labour to the total product (in the above example 20: 200 = 1/10, 1/10 of 20 = 2 thalers). As regards the other workers, the case is entirely the same; they gain from the depreciated commodity only in relation (1) as they consume it; (2) relative to the size of their wage, which is determined by necessary labour. If the depreciated commodity were, e.g. grain – one of the staffs of life – then first its producer, the farmer, and following him all other capitalists, would make the discovery that the worker’s necessary wage is no longer the necessary wage; but stands above its level; hence it is brought down; hence ultimately only the surplus value of capitals A, B, C etc. is increased, and the surplus labour of those occupied in them.

Posit 5 capitalists, A, B, C, D and E. Let E produce a commodity which is consumed only by workers. E would then realize his profit purely in the exchange of his commodity with wages; but, as always, his profit would originate not in the exchange of his commodity for the workers’ money, but in the exchange of his capital with living labour. Posit that necessary labour relates in all 5 branches of business at 1/5; let 1/5 be surplus labour in all of them; let constant capital be = 3/5 in all. Capitalist E exchanges his product for 1/5 of capital A, 1/5 of capital B, 1/5 of capital C, 1/5 of capital D, and 1/5 constitutes his wages. He would make no profit on this last 1/5, as we have seen; or rather his profit would not arise from the fact that he gives the workers 1/5 of his capital in money, and that they buy back the same 1/5 from him as money – would not originate from the exchange with them as consumers, as centres of circulation. His whole transaction with them as consumers rests on the basis that he gives them his product in the form of money, and they give him back the same money for exactly the same fractional part of the product. With the workers of A, B, C, D, his relation is not that of capitalist to worker, but of C[ommodity] to M[oney], of vendor to buyer. We have presupposed that the workers of A, B, C, D consume no part of their own products; D does, however, exchange for 1/5 of the product of A, B, C and E, i.e. 4/5 of their product; but this exchange is only a detour to get to the wages which A, B, C and D pay their own workers. They each give the workers money to the value of 1/5 of their product, or 1/5 of their product as payment for necessary labour, and with this, with 4/5 of the value of their product or capital, they then buy E’s commodity. But this exchange with E is then only an indirect form of advancing the part of capital which represents necessary labour – i.e. deduction from their capital. They cannot therefore gain thereby. The gain comes from the realization of the remaining 4/5 of capital A, B, C, D, and this realization consists of each of them, through the exchange, getting back the labour objectified in his product, in another form. For each of them, since there is a division of labour, 3/5 replaces his constant capital, raw material and material of labour. Their gain – the realization of surplus labour time, its positing as surplus value – consists in the reciprocal realization of the last 1/5. It is not necessary that capitals A, B, C, D exchange the entire 4/5 with one another. Since they are, as capitalists, at the same time large consumers, and can in no way live on air, but since, as capitalists, they do not live from their labour either, they have nothing to exchange or to consume apart from other peoples’ products. That is, for their own consumption they exchange just that 1/5 which represents surplus labour time, the labour created by means of capital. Posit that each consumes 1/5 of this 1/5, i.e. 1/25, in the form of his own product. There remain 4/25 to be either realized or to be transformed into use values for their own consumption through exchange. Let A exchange 2/25 with B, 1/25 with C, 1/25 with E, and likewise on the part of B, C, E.

The case we have posited, where capital E realizes the whole of its profit in exchange with wages, is the most favourable – or expresses, rather, the only correct relation in which it is possible for capital to realize the surplus value created in production through exchange with the workers’ consumption. But capitals A, B, C, D can realize their value in this case only through exchange among one another, i.e. through the exchange of capitalists among themselves. Capitalist E consumes nothing of his own commodity, since he has paid 1/5 of it to his own workers, exchanged 1/5 for 1/5 of capital A, 1/5 for 1/5 of capital B, 1/5 for 1/5 of capital C, 1/5 for 1/5 of capital D. A, B, C, D make no profit on this exchange, since it is the respective 1/5 which they have paid to their own workers.

Given the relation we have assumed, of 2/5 raw material, 1/5 machinery, 1/5 workers’ necessaries, and 1/5 surplus product, from which Messrs the capitalists at the same time live and realize their surplus value, then we need, if the total product of each of A, B, C, D, E = 100, a producer E for workers’ necessaries, 2 capitalists A and B, who produce raw materials for all the others, 1, C, who produces the machinery, and 1, D, who makes the surplus produce, The accounts would be these (the machinery-maker etc. has to produce every part of his commodity for himself):

(A)Raw material


20402020= 100
(B)Ditto20402020= 100


20402020= 100


20402020= 100
(D)Surplus producer20402020= 100
10201010= 50

E therefore exchanges his entire product of 100 for 20 in his own workers’ wages, 20 in wages for workers of raw material A, 20 for the workers of raw material B, 20 for the workers of machinery maker C, 20 for the workers of surplus producer D; of this he exchanges 40 for raw material, 20 for machinery, 20 he obtains back for workers’ necessaries, and 20 remain for him to buy surplus produce, from which he himself lives. Likewise the others in the relation. What constitutes their surplus value is the 1/5 or 20, which all of them can exchange for surplus product. If they consumed the entire surplus, then they would have come no further at the end than they were at the beginning, and the surplus value of their capital would not grow. Posit that they eat up only 10; or 1/10, half of the surplus value; then surplus producer D himself would eat up 10 less; and each of the others 10 less; all in all, then, he would sell only half of his commodity, = 50, and could not begin his business anew. Posit therefore that he consumes only 50 in consumables. Likewise, 50 in money, then each of the capitalists A, B, C, D, E, would accumulate 10 thalers in money. These would represent the surplus value not consumed. These 10 thalers, or together 50, could be realized, however, only by being laid out for new labour. In order to produce more raw material, A and B need 4 thalers more of living labour, and, since they have no additional machinery for it, more labour by hand to the amount of 6 thalers. Thus, out of the 400 thalers which exist in raw materials, machines and workers’ necessaries, only 50 are there for capitalists’ consumables. But each of the capitalists now owns a surplus of 10, out of which 4 are in raw material, 2 in machines, 2 in workers’ necessaries, on which he must make a gain of 2 (like 100 from 80, as before); D has gained 10 on his 40 and can therefore increase his production in the same proportion, i.e. by 5. The next year he produces 7 1/2% more = 57 1/2.

This example may or may not be continued later. Does not actually belong here. This much is clear, that realization here takes place in the exchange among the capitalists, for although E produces only for workers’ consumption, he exchanges with the others through the form of wages, 1/5 of A, 1/5 of B, 1/5 of C, 1/5 of D etc. A, B, C, D likewise exchange with E: not directly, but indirectly, in that each of them requires 1/5 from him as necessaries for his workers. The realization consists of each of them exchanging his own product for fractional parts of the products of the other four, and this in such a way that a part of the surplus product goes for the capitalist’s own consumption, and a part is transformed into surplus capital with which to set new labour into motion. The realization consists of the real possibility of increased realization – production of new and larger values. It is clear here that D and E, where E represents all commodities consumed by the workers and D all those consumed by the capitalists, would have produced too much – that is, too much relative to the proportion of the part of capital going to the worker, or too much relative to the part of capital consumable by the capitalists (too much relative to the proportion by which they must increase their capital; and this proportion later obtains a minimum limit in the form of interest) – that general overproduction would take place, not because relatively too little [sic] had been produced of the commodities consumed by the workers or too little [sic] of those consumed by the capitalists, but because too much of both had been produced – not too much for consumption, but too much to retain the correct relation between consumption and realization; too much for realization.

Barrier of capitalist production. – Relation of surplus labour to necessary labour. Proportion of the surplus consumed by capital to that transformed into capital. – Devaluation during crises[edit source]

In other words: At a given point in the development of the productive forces – for this will determine the relation of necessary labour to surplus labour – a fixed relation becomes established, in which the product is divided into one part – corresponding to raw material, machinery, necessary labour, surplus labour – and finally surplus labour divides into one part which goes to consumption and another which becomes capital again. This inner division, inherent in the concept of capital, appears in exchange in such a way that the exchange of the capitals among one another takes place in specific and restricted proportions – even if these are constantly changing, in the course of production. If the relations are e.g. those of 2/5 raw material, 1/5 machinery, 1/5 wages, 1/5 surplus product, of which 1/10 for consumption, 1/10 for new production – this is the division within capital – this will appear in the exchange process as distribution among, say, 5 capitals. This gives, in any case, both the sum total of the exchange which can take place, and the proportions in which each of these capitals must both exchange and produce. If the relation of necessary labour to the constant part of capital is, as e.g. in the above example, = 1/5:3/5, then we have seen that the capital which works for the consumption of capitalists and workers combined may not be greater than 1/5 + 1/10 of the 5 capitals, each of which represents 1, = 1 1/2 capitals. Given likewise is the relation in which each capital must exchange with each other one, which represents a specific one of its own moments. Finally, in which each of them must exchange at all. If, for example, the relation of raw material = 2/5, then the capitals which produce raw material can at any final point exchange no more than 3/5, while 2/5 must be regarded as fixed. (E.g. as seed etc. in agriculture.) Exchange in and for itself gives these conceptually opposite moments an indifferent being; they exist independently of one another; their inner necessity becomes manifest in the crisis, which puts a forcible end to their seeming indifference towards each other.

A revolution in the forces of production further alters these relations, changes these relations themselves, whose foundations – from the standpoint of capital and hence also of that of realization through exchange – always remains the relation of necessary to surplus labour, or, if you like, of the different moments of objectified to living labour. It is possible, as we have already indicated earlier, that the capital as well as the living labour capacity set free owing to the increase in productive forces must both lie dormant, because they are not present in the proportions in which production must take place on the basis of the newly developed productive forces. If it proceeds regardless of that, then ultimately a minus, a negative magnitude, will come out of the exchange on one side or the other.

The barrier always remains, that exchange – hence production as well – takes place in such a way that the relation of surplus labour to necessary labour remains the same – for this is = to the constancy [Gleichbleiben] of the realization of capital. The second relation – the proportion between the part of the surplus product consumed by capital and that part transformed anew into capital – is determined by the first relation. Firstly, the magnitude of the sum to be divided into these two parts depends on this original relation; secondly, just as the creation of surplus value by capital depends on the creation of surplus labour, so does the increase of capital as capital (accumulation, and, without accumulation, capital cannot form the foundation of production, since it would remain stagnant, and would not be an element of progress, required already by the mere increase of population etc.) depend on the transformation of a part of this surplus product into new capital. If the surplus value were simply consumed, then capital would not have realized itself as capital, and not produced itself as capital, i.e. as value which produces value.

We have seen that if 40 lb. of twist of a value of 200 thalers – because they contain labour time objectified in 200 thalers – are exchanged for 198 thalers, then not only does the manufacturer of twist lose 1 1/9% gain; but also his product is devalued, has been sold below its real value, although it is sold at a price which still leaves him a profit of 10%. On the other hand, the producer of silver gains 2 thalers. Keeps 2 thalers as liberated capital. Nevertheless, a devaluation has taken place as regards the total sum. For the sum is 398 thalers instead of 400. For, in the hand of the producer of silver, the 200 thalers of twist are also worth only 198; it is the same for him as if the productive force of his labour had increased to the point where the same objectified labour were contained in 200 thalers as before, but that 2 of these thalers had left the column of necessary outlays in his books and gone over into the column of surplus value, so that he would have paid 2 thalers less for necessary labour. The opposite could be the case only if the silver producer were able to re-sell for 200 thalers the 40 lb. of twist he bought at 198 thalers. Then he would have 202 thalers, and say he sold them to a manufacturer of silk who gave him silk to the value of 200 thalers in exchange for the 40 lb. of twist. The 40 lb. twist would then have been sold at their true value, although not first-hand by their producer, but rather second-hand, by their buyer, and the total accounts would look as follows: Exchanged, 3 products each containing objectified labour of a value of 200 thalers; hence sum of the values of the capitals: 600. The manufacturer of twist, A, the manufacturer of silver, B, the manufacturer of silk, C: A 198, B 202 (i.e. 2 extra from the first exchange and 200 in silk), C 200. Total 600. In this case the combined value of the capitals remained the same, and all that took place was a displacement, in that B pocketed as an extra the value-fraction which A lost.

If A, the twist maker, could sell only 180 (the cost of the thing for him), and absolutely could not find a buyer for 20 twist, then objectified labour in the amount of 20 thalers would have become valueless. The same would be the case if he gave a value of 200 for 180 thalers; for B, the manufacturer of silver – to the extent that this necessity had arisen for A owing to overproduction of twist, so that B, too, could not get rid of the value contained in the 40 lb. twist for more than 180 – 20 thalers of his capital would have been set free. He would have in hand a relative surplus value of 20 thalers, but in absolute values – objectified labour time to the extent that it is exchangeable – he would have only 200 as before – that is, 40 lb. twist at 180 and 20 thalers liberated capital. It would be the same for him as if the production costs of twist had decreased, i.e. as if, owing to increased labour productivity, 40 lb. twist contained 20 thalers less labour time, or as if, with a working day = 4 thalers, 5 working days less were necessary in order to transform x lb. of cotton into 40 lb. twist; so that, then, he would have to exchange less labour time objectified in silver for the labour time objectified in twist. But the combined sum of the values on hand would be 380 instead of 400. Thus a general depreciation of 20 thalers would have taken place, or a destruction of capital to the amount of 20 thalers. A general devaluation thus takes place despite the fact that the depreciation of the twist manufacturer’s 40 lb. twist from 200 to 180 necessarily appears as an appreciation on the part of silver, a depreciation of twist relative to silver; and a general depreciation of prices as such always includes an appreciation of money, i.e. of the commodity in which all the others are appraised. Thus, in a crisis – a general depreciation of prices – there occurs up to a certain moment a general devaluation or destruction of capital. The devaluation, like the depreciation, can be absolute and not merely relative, because value expresses not merely a relation between one commodity and another, as does price, but rather the relation between the price of the commodity and the labour objectified in it, or between one amount of objectified labour of the same quality and another. If these amounts are not equal, then devaluation takes place, which is not outweighed by appreciation on the other side, for the other side expresses a fixed amount of objectified labour which remains unchanged by exchange. In general crises, this devaluation extends even to living labour capacity itself. In consequence of what has been indicated above, the destruction of value and capital which takes place in a crisis coincides with – or means the same thing as – a general growth of the productive forces, which, however, takes place not by means of a real increase of the productive force of labour (the extent to which this happens in consequence of crises is beside the point here), but by means of a decrease of the existing value of raw materials, machines, labour capacity. For example. The cotton manufacturer loses capital on his products (e.g. twist), but he buys the same value of cotton, labour etc. at a lower price. It is the same for him as if the real value of labour, of cotton etc., had decreased, i.e. as if they had been produced more cheaply owing to an increase in the productive force of labour. In the same way, on the other hand, a sudden general increase in the forces of production would relatively devalue all the present values which labour objectifies at the lower stage of the productive forces, and hence would destroy present capital as well as present labouring capacity. The other side of the crisis resolves itself into a real decrease in production, in living labour – in order to restore the correct relation between necessary and surplus labour, on which, in the last analysis, everything rests. (Thus it is by no means true, as Lord Overstone thinks – as a true usurer – that crises simply resolve themselves in enormous profits for the one, and tremendous losses for the other.)[35]

Capital coming out of the production process becomes money again[edit source]

Exchange does not change the inner characteristics of realization; but it projects them to the outside; gives them a reciprocally independent form, and thereby lets their unity exist merely as an inner necessity, which must therefore come forcibly to the surface in crises. Both are therefore posited in the essence of capital: the devaluation [Entwertung] of capital in the production process, as well as the suspension of devaluation and the creation of the conditions for the realization [Verwertung] of capital. The process by which this takes place in reality can be examined only as soon as real capital, i.e. competition etc. – the actual real conditions – have been examined. Does not belong here yet. On the other hand, without exchange the production of capital as such would not exist, since realization as such cannot exist without exchange. Without exchange, the only question of concern would be the measurement etc. of the use value produced, only use value as such.

After capital, in the production process, (1) has realized itself, i.e. created a new value; (2) become devalued, i.e. made the transition from money to the form of a particular commodity, it (3) realizes itself together with its new value, in that the product is thrown into circulation again, and, as C, is exchanged for M. At the point where we stand now, where capital is being examined only in general, the real difficulties of this third process are present only as possibilities, and are therefore suspended, again as possibilities. Therefore, the product now posited as having been transformed back into money.

Capital is thus now posited as money again, and money therefore posited in the new aspect of realized capital, not merely as realized price of the commodity. Or, the commodity realized in the price is now realized capital. We will examine this new aspect of money, or rather of capital as money, later. In accord with the initial nature of money, the only apparent feature by which capital – when transformed into money – may be measured is the new value which it has created; i.e. the first aspect of money as the general measure of commodities repeats itself; now as the measure of surplus value – of the realization of capital. In the form of money, this realization appears as measured by itself; as being its own measure. The capital was originally 100 thalers; because it is now 110, the measure of its realization is posited in its own form – as a proportion of the capital returned (returned to its money form) from the production process and from exchange, relative to the original capital; no longer as a relation between two unequal qualities – objectified and living labour – or necessary labour and surplus labour. When capital is posited as money, it is therefore posited in the first aspect of money, as measure of value. Here, however, this value is its own value, or the measure of its self, negation.[36] We will return to this (under profit).

The second form of money was that of the medium of circulation, and in this regard the money form of capital appeared as a mere vanishing moment for the purpose of exchanging it again, but not, as in the case of money as a medium of circulation in general, an exchange in return for commodities – use values – for final consumption, but rather an exchange in return for those particular use values in which it is able to begin its course as capital anew – raw material and instrument on the one hand, living labour capacity on the other. In this role it is circulating capital, about which later. However, the end-product of money in its role as medium of circulation is the beginning of the act of production with posited capital as the point of departure, and this is the point which we will here examine before we go further. (In the first aspect, measure, the new value did appear as measured; but the difference merely formal; instead of surplus labour, money – surplus labour objectified in a specific commodity. But the qualitative nature of this new value also undergoes a change – i.e. the magnitude of the measure itself, to be examined only later. Secondly, as medium of circulation the disappearance of the money form is also merely formal. It only becomes essential after not only the first but also the second circular path has been completed. Thus initially it results only in our standing again at the beginning of the realization process. We therefore begin to take up the continuation at this point.)

The third form of money, as independent value in a negative relation vis-à-vis circulation, is capital which does not step out of the production process into exchange again to become money. Rather, it is capital which becomes a commodity and enters into circulation in the form of self-sufficient value [sich auf sich selbst beziehenden Werts]. This third form presupposes capital in the earlier forms and at the same time forms the transition from capital to the particular capitals, the real capitals; since now, in this last form, capital already in its very concept divides into two capitals with an independent existence. Along with the duality, plurality in general is then given. Such is the march of this development.[37]

<Before we go any further, just one remark. Capital in general, as distinct from the particular capitals, does indeed appear (1) only as an abstraction; not an arbitrary abstraction, but an abstraction which grasps the specific characteristics which distinguish capital from all other forms of wealth – or modes in which (social) production develops. These are the aspects common to every capital as such, or which make every specific sum of values into capital. And the distinctions within this abstraction are likewise abstract particularities which characterize every kind of capital, in that it is their position [Position] or negation [Negation] (e.g. fixed capital or circulating capital); (2) however, capital in general, as distinct from the particular real capitals, is itself a real existence. This is recognized by ordinary economics, even if it is not understood, and forms a very important moment of its doctrine of equilibrations etc. For example, capital in this general form, although belonging to individual capitalists, in its elemental form as capital, forms the capital which accumulates in the banks or is distributed through them, and, as Ricardo says, so admirably distributes itself in accordance with the needs of production.[38] Likewise, through loans etc., it forms a level between the different countries. If it is therefore e.g. a law of capital in general that, in order to realize itself, it must posit itself doubly, and must realize itself in this double form, then e.g. the capital of a particular nation which represents capital par excellence in antithesis to another will have to lend itself out to a third nation in order to be able to realize itself. This double positing, this relating to self as to an alien, becomes damn real in this case. While the general is therefore on the one hand only a mental [gedachte] mark of distinction [differentia specifica], it is at the same time a particular real form alongside the form of the particular and individual.[39] (We will return later to this point, which, while having more of a logical than an economic character, will nevertheless have a great importance in the course of our inquiry. The same also in algebra. For example, a, b, c are numbers as such; in general; but then again they are whole numbers as opposed to a/b, b/c, c/b, c/a, b/a etc., which latter, however, presuppose the former as their general elements.>

Surplus labour or surplus value becomes surplus capital. All determinants of capitalist production now appear as results of (wage) labour itself. The realization process [Verwirklichungsprozess] of labour at the same time its de-realization process [Entwirklichungsprozess][edit source]

The new value, then, [is] itself posited as capital again, as objectified labour entering into the process of exchange with living labour, and hence dividing itself into a constant part – the objective conditions of labour, material and instrument – and the conditions for the subjective condition of labour, the existence of living labour capacity, the necessaries, subsistence goods for the worker. With this second entrance by capital in this form, some points appear clarified which were altogether unclear in its first occurrence – as money in transition from its role as value to its role as capital. Now they are solved through the process of realization and production itself. In the first encounter, the presuppositions themselves appeared to come in from the outside, out of circulation; as external presuppositions for the arising of capital; hence not emergent from its inner essence, and not explained by it. These external presuppositions will now appear as moments of the motion of capital itself, so that it has itself – regardless how they may arise historically – pre-posited them as its own moments.

Within the production process itself, surplus value, the surplus value procured through compulsion by capital, appeared as surplus labour, itself in the form of living labour, which, however, since it cannot create something out of nothing, finds its objective conditions laid out before it. Now this surplus labour appears in objectified form as surplus product, and, in order to realize itself as capital, this surplus product divides into a double form: as objective condition of labour – material and instrument; as subjective – consumption goods for the living labour now to be put to work. The general form as value – objectified labour – and objectified labour coming out of circulation – is of course the general, self-evident presupposition. Further: the surplus product in its totality – which objectifies surplus labour in its totality – now appears as surplus capital (in contrast to the original capital, before it had undertaken this cycle), i.e. as independent exchange value, in which living labour capacity encounters its specific use value. All moments which confronted living labour capacity, and employed it as alien, external powers, and which consumed it under certain conditions independent of itself, are now posited as its own product and result.

Firstly: surplus value or the surplus product are nothing but a specific sum of objectified living labour – the sum of surplus labour. This new value which confronts living labour as independent, as engaged in exchange with it, as capital, is the product of labour. It is itself nothing other than the excess of labour as such above necessary labour – in objective form and hence as value.

Secondly: the particular forms which this value must adopt in order to realize itself anew, i.e. to posit itself as capital – on one side as raw material and instrument, on the other as subsistence goods for labour during the act of production – are likewise, therefore, only particular forms of surplus labour itself. Raw material and instrument are produced by it in such relations – or, it is itself objectively posited in production as raw material and instrument in such a proportion – that a given sum of necessary labour – i.e. living labour which reproduces (the value of) the consumption goods – can objectify itself in it, and objectify itself in it continuously, i.e. can always begin anew the diremption into the objective and subjective conditions of its self-preservation and self-reproduction. In addition to this, living labour, in the process of reproducing its objective conditions, has at the same time posited raw material and instrument in such proportions that it can realize itself in them as surplus labour, as labour beyond the necessary, and can hence make them into material for the creation of new values. The objective conditions of surplus labour – which are restricted to the proportion of raw material and instrument beyond the requirements of necessary labour, whereas the objective conditions of necessary labour divide within their objectivity into objective and subjective, into objective moments of labour as well as subjective (consumption goods for living labour) – therefore now appear, are therefore now posited, as the product, result, objective form, external existence of surplus labour itself. Originally, by contrast, the fact that instrument and necessaries were on hand in the amounts which made it possible for living labour to realize itself not only as necessary, but also as surplus labour – this appeared alien to living labour itself, appeared as an act of capital.

Thirdly: The independent, for-itself existence [Fürsichsein] of value vis-à-vis living labour capacity – hence its existence as capital – the objective, self-sufficient indifference, the alien quality [Fremdheit] of the objective conditions of labour vis-à-vis living labour capacity, which goes so far that these conditions confront the person of the worker in the person of the capitalist – as personification[40] with its own will and interest – this absolute divorce, separation of property, i.e. of the objective conditions of labour from living labour capacity – that they confront him as alien property, as the reality of other juridical persons, as the absolute realm of their will – and that labour therefore, on the other side, appears as alien labour opposed to the value personified in the capitalist, or the conditions of labour – this absolute separation between property and labour, between living labour capacity and the conditions of its realization, between objectified and living labour, between value and value-creating activity – hence also the alien quality of the content of labour for the worker himself – this divorce now likewise appears as a product of labour itself, as objectification of its own moments. For, in the new act of production itself – which merely confirmed the exchange between capital and living labour which preceded it – surplus labour, and hence the surplus product, the total product of labour in general (of surplus labour as well as necessary labour), has now been posited as capital, as independent and indifferent towards living labour capacity, or as exchange value which confronts its mere use value. Labour capacity has appropriated for itself only the subjective conditions of necessary labour – the means of subsistence for actively producing labour capacity, i.e. for its reproduction as mere labour capacity separated from the conditions of its realization – and it has posited these conditions themselves as things, values, which confront it in an alien, commanding personification. The worker emerges not only not richer, but emerges rather poorer from the process than he entered. For not only has he produced the conditions of necessary labour as conditions belonging to capital; but also the value-creating possibility, the realization [Verwertung] which lies as a possibility within him, now likewise exists as surplus value, surplus product, in a word as capital, as master over living labour capacity, as value endowed with its own might and will, confronting him in his abstract, objectless, purely subjective poverty. He has produced not only the alien wealth and his own poverty, but also the relation of this wealth as independent, self-sufficient wealth, relative to himself as the poverty which this wealth consumes, and from which wealth thereby draws new vital spirits into itself, and realizes itself anew. All this arose from the act of exchange, in which he exchanged his living labour capacity for an amount of objectified labour, except that this objectified labour – these external conditions of his being, and the independent externality [Ausserihmsein] (to him) of these objective conditions – now appear as posited by himself, as his own product, as his own self-objectification as well as the objectification of himself as a power independent of himself, which moreover rules over him, rules over him through his own actions.

In surplus capital, all moments are products of alien labour – alien surplus labour transformed into capital; means of subsistence for necessary labour; the objective conditions – material and instrument – whereby necessary labour can reproduce the value exchanged for it in means of subsistence; finally the amount of material and instrument required so that new surplus labour can realize itself in them, or a new surplus value can be created.

It no longer seems here, as it still did in the first examination of the production process, as if capital, for its part, brought with it any value whatever from circulation. Rather, the objective conditions of labour now appear as labour’s product – both to the extent that they are value in general, and as use values for production. But while capital thus appears as the product of labour, so does the product of labour likewise appear as capital – no longer as a simple product, nor as an exchangeable commodity, but as capital; objectified labour as mastery, command over living labour. The product of labour appears as alien property, as a mode of existence confronting living labour as independent, as value in its being for itself; the product of labour, objectified labour, has been endowed by living labour with a soul of its own, and establishes itself opposite living labour as an alien power: both these situations are themselves the product of labour. Living labour therefore now appears from its own standpoint as acting within the production process in such a way that, as it realizes itself in the objective conditions, it simultaneously repulses this realization from itself as an alien reality, and hence posits itself as insubstantial, as mere penurious labour capacity in face of this reality alienated [entfremdet] from it, belonging not to it but to others; that it posits its own reality not as a being for it, but merely as a being for others, and hence also as mere other-being [Anderssein], or being of another opposite itself.[41] This realization process is at the same time the de-realization process of labour. It posits itself objectively, but it posits this, its objectivity, as its own not-being or as the being of its not-being – of capital. It returns back into itself as the mere possibility of value-creation or realization [Verwertung]; because the whole of real wealth, the world of real value and likewise the real conditions of its own realization [Verwirklichung] are posited opposite it as independent existences. As a consequence of the production process, the possibilities resting in living labour’s own womb exist outside it as realities – but as realities alien to it, which form wealth in opposition to it.

In so far as the surplus product is realized anew as surplus capital, enters anew into the process of production and self-realization, it divides into (1) means of subsistence for the workers, to be exchanged for living labour capacity; let this part of capital be designated as labour fund; this labour fund, the part allotted for the maintenance of living labour capacity – and for its progressive maintenance, since surplus capital constantly grows – now likewise appears as the product of alien labour, labour alien to capital, as well as (2) its other component parts – the material conditions for the reproduction of a value = to these means of subsistence + a surplus value.

Further, if we consider this surplus capital, then the division of capital into a constant part – raw material and instrument with an antediluvian existence before labour – and a variable part, i.e. the necessary goods exchangeable for living labour capacity, appears as purely formal, in so far as both of them are equally posited by labour and are equally posited by it as its own presuppositions. Now, however, this internal division of capital appears in such a way that labour’s own product – objectified surplus labour – splits into two component parts – the objective conditions for new realization of labour (1), and a labour fund for maintaining the possibility of this living labour, i.e. of living labour capacity as alive (2), but in such a way that labour capacity can only re-appropriate that part of its own result – of its own being in objective form – which is designated as labour fund, can appropriate and extract this part from the form of the alien wealth which confronts it, only by reproducing not merely its own value, but by also realizing that part of the new capital which represents the objective conditions for the realization of new surplus labour and surplus production, or production of surplus values. Labour has itself created a new fund for the employment of new necessary labour, or, what is the same, a fund for the maintenance of new living labour capacities, of workers, but has created at the same time the condition that this fund can be employed only if new surplus labour is employed on the extra part of the surplus capital. Thus, the production by labour of this surplus capital – surplus value – is at the same time the creation of the real necessity of new surplus labour, and thus surplus capital is itself at the same time the real possibility both of new surplus labour and of new surplus capital. It here becomes evident that labour itself progressively extends and gives an ever wider and fuller existence to the objective world of wealth as a power alien to labour, so that, relative to the values created or to the real conditions of value-creation, the penurious subjectivity of living labour capacity forms an ever more glaring contrast. The greater the extent to which labour objectifies itself, the greater becomes the objective world of values, which stands opposite it as alien – alien property. With the creation of surplus capital, labour places itself under the compulsion to create yet further surplus capital etc. etc.

In regard to the original not-surplus capital, the relation has changed, as regards labour capacity, in so far as (1) the part of it which is exchanged for necessary labour has been reproduced by this labour itself, i.e. no longer comes to it out of circulation, but is its own product; and (2) that part of the value which, as raw material and instrument, represents the real conditions for the realization [Verwertung] of living labour, has been maintained by it itself in the production process; and, since every use value by its nature consists of transitory material, but since exchange value is present, exists, only in use value, therefore this maintenance = protection from decay and ruin, or negation of the transitory nature of the values owned by the capitalists; hence, this maintenance means to posit them as values for-themselves, as indestructible wealth. Hence, this original sum of values has been posited for the first time as capital in the production process, by living labour.

Formation of surplus capital I. – Surplus capital II. – Inversion of the law of appropriation. – Chief result of the production and realization process: the reproduction and new production of the relation of capital and labour itself, of capitalist and worker[edit source]

Now, from the standpoint of capital: As regards the surplus capital, the capitalist represents value for-itself, money in its third moment, wealth, by means of simple appropriation of alien labour; since every moment of surplus capital, material, instrument, necessaries, resolves into alien labour, which the capitalist does not appropriate by means of exchange for existing values, but has appropriated without exchange. True, the exchange of a part of values belonging to him, or of objectified labour possessed by him, for alien living labour capacity, appears as the original precondition for this surplus capital. For the formation of surplus capital I, if we give that name to the surplus capital emerging from the original production process, i.e. for the appropriation of alien labour, of objectified alien labour, it appears as a condition that the capitalist should possess values, of which he formally exchanges one part for living labour capacity. We say formally, because living labour must replace and return to him these exchanged values as well. But be this as it may. In any case, it appears as a condition for the formation of surplus capital I, i.e. for the appropriation of alien labour or of the values in which it is objectified, that there must be an exchange of values belonging to the capitalist, thrown into circulation by him, and supplied to living labour capacity by him – of values which do not arise from his exchange with living labour, or not from his relation as capital to labour.

But now let us think of this surplus capital as having been thrown back into the production process, as realizing its surplus value anew in exchange, and as appearing anew as new surplus capital at the beginning of a third production process. This, surplus capital II, has different presuppositions from surplus capital I. The presupposition of surplus capital I was the existence of values belonging to the capitalist and thrown by him into circulation, or, more exactly, into the exchange with living labour capacity. The presupposition of surplus capital II is nothing more than the existence of surplus capital I; i.e. in other words, the presupposition that the capitalist has already appropriated alien labour without exchange. This puts him into a position where he is able to begin the process again and again. True, in order to create surplus capital II, he had to exchange a part of the value of surplus capital I in the form of means of subsistence for living labour capacity, but the values he gave in that exchange were not values which he originally put into circulation out of his own funds; they were, rather, objectified alien labour which he appropriated without giving any equivalent whatever, and which he now re-exchanges for alien living labour; in the same way, moreover, as the material etc. in which this new labour realizes itself and in which it creates surplus value have come into his hands without exchange, by mere appropriation. The previous appropriation of alien labour now appears as the simple precondition for the new appropriation of alien labour; or, his ownership of alien labour in objective (material) form, in the form of existing values, appears as the condition of his ability to appropriate new alien living labour capacity, hence surplus labour, labour without equivalent. The fact that he has previously confronted living labour as capital appears as the only condition required in order that he may not only maintain himself as capital, but also, as a growing capital, increasingly appropriate alien labour without equivalent; or, that he may extend his power, his existence as capital opposite living labour capacity, and on the other side constantly posit living labour capacity anew in its subjective, insubstantial penury as living labour capacity. Property – previous, or objectified, alien labour – appears as the only condition for further appropriation of present or living alien labour. In so far as surplus capital I was created by means of a simple exchange between objectified labour and living labour capacity – an exchange entirely based on the laws of the exchange of equivalents as measured by the quantity of labour or labour time contained in them – and in so far as the legal expression of this exchange presupposed nothing other than everyone’s right of property over his own products, and of free disposition over them – but in so far as the relation of surplus capital II to I is therefore a consequence of this first relation – we see that, by a peculiar logic, the right of property undergoes a dialectical inversion [dialektischer Umschlag], so that on the side of capital it becomes the right to an alien product, or the right of property over alien labour, the right to appropriate alien labour without an equivalent, and, on the side of labour capacity, it becomes the duty to relate to one’s own labour or to one’s own product as to alien property. The right of property is inverted, to become, on the one side, the right to appropriate alien labour, and, on the other, the duty of respecting the product of one’s own labour, and one’s own labour itself, as values belonging to others. The exchange of equivalents, however, which appeared as the original operation, an operation to which the right of property gave legal expression, has become turned round in such a way that the exchange by one side is now only illusory, since the part of capital which is exchanged for living labour capacity, firstly, is itself alien labour, appropriated without equivalent, and, secondly, has to be replaced with a surplus by living labour capacity, is thus in fact not consigned away, but merely changed from one form into another. The relation of exchange has thus dropped away entirely, or is a mere semblance. Furthermore, the right of property originally appeared to be based on one’s own labour. Property now appears as the right to alien labour, and as the impossibility of labour appropriating its own product. The complete separation between property, and, even more so, wealth, and labour, now appears as a consequence of the law which began with their identity.

Finally, the result of the process of production and realization is, above all, the reproduction and new production of the relation of capital and labour itself, of capitalist and worker. This social relation, production relation, appears in fact as an even more important result of the process than its material results. And more particularly, within this process the worker produces himself as labour capacity, as well as the capital confronting him, while at the same time the capitalist produces himself as capital as well as the living labour capacity confronting him. Each reproduces itself, by reproducing its other, its negation. The capitalist produces labour as alien; labour produces the product as alien. The capitalist produces the worker, and the worker the capitalist etc.

Original accumulation of capital. (The real accumulation). – Once developed historically, capital itself creates the conditions of its existence (not as conditions for its arising, but as results of its being). – (Performance of personal services, as opposed to wage labour.) – Inversion of the law of appropriation. Real alien relation [Fremdheit] of the worker to his product. Division of labour. Machinery etc.[edit source]

Once production founded on capital is presupposed – money has become transformed into capital actually only at the end of the first production process, which resulted in its reproduction and in the new production of surplus capital I; surplus capital I, however, is itself posited, realized as surplus capital, only when it has produced surplus capital II, i.e. as soon as those presuppositions of money, while it is in the process of passing over into capital, which still lie outside the movement of real capital have vanished, and when capital has therefore itself posited, and posited in accordance with its immanent essence, the conditions which form its point of departure in production – [then] the condition that the capitalist, in order to posit himself as capital, must bring values into circulation which he created with his own labour – or by some other means, excepting only already available, previous wage labour – belongs among the antediluvian conditions of capital, belongs to its historic presuppositions, which, precisely as such historic presuppositions, are past and gone, and hence belong to the history of its formation, but in no way to its contemporary history, i.e. not to the real system of the mode of production ruled by it. While e.g. the flight of serfs to the cities is one of the historic conditions and presuppositions of urbanism, it is not a condition, not a moment of the reality of developed cities, but belongs rather to their past presuppositions, to the presuppositions of their becoming which are suspended in their being. The conditions and presuppositions of the becoming, of the arising, of capital presuppose precisely that it is not yet in being but merely in becoming; they therefore disappear as real capital arises, capital which itself, on the basis of its own reality, posits the conditions for its realization. Thus e.g. while the process in which money or value for-itself originally becomes capital presupposes on the part of the capitalist an accumulation – perhaps by means of savings garnered from products and values created by his own labour etc., which he has undertaken as a not-capitalist, i.e. while the presuppositions under which money becomes capital appear as given, external presuppositions for the arising of capital – [nevertheless,] as soon as capital has become capital as such, it creates its own presuppositions, i.e. the possession of the real conditions of the creation of new values without exchange – by means of its own production process. These presuppositions, which originally appeared as conditions of its becoming – and hence could not spring from its action as capital – now appear as results of its own realization, reality, as posited by it – not as conditions of its arising, but as results of its presence. It no longer proceeds from presuppositions in order to become, but rather it is itself presupposed, and proceeds from itself to create the conditions of its maintenance and growth. Therefore, the conditions which preceded the creation of surplus capital I, or which express the becoming of capital, do not fall into the sphere of that mode of production for which capital serves as the presupposition; as the historic preludes of its becoming, they lie behind it, just as the processes by means of which the earth made the transition from a liquid sea of fire and vapour to its present form now lie beyond its life as finished earth. That is, individual capitals can continue to arise e.g. by means of hoarding. But the hoard is transformed into capital only by means of the exploitation of labour. The bourgeois economists who regard capital as an eternal and natural (not historical) form of production then attempt at the same time to legitimize it again by formulating the conditions of its becoming as the conditions of its contemporary realization; i.e. presenting the moments in which the capitalist still appropriates as not-capitalist – because he is still becoming – as the very conditions in which he appropriates as capitalist. These attempts at apologetics demonstrate a guilty conscience, as well as the inability to bring the mode of appropriation of capital as capital into harmony with the general laws of property proclaimed by capitalist society itself. On the other side, much more important for us is that our method indicates the points where historical investigation must enter in, or where bourgeois economy as a merely historical form of the production process points beyond itself to earlier historical modes of production. In order to develop the laws of bourgeois economy, therefore, it is not necessary to write the real history of the relations of production. But the correct observation and deduction of these laws, as having themselves become[42] in history, always leads to primary equations – like the empirical numbers e.g. in natural science – which point towards a past lying behind this system. These indications [Andeutung], together with a correct grasp of the present, then also offer the key to the understanding of the past – a work in its own right which, it is to be hoped, we shall be able to undertake as well.[43] This correct view likewise leads at the same time to the points at which the suspension of the present form of production relations gives signs of its becoming – foreshadowings of the future. Just as, on one side the pre-bourgeois phases appear as merely historical, i.e. suspended presuppositions, so do the contemporary conditions of production likewise appear as engaged in suspending themselves and hence in positing the historic presuppositions for a new state of society.

Now, if we initially examine the relation such as it has become, value having become capital, and living labour confronting it as mere use value, so that living labour appears as a mere means to realize objectified, dead labour, to penetrate it with an animating soul while losing its own soul to it – and having produced, as the end-product, alien wealth on one side and [, on the other,] the penury which is living labour capacity’s sole possession – then the matter is simply this, that the process itself, in and by itself, posits the real objective conditions of living labour (namely, material in which to realize itself, instrument with which to realize itself, and necessaries with which to stoke the flame of living labour capacity, to protect it from being extinguished, to supply its vital processes with the necessary fuels) and posits them as alien, independent existences – or as the mode of existence of an alien person, as self-sufficient values for-themselves, and hence as values which form wealth alien to an isolated and subjective labour capacity, wealth of and for the capitalist. The objective conditions of living labour appear as separated, independent [verselbständigte] values opposite living labour capacity as subjective being, which therefore appears to them only as a value of another kind (not as value, but different from them, as use value). Once this separation is given, the production process can only produce it anew, reproduce it, and reproduce it on an expanded scale. How it does this, we have seen. The objective conditions of living labour capacity are presupposed as having an existence independent of it, as the objectivity of a subject distinct from living labour capacity and standing independently over against it; the reproduction and realization [Verwertung], i.e. the expansion of these objective conditions, is therefore at the same time their own reproduction and new production as the wealth of an alien subject indifferently and independently standing over against labour capacity. What is reproduced and produced anew [neuproduziert] is not only the presence of these objective conditions of living labour, but also their presence as independent values, i.e. values belonging to an alien subject, confronting this living labour capacity. The objective conditions of labour attain a subjective existence vis-à-vis living labour capacity – capital turns into capitalist; on the other side, the merely subjective presence of the labour capacity confronted by its own conditions gives it a merely indifferent, objective form as against them – it is merely a value of a particular use value alongside the conditions of its own realization [Verwertung] as values of another use value. Instead of their being realized [realisiert] in the production process as the conditions of its realization [Verwirklichung], what happens is quite the opposite: it comes out of the process as mere condition for their realization [Verwertung] and preservation as values for-themselves opposite living labour capacity. The material on which it works is alien material; the instrument is likewise an alien instrument; its labour appears as a mere accessory to their substance and hence objectifies itself in things not belonging to it. Indeed, living labour itself appears as alien vis-à-vis living labour capacity, whose labour it is, whose own life’s expression [Lebensäusserung] it is, for it has been surrendered to capital in exchange for objectified labour, for the product of labour itself. Labour capacity relates to its labour as to an alien, and if capital were willing to pay it without making it labour it would enter the bargain with pleasure. Thus labour capacity’s own labour is as alien to it – and it really is, as regards its direction etc. – as are material and instrument. Which is why the product then appears to it as a combination of alien material, alien instrument and alien labour – as alien property, and why, after production, it has become poorer by the life forces expended, but otherwise begins the drudgery anew, existing as a mere subjective labour capacity separated from the conditions of its life. The recognition [Erkennung] of the products as its own, and the judgement that its separation from the conditions of its realization is improper – forcibly imposed – is an enormous [advance in] awareness [Bewusstsein], itself the product of the mode of production resting on capital, and as much the knell to its doom as, with the slave’s awareness that he cannot be the property of another, with his consciousness of himself as a person, the existence of slavery becomes a merely artificial, vegetative existence, and ceases to be able to prevail as the basis of production.

However, if we consider the original relation, before the entry of money into the self-realization process, then various conditions appear which have to have arisen, or been given historically, for money to become capital and labour to become capital-positing, capital-creating labour, wage labour. (Wage labour, here, in the strict economic sense in which we use it here, and no other – and we will later have to distinguish it from other forms of labour for day-wages etc. – is capital-positing, capital-producing labour, i.e. living labour which produces both the objective conditions of its realization as an activity, as well as the objective moments of its being as labour capacity, and produces them as alien powers opposite itself, as values for-themselves, independent of it.) The essential conditions are themselves posited in the relation as it appears originally: (1) on the one side the presence of living labour capacity as a merely subjective existence, separated from the conditions of living labour as well as from the means of existence, the necessary goods, the means of self-preservation of living labour capacity; the living possibility of labour, on the one side, in this complete abstraction; (2) the value, or objectified labour, found on the other side, must be an accumulation of use values sufficiently large to furnish the objective conditions not only for the production of the products or values required to reproduce or maintain living labour capacity, but also for the absorption of surplus labour – to supply the objective material for the latter; (3) a free exchange relation – money circulation – between both sides; between the extremes a relation founded on exchange values – not on the master–servant relation – i.e., hence, production which does not directly furnish the producer with his necessaries, but which is mediated through exchange, and which cannot therefore usurp alien labour directly, but must buy it, exchange it, from the worker himself; finally (4) one side – the side representing the objective conditions of labour in the form of independent values for-themselves – must present itself as value, and must regard the positing of value, self-realization, money-making, as the ultimate purpose – not direct consumption or the creation of use value.

So long as both sides exchange their labour with one another in the form of objectified labour, the relation is impossible; it is likewise impossible if living labour capacity itself appears as the property of the other side, hence as not engaged in exchange. (The fact that slavery is possible at individual points within the bourgeois system of production does not contradict this. However, slavery is then possible there only because it does not exist at other points; and appears as an anomaly opposite the bourgeois system itself.)

The conditions under which the relation appears at the origin, or which appear as the historic presuppositions of its becoming, reveal at first glance a two-sided character – on one side, dissolution of lower forms of living labour; on the other, dissolution of happier forms of the same.

The first presupposition, to begin with, is that the relation of slavery or serfdom has been suspended. Living labour capacity belongs to itself, and has disposition over the expenditure of its forces, through exchange. Both sides confront each other as persons. Formally, their relation has the equality and freedom of exchange as such. As far as concerns the legal relation, the fact that this form is a mere semblance, and a deceptive semblance, appears as an external matter. What the free worker sells is always nothing more than a specific, particular measure of force-expenditure [Kraftäusserung]; labour capacity as a totality is greater than every particular expenditure. He sells the particular expenditure of force to a particular capitalist, whom he confronts as an independent individual. It is clear that this is not his relation to the existence of capital as capital, i.e. to the capitalist class. Nevertheless, in this way everything touching on the individual, real person leaves him a wide field of choice, of arbitrary will, and hence of formal freedom. In the slave relation, he belongs to the individual, particular owner, and is his labouring machine. As a totality of force-expenditure, as labour capacity, he is a thing [Sache] belonging to another, and hence does not relate as subject to his particular expenditure of force, nor to the act of living labour. In the serf relation he appears as a moment of property in land itself, is an appendage of the soil, exactly like draught-cattle. In the slave relation the worker is nothing but a living labour-machine, which therefore has a value for others, or rather is a value. The totality of the free worker’s labour capacity appears to him as his property, as one of his moments, over which he, as subject, exercises domination, and which he maintains by expending it. This to he developed later under wage labour.

The exchange of objectified labour for living labour does not yet constitute either capital on one side or wage labour on the other. The entire class of so-called services from the bootblack up to the king falls into this category. Likewise the free day-labourer, whom we encounter sporadically in all places where either the oriental community [Gemeinwesen] or the western commune [Gemeinde] consisting of free landowners dissolves into individual elements – as a consequence of increase of population, release of prisoners of war, accidents by which the individual is impoverished and loses the objective conditions of his self-sustaining labour, owing to division of labour etc. If A exchanges a value or money, i.e. objectified labour, in order to obtain a service from B, i.e. living labour, then this can belong:

(1) within the relation of simple circulation. Both in fact exchange only use values with one another; one exchanges necessaries, the other labour, a service which the other wants to consume, either directly – personal service – or he furnishes him the material etc. from which, with his labour, with the objectification of his labour, he makes a use value, a use value designed for A’s consumption. For example, when the peasant takes a wandering tailor, of the kind that existed in times past, into his house, and gives him the material to make clothes with. Or if I give money to a doctor to patch up my health. What is important in these cases is the service which both do for one another. Do ut facias here appears on quite the same level as facio ut des, or do ut des.[44] The man who takes the cloth I supplied to him and makes me an article of clothing out of it gives me a use value. But instead of giving it directly in objective form, he gives it in the form of activity. I give him a completed use value; he completes another for me. The difference between previous, objectified labour and living, present labour here appears as a merely formal difference between the different tenses of labour, at one time in the perfect and at another in the present. It appears in fact as a merely formal difference, a difference mediated by division of labour and by exchange, whether B himself produces the necessaries on which he has to subsist, or whether he obtains them from A and, instead of producing the necessaries himself, produces an article of clothing, in exchange for which he obtains them from A. In both cases he can take possession of the use value possessed by A only by giving him an equivalent for it; which, in the last analysis, always resolves itself into his own living labour, regardless of the objective form it may adopt, whether before the exchange is concluded, or as a consequence of it. Now, the article of clothing not only contains a specific, form-giving labour – a specific form of usefulness imparted to the cloth by the movement of labour – but it contains also a certain quantity of labour – hence not only use value, but value generally, value as such. But this value does not exist for A, since he consumes the article, and is not a clothes-dealer. He has therefore bought the labour not as value-positing labour, but as an activity which creates utility, use value. In the case of personal services, this use value is consumed as such without making the transition from the form of movement [Bewegung] into the form of the object [Sache]. If, as is frequently the case in simple relations, the performer of the service does not obtain money, but direct use values themselves, then it no longer even seems as if value were being dealt in on one or the other side; merely use values. But even given that A pays money for the service, this is not a transformation of his money into capital, but rather the positing of his money as mere medium of circulation, in order to obtain an object for consumption, a specific use value. This act is for that reason not an act which produces wealth, but the opposite, one which consumes wealth. The point for A is not the objectification in the cloth of labour as such, of a certain amount of labour time, hence value, but rather the satisfaction of a certain need. Here A sees his money not realized but devalued in its transposition from the form of value into that of use value. Labour is here exchanged not as use value for value, but as itself a particular use value, as value for use. The more frequently A repeats the exchange, the poorer does he become. This exchange is not an act of wealth-getting for him, not an act of value creation, but of devaluation of the values he has in hand, in his possession. The money which A here exchanges for living labour – service in kind, or service objectified in a thing – is not capital but revenue, money as a medium of circulation in order to obtain use value, money in which the form of value is posited as merely vanishing, not money which will preserve and realize itself as such through the acquisition of labour. Exchange of money as revenue, as a mere medium of circulation, for living labour, can never posit money as capital, nor, therefore, labour as wage labour in the economic sense. A lengthy disquisition is not required to show that to consume (spend) money is not the same as to produce money. In situations in which the greatest part of surplus labour appears as agricultural labour, and where the owner of the land therefore appears as owner both of surplus labour and of the surplus product, it is the revenue of the owner of the land which forms the labour fund for the free worker, for the worker in manufactures (here, hand crafts) as opposed to the agricultural labourers. The exchange with them[45] is a form of the consumption of the owner of the land – he divides another part of his revenue directly – for personal services, often only the illusion of services, with a heap of retainers. In Asiatic societies, where the monarch appears as the exclusive proprietor of the agricultural surplus product, whole cities arise, which are at bottom nothing more than wandering encampments, from the exchange of his revenue with the ‘free hands’, as Steuart calls them.[46] There is nothing of wage labour in this relation, but it can stand in opposition to slavery and serfdom, though need not do so, for it always repeats itself under various forms of the overall organization of labour. To the extent that money mediates this exchange the determination of prices will become important on both sides, but it will do so for A only in so far as he does not want to pay too much for the use value of the labour; not in so far as he is concerned with its value. The essence of the relation remains unchanged even if this price, which begins as conventional and traditional, is thereafter increasingly determined economically, first by the relation of demand and supply, finally by the production costs at which the vendors themselves of these living services can be produced; nothing is essentially changed thereby, because the determination of prices remains a merely formal moment for the exchange of mere use values, as before. This determination itself, however, is created by other relations, by the general laws and the self-determination of the ruling mode of production, acting, as it were, behind the back of this particular act of exchange. One of the forms in which this kind of pay [Besoldung] first appears in the old communities is where an army is maintained. The pay [Sold] of the common soldier is also reduced to a minimum – determined purely by the production costs necessary to procure him. But he exchanges the performance of his services not for capital, but for the revenue of the state.

In bourgeois society itself, all exchange of personal services for revenue – including labour for personal consumption, cooking, sewing etc., garden work etc., up to and including all of the unproductive classes, civil servants, physicians, lawyers, scholars etc. – belongs under this rubric, within this category. All menial servants etc. By means of their services – often coerced – all these workers, from the least to the highest, obtain for themselves a share of the surplus product, of the capitalist’s revenue. But it does not occur to anyone to think that by means of the exchange of his revenue for such services, i.e. through private consumption, the capitalist posits himself as capitalist. Rather, he thereby spends the fruits of his capital. It does not change the nature of the relation that the proportions in which revenue is exchanged for this kind of living labour are themselves determined by the general laws of production.

As we have already mentioned in the section on money,[47] it is here rather the performer of the service who actually posits value; who transposes a use value – a certain kind of labour, service etc. – into value, money. Hence in the Middle Ages, those who are oriented towards the production and accumulation of money proceed partly not from the side of the consuming landed nobility, but quite the opposite, from the side of living labour; they accumulate and thus become capitalists, δυνάμει, for a later period. The emancipated serf becomes, in part, the capitalist.

It thus does not depend on the general relation, but rather on the natural, particular quality of the service performed, whether the recipient of payment receives it as day-wages, or as an honorarium, or as a sinecure – and whether he appears as superior or inferior in rank to the person paying for the service. However, with the presupposition of capital as the dominant power, all these relations become more or less dishonoured. But this does not belong here yet – this demystification [Entgötterung] of personal services, regardless of the lofty character with which tradition may have poetically endowed them.

It is not, then, simply the exchange of objectified labour for living labour – which appear, from this standpoint, as two different aspects, as use values in different forms, the one objective, the other subjective – which constitutes capital and hence wage labour, but rather, the exchange of objectified labour as value, as self-sufficient value, for living labour as its use value, a use value not for a specific, particular use or consumption, but as use value for value.

In the exchange of money for labour or service, with the aim of direct consumption, a real exchange always takes place; the fact that amounts of labour are exchanged on both sides is of merely formal interest for measuring the particular forms of the utility of labour by comparing them with each other. This concerns only the form of the exchange; but does not form its content. In the exchange of capital for labour, value is not a measure of the exchange of two use values, but is rather the content of the exchange itself.

(2) In periods of the dissolution of pre-bourgeois relations, there sporadically occur free workers whose services are bought for purposes not of consumption, but of production; but, firstly, even if on a large scale, for the production only of direct use values, not of values; and secondly, if a nobleman e.g. brings the free worker together with his serfs, even if he re-sells a part of the worker’s product, and the free worker thus creates value for him, then this exchange takes place only for the superfluous [product] and only for the sake of superfluity, for luxury consumption; is thus at bottom only a veiled purchase of alien labour for immediate consumption or as use value. Incidentally, wherever these free workers increase in number, and where this relation grows, there the old mode of production – commune, patriarchal, feudal etc. – is in the process of dissolution, and the elements of real wage labour are in preparation. But these free servants [Knechte] can also emerge, as e.g. in Poland etc., and vanish again, without a change in the mode of production taking place.

<In order to express the relations into which capital and wage labour enter as property relations or laws, we need do no more than express the conduct of both sides in the realization process as an appropriation process. For example, the fact that surplus labour is posited as surplus value of capital means that the worker does not appropriate the product of his own labour; that it appears to him as alien property; inversely, that alien labour appears as the property of capital. This second law of bourgeois property, the inversion of the first – which, through laws of inheritance etc., attains an existence independent of the accidental transitoriness of individual capitalists – becomes just as established in law as the first. The first is the identity of labour with property; the second, labour as negated property, or property as negation of the alien quality of alien labour. In fact, in the production process of capital, as will be seen more closely in its further development, labour is a totality – a combination of labours – whose individual component parts are alien to one another, so that the overall process as a totality is not the work of the individual worker, and is furthermore the work of the different workers together only to the extent that they are [forcibly] combined, and do not [voluntarily] enter into combination with one another. The combination of this labour appears just as subservient to and led by an alien will and an alien intelligence – having its animating unity elsewhere – as its material unity appears subordinate to the objective unity of the machinery, of fixed capital, which, as animated monster, objectifies the scientific idea, and is in fact the coordinator, does not in any way relate to the individual worker as his instrument; but rather he himself exists as an animated individual punctuation mark; as its living isolated accessory. Thus, combined labour is combination in-itself in a double way; not combination as a mutual relation among the individuals working together, nor as their predominance either over their particular or individual function or over the instrument of labour. Hence, just as the worker relates to the product of his labour as an alien thing, so does he relate to the combination of labour as an alien combination, as well as to his own labour as an expression of his life, which, although it belongs to him, is alien to him and coerced from him, and which A. Smith etc. therefore conceives is a burden, sacrifice etc.[48] Labour itself, like its product, is negated as the labour of the particular, isolated worker. This isolated labour, negated, is now indeed communal or combined labour, posited. The communal or combined labour posited in this way – as activity and in the passive, objective form – is however at the same time posited as an other towards the really existing individual labour – as an alien objectivity (alien property) as well as an alien subjectivity (of capital). Capital thus represents both labour and its product as negated individualized labour and hence as the negated property of the individualized worker. Capital therefore is the existence of social labour – the combination of labour as subject as well as object – but this existence as itself existing independently opposite its real moments – hence itself a particular existence apart from them. For its part, capital therefore appears as the predominant subject and owner of alien labour, and its relation is itself as complete a contradiction as is that of wage labour.>

Forms which precede capitalist production. (Concerning the process which precedes the formation of the capital relation or of original accumulation)[edit source]

A presupposition of wage labour, and one of the historic preconditions for capital, is free labour and the exchange of this free labour for money, in order to reproduce and to realize money, to consume the use value of labour not for individual consumption, but as use value for money. Another presupposition is the separation of free labour from the objective conditions of its realization – from the means of labour and the material for labour. Thus, above all, release of the worker from the soil as his natural workshop – hence dissolution of small, free landed property as well as of communal landownership resting on the oriental commune. In both forms, the worker relates to the objective conditions of his labour as to his property; this is the natural unity of labour with its material [sachlich] presuppositions. The worker thus has an objective existence independent of labour. The individual relates to himself as proprietor, as master of the conditions of his reality. He relates to the others in the same way and – depending on whether this presupposition is posited as proceeding from the community or from the individual families which constitute the commune – he relates to the others as co-proprietors, as so many incarnations of the common property, or as independent proprietors like himself, independent private proprietors – beside whom the previously all-absorbing and all-predominant communal property is itself posited as a particular ager publicus[49] alongside the many private landowners.

In both forms, the individuals relate not as workers but as proprietors – and members of a community, who at the same time work. The aim of this work is not the creation of value – although they may do surplus labour in order to obtain alien, i.e. surplus products in exchange – rather, its aim is sustenance of the individual proprietor and of his family, as well as of the total community. The positing of the individual as a worker, in this nakedness, is itself a product of history.

In the first form of this landed property, an initial, naturally arisen spontaneous [naturwüchsiges] community appears as first presupposition. Family, and the family extended as a clan [Stamm],[50] or through intermarriage between families, or combination of clans. Since we may assume that pastoralism, or more generally a migratory form of life, was the first form of the mode of existence, not that the clan settles in a specific site, but that it grazes off what it finds – humankind is not settlement-prone by nature (except possibly in a natural environment so especially fertile that they sit like monkeys on a tree; else roaming like the animals) – then the clan community, the natural community, appears not as a result of, but as a presupposition for the communal appropriation (temporary) and utilization of the land. When they finally do settle down, the extent to which this original community is modified will depend on various external, climatic, geographic, physical etc. conditions as well as on their particular natural predisposition – their clan character. This naturally arisen clan community, or, if one will, pastoral society, is the first presupposition – the communality [Gemeinschaftlichkeit] of blood, language, customs – for the appropriation of the objective conditions of their life, and of their life’s reproducing and objectifying activity (activity as herdsmen, hunters, tillers etc.). The earth is the great workshop, the arsenal which furnishes both means and material of labour, as well as the seat, the base of the community. They relate naïvely to it as the property of the community, of the community producing and reproducing itself in living labour. Each individual conducts himself only as a link, as a member of this community as proprietor or possessor. The real appropriation through the labour process happens under these presuppositions, which are not themselves the product of labour, but appear as its natural or divine presuppositions. This form, with the same land-relation as its foundation, can realize itself in very different ways. E.g. it is not in the least a contradiction to it that, as in most of the Asiatic land-forms, the comprehensive unity standing above all these little communities appears as the higher proprietor or as the sole proprietor; the real communities hence only as hereditary possessors. Because the unity is the real proprietor and the real presupposition of communal property, it follows that this unity can appear as a particular entity above the many real particular communities, where the individual is then in fact propertyless, or, property – i.e. the relation of the individual to the natural conditions of labour and of reproduction as belonging to him, as the objective, nature-given inorganic body of his subjectivity – appears mediated for him through a cession by the total unity – a unity realized in the form of the despot, the father of the many communities – to the individual, through the mediation of the particular commune. The surplus product – which is, incidentally, determined by law in consequence of the real appropriation through labour – thereby automatically belongs to this highest unity. Amidst oriental despotism and the propertylessness which seems legally to exist there, this clan or communal property exists in fact as the foundation, created mostly by a combination of manufactures and agriculture within the small commune, which thus becomes altogether self-sustaining, and contains all the conditions of reproduction and surplus production within itself. A part of their surplus labour belongs to the higher community, which exists ultimately as a person, and this surplus labour takes the form of tribute etc., as well as of common labour for the exaltation of the unity, partly of the real despot, partly of the imagined clan-being, the god. Now, in so far as it actually realizes itself in labour, this kind of communal property can appear either in the form where the little communes vegetate independently alongside one another, and where, inside them, the individual with his family work independently on the lot assigned to them (a certain amount of labour for the communal reserves, insurance so to speak, and to meet the expenses of the community as such, i.e. for war, religion etc.; this is the first occurrence of the lordly dominium in the most original sense, e.g. in the Slavonic communes, in the Rumanian etc. Therein lies the transition to villeinage [Frondienst] etc.); or the unity may extend to the communality of labour itself, which may be a formal system, as in Mexico, Peru especially, among the early Celts, a few clans of India. The communality can, further, appear within the clan system more in a situation where the unity is represented in a chief of the clan-family, or as the relation of the patriarchs among one another. Depending on that, a more despotic or a more democratic form of this community system. The communal conditions of real appropriation through labour, aqueducts, very important among the Asiatic peoples; means of communication etc. then appear as the work of the higher unity – of the despotic regime hovering over the little communes. Cities proper here form alongside these villages only at exceptionally good points for external trade; or where the head of the state and his satraps exchange their revenue (surplus product) for labour, spend it as labour-fund.

The second form – and like the first it has essential modifications brought about locally, historically etc. – product of more active, historic life, of the fates and modifications of the original clans – also assumes the community as its first presupposition, but not, as in the first case, as the substance of which the individuals are mere accidents, or of which they form purely natural component parts – it presupposes as base not the countryside, but the town as an already created seat (centre) of the rural population (owners of land). The cultivated field here appears as a territorium belonging to the town; not the village as mere accessory to the land. The earth in itself – regardless of the obstacles it may place in the way of working it, really appropriating it – offers no resistance to [attempts to] relate to it as the inorganic nature of the living individual, as his workshop, as the means and object of labour and the means of life for the subject. The difficulties which the commune encounters can arise only from other communes, which have either previously occupied the land and soil, or which disturb the commune in its own occupation. War is therefore the great comprehensive task, the great communal labour which is required either to occupy the objective conditions of being there alive, or to protect and perpetuate the occupation. Hence the commune consisting of families initially organized in a warlike way – as a system of war and army, and this is one of the conditions of its being there as proprietor. The concentration of residences in the town, basis of this bellicose organization. The clan system in itself leads to higher and lower ancestral lineages [Geschlechtern],[51] a distinction which is still further developed through intermixture with subjugated clans etc. Communal property – as state property, ager publicus – here separated from private property. The property [Eigentum] of the individual is here not, unlike the first case, itself directly communal property; where it is, the individual has no property as distinct from the commune, but rather is merely its possessor [Besitzer]. The less it is the case that the individual’s property can in fact be realized solely through communal labour – thus e.g. the aqueducts in the Orient – the more the purely naturally arisen, spontaneous character of the clan has been broken by historic movement, migration; the more, further, the clan removes itself from its original seat and occupies alien ground, hence enters into essentially new conditions of labour, and develops the energy of the individual more – its common character appearing, necessarily, more as a negative unity towards the outside – the more, therefore, are the conditions given under which the individual can become a private proprietor of land and soil – of a particular plot – whose particular cultivation falls to him and his family. The commune – as state – is, on one side, the relation of these free and equal private proprietors to one another, their bond against the outside, and is at the same time their safeguard. The commune here rests as much on the fact that its members consist of working landed proprietors, small-owning peasants, as the peasants’ independence rests on their mutual relations as commune members, on protection of the ager publicus for communal needs and communal glory etc. Membership in the commune remains the presupposition for the appropriation of land and soil, but, as a member of the commune, the individual is a private proprietor. He relates to his private property as land and soil, but at the same time as to his being as commune member; and his own sustenance as such is likewise the sustenance of the commune, and conversely etc. The commune, although already a product of history here, not only in fact but also known as such, and therefore possessing an origin, is the presupposition of property in land and soil – i.e. of the relation of the working subject to the natural presuppositions of labour as belonging to him – but this belonging [is] mediated by his being a member of the state, by the being of the state – hence by a presupposition regarded as divine etc.[52] Concentration in the town, with the land as territorium; small agriculture working for direct consumption; manufacture as domestic side occupation of wives and daughters (spinning and weaving) or, independently, in individual branches only (fabri[53] etc.). The presupposition of the survival of the community is the preservation of equality among its free self-sustaining peasants, and their own labour as the condition of the survival of their property. They relate as proprietors to the natural conditions of labour; but these conditions must also constantly be posited as real conditions and objective elements of the personality of the individual, by means of personal labour. On the other side, the tendency of this small bellicose community system drives beyond these barriers etc. (Rome, Greece, Jews etc.). ‘When the auguries’, Niebuhr says, ‘had assured Numa of the divine sanction of his election, the pious king’s first concern was not worship at the temple, but a human one. He divided the lands which Romulus had won in war and given over to occupation: he endowed the order of Terminus. All the law-givers of antiquity, Moses above all, founded their success in commanding virtue, integrity and proper custom on landed property, or at least on secured, hereditary possession of land, for the greatest possible number of citizens.’ (Vol. I, 245, 2nd edition. Röm. Gesch.)[54] The individual is placed in such conditions of earning his living as to make not the acquiring of wealth his object, but self-sustenance, his own reproduction as a member of the community; the reproduction of himself as proprietor of the parcel of ground, and, in that quality, as a member of the commune. The survival of the commune is the reproduction of all of its members as self-sustaining peasants, whose surplus time belongs precisely to the commune, the work of war etc. The property in one’s own labour is mediated by property in the condition of labour – the hide of land, guaranteed in its turn by the existence of the commune, and that in turn by surplus labour in the form of military service etc. by the commune members. It is not cooperation in wealth-producing labour by means of which the commune member reproduces himself, but rather cooperation in labour for the communal interests (imaginary and real), for the upholding of the association inwardly and outwardly. Property is quiritorium,[55] of the Roman variety; the private proprietor of land is such only as a Roman, but as a Roman he is a private proprietor of land.

A[nother] form of the property of working individuals, self-sustaining members of the community, in the natural conditions of their labour, is the Germanic. Here the commune member is neither, as such, a co-possessor of the communal property, as in the specifically oriental form (wherever property exists only as communal property, there the individual member is as such only possessor of a particular part, hereditary or not, since any fraction of the property belongs to no member for himself, but to him only as immediate member of the commune, i.e. as in direct unity with it, not in distinction to it. This individual is thus only a possessor. What exists is only communal property, and only private possession. The mode of this possession in relation to the communal property may be historically, locally etc. modified in quite different ways, depending on whether labour itself is performed by the private possessor in isolation, or is in turn determined by the commune or by the unity hovering above the particular commune); nor is the situation such as obtains in the Roman, Greek form (in short, the form of classical antiquity) – in this case, the land is occupied by the commune, Roman land; a part remains to the commune as such as distinct from the commune members, ager publicus in its various forms; the other part is divided up and each parcel of land is Roman by virtue of being the private property, the domain of a Roman, the part of the laboratorium belonging to him; but, also, he is a Roman only in so far as he possesses this sovereign right over a part of the Roman earth. <In antiquity, urban occupation and trade little esteemed, agriculture, however, highly; in the Middle Ages the contrary appraisal.> <The right of using the communal land through possession originally appertained to the patricians, who then granted it to their clients; the transfer of property out of the ager publicus appertained exclusively to the plebeians; all assignments in favour of the plebeians and compensation for a share of the communal property. Actual property in land, excepting the area around the city walls, originally only in the hands of the plebeians (rural communes included later.)> <Basis of the Roman plebs as a totality of agriculturists, as is indicated in their quiritary property. Antiquity unanimously esteemed agriculture as the proper occupation of the free man, the soldier’s school. In it the ancestral stock of the nation sustains itself; it changes in the cities, where alien merchants and dealers settle, just as the indigenous move where gain entices them. Wherever there is slavery, the freedman seeks his support in such dealings, in which he then often gathers riches: thus these occupations were mostly in their hands in antiquity, and were therefore not proper for a citizen: hence the opinion that admission of the craftsmen to full citizenship rights would be a risky undertaking (among the earlier Greeks they were as a rule excluded). ‘ὀὐδενὶ γὰρ ἐξῆν ῾Ρωμαίων οὔτε ϰάπηλον οὔτε χειροτέχνην βίον ἔχειν.’ Antiquity had no inkling of a privileged guild-system such as prevailed in the history of medieval cities; and already here the martial spirit declined as the guilds defeated the aristocratic lineages, and was finally extinguished altogether; and consequently, with it, the cities’ external respect and freedom.> <The clans of the ancient states were founded on two different principles, either on ancestry [Geschlecht] or on the locality. The ancestral clans preceded the locality clans in time and are almost everywhere pushed aside by the latter. Their most extreme, strictest form is the caste-order, in which one is separated from the other, without the right of intermarriage, quite different in [degree of] privilege; each with an exclusive, irrevocable occupation. The locality clans originally corresponded to a partition of the countryside into districts and villages; so that someone residing in a given village at the time of this partition, in Attica under Cleisthenes, was registered as a demotes (villager) of that village, and as a member of the phylon (tribe) of the village’s region. Now, his descendants, as a rule, remained in the same phylon and the same demos without regard to their residence; whereby this partition also took on an ancestral appearance.> <These Roman gens not blood relatives; to the communal name, Cicero adds descent from free men as a sign. Communal sacra (shrines) for the Roman gentiles; later ceased (already in Cicero’s time). Practice of co-gentile inheritance, in cases without dependents or will, survived longest of all. In the earliest periods, obligation of all members of the gens to help those of their own who require this, to carry unaccustomed burdens. (This occurs originally everywhere among the Germans, remains longest among the Dithmarschen.) The gentes, corporations [Innungen]. There was in the world of antiquity no more general institution than that of kin groups. Thus among the Gaels the noble Campbells and their vassals forming one clan.>[56] Since the patrician represents the community in a higher degree, he is the possessor of the ager publicus and uses it through his clients etc. (and also appropriates it little by little). The Germanic commune is not concentrated in the town; by means of such a concentration – the town as centre of rural life, residence of the agricultural workers, likewise the centre of warfare – the commune as such would have a merely outward existence, distinct from that of the individual. The history of classical antiquity is the history of cities, but of cities founded on landed property and on agriculture; Asiatic history is a kind of indifferent unity of town and countryside (the really large cities must be regarded here merely as royal camps, as works of artifice [Superfötation] erected over the economic construction proper); the Middle Ages (Germanic period) begins with the land as the seat of history, whose further development then moves forward in the contradiction between town and countryside; the modern [age] is the urbanization of the countryside, not ruralization of the city as in antiquity.

Notebook V (22 January – Beginning of February 1858)[edit source]

With its coming-together in the city, the commune possesses an economic existence as such; the city’s mere presence, as such, distinguishes it from a mere multiplicity of independent houses. The whole, here, consists not merely of its parts. It is a kind of independent organism. Among the Germanic tribes, where the individual family chiefs settled in the forests, long distances apart, the commune exists, already from outward observation, only in the periodic gathering-together [Vereinigung] of the commune members, although their unity-in-itself is posited in their ancestry, language, common past and history, etc. The commune thus appears as a coming-together [Vereinigung], not as a being-together [Verein]; as a unification made up of independent subjects, landed proprietors, and not as a unity. The commune therefore does not in fact exist as a state or political body, as in classical antiquity, because it does not exist as a city. For the commune to come into real existence, the free landed proprietors have to hold a meeting, whereas e.g. in Rome it exists even apart from these assemblies in the existence of the city itself and of the officials presiding over it etc. True, the ager publicus, the communal or people’s land, as distinct from individual property, also occurs among the Germanic tribes. It takes the form of hunting land, grazing land, timber land etc., the part of the land which cannot be divided if it is to serve as means of production in this specific form. But this ager publicus does not appear, as with the Romans e.g., as the particular economic presence of the state as against the private proprietors, so that these latter are actually private proprietors as such, in so far as they are excluded, deprived, like the plebeians, from using the ager publicus. Among the Germanic tribes, the ager publicus appears rather merely as a complement to individual property, and figures as property only to the extent that it is defended militarily as the common property of one tribe against a hostile tribe. Individual property does not appear mediated by the commune; rather, the existence of the commune and of communal property appear as mediated by, i.e. as a relation of, the independent subjects to one another. The economic totality is, at bottom, contained in each individual household, which forms an independent centre of production for itself (manufactures purely as domestic secondary task for women etc.). In the world of antiquity, the city with its territory is the economic totality; in the Germanic world, the totality is the individual residence, which itself appears as only a small dot on the land belonging to it, and which is not a concentration of many proprietors, but the family as independent unit. In the Asiatic form (at least, predominantly), the individual has no property but only possession; the real proprietor, proper, is the commune – hence property only as communal property in land. In antiquity (Romans as the most classic example, the thing in its purest, most fully developed form), the form of state property in land and that of private property in land [are] antithetical, so that the latter is mediated by the former, or the former itself exists in this double form. The private proprietor of land hence at the same time urban citizen. Urban citizenship resolves itself economically into the simple form that the agriculturist [is a] resident of a city. In the Germanic form, the agriculturist not citizen of a state, i.e. not inhabitant of a city; [the] basis [is] rather the isolated, independent family residence, guaranteed by the bond with other such family residences of the same tribe, and by their occasional coming-together [Zusammnenkommen] to pledge each others’ allegiance in war, religion, adjudication etc. Individual landed property here appears neither as a form antithetical to the commune’s landed property, nor as mediated by it, but just the contrary. The commune exists only in the interrelations among these individual landed proprietors as such. Communal property as such appears only as a communal accessory to the individual tribal seats and the land they appropriate. The commune is neither the substance of which the individual appears as a mere accident; nor is it a generality with a being and unity as such [seiende Einheit] either in the mind and in the existence of the city and of its civic needs as distinct from those of the individual, or in its civic land and soil as its particular presence as distinct from the particular economic presence of the commune member; rather, the commune, on the one side, is presupposed in-itself prior to the individual proprietors as a communality of language, blood etc., but it exists as a presence, on the other hand, only in its real assembly for communal purposes; and to the extent that it has a particular economic existence in the hunting and grazing lands for communal use, it is so used by each individual proprietor as such, not as representative of the state (as in Rome); it is really the common property of the individual proprietors, not of the union of these proprietors endowed with an existence separate from themselves, the city itself.

The main point here is this: In all these forms – in which landed property and agriculture form the basis of the economic order, and where the economic aim is hence the production of use values, i.e. the reproduction of the individual within the specific relation to the commune in which he is its basis – there is to be found: (1) Appropriation not through labour, but presupposed to labour; appropriation of the natural conditions of labour, of the earth as the original instrument of labour as well as its workshop and repository of raw materials. The individual relates simply to the objective conditions of labour as being his; [relates] to them as the inorganic nature of his subjectivity, in which the latter realizes itself; the chief objective condition of labour does not itself appear as a product of labour, but is already there as nature; on one side the living individual, on the other the earth, as the objective condition of his reproduction; (2) but this relation to land and soil, to the earth, as the property of the labouring individual – who thus appears from the outset not merely as labouring individual, in this abstraction, but who has an objective mode of existence in his ownership of the land, an existence presupposed to his activity, and not merely as a result of it, a presupposition of his activity just like his skin, his sense organs, which of course he also reproduces and develops etc. in the life process, but which are nevertheless presuppositions of this process of his reproduction – is instantly mediated by the naturally arisen, spontaneous, more or less historically developed and modified presence of the individual as member of a commune – his naturally arisen presence as member of a tribe etc. An isolated individual could no more have property in land and soil than he could speak. He could, of course, live off it as substance, as do the animals. The relation to the earth as property is always mediated through the occupation of the land and soil, peacefully or violently, by the tribe, the commune, in some more or less naturally arisen or already historically developed form. The individual can never appear here in the dot-like isolation [Punktualität] in which he appears as mere free worker. If the objective conditions of his labour are presupposed as belonging to him, then he himself is subjectively presupposed as member of a commune, through which his relation to land and soil is mediated. His relation to the objective conditions of labour is mediated through his presence as member of the commune; at the same time, the real presence of the commune is determined by the specific form of the individual’s property in the objective conditions of labour. Whether this property mediated by commune-membership appears as communal property, where the individual is merely the possessor and there is no private property in land and soil – or whether property appears in the double form of state and private property alongside one another, but so that the latter appears as posited by the former, so that only the citizen is and must be a private proprietor, while his property as citizen has a separate, particular existence at the same time – or whether, finally, the communal property appears only as a complement to individual property, with the latter as the base, while the commune has no existence for-itself except in the assembly of the commune members, their coming-together for common purposes – these different forms of the commune or tribe members’ relation to the tribe’s land and soil – to the earth where it has settled – depend partly on the natural inclinations of the tribe, and partly on the economic conditions in which it relates as proprietor to the land and soil in reality, i.e. in which it appropriates its fruits through labour, and the latter will itself depend on climate, physical make-up of the land and soil, the physically determined mode of its exploitation, the relation with hostile tribes or neighbour tribes, and the modifications which migrations, historic experiences etc. introduce. The survival of the commune as such in the old mode requires the reproduction of its members in the presupposed objective conditions. Production itself, the advance of population (this too belongs with production), necessarily suspends these conditions little by little; destroys them instead of reproducing them etc., and, with that, the communal system declines and falls, together with the property relations on which it was based. The Asiatic form necessarily hangs on most tenaciously and for the longest time. This is due to its presupposition that the individual does not become independent vis-à-vis the commune; that there is a self-sustaining circle of production, unity of agriculture and manufactures, etc. If the individual changes his relation to the commune, he thereby changes and acts destructively upon the commune; as on its economic presupposition; on the other side, the alteration of this economic presupposition brought about by its own dialectic – impoverishment etc. In particular, the influence of warfare and of conquest, which e.g. in Rome belonged to the essential conditions of the commune itself, suspends the real bond on which it rests. In all these forms, the reproduction of presupposed relations – more or less naturally arisen or historic as well, but become traditional – of the individual to his commune, together with a specific, objective existence, predetermined for the individual, of his relations both to the conditions of labour and to his co-workers, fellow tribesmen etc. – are the foundation of development, which is therefore from the outset restricted, but which signifies decay, decline and fall once this barrier is suspended. Thus among the Romans, the development of slavery, the concentration of land possession, exchange, the money system, conquest etc., although all these elements up to a certain point seemed compatible with the foundation, and in part appeared merely as innocent extensions of it, partly grew out of it as mere abuses. Great developments can take place here within a specific sphere. The individuals may appear great. But there can be no conception here of a free and full development either of the individual or of the society, since such development stands in contradiction to the original relation.

Do we never find in antiquity an inquiry into which form of landed property etc. is the most productive, creates the greatest wealth? Wealth does not appear as the aim of production, although Cato may well investigate which manner of cultivating a field brings the greatest rewards, and Brutus may even lend out his money at the best rates of interest.[57] The question is always which mode of property creates the best citizens. Wealth appears as an end in itself only among the few commercial peoples – monopolists of the carrying trade – who live in the pores of the ancient world, like the Jews in medieval society. Now, wealth is on one side a thing, realized in things, material products, which a human being confronts as subject; on the other side, as value, wealth is merely command over alien labour not with the aim of ruling, but with the aim of private consumption etc. It appears in all forms in the shape of a thing, be it an object or be it a relation mediated through the object, which is external and accidental to the individual. Thus the old view, in which the human being appears as the aim of production, regardless of his limited national, religious, political character, seems to be very lofty when contrasted to the modern world, where production appears as the aim of mankind and wealth as the aim of production. In fact, however, when the limited bourgeois form is stripped away, what is wealth other than the universality of individual needs, capacities, pleasures, productive forces etc., created through universal exchange? The full development of human mastery over the forces of nature, those of so-called nature as well as of humanity’s own nature? The absolute working-out of his creative potentialities, with no presupposition other than the previous historic development, which makes this totality of development, i.e. the development of all human powers as such the end in itself, not as measured on a predetermined yardstick? Where he does not reproduce himself in one specificity, but produces his totality? Strives not to remain something he has become, but is in the absolute movement of becoming? In bourgeois economics – and in the epoch of production to which it corresponds – this complete working-out of the human content appears as a complete emptying-out, this universal objectification as total alienation, and the tearing-down of all limited, one-sided aims as sacrifice of the human end-in-itself to an entirely external end. This is why the childish world of antiquity appears on one side as loftier. On the other side, it really is loftier in all matters where closed shapes, forms and given limits are sought for. It is satisfaction from a limited standpoint; while the modern gives no satisfaction; or, where it appears satisfied with itself, it is vulgar.

What Mr Proudhon calls the extra-economic origin of property, by which he understands just landed property,[58] is the pre-bourgeois relation of the individual to the objective conditions of labour, and initially to the natural objective conditions of labour – for, just as the working subject appears naturally as an individual, as natural being – so does the first objective condition of his labour appear as nature, earth, as his inorganic body; he himself is not only the organic body, but also the subject of this inorganic nature. This condition is not his product but something he finds to hand – presupposed to him as a natural being apart from him. Before we analyse this further, one more point: the worthy Proudhon would not only be able to, but would have to, accuse capital and wage labour – as forms of property – of having an extra-economic origin. For the encounter with the objective conditions of labour as separate from him, as capital from the worker’s side, and the encounter with the worker as propertyless, as an abstract worker from the capitalist’s side – the exchange such as takes place between value and living labour, presupposes a historic process, no matter how much capital and labour themselves reproduce this relation and work out its objective scope, as well as its depth – a historic process, which, as we saw, forms the history of the origins of capital and wage labour. In other words: the extra-economic origin of property means nothing else than the historic origin of the bourgeois economy, of the forms of production which are theoretically or ideally expressed by the categories of political economy. But the fact that pre-bourgeois history, and each of its phases, also has its own economy and an economic foundation for its movement, is at bottom only the tautology that human life has since time immemorial rested on production, and, in one way or another, on social production, whose relations we call, precisely, economic relations.

The original conditions of production (or, what is the same, the reproduction of a growing number of human beings through the natural process between the sexes; for this reproduction, although it appears as appropriation of the objects by the subjects in one respect, appears in another respect also as formation, subjugation of the objects to a subjective purpose; their transformation into results and repositories of subjective activity) cannot themselves originally be products – results of production. It is not the unity of living and active humanity with the natural, inorganic conditions of their metabolic exchange with nature, and hence their appropriation of nature, which requires explanation or is the result of a historic process, but rather the separation between these inorganic conditions of human existence and this active existence, a separation which is completely posited only in the relation of wage labour and capital. In the relations of slavery and serfdom this separation does not take place; rather, one part of society is treated by the other as itself merely an inorganic and natural condition of its own reproduction. The slave stands in no relation whatsoever to the objective conditions of his labour; rather, labour itself, both in the form of the slave and in that of the serf, is classified as an inorganic condition of production along with other natural beings, such as cattle, as an accessory of the earth. In other words: the original conditions of production appear as natural presuppositions, natural conditions of the producer’s existence just as his living body, even though he reproduces and develops it, is originally not posited by himself, but appears as the presupposition of his self; his own (bodily) being is a natural presupposition, which he has not posited. These natural conditions of existence, to which he relates as to his own inorganic body, are themselves double: (1) of a subjective and (2) of an objective nature. He finds himself a member of a family, clan, tribe etc. – which then, in a historic process of intermixture and antithesis with others, takes on a different shape; and, as such a member, he relates to a specific nature (say, here, still earth, land, soil) as his own inorganic being, as a condition of his production and reproduction. As a natural member of the community he participates in the communal property, and has a particular part of it as his possession; just as, were he a natural Roman citizen, he would have an ideal claim (at least) to the ager publicus and a real one to a certain number of iugera[59] of land etc. His property, i.e. the relation to the natural presuppositions of his production as belonging to him, as his, is mediated by his being himself the natural member of a community. (The abstraction of a community, in which the members have nothing in common but language etc., and barely that much, is obviously the product of much later historical conditions.) As regards the individual, it is clear e.g. that he relates even to language itself as his own only as the natural member of a human community. Language as the product of an individual is an impossibility. But the same holds for property.

Language itself is the product of a community, just as it is in another respect itself the presence [Dasein] of the community, a presence which goes without saying. <Communal production and common property as they exist e.g. in Peru are evidently a secondary form; introduced by and inherited from conquering tribes, who, at home, had common property and communal production in the older, simpler form such as is found in India and among the Slavs. Likewise the form which we find among the Celts in Wales e.g. appears as a transplanted, secondary form, introduced by conquerors among the lesser, conquered tribes. The completion and systematic elaboration of these systems by a supreme central authority shows their later origin. Just as the feudalism introduced into England was more perfect in form than that which arose spontaneously in France.> <Among nomadic pastoral tribes – and all pastoral peoples are originally migratory – the earth appears like other natural conditions, in its elemental limitlessness, e.g. in the Asiatic steppes and the high plateau. It is grazed etc., consumed by the herds, from which the pastoral peoples in turn live. They relate to it as their property, although they never stabilize this property. This is the case too with the hunting grounds of the wild Indian tribes in America; the tribe regards a certain region as its hunting domain, and asserts it by force against other tribes, or tries to drive others off the domains they assert. Among the nomadic pastoral peoples, the commune is indeed constantly united; the travelling society, the caravan, the horde, and the forms of supremacy and subordination develop out of the conditions of this mode of life. What is in fact appropriated and reproduced here is not the earth but the herd; but the earth is always used communally at each halting place.> The only barrier which the community can encounter in relating to the natural conditions of production – the earth – as to its own property (if we jump ahead to the settled peoples) is another community, which already claims it as its own inorganic body. Warfare is therefore one of the earliest occupations of each of these naturally arisen communities, both for the defence of their property and for obtaining new property. (We can indeed content ourselves here with speaking of land and soil as original property, for among the herding peoples property in natural products of the earth – e.g. sheep – is at the same time property in the pastures they wander through. In general, property in land and soil includes its organic products.) <If human beings themselves are conquered along with the land and soil as its organic accessories, then they are equally conquered as one of the conditions of production, and in this way arises slavery and serfdom, which soon corrupts and modifies the original forms of all communities, and then itself becomes their basis. The simple construction is thereby negatively determined.>

Property thus originally means no more than a human being’s relation to his natural conditions of production as belonging to him, as his, as presupposed along with his own being; relations to them as natural presuppositions of his self, which only form, so to speak, his extended body. He actually does not relate to his conditions of production, but rather has a double existence, both subjectively as he himself, and objectively in these natural non-organic conditions of his existence. The forms of these natural conditions of production are double: (1) his existence as a member of a community; hence the existence of this community, which in its original form is a clan system, a more or less modified clan system; (2) the relation to land and soil mediated by the community, as its own, as communal landed property, at the same time individual possession for the individual, or in such a way that only the fruits are divided, but the land itself and the labour remain common. (However, residences etc., even if only the Scythians’ wagons, always appear in individual possession.) A natural condition of production for the living individual is his belonging to a naturally arisen, spontaneous society, clan etc. This is e.g. already a condition for his language etc. His own productive existence is possible only on this condition. His subjective existence is thereby conditioned as such, just as it is conditioned by his relation to the earth as his workshop. (Property is, it is true, originally mobile, for mankind first seizes hold of the ready-made fruits of the earth, among whom belong e.g. the animals, and for him especially the ones that can be tamed. Nevertheless even this situation – hunting, fishing, herding, gathering fruits from trees etc. – always presupposes appropriation of the earth, whether for a fixed residence, or for roaming, or for animal pasture etc.)

Property therefore means belonging to a clan (community) (having subjective-objective existence in it); and, by means of the relation of this community to the land and soil, [relating] to the earth as the individual’s inorganic body; his relation to land and soil, to the external primary condition of production – since the earth is raw material, instrument and fruit all in one – as to a presupposition belonging to his individuality, as modes of his presence. We reduce this property to the relation to the conditions of production. Why not to consumption, since the production of the individual is originally restricted to the reproduction of his own body through the appropriation of ready objects prepared by nature itself for consumption? Even where the only task is to find and to discover, this soon requires exertion, labour – as in hunting, fishing, herding – and production (i.e. development) of certain capacities on the part of the subject. Then also, situations in which it is possible to seize hold of the things available without any instruments whatever (i.e. products of labour destined for production), without alteration of form (which already takes place for herding) etc., are themselves transitional and in no case to be regarded as normal; nor as normal original situations. The original conditions of production, incidentally, of course include substances consumable directly, without labour; thus the consumption fund appears as s component part of the original production fund.

The fundamental condition of property resting on the clan system (into which the community originally resolves itself) – to be a member of the clan – makes the clan conquered by another clan propertyless and throws it among the inorganic conditions of the conqueror’s reproduction, to which the conquering community relates as its own. Slavery and serfdom are thus only further developments of the form of property resting on the clan system. They necessarily modify all of the latter’s forms. They can do this least of all in the Asiatic form. In the self-sustaining unity of manufacture and agriculture, on which this form rests, conquest is not so necessary a condition as where landed property, agriculture are exclusively predominant. On the other hand, since in this form the individual never becomes a proprietor but only a possessor, he is at bottom himself the property, the slave of him in whom the unity of the commune exists, and slavery here neither suspends the conditions of labour nor modifies the essential relation.

It is now clear, further, that:

Property, in so far as it is only the conscious relation – and posited in regard to the individual by the community, and proclaimed and guaranteed as law – to the conditions of production as his own, so that the producer’s being appears also in the objective conditions belonging to him – is only realized by production itself. The real appropriation takes place not in the mental but in the real, active relation to these conditions – in their real positing as the conditions of his subjective activity.

It is thereby also clear that these conditions change. Only when tribes hunt upon it does a region of the earth become a hunting domain; only cultivation of the soil posits the land as the individual’s extended body. After the city of Rome had been built and the surrounding countryside cultivated by its citizens, the conditions of the community were different from what they had been before. The aim of all these communities is survival; i.e. reproduction of the individuals who compose it as proprietors, i.e. in the same objective mode of existence as forms the relation among the members and at the same time therefore the commune itself. This reproduction, however, is at the same time necessarily new production and destruction of the old form. For example, where each of the individuals is supposed to possess a given number of acres of land, the advance of population is already under way. If this is to be corrected, then colonization, and that in turn requires wars of conquest. With that, slaves etc. Also, e.g., enlargement of the ager publicus, and therewith the patricians who represent the community etc. Thus the preservation of the old community includes the destruction of the conditions on which it rests, turns into its opposite. If it were thought that productivity on the same land could be increased by developing the forces of production etc. (this precisely the slowest of all in traditional agriculture), then the new order would include combinations of labour, a large part of the day spent in agriculture etc., and thereby again suspend the old economic conditions of the community. Not only do the objective conditions change in the act of reproduction, e.g. the village becomes a town, the wilderness a cleared field etc., but the producers change, too, in that they bring out new qualities in themselves, develop themselves in production, transform themselves, develop new powers and ideas, new modes of intercourse, new needs and new language. The older and more traditional the mode of production itself – and this lasts a long time in agriculture; even more in the oriental supplementation of agriculture with manufactures – i.e. the longer the real process of appropriation remains constant, the more constant will be the old forms of property and hence the community generally. Where there is already a separation between the commune members as private proprietors [on one side,] and they themselves as the urban commune and proprietors of the commune’s territorium [on the other], there the conditions already arise in which the individual can lose his property, i.e. the double relation which makes him both an equal citizen, a member of the community, and a proprietor. In the oriental form this loss is hardly possible, except by means of altogether external influences, since the individual member of the commune never enters into the relation of freedom towards it in which he could lose his (objective, economic) bond with it. He is rooted to the spot, ingrown. This also has to do with the combination of manufacture and agriculture, of town (village) and countryside. In classical antiquity, manufacture appears already as a corruption (business for freedmen, clients, aliens) etc. This development of productive labour (not bound in pure subordination to agriculture as a domestic task, labour by free men for agriculture or war only, or for religious observances, and manufactures for the community – such as construction of houses, streets, temples), which necessarily develops through intercourse with aliens and slaves, through the desire to exchange the surplus product etc., dissolves the mode of production on which the community rests, and, with it, the objective individual, i.e. the individual defined as Roman, Greek, etc. Exchange acts in the same way; indebtedness etc.

The original unity between a particular form of community (clan) and the corresponding property in nature, or relation to the objective conditions of production as a natural being, as an objective being of the individual mediated by the commune – this unity, which appears in one respect as the particular form of property – has its living reality in a specific mode of production itself, a mode which appears both as a relation between the individuals, and as their specific active relation to inorganic nature, a specific mode of working (which is always family labour, often communal labour). The community itself appears as the first great force of production; particular kinds of production conditions (e.g. stock-breeding, agriculture), develop particular modes of production and particular forces of production, subjective, appearing as qualities of individuals, as well as objective [ones].

In the last analysis, their community, as well as the property based on it, resolves itself into a specific stage in the development of the productive forces of working subjects – to which correspond their specific relations amongst one another and towards nature. Until a certain point, reproduction. Then turns into dissolution.

Property, then, originally means – in its Asiatic, Slavonic, ancient classical, Germanic form – the relation of the working (producing or self-reproducing) subject to the conditions of his production or reproduction as his own. It will therefore have different forms depending on the conditions of this production. Production itself aims at the reproduction of the producer within and together with these, his objective conditions of existence. This relation as proprietor – not as a result but as a presupposition of labour, i.e. of production – presupposes the individual defined as a member of a clan or community (whose property the individual himself is, up to a certain point). Slavery, bondage etc., where the worker himself appears among the natural conditions of production for a third individual or community (this is not the case e.g. with the general slavery of the Orient, only from the European point of view) – i.e. property no longer the relation of the working individual to the objective conditions of labour – is always secondary, derived, never original, although [it is] a necessary and logical result of property founded on the community and labour in the community. It is of course very simple to imagine that some powerful, physically dominant individual, after first having caught the animal, then catches humans in order to have them catch animals; in a word, uses human beings as another naturally occurring condition for his reproduction (whereby his own labour reduces itself to ruling) like any other natural creature. But such a notion is stupid – correct as it may be from the standpoint of some particular given clan or commune – because it proceeds from the development of isolated individuals. But human beings become individuals only through the process of history. He appears originally as a species-being [Gattungswesen], clan being, herd animal – although in no way whatever as a ζῶον πολιτιϰόν[60] in the political sense. Exchange itself is a chief means of this individuation [Vereinzelung]. It makes the herd-like existence superfluous and dissolves it. Soon the matter [has] turned in such a way that as an individual he relates himself only to himself, while the means with which he posits himself as individual have become the making of his generality and commonness. In this community, the objective being of the individual as proprietor, say proprietor of land, is presupposed, and presupposed moreover under certain conditions which chain him to the community, or rather form a link in his chain. In bourgeois society, the worker e.g. stands there purely without objectivity, subjectively; but the thing which stands opposite him has now become the true community [Gemeinwesen],[61] which he tries to make a meal of, and which makes a meal of him.

All forms (more or less naturally arisen, spontaneous, all at the same time however results of a historic process) in which the community presupposes its subjects in a specific objective unity with their conditions of production, or in which a specific subjective mode of being presupposes the communities themselves as conditions of production, necessarily correspond to a development of the forces of production which is only limited, and indeed limited in principle. The development of the forces of production dissolves these forms, and their dissolution is itself a development of the human productive forces. Labour begins with a certain foundation – naturally arisen, spontaneous, at first – then historic presupposition. Then, however, this foundation or presupposition is itself suspended, or posited as a vanishing presupposition which has become too confining for the unfolding of the progressing human pack.

In so far as classical landed property reappears in modern small-parcel landownership, it itself belongs to political economy and we shall come to it in the section on landed property.

(All this is to be returned to at greater depth and length.)

What we are here concerned with is this: the relation of labour to capital, or to the objective conditions of labour as capital, presupposes a process of history which dissolves the various forms in which the worker is a proprietor, or in which the proprietor works. Thus above all (1) Dissolution of the relation to the earth – land and soil – as natural condition of production – to which he relates as to his own inorganic being; the workshop of his forces, and the domain of his will. All forms in which this property appears presuppose a community, whose members, although there may be formal distinctions between them, are, as members of it, proprietors. The original form of this property is therefore itself direct common property (oriental form, modified in the Slavonic; developed to the point of antithesis, but still as the secret, if antithetical, foundation in classical and Germanic property). (2) Dissolution of the relations in which he appears as proprietor of the instrument. Just as the above form of landed property presupposes a real community, so does this property of the worker in the instrument presuppose a particular form of the development of manufactures, namely craft, artisan work; bound up with it, the guild-corporation system etc. (The manufacture system of the ancient Orient can be examined under (1) already.) Here labour itself still half artistic, half end-in-itself etc. Mastery. Capitalist himself still master-journeyman. Attainment of particular skill in the work also secures possession of instrument etc. etc. Inheritability then to a certain extent of the mode of work together with the organization of work and the instrument of work. Medieval cities. Labour still as his own; definite self-sufficient development of one-sided abilities etc. (3) Included in both is the fact that he has the means of consumption in his possession before production, which are necessary for him to live as producer – i.e. during production, before its completion. As proprietor of land he appears as directly provided with the necessary consumption fund. As master in a craft he has inherited it, earned it, saved it up, and as a youth he is first an apprentice, where he does not appear as an actual independent worker at all, but shares the master’s fare in a patriarchal way. As journeyman (a genuine one) there is a certain communality in the consumption fund possessed by the master. While it is not the journeyman’s property either, still, through the laws of the guild, tradition etc., at least co-possession etc. (To be gone into further.) (4) Dissolution likewise at the same time of the relations in which the workers themselves, the living labour capacities themselves, still belong directly among the objective conditions of production, and are appropriated as such – i.e. are slaves or serfs. For capital, the worker is not a condition of production, only work is. If it can make machines do it, or even water, air, so much the better. And it does not appropriate the worker, but his labour – not directly, but mediated through exchange.

These are, now, on one side, historic presuppositions needed before the worker can be found as a free worker, as objectless, purely subjective labour capacity confronting the objective conditions of production as his not-property, as alien property, as value for-itself, as capital. But the question arises, on the other side, which conditions are required so that he finds himself up against a capital?

<The formula of capital, where living labour relates to the raw material as well as to the instrument and to the means of subsistence required during labour, as negatives, as not-property, includes, first of all, not-land-ownership, or, the negation of the situation in which the working individual relates to land and soil, to the earth, as his own, i.e. in which he works, produces, as proprietor of the land and soil. In the best case he relates not only as worker to the land and soil, but also as proprietor of the land and soil to himself as working subject. Ownership of land and soil potentially also includes ownership of the raw material, as well as of the primordial instrument, the earth itself, and of its spontaneous fruits. Posited in the most original form, it means relating to the earth as proprietor, and finding raw material and instrument on hand, as well as the necessaries of life created not by labour but by the earth itself. Once this relation is reproduced, secondary instruments and fruits of the earth created through labour itself appear as included with landed property in its primitive forms. This historic situation is thus first of all negated as a full property relation, in the worker’s relation to the conditions of labour as capital. This is historic state No. I, which is negated in this relation or presupposed as historically dissolved. Secondly, however, where there is ownership of the instrument on the part of the worker, i.e. the worker relates to the instrument as his own, where the worker works as owner of the instrument (which at the same time presupposes the subsumption of the instrument under his individual work, i.e. a particular, limited developmental stage of the productive force of labour), where this form of the worker as owner or of the working owner is already posited as an independent form beside and apart from landed property – the artisan-like and urban development of labour – not, as in the first case, as accidental to landed property and subsumed under it – hence where the raw material and the necessaries of life are also mediated as the craftsman’s property, mediated through his craft work, through his property in the instrument – there a second historical stage is already presupposed beside and apart from the first, which must itself already appear significantly modified, through the achievement of independence by this second sort of property or by working owners. Since the instrument itself is already the product of labour, thus the element which constitutes property already exists as posited by labour, the community can no longer appear here in a naturally arisen, spontaneous form as in the first case – the community on which this form of property founded – but rather as itself already a produced, made, derived and secondary community, produced by the worker himself. It is clear that wherever ownership of the instrument is the relation to the conditions of production as property, there, in the real labour process, the instrument appears only as a means of individual labour; the art of really appropriating the instrument, of handling it as an instrument of labour, appears as the worker’s particular skill, which posits him as the owner of the instrument. In short, the essential character of the guild-corporation system, of craft work as its subject, constituted by owners – can be resolved into the relation to the instrument of production – the instrument of labour as property – as distinct from the relation to the earth, to land and soil (to the raw material as such) as one’s own. That the relation to this one moment of the conditions of production constitutes the working subject as owner, makes him into a working owner, this [is] historic situation No. II, which by its nature can exist only as antithesis to or, if one will, at the same time as complement of a modified form of the first – likewise negated in the first formula of capital. The third possible form, in which the worker relates as owner only to the necessaries of life, finding them on hand as the natural condition of the working subject, without relating to the land and soil, or to the instrument, or even (therefore) to labour itself as his own, is at bottom the formula of slavery and bondage, which is likewise negated, posited as a historically dissolved condition, in the relation of the worker to the conditions of production as capital. The original forms of property necessarily dissolve into the relation to the different objective moments which condition production, as one’s own; they form the economic foundation of different forms of community, just as they for their part have specific forms of the community as presupposition. These forms are essentially modified by the inclusion of labour itself among the objective conditions of production (serfdom and slavery), through which the simply affirmative character of all forms of property included under No. I is lost and modified. They all contain, within themselves, slavery as possibility and hence as their own suspension. As regards No. II, where the particular kind of work – mastery of it, and, consequent upon that, an identity between property in the instrument and property in the conditions of production – while it excludes slavery and bondage, can take on an analogous negative development in the form of the caste system.> <The third form, ownership of the necessaries of life – if it does not reduce itself to slavery and serfdom – cannot contain a relation by the working individual to the conditions of production and hence of existence; it can therefore only be the relation of a member of the original community based on land ownership who has lost his landed property and not yet proceeded to variety No. II of property, such as the Roman plebs at the time of the bread and circuses.> <The relation of personal servitude, or of the retainers to their lord, is essentially different. For it forms, at bottom, only a mode of existence of the land-proprietor himself, who no longer works, but whose property includes, among the other conditions of production, the workers themselves as bondsmen etc. Here the master–servant relation [Herrschaftsverhältnis] as essential element of appropriation. Basically the appropriation of animals, land etc. cannot take place in a master–servant relation, although the animal provides service. The presupposition of the master–servant relation is the appropriation of an alien will. Whatever has no will, e.g. the animal, may well provide a service, but does not thereby make its owner into a master. This much can be seen here, however, that the master–servant relation likewise belongs in this formula of the appropriation of the instruments of production; and it forms a necessary ferment for the development and the decline and fall of all original relations of property and of production, just as it also expresses their limited nature. Still, it is reproduced – in mediated form – in capital, and thus likewise forms a ferment of its dissolution and is an emblem of its limitation.>

<‘The power to sell one’s self and one’s own when in distress was a grievous general right; it prevailed in the North as well as among the Greeks and in Asia: the power of the creditor to take into servitude a debtor who could not make payment, and to obtain payment through sale of the debtor’s labour or of his person, was almost equally widespread.’ (Niebuhr, I, p. 600.)> <In one passage Niebuhr says that the Greek writers writing in the period of Augustus had great difficulty with, and misunderstood, the relation between patricians and plebeians, confusing this relation with that between patrons and clients, because they ‘write at a time when rich and poor were the only true classes of citizens; where the needy person, no matter how noble his ancestry, required a patron, and where the millionaire, even if he were a freed slave, was sought out as a patron. They could hardly find a trace of inherited dependency-relations any longer.’ (I, 620.)> <‘Craftsmen were to be found in both classes – Metoikoi[62] and freedmen and their descendants – and the plebeian who abandoned agriculture assumed the limited civic rights to which these were restricted. They did not lack the privilege of legal corporations; and their guilds were so highly esteemed, that Numa[63] was named as their founder: they were 9: pipers, gold-smiths, carpenters, dyers, harness makers, tanners, copper-smiths, potters, and the ninth guild, the miscellaneous remainder … Those among them who were independent citizens; isopolites,[64] who belonged to no patron – if there was such a right; and descendants of servitors, whose bondage was dissolved by extinction of their patron’s line; all these people without a doubt remained as distant from the wranglings of the patricians and the commune as did the Florentine guilds from the feuds of the Guelphs and the Ghibellines: the servitors probably still stood entirely under the command of the patricians.’ (I, 623.)>

On one side, historic processes are presupposed which place a mass of individuals in a nation etc. in the position, if not at first of real free workers, nevertheless of such who are so δυνάμει, whose only property is their labour capacity and the possibility of exchanging it for values then present; individuals who confront all objective conditions of production as alien property, as their own not-property, but at the same time as values, as exchangeable, hence appropriable to a certain degree through living labour. Such historic processes of dissolution are also the dissolution of the bondage relations which fetter the worker to land and soil and to the lord of land and soil; but which factually presuppose his ownership of the necessaries of life – this is in truth the process of his release from the earth; dissolution of the landed property relations, which constituted him as a yeoman, as a free, working small landowner or tenant (colonus), a free peasant;[65] dissolution of the guild relations which presuppose his ownership of the instrument of labour, and which presuppose labour itself as a craftsmanlike, specific skill, as property (not merely as the source of property); likewise dissolution of the client-relations in the various forms in which not-proprietors appear in the retinue of their lord as co-consumers of the surplus product and wear the livery of their master as an equivalent, participate in his feuds, perform personal services, imaginary or real etc. It will be seen on closer inspection that all these processes of dissolution mean the dissolution of relations of production in which: use value predominates, production for direct consumption; in which exchange value and its production presupposes the predominance of the other form; and hence that, in all these relations, payments in kind and services in kind predominate over payment in money and money-services. But this only by the way. It will likewise be found on closer observation that all the dissolved relations were possible only with a definite degree of development of the material (and hence also the intellectual) forces of production.

What concerns us here for the moment is this: the process of dissolution, which transforms a mass of individuals of a nation etc. into free wage labourers δυνάμει – individuals forced solely by their lack of property to labour and to sell their labour – presupposes on the other side not that these individuals’ previous sources of income and in part conditions of property have disappeared, but the reverse, that only their utilization has become different, that their mode of existence has changed, has gone over into other hands as a free fund or has even in part remained in the same hands. But this much is clear: the same process which divorced a mass of individuals from their previous relations to the objective conditions of labour, relations which were, in one way or another, affirmative, negated these relations, and thereby transformed these individuals into free workers, this same process freed – δυνάμει – these objective conditions of labour – land and soil, raw material, necessaries of life, instruments of labour, money or all of these – from their previous state of attachment to the individuals now separated from them. They are still there on hand, but in another form; as a free fund, in which all political etc. relations are obliterated. The objective conditions of labour now confront these unbound, propertyless individuals only in the form of values, self-sufficient values. The same process which placed the mass face to face with the objective conditions of labour as free workers also placed these conditions, as capital, face to face with the free workers. The historic process was the divorce of elements which up until then were bound together; its result is therefore not that one of the elements disappears, but that each of them appears in a negative relation to the other – the (potentially) free worker on the one side, capital (potentially) on the other. The separation of the objective conditions from the classes which have become transformed into free workers necessarily also appears at the same time as the achievement of independence by these same conditions at the opposite pole.

If the relation of capital and wage labour is regarded not as already commanding and predominant over the whole of production,[66] but as arising historically – i.e. if we regard the original transformation of money into capital, the process of exchange between capital, still only existing δυνάμει on one side and the free workers existing δυνάμει on the other – then of course one cannot help making the simple observation, out of which the economists make a great show,[67] that the side which appears as capital has to possess raw materials, instruments of labour and necessaries of life so that the worker can live during production, before production is completed. This further takes the form that there must have taken place on the part of the capitalist an accumulation – an accumulation prior to labour and not sprung out of it – which enables him to put the worker to work and to maintain his effectiveness, to maintain him as living labour capacity. This act by capital which is independent of labour, not posited by labour, is then shifted from the prehistory of capital into the present, into a moment of its reality and of its present activity, of its self-formation. From this is ultimately derived the eternal right of capital to the fruits of alien labour, or rather its mode of appropriation is developed out of the simple and just laws of equivalent exchange.[68]

Once capital and wage labour are posited as their own presupposition, as the basis presupposed to production itself, then what appears initially is that the capitalist possesses, in addition to the fund of raw materials and necessaries required for the labourer to reproduce himself, to create the required means of subsistence, i.e. to realize necessary labour, a fund of raw material and means of labour in which the worker realizes his surplus labour, i.e. the capitalist’s profit. On further analysis this takes the form that the worker constantly creates a double fund for the capitalist, or in the form of capital. One part of this fund constantly fulfils the conditions of his own existence and the other part fulfils the conditions for the existence of capital. As we have seen, in the case of the surplus capital – and surplus capital in relation to its antediluvian relation to labour – all real, present capital and each of its elements has equally been appropriated without exchange, without an equivalent, as objectified, appropriated alien labour.

Wealth present in the form of money can be exchanged for the objective conditions of labour only because and if these are separated from labour itself. We saw that money can be piled up in part by way of the sheer exchange of equivalents; but this forms so insignificant a source that it is not worth mentioning historically – if it is presupposed that this money is gained through the exchange of one’s own labour. The monetary wealth which becomes transformed into capital in the proper sense, into industrial capital, is rather the mobile wealth piled up through usury – especially that practised against landed property – and through mercantile profits. We shall have occasion below to speak further of both of these forms – in so far as they appear not as themselves forms of capital, but as earlier forms of wealth, as presuppositions for capital.

It is inherent in the concept of capital, as we have seen – in its origin – that it begins with money and hence with wealth existing in the form of money. It is likewise inherent in it that it appears as coming out of circulation, as the product of circulation. The formation of capital thus does not emerge from landed property (here at most from the tenant [Pächter] in so far as he is a dealer in agricultural products); or from the guild (although there is a possibility at the last point); but rather from merchant’s and usurer’s wealth. But the latter encounter the conditions where free labour can be purchased only when this labour has been released from its objective conditions of existence through the process of history. Only then does it also encounter the possibility of buying these conditions themselves. Under guild conditions, e.g., mere money, if it is not itself guild money, masters’ money, cannot buy the looms to make people work with them; how many an individual may operate etc. is prescribed. In short, the instrument itself is still so intertwined with living labour, whose domain it appears, that it does not truly circulate. What enables money-wealth to become capital is the encounter, on one side, with free workers; and on the other side, with the necessaries and materials etc., which previously were in one way or another the property of the masses who have now become object-less, and are also free and purchasable. The other condition of labour, however – a certain level of skill, instrument as means of labour etc. – is already available to it in this preliminary or first period of capital, partly as a result of the urban guild system, partly as a result of domestic industry, or industry which is attached to agriculture as an accessory. This historic process is not the product of capital, but the presupposition for it. And it is through this process that the capitalist inserts himself as (historic) middle-man between landed property, or property generally, and labour. History knows nothing of the congenial fantasies according to which the capitalist and the workers form an association etc., nor is there a trace of them in the conceptual development of capital. Manufactures may develop sporadically, locally, in a framework which still belongs to a quite different period, as e.g. in the Italian cities alongside the guilds. But as the sole predominant forms of an epoch, the conditions for capital have to be developed not only locally but on a grand scale. (Notwithstanding this, individual guild masters may develop into capitalists with the dissolution of the guilds; but the case is rare, in the nature of the thing as well. As a rule, the whole guild system declines and falls, both master and journeyman, where the capitalist and the worker arise.)

It goes without saying – and shows itself if we go more deeply into the historic epoch under discussion here – that in truth the period of the dissolution of the earlier modes of production and modes of the workers relation to the objective conditions of labour is at the same time a period in which monetary wealth on the one side has already developed to a certain extent, and on the other side grows and expands rapidly through the same circumstances as accelerate the above dissolution. It is itself one of the agencies of that dissolution, while at the same time that dissolution is the condition of its transformation into capital. But the mere presence of monetary wealth, and even the achievement of a kind of supremacy on its part, is in no way sufficient for this dissolution into capital to happen. Or else ancient Rome, Byzantium etc. would have ended their history with free labour and capital, or rather begun a new history. There, too, the dissolution of the old property relations was bound up with development of monetary wealth – of trade etc. But instead of leading to industry, this dissolution led in fact to the supremacy of the countryside over the city. – The original formation of capital does not happen, as is sometimes imagined, with capital heaping up necessaries of life and instruments of labour and raw materials, in short, the objective conditions of labour which have already been unbound from the soil and animated by human labour.[69] Capital does not create the objective conditions of labour. Rather, its original formation is that, through the historic process of the dissolution of the old mode of production, value existing as money-wealth is enabled, on one side, to buy the objective conditions of labour; on the other side, to exchange money for the living labour of the workers who have been set free. All these moments are present; their divorce is itself a historic process, a process of dissolution, and it is the latter which enables money to transform itself into capital. Money itself, to the extent that it also plays an active role, does so only in so far as it intervenes in this process as itself a highly energetic solvent, and to that extent assists in the creation of the plucked, object-less free workers; but certainly not by creating the objective conditions of their existence; rather by helping to speed up their separation from them – their propertylessness. When e.g. the great English landowners dismissed their retainers, who had, together with them, consumed the surplus product of the land; when further their tenants chased off the smaller cottagers etc., then, firstly, a mass of living labour powers was thereby thrown onto the labour market, a mass which was free in a double sense, free from the old relations of clientship, bondage and servitude, and secondly free of all belongings and possessions, and of every objective, material form of being, free of all property; dependent on the sale of its labour capacity or on begging, vagabondage and robbery as its only source of income. It is a matter of historic record that they tried the latter first, but were driven off this road by gallows, stocks and whippings, onto the narrow path to the labour market; owing to this fact, the governments, e.g. of Henry VII, VIII etc. appear as conditions of the historic dissolution process and as makers of the conditions for the existence of capital. On the other side, the necessaries of life etc., which the landowners previously ate up together with their retainers, now stood at the disposal of any money which might wish to buy them in order to buy labour through their instrumentality. Money neither created nor stockpiled these necessaries; they were there and were consumed and reproduced before they were consumed and reproduced through its mediation. What had changed was simply this, that these necessaries were now thrown on to the exchange market – were separated from their direct connection with the mouths of the retainers etc. and transformed from use values into exchange values, and thus fell into the domain and under the supremacy of money wealth. Likewise with the instruments of labour. Money wealth neither invented nor fabricated the spinning wheel and the loom. But, once unbound from their land and soil, spinner and weaver with their stools and wheels came under the command of money wealth. Capital proper does nothing but bring together the mass of hands and instruments which it finds on hand. It agglomerates them under its command. That is its real stockpiling; the stockpiling of workers, along with their instruments, at particular points. This will have to be dealt with more closely in the so-called stockpiling of capital. Monetary wealth – as merchant wealth – had admittedly helped to speed up and to dissolve the old relations of production, and made it possible for the proprietor of land for example, as A. Smith already nicely develops,[70] to exchange his grain and cattle etc. for use values brought from afar, instead of squandering the use values he himself produced, along with his retainers, and to locate his wealth in great part in the mass of his co-consuming retainers. It gave the exchange value of his revenue a higher significance for him. The same thing took place in regard to his tenants, who were already semi-capitalists, but still very hemmed-in ones. The development of exchange value – favoured by money existing in the form of the merchant estate – dissolves production which is more oriented towards direct use value and its corresponding forms of property – the relations of labour to its objective conditions – and thus pushes forward towards the making of the labour market (certainly to be distinguished from the slave market). However, even this action of money is only possible given the presupposition of an urban artisanate resting not on capital but on the organization of labour in guilds etc. Urban labour itself had created means of production for which the guilds became just as confining as were the old relations of landownership to an improved agriculture, which was in part itself a consequence of the larger market for agricultural products in the cities etc. The other circumstances which e.g. in the sixteenth century increased the mass of circulating commodities as well as that of money, which created new needs and thereby raised the exchange value of indigenous products etc., raised prices etc., all of these promoted on one side the dissolution of the old relations of production, sped up the separation of the worker or non-worker but able-bodied individual from the objective conditions of his reproduction, and thus promoted the transformation of money into capital. There can therefore be nothing more ridiculous than to conceive this original formation of capital as if capital had stockpiled and created the objective conditions of production – necessaries, raw materials, instrument – and then offered them to the worker, who was bare of these possessions. Rather, monetary wealth in part helped to strip the labour powers of able-bodied individuals from these conditions; and in part this process of divorce proceeded without it. When the formation of capital had reached a certain level, monetary wealth could place itself as mediator between the objective conditions of life, thus liberated, and the liberated but also homeless and empty-handed labour powers, and buy the latter with the former. But now, as far as the formation of money-wealth itself is concerned, this belongs to the prehistory of the bourgeois economy. Usury, trade, urbanization and the treasury rising with it play the main roles here. So, too, hoarding by tenants, peasants etc.; although to a lesser degree. – This shows at the same time that the development of exchange and of exchange value, which is everywhere mediated through trade, or whose mediation may be termed trade – money achieves an independent existence in the merchant estate, as does circulation in trade – brings with it both the dissolution of labour’s relations of property in its conditions of existence, in one respect, and at the same time the dissolution of labour which is itself classed as one of the objective conditions of production; all these are relations which express a predominance of use value and of production directed towards use value, as well as of a real community which is itself still directly present as a presupposition of production. Production based on exchange value and the community based on the exchange of these exchange values – even though they seem, as we saw in the previous chapter on money, to posit property as the outcome of labour alone, and to posit private property over the product of one’s own labour as condition – and labour as general condition of wealth, all presuppose and produce the separation of labour from its objective conditions. This exchange of equivalents proceeds; it is only the surface layer of a production which rests on the appropriation of alien labour without exchange, but with the semblance of exchange. This system of exchange rests on capital as its foundation, and, when it is regarded in isolation from capital, as it appears on the surface, as an independent system, then it is a mere illusion, but a necessary illusion. Thus there is no longer any ground for astonishment that the system of exchange values – exchange of equivalents measured through labour – turns into, or rather reveals as its hidden background, the appropriation of alien labour without exchange, complete separation of labour and property. For the domination of exchange value itself, and of exchange-value-producing production, presupposes alien labour capacity itself as an exchange value – i.e. the separation of living labour capacity from its objective conditions; a relation to them – or to its own objectivity – as alien property; a relation to them, in a word, as capital. Only in the period of the decline and fall of the feudal system, but where it still struggles internally – as in England in the fourteenth and first half of the fifteenth centuries – is there a golden age for labour in the process of becoming emancipated. In order for labour to relate to its objective conditions as its property again, another system must take the place of the system of private exchange, which, as we saw, posits the exchange of objectified labour for labour capacity, and therefore the appropriation of living labour without exchange. – The way in which money transforms itself into capital often shows itself quite tangibly in history; e.g. when the merchant induces a number of weavers and spinners, who until then wove and spun as a rural, secondary occupation, to work for him, making their secondary into their chief occupation; but then has them in his power and has brought them under his command as wage labourers. To draw them away from their home towns and to concentrate them in a place of work is a further step. In this simple process it is clear that the capitalist has prepared neither the raw material, nor the instrument, nor the means of subsistence for the weaver and the spinner. All that he has done is to restrict them little by little to one kind of work in which they become dependent on selling, on the buyer, the merchant, and ultimately produce only for and through him. He bought their labour originally only by buying their product; as soon as they restrict themselves to the production of this exchange value and thus must directly produce exchange values, must exchange their labour entirely for money in order to survive, then they come under his command, and at the end even the illusion that they sold him products disappears. He buys their labour and takes their property first in the form of the product, and soon after that the instrument as well, or he leaves it to them as sham property in order to reduce his own production costs. – The original historic forms in which capital appears at first sporadically or locally, alongside the old modes of production, while exploding them little by little everywhere, is on one side manufacture proper (not yet the factory); this springs up where mass quantities are produced for export, for the external market – i.e. on the basis of large-scale overland and maritime commerce, in its emporiums like the Italian cities, Constantinople, in the Flemish, Dutch cities, a few Spanish ones, such as Barcelona etc. Manufacture seizes hold initially not of the so-called urban trades, but of the rural secondary occupations, spinning and weaving, the two which least requires guild-level skills, technical training. Apart from these great emporiums, where the external market is its basis, where production is thus, so to speak, naturally oriented towards exchange value – i.e. manufactures directly connected with shipping, shipbuilding itself etc. – it takes up its first residence not in the cities, but on the land, in villages lacking guilds etc. The rural subsidiary occupations have the broad basis [characteristic] of manufactures, while the urban trades demand great progress in production before they can be conducted in factory style. Likewise certain branches of production – such as glassworks, metal works, sawmills etc., which demand a higher concentration of labour powers from the outset, apply more natural energy from the outset, demand mass production, likewise concentration of the means of labour etc. Likewise paper mills. On the other side the rise of the tenant and the transformation of the agricultural population into free day-labourers. Although this transformation in the countryside is the last to push on towards its ultimate consequences and its purest form, its beginnings there are among the earliest. Classical antiquity, which could never get beyond the urban artisanate proper, could therefore never get to large industry. The first presupposition of the latter is to draw the land in all its expanse into the production not of use values but of exchange values. Glass factories, paper mills, iron works etc. cannot be operated on guild principles. They demand mass production; sales to a general market; monetary wealth on the part of their entrepreneur – not that he creates the conditions, neither the subjective nor the objective ones; but under the old relations of property and of production these conditions cannot be brought together. – The dissolution of relations of serfdom, like the rise of manufacture, then little by little transforms all branches of work into branches operated by capital. – The cities themselves, it is true, also contain an element for the formation of wage labour proper, in the non-guild day-labourers, unskilled labourers etc.

While, as we have seen, the transformation of money into capital presupposes a historic process which divorces the objective conditions of labour from the worker and makes them independent of him, it is at the same time the effect of capital and of its process, once arisen, to conquer all of production and to develop and complete the divorce between labour and property, between labour and the objective conditions of labour, everywhere. It will be seen in the course of the further development how capital destroys craft and artisan labour, working small-landownership etc., together with itself in forms in which it does not appear in opposition to labour – in small capital and in the intermediate species, the species between the old modes of production (or their renewal on the foundation of capital) and the classical, adequate mode of production of capital itself.

The only stockpiling presupposed at the origin of capital is that of monetary wealth, which, regarded in and for itself, is altogether unproductive, as it only springs up out of circulation and belongs exclusively to it. Capital rapidly forms an internal market for itself by destroying all rural secondary occupations, so that it spins, weaves for everyone, clothes everyone etc., in short, brings the commodities previously created as direct use values into the form of exchange values, a process which comes about by itself through the separation of the workers from land and soil and from property (even in the form of serf property) in the conditions of production.

With the urban crafts, although they rest essentially on exchange and on the creation of exchange values, the direct and chief aim of this production is subsistence as craftsmen, as master-journeymen, hence use value; not wealth, not exchange value as exchange value. Production is therefore always subordinated to a given consumption, supply to demand, and expands only slowly.

The production of capitalists and wage labourers is thus a chief product of capital’s realization process. Ordinary economics, which looks only at the things produced, forgets this completely. When objectified labour is, in this process, at the same time posited as the worker’s non-objectivity, as the objectivity of a subjectivity antithetical to the worker, as property of a will alien to him, then capital is necessarily at the same time the capitalist, and the idea held by some socialists that we need capital but not the capitalists is altogether wrong. It is posited within the concept of capital that the objective conditions of labour – and these are its own product – take on a personality towards it, or, what is the same, that they are posited as the property of a personality alien to the worker. The concept of capital contains the capitalist. Still, this error is in no way greater than that of e.g. all philologists who speak of capital in antiquity, of Roman, Greek capitalists. This is only another way of expressing that labour in Rome and Greece was free, which these gentlemen would hardly wish to assert. The fact that we now not only call the plantation owners in America capitalists, but that they are capitalists, is based on their existence as anomalies within a world market based on free labour. If the concern is the word, capital, which does not occur in antiquity[71] then the still migrating hordes with their herds on the Asiatic high plateau are the biggest capitalists, since capital originally means cattle, which is why the métairie contract still frequently drawn up in southern France, for lack of capital, just as an exception, is called: Bail de bestes à cheptel.[72] If one wants to descend to bad Latin, then our capitalists or Capitales Homines would be those ‘qui debent censum de capite’.

The conceptual specification of capital encounters difficulties which do not occur with money; capital is essentially capitalist; but at the same time again as an element of his existence distinct from him, or production in general, capital. We shall likewise find later that many things are subsumed under capital which do not seem to belong within it conceptually. E.g. capital is lent out. It is stockpiled etc. In all these designations it appears to be a mere thing, and to coincide entirely with the matter in which it is present. But this and other questions will be cleared up in the course of the development. (Noted incidentally as a joke: the good Adam Müller, who takes all figurative ways of speaking as very mystical, has also heard of living capital in ordinary life as opposed to dead capital, and now rationalizes this theosophically.[73] King Aethelstan could teach him a lesson here: Reddam de meo proprio decimas Deo tam in Vivente Capitale (livestock), quam in mortis fructuis terrae (dead fruits of the earth).) Money always remains the same form in the same substratum; and can thus be more easily conceived as a mere thing. But one and the same commodity, money etc., can represent capital or revenue etc. Thus it is clear even to the economists that money is not something tangible; but that one and the same thing can be subsumed sometimes under the title capital, sometimes under another and contrary one, and correspondingly is or is not capital. It is then evident that it is a relation, and can only be a relation of production.

We have seen that the true nature of capital emerges only at the end of the second cycle. What we have to examine now is this cycle itself, or the circulation of capital. Production originally appeared to lie beyond circulation, and circulation beyond production. The circulation of capital – circulation posited as the circulation of capital – spans both moments. Production appears in it as the conclusion and the point of departure of circulation, and vice versa. The independence of circulation is here reduced to a mere semblance, as is the otherworldliness of production.

Exchange of labour for labour rests on the worker’s propertylessness[edit source]

<But one more remark on the topic above: The exchange of equivalents, which seems to presuppose ownership of the products of one’s own labour – hence seems to posit as identical: appropriation through labour, the real economic process of making something one’s own [Zueigen-Machen], and ownership of objectified labour; what appeared previously as a real process is here recognized as a legal relation, i.e. as a general condition of production, and therefore recognized by law, posited as an expression of the general will – turns into, reveals itself through a necessary dialectic as absolute divorce of labour and property, and appropriation of alien labour without exchange, without equivalent. Production based on exchange value, on whose surface this free and equal exchange of equivalents proceeds, is at its base the exchange of objectified labour as exchange value for living labour as use value, or, to express this in another way, the relating of labour to its objective conditions – and hence to the objectivity created by itself – as alien property: alienation [Entäusserung] of labour. At the same time, the condition of exchange value is its measurement by labour time, and hence living labour – not its value – as measure of values. The notion that production and hence society depended in all states of production on the exchange of mere labour for labour is a delusion. In the various forms in which labour relates to the conditions of production as its own property, the reproduction of the worker is by no means posited through mere labour, for his property relation is not the result but the presupposition of his labour. In landed property this is clear; it must also become clear in the guild system that the particular kind of property which labour creates does not rest on labour alone or on the exchange of labour, but on an objective connection between the worker and a community and conditions which are there before him, which he takes as his basis. These too are products of labour, of the labour of world history; of the labour of the community – of its historic development, which does not proceed from the labour of individuals nor from the exchange of their labours. Therefore, mere labour is also not the presupposition of realization [Verwertung]. A situation in which labour is merely exchanged for labour – whether in the direct, living form, or in the form of the product – presupposes the separation of labour from its original intertwinement with its objective conditions, which is why it appears as mere labour on one side, while on the other side its product, as objectified labour, has an entirely independent existence as value opposite it. The exchange of labour for labour – seemingly the condition of the worker’s property – rests on the foundation of the worker’s propertylessness.>

(It will be shown later that the most extreme form of alienation, wherein labour appears in the relation of capital and wage labour, and labour, productive activity appears in relation to its own conditions and its own product, is a necessary point of transition – and therefore already contains in itself, in a still only inverted form, turned on its head, the dissolution of all limited presuppositions of production, and moreover creates and produces the unconditional presuppositions of production, and therewith the full material conditions for the total, universal development of the productive forces of the individual.)

Circulation of capital and circulation of money. – Presupposition of value within each single capital (instrument etc.). – Production process and circulation process moments of production. – The productivity of the different capitals (branches of industry) determines that of the individual capital. – Circulation period. Velocity of circulation substitutes for volume of capital. Mutual dependence of capitals in the velocity of their circulation. Circulation a moment of production. Production process and its duration. Transformation of the product into money. Duration of this operation. Retransformation of money into the conditions of production. Exchange of part of the capital with living labour. – Transport costs[edit source]

The circulation of money began at an infinite number of points and returned to an infinite number of points. The point of return was in no way posited as the point of departure. In the circulation of capital, the point of departure is posited as the terminal point and the terminal point as the point of departure. The capitalist himself is the point of departure and of return. He exchanges money for the conditions of production, produces, realizes the product, i.e. transforms it into money, and then begins the process anew. The circulation of money, regarded for itself, necessarily becomes extinguished in money as a static thing. The circulation of capital constantly ignites itself anew, divides into its different moments, and is a perpetuum mobile. The positing of prices on the side of money circulation was purely formal, in so far as value is presupposed independently of money circulation. The circulation of capital posits prices, not only formally but really, in so far as it posits value. If value itself appears within it as presupposition, this can only be as value posited by another capital. The breadth of the path for money circulation has been measured in advance, and the circumstances which accelerate or retard it are external impulses. In its circulation, capital expands itself and its path, and the speed or slowness of its circulation itself forms one of its intrinsic moments. It becomes qualitatively altered in circulation and the totality of the moments of its circulation are themselves the moments of its production – its reproduction as well as its new production.

<We saw how at the end of the second cycle, i.e. the second cycle of surplus value which has been realized as surplus capital, the illusion disappears that the capitalist exchanges anything at all with the worker other than a part of the latter’s own objectified labour.[74] However, within the mode of production already founded on capital, the part of capital which represents raw materials and instrument appears to the individual capital as a value presupposed to it and likewise presupposed to the living labour which it buys. These two headings turn out to have been posited by alien capital, hence again by capital, but another one. One capitalist’s raw material is another’s product. One’s product is the other’s raw material. One capitalist’s instrument is another’s product, and may even serve as raw material for the production of another instrument. Thus, what we called the constant value which appeared as a presupposition in the case of the individual capital is nothing but the presupposition of capital by capital, i.e. the fact that the different capitals in the different branches of industry posit one another reciprocally as presupposition and condition. Each of them regarded for itself can be resolved into dead labour which, as value, has become independent vis-à-vis living labour. None of them in the last analysis contains anything other than labour – apart from the natural material from which value is absent. The introduction of many capitals must not interfere with the investigation here. The relation of the many will, rather, be explained after what they all have in common, the quality of being capital, has been examined.>

The circulation of capital is at the same time its becoming, its growth, its vital process. If anything needed to be compared with the circulation of the blood, it was not the formal circulation of money, but the content-filled circulation of capital.

Since circulation presupposes production at all points – and is the circulation of products, whether money or commodity, while the latter always arise from the production process, which is itself the process of capital – it follows that the circulation of money itself now appears as determined by the circulation of capital, whereas previously it seemed to run side by side with the production process. We shall return to this point.

If we now consider circulation, or the circulation of capital as a whole, then the great distinction within it appears to be that between the production process and circulation itself, both as moments of its circulation. How long capital remains within the sphere of the production process depends on the latter’s technological conditions, and the time it spends in this phase directly coincides – even though the duration is necessarily different depending on the type of production, its object etc. – with the development of the productive forces. The duration is here nothing but the labour time necessary for the making of the product (false!). The smaller this labour time, the greater, as we have seen, the relative surplus value. If less labour time is required to make a given quantity of products, it is the same thing as if more finished products can be supplied in a given amount of labour time. The abbreviation of the time during which a given amount of capital remains within the production process and is withdrawn from circulation, ‘embarked’,[75] coincides with the abbreviation of the labour time required to make the product – [therefore coincides] with the development of the forces of production, the utilization of the forces of nature, of machinery, and of the natural powers of social labour – the agglomeration of the workers, the combination and division of labour. Thus no new moment seems to enter in from this side. However, when it is recalled that, as far as the individual capital is concerned, the part of it which constitutes raw material and instrument (means of labour) is itself the product of an alien capital, then it may be seen that the speed with which it can repeat the production process anew is at the same time determined by the development of the productive forces in all other branches of industry. This becomes quite clear if one supposes the same capital to produce its own raw materials, instruments and final products. The length of time during which capital remains in the phase of the production process becomes itself a moment of circulation, if we presuppose various capitals. But we are not yet concerned with many capitals here. This moment therefore does not belong here.

The second moment is the space of time running from the completed transformation of capital into the product until when it becomes transformed into money. The frequency with which capital can repeat the production process, self-realization, in a given amount of time, evidently depends on the speed with which this space of time is run through, or on its duration. If a capital – say originally a capital of 100 thalers – turns over 4 times in one year; let the gain be 5% of itself each time, if the new value is not capitalized; this is the same as if a capital 4 times as large, say 400, at the same percentage, were to turn over once in one year; each time 20%. The velocity of turnover therefore – the remaining conditions of production being held constant – substitutes for the volume of capital. Or, if a value 4 times smaller realizes itself as capital 4 times in the same period in which a 4 times greater value realizes itself as capital only once, then the smaller capital’s gain – production of surplus value – is at least as great as the larger’s. We say at least. It can be greater, because the surplus value can itself again be employed as surplus capital. For example, assume that a capital of 100 has a profit (here anticipating this form of surplus value for the calculation’s sake) of 10% each time, no matter how often it turns over. Then, at the end of the first 3 months, it would be 110, at the end of the second 121, at the end of the third 133 1/10, and at the end of the last turnover 146 41/100, while a capital of 400 with one annual turnover would be only 440. In the first case the gain = 46 41/100, in the second only = 40. (The fact that the presupposition is wrong, in as much as capital does not bring the same rate of profit with each increase in its size, is beside the point as far as the example is concerned, for the issue here is not how much more than 40 it brings, but the very fact that in the first case it does – and it does – bring in more than 40.) We have already encountered the law of the substitution of velocity for mass, and mass for velocity, in money circulation. It holds in production just as in mechanics. It is a circumstance to return to when we consider the equalization of the rate of profit, price etc. The question which interests us here is this: Does not a moment of value-determination enter in independently of labour, not arising directly from it, but originating in circulation itself? <The fact that credit equalizes the differences in capital turnover does not belong here yet. But the question itself belongs here, because it arises out of the simple concept of capital – regarded in general.> The more frequent turnover of capital in a given period of time resembles the more frequent harvests during the natural year in the southerly countries compared with the northerly. As already stated above, we here abstract entirely from the different amounts of time which capital must spend in the phase of production – in the productive realization process itself. Just as grain when it is put in the soil as seed loses its immediate use value, is devalued as immediate use value, so is capital devalued from the completion of the production process until its retransformation into money and from there into capital again. <This velocity with which it can transpose itself from the form of money back into the conditions of production – unlike in slavery, it is not the worker himself who appears among these conditions of production, but rather the exchange with him – depends on the production speed and continuity of the remaining capitals, which supply him with raw material and instrument, as well as on the availability of workers, and in this last respect a relative surplus population is the best condition for capital.> <Quite apart from capital A’s production process, the speed and continuity of production process B appears as a moment which conditions the retransformation of capital A from the form of money into the form of industrial capital. The duration of the production process of capital B thus appears as a moment in the velocity of the circulation process of capital A. The duration of one capital’s production phase determines the velocity of the other’s circulation phase. Their simultaneity is a condition required so that A’s circulation is not obstructed – the fact that its own elements, for which it has to exchange and be exchanged, are thrown into production and circulation simultaneously. For example. In the final third of the eighteenth century, the hand-spinning system was incapable of supplying the required amounts of raw material for weaving – or, what is the same – spinning could not put the flax or cotton through its production process with the required simultaneity – simultaneous velocity. The consequence was the invention of the spinning machine, which supplied a greater product in the same labour time, or, what is the same thing, required less labour time for the same product – less time delay in the spinning process. All moments of capital which appear involved in it when it is considered from the point of view of its general concept obtain an independent reality, and, further, only show themselves when it appears as real, as many capitals. The inner, living organization, which takes place in this way within and through competition, thus develops all the more extensively.>

If we examine the entire turnover of capital, then four moments appear, or, each of the two great moments of the production process and the circulation process appears again in a duality: we can take either circulation or production as the point of departure here. This much has now been said, that circulation is itself a moment of production, since capital becomes capital only through circulation; production is a moment of circulation only in so far as the latter is itself regarded as the totality of the production process. The moments are: (I) The real production process and its duration. (II) Transformation of the product into money. Duration of this operation. (III) Transformation of the money in the proper proportions into raw material, means of labour and labour, in short, into the elements of productive capital. (IV) The exchange of a part of the capital for living labour capacity can be regarded as a particular moment, and must be so regarded, since the labour market is ruled by other laws than the product market etc. Here population is the main thing, not in absolute but in relative terms. Moment I does not come into consideration here, as stated, since it coincides with the conditions of realization generally. Moment III can be considered only when the theme is not capital generally, but many capitals. Moment IV belongs in the section on wages etc.

We are concerned here only with Moment II. In money circulation there was a merely formal alternation of exchange value as money and as commodity. Here money, commodity, are conditions of production, ultimately of the production process. The moments here are different; they are filled with content. The differences in capital turnover as posited in II – since it depends neither on greater difficulty in the exchange with labour, nor on delays resulting from the fact that raw material [Rohstoff] and raw material [Rohmaterial][76] are not present simultaneously in circulation, nor in the different durations of the production process – could therefore arise only from increased difficulties in realization. This is obviously not an immanent case arising from the relation itself, but rather coincides here, where we are examining capital in general, with what we have said about the way in which realization simultaneously results in devaluation.[77] No business will be founded on the principle that it can sell its products with greater difficulty than another. If this resulted from the smaller size of the market, then not a larger – as presupposed – but a smaller capital would be employed there than in the business with a larger market. It could be connected, however, with the greater distance of the market in space and hence the delayed return. The longer time required by capital A to realize itself would be due here to the greater spatial distance it has to travel after the production process in order to exchange as C for M. But cannot e.g. the product produced for China be regarded in such a way that the product is completed, its production process completed, only when it has reached the Chinese market? Its realization costs would rise by the costs of transport from England to China. (We cannot yet speak about the compensation for the longer fallow period of capital here, because the secondary and derived forms of surplus value – interest – would already have to have been presupposed.) The costs of production would resolve into the labour time objectified in the direct production process + the labour time contained in transport. Now the question is initially this: Given the basic principles we have so far asserted, can a surplus value be extracted from the transport costs? Let us deduct the constant part of the capital consumed in transport, ship, vehicle etc. and everything which falls under the heading of their application, since this element contributes nothing to the question, and it is irrelevant whether this is posited as = 0 or = x. Is it possible, then, that there is surplus labour in these transport costs, and that capital can therefore squeeze a surplus value out of them? The question is simple to answer if we ask a further question, where and which is the necessary labour or the value in which it objectifies itself? The product must pay (1) its own exchange value, the labour objectified in itself; (2) the surplus time, which the shipper, carter etc. employs on its transportation. Whether he can or cannot extract the surplus value depends on the wealth of the country into which he brings the product and on its needs etc., on the use value of the product for this land. In direct production, it is clear that all the surplus labour which the manufacturer makes the worker do is surplus value for him, in that it is labour objectified in new use values, which costs him nothing. But he can obviously not employ him during transport for a longer time than is required for the transporting. Otherwise he would throw labour time away instead of realizing it, i.e. he would not objectify it in a use value. If the sailor, the carter etc. require only half a year of labour time to live a full year (if this is generally the proportion of labour necessary for subsistence), then the capitalist employs him for a whole year and pays him a half. By adding a whole year’s labour time to the value of the transported products, but paying only 1/2, he gains a surplus value of 100% on necessary labour. The case is entirely the same as indirect production, and the original surplus value of the transported product can come about only because the workers are not paid for a part of the transportation time, because it is surplus time, time over and above the labour necessary for them to live. That an individual product might be made so much more expensive, owing to the transport costs, that it could not be sold – on account of the disproportion between the value of the product and its surplus value as a transported product, a quality which becomes extinguished in it as soon as it has arrived at its destination – does not affect the matter. If a manufacturer were to set his entire machinery into motion in order to spin 1 lb. of twist, then the value of this lb. would likewise rise so that it would hardly find a market. The rise in the prices of imported products, as well as the smaller consumption of them in the Middle Ages etc., stem precisely from this cause. Whether I extract metals from mines, or take commodities to the site of their consumption, both movements are equally spatial. The improvement of the means of transport and communication likewise falls into the category of the development of the productive forces generally. The fact that it can depend on the value of the products whether or not they are able to bear transport costs; that, further, commercial traffic in mass quantities is required to reduce transport costs – a ship with a loading capacity of 100 tons can carry 2 or 100 tons with the same transport costs etc. – and in order to make means of communication pay etc., all this does not belong here. (Nevertheless, it will be necessary to devote a special section to the means of communication, since they make up a form of fixed capital which has its own laws of realization.) If one imagines the same capital both producing and transporting, then both acts fall within direct production, and circulation as we have considered it so far, i.e. transformation into money as soon as the product has achieved its final form for consumption, would begin only when the product had been brought to its point of destination. This capitalist’s delayed return compared to that of another, who gets rid of his product on the spot, would resolve into another form of greater use of fixed capital, with which we are not yet concerned here. Whether A requires 100 thalers more for instrument, or whether he needs 100 thalers more in order to bring his product to its destination, to market, is the same thing. In both cases more fixed capital is used; more means of production, which is consumed in direct production. In this respect, then, no immanent case would be posited here; it would fall under the examination of the difference between fixed capital and circulating capital.

Circulation costs. – Means of communication and transport. (Division of the branches of labour.) (Concentration of many workers. Productive force of this concentration.) (Mass production.) – General as distinct from particular conditions of production[edit source]

Still, an additional moment enters here: the costs of circulation, which are not contained in the simple concept of circulation and do not concern us yet. Only in connection with interest and particularly with credit can we speak of the costs of circulation arising from circulation as an economic act – as a relation of production, not as a direct moment of production, as was the case with the means of transport and communication. Circulation as we regard it here is a process of transformation, a qualitative process of value, as it appears in the different form of money, production (realization) process, product, retransformation into money and surplus capital. [We are concerned here] in so far as new aspects are created within this process of transformation as such – in this transition from one form to another. The costs of circulation are not necessarily included e.g. in the transition from product to money. They can be = 0.

However, in so far as circulation itself creates costs, itself requires surplus labour, it appears as itself included within the production process. In this respect circulation appears as a moment of the direct production process. Where production is directly oriented towards use, and only the excess product is exchanged, the costs of circulation appear only for the excess product, not for the main product.[78] The more production comes to rest on exchange value, hence on exchange, the more important do the physical conditions of exchange – the means of communication and transport – become for the costs of circulation. Capital by its nature drives beyond every spatial barrier. Thus the creation of the physical conditions of exchange – of the means of communication and transport – the annihilation of space by time – becomes an extraordinary necessity for it. Only in so far as the direct product can be realized in distant markets in mass quantities in proportion to reductions in the transport costs, and only in so far as at the same time the means of communication and transport themselves can yield spheres of realization for labour, driven by capital; only in so far as commercial traffic takes place in massive volume – in which more than necessary labour is replaced – only to that extent is the production of cheap means of communication and transport a condition for production based on capital, and promoted by it for that reason. All labour required in order to throw the finished product into circulation – it is in economic circulation only when it is present on the market – is from capital’s viewpoint a barrier to be overcome – as is all labour required as a condition for the production process (thus e.g. expenses for the security of exchange etc.). The sea route, as the route which moves and is transformed under its own impetus, is that of trading peoples ϰατ᾽ ἐξοχήν.[79] On the other side, highways originally fall to the community, later for a long period to the governments, as pure deductions from production, deducted from the common surplus product of the country, but do not constitute a source of its wealth, i.e. do not cover their production costs. In the original, self-sustaining communes of Asia, on one side no need for roads; on the other side the lack of them locks them into their closed-off isolation and thus forms an essential moment of their survival without alteration (as in India). Road construction by means of the corvée, or through taxes, which is another form, is a forced transformation of a part of a country’s surplus labour or surplus product into roads. If an individual capital is to undertake this – i.e. if it is to create the conditions of the production process which are not included in the production process directly – then the work must provide a profit.

Presupposing a certain road between A and B (let land cost nothing), then this contains no more than a definite quantity of labour, hence value. Whether the capitalist or the state has it built is the same thing. Does the capitalist make a gain here, then, by creating surplus labour and hence surplus value? First, strip off what is puzzling about the road, which arises from its nature as fixed capital. Imagine that the road could be sold at once, like a coat or a ton of iron. If the production of the road cost say 12 months, then its value = 12 months. If the general standard of labour is such that a worker can live from say 6 months of objectified labour, then, if he built the entire road, he would create surplus value for himself to the amount of 6 months labour; or if the commune built the road, and the worker wanted to work only the necessary time, then another worker would have to be drawn in to work 6 months. The capitalist, however, forces the one worker to work 12 months, and pays him 6. The part of the value of the road which contains his surplus labour forms the capitalist’s profit. The material form in which the product appears must absolutely not interfere in laying the foundations of the theory of value through objectified labour time. But the question is precisely: can the capitalist realize the road [den Weg verwerten], can he realize [realisieren] its value through exchange? This question naturally arises with every product, but it takes a special form with the general conditions of production. Suppose the value of the road is not realized. But it is built anyway, because it is a necessary use value. How does the matter stand then? It has to be built and has to be paid for – in so far as its cost of production must be exchanged for it. It comes into existence only through a certain consumption of labour, means of labour, raw materials etc. Whether it is built by corvée or through taxes is the same. But it is built only because it is a necessary use value for the commune, because the commune requires it at any price. This is certainly a surplus labour which the individual must perform, whether in the form of forced labour, or in the indirect form of taxes, over and above the direct labour necessary for his subsistence. But to the extent that it is necessary for the commune, and for each individual as its member, what he performs is not surplus labour, but a part of his necessary labour, the labour necessary for him to reproduce himself as commune member and hence to reproduce the community, which is itself a general condition of his productive activity. If the labour time were entirely consumed in direct production (or, expressed indirectly, if it were impossible to raise surplus tax revenue for this specific purpose), then the road would have to remain unbuilt. If the whole society is regarded as one individual, then necessary labour would consist of the sum of all the particular labour functions which the division of labour separates off. This one individual would have to spend e.g. so much time for agriculture, so much for industry, so much for trade, so much for making instruments, so much, to return to our subject, for road building and means of communication. All these necessities resolve into so much labour time which must be directed towards different aims and expended in particular activities. How much labour time could be employed would depend on the amount of labour capacity (= the mass of individuals capable of labour who constitute the society) and on the development of the productive force of labour (the mass of products (use values) which it can create in a given span of time). Exchange value, which presupposes a more or less developed division of labour, depending on the level of exchange itself, presupposes that, instead of one individual (the society) doing different kinds of labour and employing his labour time in different forms, each and every individual’s labour time is devoted exclusively to the necessary particular functions. If we speak of necessary labour time, then the particular separate branches of labour appear as necessary. Where exchange value is the basis, this reciprocal necessity is mediated through exchange, and shows itself precisely in the fact that every particular [piece of] objectified labour, every particularly specified and materialized [piece of] labour time exchanges for the product and symbol of labour time in general, of objectified labour time pure and simple, for money, and can thus be exchanged again for every particular labour. This necessity is itself subject to changes, because needs are produced just as are products and the different kinds of work skills. Increases and decreases do take place within the limits set by these needs and necessary labours. The greater the extent to which historic needs – needs created by production itself, social needs – needs which are themselves the offspring of social production and intercourse, are posited as necessary, the higher the level to which real wealth has become developed. Regarded materially, wealth consists only in the manifold variety of needs. The crafts themselves do not appear necessary ALONGSIDE self-sustaining agriculture, where spinning, weaving etc. are done as a secondary domestic occupation. But e.g. if agriculture itself rests on scientific activities – if it requires machinery, chemical fertilizer acquired through exchange, seeds from distant countries etc., and if rural, patriarchal manufacture has already vanished – which is already implied in the presupposition – then the machine-making factory, external trade, crafts etc. appear as needs for agriculture. Perhaps guano can be procured for it only through the export of silk goods. Then the manufacture of silk no longer appears as a luxury industry, but as a necessary industry for agriculture. It is therefore chiefly and essentially because, in this case, agriculture no longer finds the natural conditions of its own production within itself, naturally, arisen, spontaneous, and ready to hand, but these exist as an independent industry separate from it – and, with this separateness the whole complex set of interconnections in which this industry exists is drawn into the sphere of the conditions of agricultural production – it is because of this, that what previously appeared as a luxury is now necessary, and that so-called luxury needs appear e.g. as a necessity for the most naturally necessary and down-to-earth industry of all. This pulling-away of the natural ground from the foundations of every industry, and this transfer of its conditions of production outside itself, into a general context – hence the transformation of what was previously superfluous into what is necessary, as a historically created necessity – is the tendency of capital. The general foundation of all industries comes to be general exchange itself, the world market, and hence the totality of the activities, intercourse, needs etc. of which it is made up. Luxury is the opposite of the naturally necessary. Necessary needs are those of the individual himself reduced to a natural subject. The development of industry suspends this natural necessity as well as this former luxury – in bourgeois society, it is true, it does so only in antithetical form, in that it itself only posits another specific social standard as necessary, opposite luxury. These questions about the system of needs and system of labours – at what point is this to be dealt with? Will be seen in due course.

Now back to our road. If it can be built at all, it proves that the society possesses the labour time (living labour and objectified labour) required for its construction.[80] Why, then, as soon as production based on exchange value and division of labour appears does road building not become the business of individuals? (And it does not so become where it is conducted through taxes by the state.) First of all: the society, the united individuals, may possess the surplus time to build the road, but only in concentration. Concentration is always the addition of the part of labour capacity which each individual can employ on road building, apart from his particular work; but it is not only addition. The unification of their forces increases their force of production; but this is by no means the same as saying that all of them added together numerically would possess the same labour capacity if they did not work together, hence if to the sum of their labour capacities were not added the surplus existing only in and through their united, combined labour. Hence the violent rounding-up of the people in Egypt, Etruria, India etc. for forced construction and compulsory public works. Capital effects the same concentration in another way, through the manner of its exchange with free labour. Secondly: On one side, the population may be developed far enough, and the support which it finds in the employment of machinery etc. may be far enough advanced on the other side, so that the power arising only from the material, massive concentration of labour – and in antiquity it is always this massive effect of forcibly concentrated labour – may be superfluous, and a relatively smaller mass of living labour may be required. A special class of road-workers may form, employed by the state, § or a part of the occasionally unemployed population is used for it, together with a number of superintendents etc., who do not work as capitalists, however, but as more highly educated menials. (About the relation of this skilled labour etc. later.) The workers are then wage workers, but the state employs them not as such, but as menial servants.

That capital has to do not with isolated, individual labour but with combined labour, just as it is in and for itself already a social, combined force, is a point which should perhaps be treated already in the general history of the rise of capital.

The greater the extent to which production still rests on mere manual labour, on use of muscle power etc., in short on physical exertion by individual labourers, the more does the increase of the productive force consist in their collaboration on a mass scale. The opposite features, particularization and individualization, are displayed by the semi-artistic crafts; the skilfulness of individual, but uncombined labour. Capital, in its true development, combines mass labour with skill, but in such a way that the former loses its physical power, and the skill resides not in the worker but in the machine and in the scientific combination of both as a whole in the factory. The social spirit of labour obtains an objective existence separate from the individual workers.

§ Among the Romans, the army constituted a mass – but already divorced from the whole people – which was disciplined to labour, whose surplus time also belonged to the state; who sold their entire labour time for pay to the state, exchanged their entire labour capacity for a wage necessary for the maintenance of their life, just as does the worker with the capitalist. This holds for the period when the Roman army was no longer a citizen’s army but a mercenary army. This is here likewise a free sale of labour on the part of the soldier. But the state does not buy it with the production of values as aim. And thus, although the wage form may seem to occur originally in armies, this pay system is nevertheless essentially different from wage labour. There is some similarity in the fact that the state uses up the army in order to gain an increase in power and wealth.

Now, for the capitalist to undertake road building as a business, at his expense,[81] various conditions are required, which all amount to this, that the mode of production based on capital is already developed to its highest stage. Firstly: Large capital is itself presupposed, a large capital concentrated in his hands, in order that he may be able to undertake work of such dimensions and of such slow turnover, [and hence] realization. Hence mostly share-capital, the form in which capital has worked itself up to its final form, in which it is posited, not only in itself, in its substance, but is posited also in its form, as social power and product. Secondly: It must bring interest, but not necessarily profit (it may bring more than interest, but this is not required). We do not yet need to examine this point any further here. Thirdly: As presupposition, such a volume of traffic – commercial, above all – that the road pays for itself, i.e. that the price demanded for the use of the road is worth that much exchange value for the producers, or supplies a productive force for which they can pay that much. Fourthly: A portion of idle wealth which can lay out its revenue for these articles of locomotion. But these two presuppositions are what remains essential: (1) Capital in the required mass, employable for this object, at attractive interest; (2) it has to be worth it for the productive capitals, for industrial capital, to pay the price of passage. Thus e.g. the first railway between Liverpool and Manchester had become a necessity of production for the Liverpool cotton brokers and even more for the Manchester manufacturers. Capital as such – its being posited with the necessary scope – will produce roads only when the production of roads has become a necessity for the producers, especially for productive capital itself; a condition for the capitalist’s profit-making. Then the road will pay for itself. But in this case, a large volume of traffic is already presupposed. It is the same presupposition doubly: On one side, the wealth of the country sufficiently concentrated and transformed into the form of capital, to allow it to undertake such works as realization processes for capital; on the other side the volume of traffic sufficient, and the barrier formed by the lack of means of communication sufficiently felt as such, to allow the capitalist to realize the value of the road (in instalments over time) as road (i.e. its use). All general conditions of production, such as roads, canals, etc., whether they facilitate circulation or even make it possible at all, or whether they increase the force of production (such as irrigation works etc. as in Asia and, incidentally, as still built by governments in Europe), presuppose, in order to be undertaken by capital instead of by the government which represents the community as such, the highest development of production founded on capital. The separation of public works from the state, and their migration into the domain of the works undertaken by capital itself, indicates the degree to which the real community has constituted itself in the form of capital. A country, e.g. the United States, may feel the need for railways in connection with production; nevertheless the direct advantage arising from them for production may be too small for the investment to appear as anything but sunk capital. Then capital shifts the burden on to the shoulders of the state; or, where the state traditionally still takes up a position superior to capital, it still possesses the authority and the will to force the society of capitalists to put a part of their revenue, not of their capital, into such generally useful works, which appear at the same time as general conditions of production, and hence not as particular conditions for one capitalist or another – and, so long as capital does not adopt the form of the joint-stock company, it always looks out only for its particular conditions of realization, and shifts the communal conditions off on to the whole country as national requirements. Capital undertakes only advantageous undertakings, advantageous in its sense. True, it also speculates unsoundly, and, as we shall see, must do so. It then undertakes investments which do not pay, and which pay only as soon as they have become to a certain degree devalued. Hence the many undertakings where the first investment is sunk and lost, the first entrepreneurs go bankrupt – and begin to realize themselves only at second or third hand, where the invested capital has become smaller owing to devaluation. Incidentally, the state itself and everything connected with it belongs with these deductions from revenue, belongs so to speak to the consumption costs for the individual, the production costs for society. A road itself may so increase the force of production that it creates new traffic which then makes the road profitable. There are works and investments which may be necessary without being productive in the capitalist sense, i.e. without the realization of the surplus labour contained in them through circulation, through exchange, as surplus value. If a worker works e.g. 12 hours per day for a year building a road, and if the generally necessary labour time is = 6 hours on the average, then he works a surplus time of 6 hours. But if the road cannot be sold for 12 hours, perhaps only for 6, then this road construction is not an undertaking for capital, and road building is not productive labour for it. Capital must be able to sell the road (the timing and mode of the sale are beside the point here) in such a way that both the necessary and the surplus labour are realized, or in such a way that it obtains out of the general fund of profits – of surplus values – a sufficiently large share to make it the same as if it had created surplus value. This relation is to be examined later in connection with profit and necessary labour. The highest development of capital exists when the general conditions of the process of social production are not paid out of deductions from the social revenue, the state’s taxes – where revenue and not capital appears as the labour fund, and where the worker, although he is a free wage worker like any other, nevertheless stands economically in a different relation – but rather out of capital as capital. This shows the degree to which capital has subjugated all conditions of social production to itself, on one side; and, on the other side, hence, the extent to which social reproductive wealth has been capitalized, and all needs are satisfied through the exchange form; as well as the extent to which the socially posited needs of the individual, i.e. those which he consumes and feels not as a single individual in society, but communally with others – whose mode of consumption is social by the nature of the thing – are likewise not only consumed but also produced through exchange, individual exchange. In the case of the above road, road building must be so advantageous that the transformation of a given amount of labour time into the road must reproduce the worker’s labour capacity to the same degree as if he transformed it into cultivated fields. Value is determined by objectified labour time, whatever form it may take. But it does depend now on the use value in which it is realized, whether this value is realizable. It is presupposed here that the road is a requirement for the commune, hence the use value is presupposed. For capital, on the other side, if it is to undertake the building of the road, it must be presupposed that not only the necessary labour time but also the surplus labour time worked by the worker can be paid for – this is where his profit comes from. (The capitalist often compels this payment by means of protective tariffs, monopoly, state coercion; while the individuals engaged in exchange, under conditions of free exchange, would at most pay the necessary labour.) It is very possible that surplus labour time is present but not paid for (which can after all happen to every capitalist). Where capital rules (just as where there is slavery and bondage or serfdom of any sort), the worker’s absolute labour time is posited for him as condition of being allowed to work the necessary labour time, i.e. of being allowed to realize the labour time necessary for the maintenance of his labour capacity in use values for himself. Competition then has the result, in every kind of work, that he must work the full time – i.e. surplus labour time. But it may be the case that this surplus labour time, although present in the product, is not exchangeable. For the worker himself – compared with the other wage workers – it is surplus labour. For the employer, it is labour which, while it has a use value for him, like e.g. his cook, has no exchange value, hence the entire distinction between necessary and surplus labour time does not exist. Labour may be necessary without being productive. All general, communal conditions of production – so long as their production cannot yet be accomplished by capital as such and under its conditions – are therefore paid for out of a part of the country’s revenue – out of the government’s treasury – and the workers do not appear as productive workers, even though they increase the productive force of capital.

Competition is better suited to create the necessity of e.g. the railway in a country where the previous development of its forces of production would not yet push so far. The effect of competition among nations belongs in the section on international intercourse. The civilizing influences of capital particularly show themselves here.

The result of our digression is, incidentally, that the production of the means of communication, of the physical conditions of circulation, is put into the category of the production of fixed capital, and hence does not constitute a special case. Meanwhile, and incidentally, there opened up for us the prospect, which cannot be sharply defined yet at this point, of a specific relation of capital to the communal, general conditions of social production, as distinct from the conditions of a particular capital and its particular production process.

Transport to market (spatial condition of circulation) belongs in the production process. Credit, the temporal moment of circulation. – Capital is circulating capital. – Money circulation a mere illusion. – Sismondi. Cherbuliez. (Capital. Its various component parts)[edit source]

Circulation proceeds in space and time. Economically considered, the spatial condition, the bringing of the product to the market, belongs to the production process itself. The product is really finished only when it is on the market. The movement through which it gets there belongs still with the cost of making it. It does not form a necessary moment of circulation, regarded as a particular value-process, since a product may be bought and even consumed at the point of its production. But this spatial moment is important in so far as the expansion of the market and the exchangeability of the product are connected with it. The reduction of the costs of this real circulation (in space) belongs to the development of the forces of production by capital, the reduction of the costs of its realization. In certain respects, as an external condition for the existence of the economic process of circulation, this moment may also be reckoned as part of the production costs of circulation, so that, with respect to this moment, circulation itself appears as a moment not only of the production process in general, but also of the direct production process. In any case, what appears here is the determination of this moment by the general degree of development of the productive forces, and of production based on capital generally. This locational moment – the bringing of the product to market, which is a necessary condition of its circulation, except when the point of production is itself a market – could more precisely be regarded as the transformation of the product into a commodity. Only on the market is it a commodity. (Whether or not this forms a particular moment is a matter of chance. If capital produces to order, then neither this moment nor the transformation into money exists as a particular moment for it. Work done to order, i.e. supply corresponding to a prior demand, as a general or predominant situation, is not characteristic of large industry and in no way arises from the nature of capital as a condition.)

Secondly, the temporal moment. This is an essential part of the concept of circulation. Suppose the act of making the transition from commodity to money is fixed by contract, then this still requires time – calculating, weighing, measuring. The abbreviation of this moment is likewise development of productive force. However, this is time still conceived only as an external condition for the transition from the state of money into that of commodity; the transition itself is presupposed; the question is the time which elapses during this presupposed act. This belongs to the cost of production. Quite different is the time which generally passes before the commodity makes its transition into money; or the time during which it remains a commodity, only a potential but not a real value. This is pure loss.

It is clear from everything said above that circulation appears as an essential process of capital. The production process cannot be begun anew before the transformation of the commodity into money. The constant continuity of the process, the unobstructed and fluid transition of value from one form into the other, or from one phase of the process into the next, appears as a fundamental condition for production based on capital to a much greater degree than for all earlier forms of production. On another side, while the necessity of this continuity is given, its phases are separate in time and space, and appear as particular, mutually indifferent processes. It thus appears as a matter of chance for production based on capital whether or not its essential condition, the continuity of the different processes which constitute its process as a whole, is actually brought about. The suspension of this chance element by capital itself is credit. (It has other aspects as well; but this aspect arises out of the direct nature of the production process and is hence the foundation of the necessity of credit.) Which is why credit in any developed form appears in no earlier mode of production. There was borrowing and lending in earlier situations as well, and usury is even the oldest of the antediluvian forms of capital. But borrowing and lending no more constitute credit than working constitutes industrial labour or free wage labour. And credit as an essential, developed relation of production appears historically only in circulation based on capital or on wage labour. (Money itself is a form for suspending the unevenness of the times required in different branches of production, to the extent that this obstructs exchange.) Although usury is itself a form of credit in its bourgeoisified form, the form adapted to capital, in its pre-bourgeois form it is rather the expression of lack of credit.

(The retransformation of money into objective moments or conditions of production presupposes the latters’ availability. It constitutes the various markets where the producer encounters them as commodity – in the hands of a merchant – markets which (alongside the labour market) are essentially distinct from the markets for direct, individual, final consumption.)

Money became transformed into commodity through circulation, and in the exchange of M–C, consumption completed the process; or, the commodity was exchanged for money – and in the exchange C–M, M was either a vanishing moment itself to be exchanged for C again, in which case the process ended with consumption again, or the money withdrew from circulation and transformed itself into dead treasure, merely symbolic wealth. At no point did the process ignite from within, but rather the presuppositions of money circulation lay outside it, and it constantly required a new push from the outside. In so far as both moments were exchanged, their change of form within circulation was merely formal. But in so far as content entered in, it dropped out of the economic process; content did not form a part of it. The commodity did not sustain itself as money, nor the money as commodity; each was either one or the other. Value as such did not sustain itself in and through circulation as predominant over the process of its transformation, its metamorphosis; nor was the use value itself (as is the case in the capital production process) produced by the exchange value. With capital the consumption of the commodity is itself not final; it falls within the production process; it itself appears as a moment of production, i.e. of value-positing [Wertsetzen].

Capital is now posited, however, as not merely sustaining itself formally, but as realizing itself as value, as value relating to itself as value in every one of the moments of its metamorphosis, in which it appears at one time as money, at another time as commodity, then again as exchange value, then again as use value. The passage from one moment to the other appears as a particular process, but each of these processes is the transition to the other. Capital is thus posited as value-in-process, which is capital in every moment.[82] It is thus posited as circulating capital; in every moment capital, and circulating from one form into the next. The point of return is at the same time the point of departure and vice versa – namely the capitalist. All capital is originally circulating capital, product of circulation, as well as producing circulation, tracing in this way its own course. From the present standpoint, money circulation now appears as itself merely a moment of the circulation of capital, and its independence is posited as a mere semblance. It appears as determined on all sides by the circulation of capital, to which we shall return. In so far as it forms an independent motion alongside that of capital, this independence is posited only by the continuity of the circulation of capital, so that this one moment may be held constant and regarded for itself.

<‘Capital a permanent, self-multiplying value which never decays. This value tears itself loose from the commodity which created it; remains, like a metaphysical, insubstantial quality, always in the possession of the same farmer,’ (e.g.), ‘for whom it cloaks itself in different forms.’ (Sism. VI.)[83] ‘In the exchange of labour for capital, the worker demands subsistence in order to live; the capitalist demands work in order to make a profit.’ (Sism. loc. cit.) ‘The master of the workshop gains, makes a profit from every increase in the powers of production which the division of labour brings about.’ (loc. cit.)[84] ‘Sale of labour = renunciation of all fruits of labour.’ (Cherbuliez, ch. XXVIII.)[85] ‘The three component parts of capital do not grow evenly’ (i.e. matière première, instrument, approvisionnement),[86] ‘nor are they in the same relation in the different stages of society. The approvisionnement remains the same for a certain period, regardless of how quickly the speed of production and consequently the quantity of products may increase. Thus an increase of productive capital does not necessarily entail an increase of the approvisionnement which is destined to form the price of labour; it can be accompanied by a reduction of it.’ (loc. cit.)[87]>

Influence of circulation on the determination of value. – Circulation time = time of devaluation. – Difference between the capitalist mode of production and all earlier ones (universality etc.). Propagandistic nature of capital. – Abbreviation of circulation (credit). – Storch. – What the capitalist advances is labour. (Malthus.) – Barriers to capitalist production. (Thompson)[88][edit source]

<In as much as the renewal of production depends on the sale of the finished products; transformation of the commodity into money and retransformation of money into the conditions of production – raw material, instrument, wages; in as much as the circuits which capital travels in order to go from one of these forms into the other constitute sections of circulation, and these sections are travelled in specific amounts of time (even spatial distance reduces itself to time; the important thing e.g. is not the market’s distance in space, but the speed – the amount of time – with which it can be reached), by that much the velocity of circulation, the time in which it is accomplished, is a determinant of how many products can be produced in a given period of time; how often capital can be realized in a given period of time, how often it can reproduce and multiply its value. Thus a moment enters into value-determination which indeed does not come out of the direct relation of labour to capital. The frequency with which the same capital can repeat the production process (creation of new value) in a given period of time is evidently a condition not posited directly by the production process itself. Thus, while circulation does not itself produce a moment of value-determination, for that lies exclusively in labour, its speed does determine the speed with which the production process is repeated, values are created – thus, if not values, at least to a certain extent the mass of values. Namely, the values and surplus values posited by the production process, multiplied by the number of repetitions of the production process in a given period of time. When we speak of the velocity of the circulation of capital, we postulate that delays in the transition from one phase to the next arise only from external barriers, not such as arise from the production process and circulation itself (such as crises, overproduction etc.). Thus, in addition to the labour time realized in production, the circulation time of capital enters in as a moment of value creation – of productive labour time itself. While labour time appears as value-positing activity, this circulation time of capital appears as the time of devaluation. The difference shows itself simply in this: if the totality of the labour time commanded by capital is set at its maximum, say infinity, ∞, so that necessary labour time forms an infinitely small part and surplus labour time an infinitely large part of this [infinity], then this would be the maximum realization of capital, and this is the tendency towards which it strives. On the other side, if the circulation time of capital were = 0, if the various stages of its transformation proceeded as rapidly in reality as in the mind, then that would likewise be the maximum of the factor by which the production process could be repeated, i.e. the number of capital realization processes in a given period of time. The repetition of the production process would be restricted only by the amount of time which it lasts, the amount of time which elapses during the transformation of raw material into product. Circulation time is therefore not a positive value-creating element; if it were = to 0, then value-creation would be at its maximum. But if either surplus labour time or necessary labour time = 0, i.e. if necessary labour time absorbed all time, or if production could proceed altogether without labour, then neither value, nor capital, nor value-creation would exist. Circulation time therefore determines value only in so far as it appears as a natural barrier to the realization of labour time. It is therefore in fact a deduction from surplus labour time, i.e. an increase of necessary labour time. It is clear that necessary labour time has to be paid for, whether the circulation process proceeds slowly or quickly. E.g. in trades where specific workers are required, who can, however, only be employed for a part of the year because the products are, say, saleable only in a given season, [in those trades] the workers would have to be paid for the entire year, i.e. surplus labour time is decreased in exact proportion to the reduction in their possibilities of employment during a given period of time, but still they must be paid in one way or another. (For example in the form that their wages for 4 months suffice to maintain them for a year.) If capital could utilize them for 12 months, it would pay them no higher, and would have gained that much surplus labour. Circulation time thus appears as a barrier to the productivity of labour = an increase in necessary labour time = a decrease in surplus labour time = a decrease in surplus value = an obstruction, a barrier to the self-realization process [Selbstverwertungsprozess] of capital. Thus, while capital must on one side strive to tear down every spatial barrier to intercourse, i.e. to exchange, and conquer the whole earth for its market, it strives on the other side to annihilate this space with time, i.e. to reduce to a minimum the time spent in motion from one place to another. The more developed the capital, therefore, the more extensive the market over which it circulates, which forms the spatial orbit of its circulation, the more does it strive simultaneously for an even greater extension of the market and for greater annihilation of space by time. (If labour time is regarded not as the working day of the individual worker, but as the indefinite working day of an indefinite number of workers, then all relations of population come in here; the basic doctrines of population are therefore just as much contained in this first chapter on capital as are those of profit, price, credit etc.) There appears here the universalizing tendency of capital, which distinguishes it from all previous stages of production. Although limited by its very nature, it strives towards the universal development of the forces of production, and thus becomes the presupposition of a new mode of production, which is founded not on the development of the forces of production for the purpose of reproducing or at most expanding a given condition, but where the free, unobstructed, progressive and universal development of the forces of production is itself the presupposition of society and hence of its reproduction; where advance beyond the point of departure is the only presupposition. This tendency – which capital possesses, but which at the same time, since capital is a limited form of production, contradicts it and hence drives it towards dissolution – distinguishes capital from all earlier modes of production, and at the same time contains this element, that capital is posited as a mere point of transition. All previous forms of society – or, what is the same, of the forces of social production – foundered on the development of wealth. Those thinkers of antiquity who were possessed of consciousness therefore directly denounced wealth as the dissolution of the community. The feudal system, for its part, foundered on urban industry, trade, modern agriculture (even as a result of individual inventions like gunpowder and the printing press). With the development of wealth – and hence also new powers and expanded intercourse on the part of individuals – the economic conditions on which the community rested were dissolved, along with the political relations of the various constituents of the community which corresponded to those conditions: religion, in which it was viewed in idealized form (and both [religion and political relations] rested in turn on a given relation to nature, into which all productive force resolves itself); the character, outlook etc. of the individuals. The development of science alone – i.e. the most solid form of wealth, both its product and its producer – was sufficient to dissolve these communities. But the development of science, this ideal and at the same time practical wealth, is only one aspect, one form in which the development of the human productive forces, i.e. of wealth, appears. Considered ideally, the dissolution of a given form of consciousness sufficed to kill a whole epoch. In reality, this barrier to consciousness corresponds to a definite degree of development of the forces of material production and hence of wealth. True, there was not only a development on the old basis, but also a development of this basis itself. The highest development of this basis itself (the flower into which it transforms itself; but it is always this basis, this plant as flower; hence wilting after the flowering and as consequence of the flowering) is the point at which it is itself worked out, developed, into the form in which it is compatible with the highest development of the forces of production, hence also the richest development of the individuals. As soon as this point is reached, the further development appears as decay, and the new development begins from a new basis. We saw earlier that property in the conditions of production was posited as identical with a limited, definite form of the community; hence of the individual with the characteristics – limited characteristics and limited development of his productive forces – required to form such a community. This presupposition was itself in turn the result of a limited historic stage of the development of the productive forces; of wealth as well as of the mode of creating it. The purpose of the community, of the individual – as well as the condition of production – [is] the reproduction of these specific conditions of production and of the individuals, both singly and in their social groupings and relations – as living carriers of these conditions. Capital posits the production of wealth itself and hence the universal development of the productive forces, the constant overthrow of its prevailing presuppositions, as the presupposition of its reproduction. Value excludes no use value; i.e. includes no particular kind of consumption etc., of intercourse etc. as absolute condition; and likewise every degree of the development of the social forces of production, of intercourse, of knowledge etc. appears to it only as a barrier which it strives to overpower. Its own presupposition – value – is posited as product, not as a loftier presupposition hovering over production. The barrier to capital is that this entire development proceeds in a contradictory way, and that the working-out of the productive forces, of general wealth etc., knowledge etc., appears in such a way that the working individual alienates himself [sich entäussert]; relates to the conditions brought out of him by his labour as those not of his own but of an alien wealth and of his own poverty. But this antithetical form is itself fleeting, and produces the real conditions of its own suspension. The result is: the tendentially and potentially general development of the forces of production – of wealth as such – as a basis; likewise, the universality of intercourse, hence the world market as a basis. The basis as the possibility of the universal development of the individual, and the real development of the individuals from this basis as a constant suspension of its barrier, which is recognized as a barrier, not taken for a sacred limit. Not an ideal or imagined universality of the individual, but the universality of his real and ideal relations. Hence also the grasping of his own history as a process, and the recognition of nature (equally present as practical power over nature) as his real body. The process of development itself posited and known as the presupposition of the same. For this, however, necessary above all that the full development of the forces of production has become the condition of production; and not that specific conditions of production are posited as a limit to the development of the productive forces. –

If we now return to the circulation time of capital, then its abbreviation (except for development of the means of communication and transport required to bring the product to market) [means] in part the creation of a continuous and hence an ever more extensive market; and in part the development of economic relations, development of forms of capital, by means of which it artificially abbreviates the circulation time. (All forms of credit.) <It may be further remarked at this point that, since capital alone possesses the conditions of the production of capital, hence satisfies and strives to realize [them], [it is] a general tendency of capital at all points which are presuppositions of circulation, which form its productive centres, to assimilate these points into itself, i.e. to transform them into capitalizing production or production of capital. This propagandistic (civilizing) tendency a property exclusively of capital – as distinct from the earlier conditions of production.> The modes of production where circulation does not form the immanent, dominant condition of production, naturally [do] not [meet] the specific circulation requirements of capital and hence also do not [provide for] the working-out of the economic forms as well as of the real forces of production corresponding to them. – Production based on capital originally came out of circulation; we now see that it posits circulation as its own condition, and likewise the production process in its immediacy as moment of the circulation process, as well as the circulation process as one phase of the production process in its totality. – In so far as different capitals have different circulation times (e.g. one a more distant market, the other a near one; one a guaranteed transformation into money, the other a risky one; one more fixed capital, the other more circulating capital), this makes for differences among them in realization. But this happens only in the secondary realization process. Circulation time in itself is a barrier to realization (necessary labour time is of course also a barrier; but at the same time an element, since value and capital would vanish without it); [it is a] deduction from surplus labour time or an increase in necessary labour time in relation to surplus labour time. The circulation of capital realizes value, while living labour creates value. Circulation time is only a barrier to this realization of value, and, to that extent, to value creation; a barrier arising not from production generally but specific to production of capital, the suspension of which – or the struggle against which – hence also belongs to the specific economic development of capital and gives the impulse for the development of its forms in credit etc. <Capital itself is the contradiction [, in] that, while it constantly tries to suspend necessary labour time (and this is at the same time the reduction of the worker to a minimum, i.e. his existence as mere living labour capacity), surplus labour time exists only in antithesis with necessary labour time, so that capital posits necessary labour time as a necessary condition of its reproduction and realization. At a certain point, a development of the forces of material production – which is at the same time a development of the forces of the working class – suspends capital itself.>

<‘The entrepreneur can resume production only after he has sold the completed product, and has employed the price for the purchase of new materials and wages: thus, the more prompt circulation is in bringing about these two effects, the more is he capable of beginning his production anew, and the more products does the capital supply in a given period of time.’ (Storch, 34.)[89]> <‘The specific advances of the capitalist do not consist of cloth etc., but of labour.’ (Malthus, IX, 26.)[90]> <‘The accumulation of the general capital of the community in other hands [than] those of the operative labourers, necessarily retards the progress of all industry save that of the usual remuneration of capital, which the time and circumstances afford to the holders of the capital … In the previous systems, the force of production regarded in reference to and subordinate to actual accumulations, and to the perpetuating of the existing modes of distribution. Actual accumulation and distribution are subordinate to the power of producing.’ (Thompson, 3.)[91]>

Circulation and creation of value. (Equalization between different capitals in the conditions of circulation.) Capital not a source of value-creation. – Circulation costs. – Continuity of production presupposes suspension of circulation time[edit source]

It follows from the relation of circulation time to the production process that the sum of values produced, or the total realization of capital in a given epoch, is determined not simply by the new value which it creates in the production process, or by the surplus time realized in the production process, but rather by this surplus time (surplus value) multiplied by the number which expresses how often the production process of capital can be repeated within a given period of time. The number which expresses this frequency of repetition may be regarded as the coefficient of the production process or of the surplus value created through it. However, this coefficient is not positively but negatively determined by the velocity of circulation. I.e. if the velocity of circulation were absolute, i.e. if no interruption in production resulting from circulation occurred at all, then this coefficient would be at its maximum. If the real conditions of e.g. wheat production in a given country permit only one harvest, then no velocity of circulation can make two harvests out of it. But if an obstruction in the circulation occurred, if the farmer could not sell his wheat soon enough e.g. to hire workers again, then production would be delayed. The maximum of the coefficient of the production process or the realization process in a given period of time is determined by the absolute time taken up by the production phase itself. With circulation completed, capital is able to begin its production process anew. Thus if circulation caused no delay at all, if its velocity were absolute and its duration = 0, i.e. if it were accomplished in no time, then this would only be the same as if capital had been able to begin its production process anew directly it was finished; i.e. circulation would not have existed as a limiting barrier for production, and the repetition of the production process in a given period of time would be absolutely dependent on, identical with, the duration of the production process. Thus if the development of industry allowed x lb. of twist to be produced in 4 months with a capital of 100, then with that capital the production process could be repeated only 3 times per year, and only 3x lb. of twist could be produced. No velocity of circulation could increase the reproduction of capital, or rather the repetition of its realization process, beyond that point. That could occur only in consequence of an increase in the forces of production. Circulation time in itself is not a productive force of capital, but a barrier to its productive force arising from its nature as exchange value. The passage through the various phases of circulation here appears as a barrier to production, a barrier posited by the specific nature of capital itself. All that can happen through the acceleration and abbreviation of circulation time – of the circulation process – is the reduction of the barrier posited by the nature of capital. The natural barriers to the repetition of the production process e.g. in agriculture coincide with the duration of one cycle of the production phase. The barrier posited by capital is the lag not between seeding and harvest, but between harvest and the transformation of the harvest into money, and retransformation of the money into say e.g. purchase of labour. The circulation-artists who imagine that they can do something with the velocity of circulation other than lessen the obstacles to reproduction posited by capital itself are on the wrong track. (Even madder, of course, are those circulation-artists who imagine that credit institutes and inventions which abolish the lag of circulation time will not only do away with the delays and interruptions in production caused by the transformation of the finished product into capital, but will also make the capital, with which productive capital exchanges, itself superfluous; i.e. they want to produce on the basis of exchange value but to remove at the same time, by some witchcraft, the necessary conditions of production on this basis.) The most that credit can do in this respect – as regards mere circulation – is maintain the continuity of the production process, if all other conditions of this continuity are present, i.e. if the capital to be exchanged with actually exists etc.

It is posited in the circulation process that the transformation of the capital into money is posited as a condition for the realization of capital through production, for the exploitation of labour by capital; or, the exchange of capital for capital[92] is posited as barrier to the exchange of capital for labour and vice versa.

Capital exists as capital only in so far as it passes through the phases of circulation, the various moments of its transformation, in order to be able to begin the production process anew, and these phases are themselves phases of its realization – but at the same time, as we saw, of its devaluation. As long as capital remains frozen in the form of the finished product, it cannot be active as capital, it is negated capital. Its realization process is delayed in the same degree, and its value-in-process [prozessierender Wert] negated. This thus appears as a loss for capital, as a relative loss of its value, for its value consists precisely in its realization process. This loss of capital means in other words nothing else but that time passes it by unseized, time during which it could have been appropriating alien labour, surplus labour time through exchange with living labour, if the deadlock had not occurred. Now let us imagine many capitals in particular branches of business, all of which are necessary (which would become evident if, in the eventuality of a massive flight of capital from a given branch, supply falling below demand, the market price would therefore rise above the natural price in that branch), and let a single branch of business require e.g. that capital A remain longer in the form of devaluation, i.e. that the time in which it passes through the various phases of circulation is longer than in all other branches of business, in which case this capital A would regard the smaller new value which it could produce as a positive loss, just as if it had so many more outlays to make in order to produce the same value. It would thus charge relatively more exchange value for its products than the other capitals, in order to share the same rate of gain. But this could take place in fact only if the loss were distributed among the other capitals. If A demands more exchange value for the product than there is labour objectified in it, then it can obtain this more only if the others obtain less than the real value of their products. That is, the less favourable conditions under which A has produced would be borne in proportional shares by all the capitalists who exchange with it, and in this way an equal average level would come out. But the sum of the surplus value created by all these capitals together would be lessened exactly by the amount of capital A’s lesser realization in relation to the other capitals; only, instead of this reduction falling exclusively on capital A, it is borne as a general loss, as a loss shared proportionally by all the capitals. Nothing can therefore be more ridiculous than the notion (see e.g. Ramsay)[93] that, apart from the exploitation of labour, capital forms an original source, separately from labour, of value-creation, because the distribution of surplus labour among the capitals takes place not in proportion to the surplus labour time achieved by the individual capital, but in proportion to the total surplus labour which the totality of capitals achieved, and hence a higher value-creation can be attributed to the individual capital than is directly explicable from its particular exploitation of labour power. But this more on one side has to be compensated by a less on the other. This is what average means, if it means anything at all. The question how the relation of capital to alien capital, i.e. the competition of capitals, distributes the surplus value among them obviously has nothing to do with the absolute amount of this surplus value. Nothing more absurd, then, than to conclude that, because one capital obtains a compensation for its exceptional circulation time, i.e. puts its relatively lesser realization to account as positively greater realization, now all capitals combined, capital can make something out of nothing, make a plus out of a minus, make a plus-surplus value out of a minus-surplus value or out of minus-surplus labour time, and that it possesses, therefore, a mystical wellspring of value independent of the appropriation of alien labour. The manner in which the capitals among other things compute their proportional share of the surplus value – not only according to the surplus labour time which they set in motion, but also in accordance with the time which their capital has worked as such, i.e. lain fallow, found itself in the phase of devaluation – does of course not alter in the least the total sum of the surplus value which they have to distribute among themselves. This sum itself cannot grow by being smaller than it would have been if capital A, instead of lying fallow, had created surplus value; i.e. by having created less surplus value in the same time as the other capitalists. And this lying-fallow is made good for capital A only in so far as it arises necessarily out of the conditions of the particular branch of production, and hence appears in respect to capital as such as a burden on realization, as a necessary barrier to its realization generally. The division of labour leaves this barrier as a barrier only as regards the production process of this particular capital. If the production process is regarded as conducted by capital as such, this lying-fallow is a general barrier to capital’s realization. If one imagines all production carried out by labour alone, then all the larger advances which it requires during its realization appear as what they are – deductions from surplus value.

Circulation can create value only in so far as it requires fresh employment – of alien labour – in addition to that directly consumed in the production process. This is then the same as if more necessary labour were used in the direct production process. Only the actual circulation costs increase the value of the product, but decrease the surplus value.

To the extent that the circulation of capital (the product etc.) does not merely express the phases necessary to begin the production process anew, this circulation (see Storch’s example) does not form a moment of production in its totality – is hence not circulation posited by production, and, in so far as it creates expenses, these are faux frais de production.[94] The costs of circulation generally, in so far as their merely economic moments, circulation proper, are concerned (bringing the product to market gives it a new use value), are to be regarded as deduction from surplus value, i.e. as an increase of necessary labour in relation to surplus labour.

The continuity of production presupposes that circulation time has been suspended. If it has not been suspended, then time must pass between the different metamorphoses through which capital must travel; its circulation time must appear as deduction from its production time. On the other hand, the nature of capital presupposes that it travels through the different phases of circulation not as it does in the mind, where one concept turns into the next at the speed of thought, in no time, but rather as situations which are separate in time. It must spend some time as a cocoon before it can take off as a butterfly. Thus the conditions of production arising out of the nature of capital itself contradict each other. The contradiction can be suspended and overcome only[95] in two ways:

Firstly, credit: A pseudo-buyer B – i.e. someone who really pays but does not really buy – mediates the transformation of capitalist A’s product into money. But B himself is paid only after capitalist C has bought A’s product. Whether the money which this credit-man, B, gives to A is used by A to buy labour or to buy raw material and instrument, before A can replace either of them from the sale of his product, does not alter the case. Given our presupposition, he must basically give him both – i.e. all the conditions of production (these represent, however, a greater value than the original ones with which A began the production process). In this case capital B replaces capital A; but they are not realized at the same time. Now B takes the place of A; i.e. his capital lies fallow, until it is exchanged with capital C. It is frozen in the product of A, who has made his product liquid in capital B.

Ramsay. Circulation time. Concludes therefore that capital is its own source of profit. – Ramsay. Confusion about surplus value and profit and law of values. (No surplus value according to Ricardo’s law.) – Ricardo. Competition. – Quincey.[96] Ricardo’s theory of value. Wages and profit. Quincey. – Ricardo. – Wakefield. Conditions of capitalist production [in] colonies[edit source]

The economists’ absolute confusion in respect of Ricardo‘s determination of value through labour time – something which is founded on a basic defect of his own development – emerges very clearly with Mr Ramsay. He says (after having previously drawn, from the influence of the circulation time of capitals on their relative realization, i.e. their relative share of the general surplus value, the nonsensical conclusion that: ‘This shows how capital may regulate value independently of labour’ (IX, 84. R, 43)[97] or ‘that capital is a source of value independent of labour’[98]) – he says, literally: ‘A circulating capital (approvisionnement) will always maintain more labour than that formerly bestowed upon itself. Because, could it employ no more than had been previously bestowed upon itself, what advantage could arise to the owner from the use of it as such?’ (loc. cit. 49.) ‘Given two capitals of equal value, each produced through the labour of 100 men operating for a given time, of which the one is entirely circulating, the other entirely fixed, and may perhaps consist of wine kept to improve. Now, this circulating capital, raised by the labour of 100 men, will set 150 men in motion. Therefore the product at the end of the coming year will in this case be the result of the labour of 150 men. But still it will be of no more value than the wine at the termination of the same period, although only 100 men employed upon the latter.’ (50.) ‘Or is it asserted that the quantity of labour which every circulating capital will employ is no more than equal to the [quantity] previously bestowed upon it? That would mean, that the value of the capital expended = that of the product.’ (52.) Great confusion between the labour bestowed upon capital and that which it will employ. The capital which is exchanged for labour capacity, the approvisionnement – and this he here calls circulating capital – can never employ more labour than has been bestowed upon it. (The reaction of a development of the productive forces on present capital is beside the point here.) But there has been more labour bestowed upon it than it has paid for – surplus labour, which is converted into surplus value and surplus produce, enabling the capital to renew this profitable bargain, where the mutuality is all on one side, on a more enlarged scale. It is enabled to employ more new living labour, because during the process of production a portion of fresh labour has been bestowed upon it beyond the accumulated labour of which it consisted before entering that process.

Mr Ramsay seems to imagine that, if a capital is the product of 20 working days (necessary and surplus together), this product of 20 working days can employ 30 working days. But this is by no means the case. Say that 10 days of necessary labour and 10 surplus days were employed on the product. Then the surplus value = 10 surplus days. If the capitalist then exchanges these again for raw material, instrument and labour, then he can set new necessary labour into motion with the surplus product. The point is not that he employed more labour time than is present in the product, but that he exchanges the surplus labour time, which costs him nothing, for new necessary labour time – in other words, precisely, that he employs the entire labour time bestowed upon the product, while he has paid only part of that labour. Mr Ramsay’s conclusion, that if the quantity of labour which every circulating capital will employ was no more than equal to that previously bestowed upon it, the value of the capital expended would be equal to that of the produce, i.e. no surplus value would be left, would be correct only if the quantity of labour bestowed upon the capital were wholly paid for, i.e. if capital did not appropriate a part of the labour without equivalent. These misunderstandings on Ricardo’s part[99] obviously arise from the fact that he himself was not clear about the process, nor, as a bourgeois, could he be. Insight into this process is = to the statement that capital is not only, as A. Smith thinks,[100] command over alien labour, in the sense that every exchange value is that, since it gives its possessor buying power, but that it is the power to appropriate alien labour without exchange, without equivalent, but with the semblance of exchange. Ricardo knows no argument to refute those, like A. Smith and others, who fall into the same error regarding value as determined by labour, and value as determined by the price of labour (wages), other than to say: with the product of the same quantity of labour one can set sometimes more and sometimes less living labour into motion, i.e. he regards the product of labour in respect of the worker only as use value – only the part of the product which he needs to be able to live as worker. But how it comes about that the worker suddenly only represents use value in the exchange, or only draws use value from the exchange, is by no means clear to him, as is already proved by his arguments against A. Smith, which are never in general terms, but always about particular examples. But why is it, then, that the share of the worker in the value of the product is determined not by the value, but rather by the use value of the product, thus not by the labour time employed on it, but by its quality of maintaining living labour capacity? If he tries to explain this with, say, competition among the workers, then the answer which would have to be given is the same as that which he gives A. Smith about competition among capitalists, i.e. that competition may well even out, equalize the level of profit, but in no way creates the measure of this level.[101] Likewise, competition among the workers could press down a higher wages level etc., but the general standard of wages, or as Ricardo puts it the natural price of wages, could not be explained by the competition between worker and worker, but only by the original relation between capital and labour. Competition generally, this essential locomotive force of the bourgeois economy, does not establish its laws, but is rather their executor. Unlimited competition is therefore not the presupposition for the truth of the economic laws, but rather the consequence – the form of appearance in which their necessity realizes itself. For the economists to presuppose, as does Ricardo, that unlimited competition exists[102] is to presuppose the full reality and realization of the bourgeois relations of production in their specific and distinct character. Competition therefore does not explain these laws; rather, it lets them be seen, but does not produce them. Then Ricardo says, too: the production costs of living labour depend on the production costs of making the values required to reproduce it.[103] While he previously regarded the product in relation to the worker only as a use value, he now regards the worker only as an exchange value in relation to the product. The historic process through which product and living labour come into this mutual relation is none of his concern. He is just as vague about the way in which this relation is perpetuated. Capital, with him, is the result of saving; this already shows that he misunderstands the process of its origins and reproduction. He therefore also imagines that production is impossible without capital, although he can very well imagine capital possible without ground rent. The distinction between profit and surplus value does not exist for him, proof that he is clear about the nature of neither one. His procedure already shows this from the very beginning. Originally, he makes workers exchange with workers – and their exchange is then determined by the equivalent, by the labour time reciprocally expended in production. Then comes the real problem of his economics, to demonstrate that this determination of value is not altered by the accumulation of capitals – i.e. by the presence [Dasein] of capital. Firstly, he has no inkling that his first spontaneous relation is itself only a relation abstracted from the mode of production resting on capital. Secondly, what he has available is a definite amount of objective labour time, which may of course increase, and he asks himself, how is it distributed? The question is rather how is it created, and there it is precisely the specific nature of the relation of capital and labour, or the specific and distinct character of capital, which explains this. As Quincey (X, 5) puts it, modern economics (the economics of Ricardo) is in fact concerned only with the dividends, while the total product is regarded as fixed, determined by the quantity of labour employed on it – its value appraised in accordance with that.[104] Accordingly, Ricardo has rightly been accused of not understanding surplus value, although his opponents understand it even less. Capital is represented as appropriating a certain part of the ready and available value of labour (of the product); the creation of this value, which it appropriates above and beyond the reproduced capital, is not presented as the source of the surplus value. This creation is identical with the appropriation of alien labour without exchange, and for that reason the bourgeois economists are never permitted to understand it clearly. Ramsay accuses Ricardo of forgetting that the fixed capital (which consists of capital not included in approvisionnement, with Ramsay the raw material at the same time along with the instrument) is a deduction from the sum total available for distribution among capitalist and worker. ‘Ricardo forgets that the whole product is divided not only between wages and profits, but that another part is necessary for replacing fixed capital.’ (IX, p. 88. R. 174, note.) Indeed, since Ricardo does not grasp the relation between objectified and living labour in its living movement – [a relation] not to be deduced from the dividends of a given quantity of labour, but from the positing of surplus labour – and does not, therefore, grasp the relation among the different component parts of capital, it therefore seems with him as if the entire product were divided into wages and profits, so that the reproduction of capital is itself counted as part of profit. Quincey (loc. cit. Notebook X, 5) gives this exposition of the Ricardian doctrine: ‘If the price is 10s. then wages and profit as a whole cannot exceed 10s. But do not the wages and profits as a whole, themselves, on the contrary, predetermine the price? No, that is the old superannuated doctrine.’ (p. 204). ‘The new economics has shown that all price is governed by proportional quantity of the producing labour, and by that only. Being itself once settled, then ipso facto, price settles the fund out of which both wages and profits must derive their separate dividends.’ (loc. cit. 204.)[105] Capital here appears not as positing surplus value, i.e. surplus labour, but only as making deductions from a given quantity of labour. The fact that instrument and raw material appropriate these dividends then has to be explained by their use value in production, which then presupposes the absurdity that raw material and instrument create use value through their separation from labour. For this separation makes them into capital. Considered for themselves, they are themselves labour, accumulated labour. Besides, this clashes with sound common sense, because the capitalist knows very well that he counts wages and profit among the production costs and regulates the necessary price accordingly. This contradiction in the determination of the product by relative labour time, and the limitation of the sum of profit and wages by the sum of this labour time, and the real determination of prices in practice, comes about only because profit is not grasped as itself a derivative, secondary form of surplus value; the same is true of what the capitalist justly regards as his production costs. His profit arises simply from the fact that a part of the cost of production costs him nothing, hence does not enter into his outlays, his production costs.

Notebook VI (February 1858)[edit source]

£500interest on £10,000 fixed capital
350floating capital
150Rents, taxes, rates
650Sinking fund of 6 1/2% for wear
and tear of the fixed capital
£1,100Contingencies, carriage, coal, oil
2,600Wages and salaries
10,000for about 400,000 lb. raw cotton at 6d.
16,000for 363,000 lb. twist spun. Value £16,000

The capital laid out in labour is 2,600; the surplus value = 1,650 (850 interest + 150 rents etc., makes 1,000 + 650 profit).

But 2,000:1,650 = 100:63 6/13. Thus the rate of surplus value is 63 6/13%. According to the profit calculation it would have to be 850 interest, 150 rents and 650 profit, or 1,650:15,350; nearly 10.1%.

In the above example, the floating capital turns over 167/70 times per year; the fixed capital turns over once in 15 5/13 years; once in 200/13 year.

Profit: 650 or about 4.2.[106] The wages of the operatives 1/6. The profit is indicated here as 4.2; say it were only 4%. This 4% figured on an outlay of 15,350. But then we also have 5% interest on £10,000 and 5% on 7,000; £850 = 5% of 17,000. From the actual annual advances made, we must deduct (1) the part of the fixed capital which does not figure in the sinking fund; (2) that which is figured as interest. (It is possible that capitalist A does not pocket the interest, but capitalist B. In any case they are revenue, not capital; surplus value.) From the £15,350 outlays thus deduct 850; leaves: £14,500. Of the £2,600 for wages and salaries there were £183 1/3 in the form of salary, since 1/6 of 14,500 is not 2,600 but 2,416 2/3, and 14,500 divided by this is 6.

Thus, he sells the 14,500 at 16,000 or a profit of 1,500; makes 10 2/3%; but let us ignore these 2/3 and say 10%; 1/6 of 100 is 16 2/3. Thus, out of 100, he would give: 83 1/3 for advances, 16 2/3 wages and 10 profit. In detail:

£ St.:83 1/316 2/310011010

10 of 16 2/3 or of 50/3 is exactly 60%. Thus, in order that, in the capitalist’s calculation, an annual profit of 10% (it was slightly more) be made on a capital of £17,000, wherein labour makes up only 1/6 of the annual advances of 14,500, the worker (or capital, as you like) has to create a surplus value of 60%. Or, of the total labour time 40% are for necessary and 60 for surplus labour; they relate as 4:6 or = 2:3 or 1:3/2. If, however, the advances on capital had been 50, the advances on wages also 50, then only 20% surplus value would have to be created in order that the capitalist should have 10%; 50 50 10 = 110. But 10 to 50 = 20:100 or 20%. If necessary labour in the second case posited as much surplus labour as in the first, then the capitalist’s profit would amount to £30; on the other hand if the rate of real value-creation, the positing of surplus labour, in the first case, were only as great as in the second, then the profit would amount to only £3 1/3, and if the capitalist had to pay 5% interest to another capitalist, then he would have to carry an actual loss. This much arises simply from the formula, (1) that, in order to determine the size of the real surplus value, one must calculate the profit on the advance made for wages; the percentage which expresses the proportion between the so-called profit and wages; (2) the relatively smaller percentage made up by the proportion between the outlay in living labour and the total outlay presupposes a greater outlay in fixed capital, machinery etc.; greater division of labour. Thus, although the percentage of labour is smaller than in the capital working with more labour, the mass of labour really set in motion must be significantly greater; i.e. a greater capital generally has to be worked with. The proportional part of labour out of the total advance is smaller; but the absolute sum of labour set in motion is larger for the individual capital; i.e. it must itself be larger. (3) If it is a case not of larger machinery etc., but of an instrument which does not set more labour into motion and itself represents no greater fixed capital (e.g. manual lithography) but merely replaces labour, then the profit of the capital working with the machine is absolutely smaller than that of the capital working with living labour. (But the latter can make a percentage profit higher than the former, and thus throw him out of the market.) (etc.) The examination of how far the rate of profit can decrease as capital grows, while the gross profit nevertheless increases, belongs to the doctrine of profit (competition).

In his Principles of Political Economy, 2nd ed., 1836, Malthus has an inkling that profit, i.e. not profit, but real surplus value, has to be calculated not in respect of capital advanced, but of living labour advanced, whose value is expressed objectively in wages; but this leads him into playing games which become absurd if they are to serve as a basis for any determination of value, or for reasoning about the relation of labour to the determination of value.

For example, if I take the total value of the finished product, then I can compare every part of the product advanced with the part of the outlay corresponding to it; and the percentage of profit in relation to the whole product is naturally the same percentage for any fractional part of the product. Say e.g. that 100 thalers brought 110; thus 10% the whole product; 75%, say, for the invariable part of capital, 25 for labour, i.e. 3/4 for the former, 1/4 for living labour. Now if I take 1/4 of the total product, i.e. of 110, then I obtain 27 2/4 or 27 1/2. On an outlay of 25 for labour, the capitalist would have a gain of 2 1/2, i.e. 10%. Likewise Malthus could have said that if I take 3/4 of the total product, i.e. 75, then these 3/4 are represented in the total product by 82 1/2; then 7 1/2 out of 75 is exactly 10%. This obviously means nothing other than that if I gain 10% on 100 then the gain on every part of 100 amounts to as much as, when added together, will be 10% on the total sum. If I have gained 10 on 100, then on 2 × 50 I have gained 5 each time etc. The fact that, if I gain 10 on 100, I gain 2 1/2 on 1/4 of 100 and 7 1/2 on 3/4 takes us not a single step further. If I have gained 10 on 100, how much have I then won on 1/4 of 100 or on 3/4? Malthus’s insight can be reduced to this childishness. The advance for labour amounted to 1/4 of the 100, and the gain on it amounted to 10%. 10% of 25 is 2 1/2. Or the capitalist, if he has gained 10 on 100, has gained 1/10 on every part of his capital, i.e. 10%. This gives the parts of the capital no qualitative character whatever, and it therefore holds for fixed capital etc. just as well as for the part advanced in labour. Moreover, this only expresses the illusion that each part of the capital is involved to an equal degree in the newly created value. Nor has the 1/4 of the capital advanced for wages created the surplus value; rather, the unpaid living labour has done so. However, from the relation of the total value – here the 10 thalers – to wages we can see what percentage of labour was not paid, or, how much surplus labour there was. In the above relation, the necessary labour is objectified in 25 thalers, the surplus labour in 10; thus they relate as 25:10 = 100:40; 40% of the labour was surplus labour, or, what is the same, 40% of the value it produced was surplus value. It is quite true that the capitalist can make this reckoning: if I make 10 on 100, then, on wages, = 25, I have made 2 1/2. It is impossible to see what use this calculation is. But what Malthus wants to do with it will be seen shortly when we go into his determination of value. However, it is clear from the following that he indeed believes that his simple arithmetical example contains a real determination:

‘Suppose the capital be expended only for wages, £100 expended in immediate labour. The returns at the end of the year 110, 120, or 130; it is evident that in each case the profits will be determinated by the proportion of the value of the whole produce which is required to pay the labour employed. If the value of the produce in the market = 110, the proportion required to pay the labourers = 10/11 of the value of the produce, or the profits = 10%.’ (Here Mr Malthus does nothing more than to express the original advance, £100, as a relation to the total product. 100 is 10/11 of 110. Whether I say I gain 10 on 100, i.e. 1/10 of 100, or I say 1/11 of the 110 are gain, it is the same.) ‘If the value of the product is 120, the proportion for labour = 10/12 and the gain 20%; if 130, the proportion required to pay the labour = 10/13 and the gain = 30%.’ (Instead of saying: I gain 10 on 100, I can also say that 10/11 of the 110 were the advances; or, 20 on the 100, the advances amount only to 10/12 of 120 etc. The character of these advances, whether in labour or otherwise, has absolutely nothing to do with this other arithmetic form of expressing the matter. If a capital of 100 has brought in 110, then either I can start with the capital and say I gained 10 on it, or I can start with the product, with 110, and say that I advanced only 10/11 on it beforehand. The relation is, of course, the same.) ‘Now assume that the capitalist’s advances do not consist entirely of labour. The capitalist expects an equal benefit on all parts of the capital he advances’ (that means simply that he distributes the benefit he has made, and whose origin may be quite obscure to him, among all parts of his outlays equally, entirely abstracting away their qualitative difference). ‘Suppose 1/4 of the advances, for labour’ (direct), ‘3/4 consisting of accumulated labour and profits, with any additions which may arise of rents, taxes and other outgoings. Then strictly true that the profits of the capitalist will vary with the varying value of this 1/4 of the produce compared with the quantity of labour employed.’ (Not quantity with Mr Malthus, but rather compared with the salary paid.) (Thus strictly true that his profits will vary with the varying value of the 3/4 of his profits compared with the advances in accumulated labour, i.e. the gain relates to the total capital advanced (10:100) as every part of the total product (110) does to the part of the advance corresponding to it.) ‘For example,’ Malthus continues, ‘a farmer employs £2,000 in cultivation, of which 1,500 in seed, keep of horses, wear and tear of his fixed capital, etc., and £500 on immediate labour, and the returns at the end are 2,400. His profit 400, on 2,000 = 20%. And it is immediately obvious that if we took 1/4 of the value of the produce, namely £600, and compared it with the amount paid in the wages of the immediate labour, the result would show exactly the same rate of profits.’ (loc. cit. 267, 268. Notebook X, 41, 42.) (It is equally obvious that if we took 3/4 of the value of the produce, namely 1,800, and compared it with the amount paid in the advances on accumulated labour, namely with 1,500, the result would show exactly the same rate of profits. 1,800:1,500 = 18:15 = 6:5. And 6 is 1/5 more than 5, hence 20%.) (Malthus here has two different arithmetic formulae in mind and gets them mixed up: firstly, if I make 10 on 100, then on every part of the 100 my gain is not 10 but 10%: i.e. 5 on 50, 2 1/2 on 25 etc.; to gain 10 on 100 means to gain 1/10 on each part of the 100, and consequently the profit has to show up also as 1/10 profit on wages, and if the profit is distributed evenly among all parts of the capital, then I can say that the rate of profit on the total capital varies with the rate of profit on each of its parts, including e.g. the part advanced as wages; secondly if I gained 10% on 100, then the total product 110. Now, if wages formed 1/4 of the advances = 25, then they form only a 4 2/5 part of 110; i.e. they form a fraction that is smaller by 2/5, and it will form an ever smaller part of the total product in proportion as the latter has risen in comparison with the original. This is again only another way of calculating. 10 is 1/10 of 100 but only 1/11 of 110. I can therefore say that as the total product grows larger, each of the fractional parts of the original capital forms a relatively smaller part of it. Tautology.)

In his work The Measure of Value Stated and Illustrated, London, 1823 (Notebook IX), Malthus asserts that the ‘value of labour’ is ‘constant’ and is hence the true Measure of Value generally. ‘Any given quantity of labour must be of the same value as the wages which command it, or for which it actually exchanges.’ (p. 5, loc. cit.) (IX, 29.) He is speaking here, of course, about wage labour. The truth is rather: any given quantity of labour is = the same quantity of labour expressed in a product; or, each product is only a specific quantity of labour, objectified in the value of the product, which is measured with respect to other products by this quantity. Wages, however, express the value of living labour capacity, but in no way the value of living labour, which is expressed, rather, in wages + profit. Wages are the price of necessary labour. If the worker had to work 6 hours in order to live, and if he produced for himself as mere worker, then he would daily receive the commodity of 6 hours of labour, say 6d. Now the capitalist makes him work 12 hours, and pays him 6d. He pays him 1/2d. per hour, i.e. a given quantity of 12 hours of labour has the value of 12d., and 12d. is indeed the value for which the product exchanges, when it gets sold. On the other hand, the capitalist commands with this value, if he could re-invest it in mere labour, 24 hours. The wages command, therefore, a much greater quantity of labour than they consist of, and a given quantity of living labour actually exchanges for a much smaller one of accumulated labour. The only thing that is sure is that the price of labour, wages, must always express the quantity of labour which the labourers want in order to keep soul and body together. The wages of any quantity of labour must be equal to the quantity of labour which the labourer must expend upon his own reproduction. In the above instance a man would set to work two men for 12 hours each – together 24 hours – with the quantity of labour afforded by one man. In the case above, the product would be exchanged for another product with a value of 12d., or for 12 hours of labour, and this would be the source of its profit of 6d. (its surplus value for the capitalist). The value of products is determined by the labour contained in them, not by that part of the labour in them which the employer pays for. The value of the product is constituted by labour done, including that not paid for; but wages only express paid labour, never all labour done. The measure of this payment itself depends on the productivity of labour, for the latter determines the amount of necessary labour time. And since these wages constitute the value of labour (labour itself posited as commodity), this value is constantly variable, and is the opposite of constant. The amount of labour which the worker works is very different from the amount of labour that is worked up into his labour capacity, or which is required to reproduce his labour capacity. But he does not sell as commodity the use made of him, he sells himself not as cause but as effect. Let us listen how Mr Malthus exerts himself to get the matter clear:

‘The conditions of the supply of commodities do not require that they should retain always the same relative values, but that each should retain its proper natural value, or the means of obtaining those objects which will continue to the producer the same power of production AND accumulation … profits are calculated upon the advances necessary to production … the specific advances of capitalists do not consist of cloth, but of labour; AND as no other object whatever can represent a given quantity of labour, it is clear that it is the quantity of labour which a commodity will command, and not the quantity of any other commodity, which can represent the condition of its supply, or its natural value.’ (17, 18.) (IX, 29.) Already, from the fact that the capitalist’s advances consist of labour, Malthus could have seen that the matter has not become clear. Posit that the necessary labour time is 6 hours; also A, B, two men each of whom works for himself but who exchange with one another. Let A work 6 hours, B 12 hours. Now if A wants to eat up the 6 extra hours worked by B, if he wants to consume the product of B’s 6 surplus hours, there is nothing he can give him other than 6 hours of living labour, say the next day. B now has a product of 6 hours of labour more than A. Now posit that under these circumstances he begins to fancy himself a capitalist and stops working altogether. Then on the third day, the only thing he could give in exchange for A’s 6 hours is his own accumulated product of 6 hours, and, as soon as this exchange was accomplished, he would have to begin working again himself, or starve. But if he continues to work 12 hours for A, and A continues to work 6 hours for himself and 6 for B, then they exchange exactly 12 hours with one another. The natural value of the commodity, says Malthus, consists in its giving back to its possessor through exchange the same power of production AND accumulation. His commodity consists of 2 quantities of labour, one quantity of accumulated labour + one quantity of immediate labour. Thus if he exchanges his commodity for another which contains exactly the same total quantity of labour, then his power of production and accumulation has remained at least the same, equal. But it grew, because a part of the immediate labour has cost him nothing, while he sells it nevertheless. Yet Malthus comes to the conclusion that the quantity of labour of which the product consists is paid labour only, hence = to the sum of the wages, or, that wages are the measuring rod of the value of the commodity. If every amount of labour contained in the commodity were paid for, then Mr Malthus’s doctrine would be correct, but it would be equally true that his capitalist would have no ‘advances of labour’ to make, and his ‘powers of accumulation would become totally forfeited’. Where is the profit to come from, if no unpaid labour is performed? Well, thinks Mr Malthus, [from] the wages for accumulated labour. But since labour done has ceased to work, it also ceases to draw wages. True, the product in which it exists could now be again exchanged for living labour, but posit that this product = 6 hours of labour; then the worker would give 6 hours of living labour and would receive the advances, the capitalist’s 6 hours of done labour, in return; so that the capitalist would not have budged a single step forward. Living labour would very soon be in possession of his dead labour. The reason Malthus gives, however, is that because ‘no other object whatsoever can represent a given quantity of labour’, the natural value of a commodity consists of ‘the quantity of labour which a commodity will command, and not the quantity of any other commodity’. That means a given quantity of labour can be represented only by a quantity of living (immediate) labour. Not ‘no other object whatsoever’ but rather ‘every object whatsoever’ can represent a given quantity of labour, namely every object in which the same quantity of labour is contained. But Malthus wants the quantity of labour contained in the commodity to be measured by, to be equal to, not the quantity of living labour which it can set in motion, but the quantity of paid labour which it sets in motion. Posit that the commodity contains 24 hours of labour; he thinks, then, that the capitalist can buy 2 working days with it; and if the capitalist paid all of this labour, or if the quantity of labour done = the quantity of paid living labour, then he could buy only 24 hours of living labour with his 24 hours of done labour, and his ‘powers of accumulation’ would have gone to the wall. But the capitalist does not pay the worker the labour time, the amount of labour, but rather pays him only the necessary labour, while forcing him to work the rest free of charge. Thus, with the 24 hours of done labour he may perhaps set 48 hours of living labour into motion. Thus he in fact pays 1 hour of done labour for 2 hours of living labour, and thus gains 100% on the exchange. The value of his commodity now = 48 hours, but is in no way equal to the wages exchanged for them, nor equal to the wages for which it then in turn exchanges. If he continues in the same way, his 48 hours of done labour will buy 96 hours of living labour.

Posit that no capitalists exist at all, but that the independent and mutually exchanging workers worked more than necessary to live, because they want to accumulate too, etc. Call that part of the work which the worker does in order to live, wages; and the surplus time he works in order to accumulate, profit. Then the value of his commodity would be = to the total amount of labour contained in it, = to the total sum of living labour time; but in no way = to the wages he paid himself, or equal to the part of the commodity which he would have to reproduce in order to live. Because the value of a commodity = a specific quantity of labour, Malthus says it is = to the quantity of necessary labour (i.e. wages) contained in it, and not = to the total sum of labour contained in it; its totality is = to a fraction of it. But the worker’s ‘powers of accumulation’ evidently would arise only because he has worked more than necessary to pay himself his wages. If a specific quantity of living labour time were = to the time required for the worker to live, then a specific quantity of living labour would be = to the wages which he produces, or the wages would be exactly equal to the living labour which they set in motion. If such were the case, capital would of course be impossible. If the worker, in the whole of his working time, can produce not a farthing more than his wages, then with the best of wills he cannot squeeze out a farthing for the capitalist. Property is the offspring of the productivity of labour. ‘If one can produce only for one, everyone a worker; there can be no property. If one man’s labour can maintain 5, there will be 4 idle men for 1 employed in production.’ (Ravenstone.)[107] We saw above how Malthus’s fantasizing profundity expressed itself in a purely childish kind of calculation. What lay behind this, by the way, was the doctrine that the value of labour was constant and that wages constituted price. Because the rate of profit on a total capital can be expressed as the same rate on the fraction of the capital made up by wages, he asserts that this fractional part constitutes and determines the price. Exactly the same profundity as here. If commodity A = an amount of x commodity, he thinks that this can mean nothing else than that it = x living labour, for only labour can represent labour. From this he concludes that commodity A = the amount of wage labour which it can command, and that therefore the value of labour is constant, because always = to the commodity by which it is set in motion. The nub of it is simply that the amount of living labour and the amount of wage labour are identical for him, and that he believes that every fractional part of wage labour is really paid for. But x living labour can be (and, as wage labour, always is) = xy necessary labour (wages) + y surplus labour. x dead labour can therefore set in motion x − y necessary labour (wages) + y surplus labour time; i.e. it always sets in motion as many additional hours of living labour time as there are hours of surplus labour time over and above necessary labour time contained within x hours of labour.

Wage labour always consists of paid and unpaid labour.

The value of labour is constant, thus means nothing other than that all labour time is necessary, i.e. wage-producing labour time. There is no surplus labour time but – nevertheless – there are ‘powers of accumulation’ and capital. Since wages are always equal to a given quantity of labour, namely the quantity of living labour which they set in motion, and since this is the same quantity of labour contained in the wages, therefore the value of labour is constant, for it is always = to the quantity of objectified labour. The rise and fall in the price of commodities, not of the value of labour. If a worker gets 8s. silver per week or 16, this comes about only because the price of shillings has risen or fallen, but the value of labour has remained the same. In both cases he obtains a week of done labour for a week of living labour. Mr M. proves this as follows:

‘If labour alone, without capital, were employed in procuring the fruits of the earth, the greater facility of procuring one sort of them compared with another would not, it is acknowledged, alter the value of labour, or the exchangeable value of the whole produce obtained by a given quantity of exertion.’[108]

This means nothing but that each of the commodities, regardless of their quantity, would be determined by the labour contained in it, despite the fact that, depending on the degree of its productivity, it would express itself in one case in more, in another in fewer, use values. ‘We should, without hesitation, allow that the difference was in the cheapness or dearness of the produce, not of the labour.’[109] We would say labour is more productive in one branch than in the other, or, alternatively, the product costs more or less labour. We could not speak of cheapness or dearness of labour, since no wage labour existed, and hence an hour of immediate labour would always command an hour of objectified labour, which would naturally not prevent one hour from being more productive than another. But still, to the extent that we distinguish the part of labour necessary for subsistence from the part that is surplus labour – and if any hours of the day are at all worked as surplus time, then it is the same as if every fractional part of labour time consisted of a part necessary and a part surplus labour – done by the immediate labourers, it could still not be said that the value of labour, i.e. wages (the part of the product exchanged for necessary labour, or the part of the total labour which is employed for the necessary product), are constant. The fractional part of labour time which reproduces wages would vary with productivity; thus, with the productivity of labour, the value of labour, i.e. wages, would constantly vary. Wages would be measured both before and after by a definite use value, and since the latter constantly varies in its exchange value depending on the productivity of labour, wages would change, or [in other words] the value of labour. Value of labour presupposes in principle that living labour is not equal to its product, or, what is the same, that it is sold not as an acting cause, but as itself a produced effect. ‘The value of labour is constant’ means nothing further than that it is constantly measured by the quantity of labour contained in it. A product may contain more or less labour. Therefore sometimes a greater, sometimes a lesser portion of product A may exchange for product B. But the quantity of living labour which the product buys can never be greater or smaller than the done labour which it represents, for a given quantity of labour is always a given quantity of labour, whether it exists in the form of objectified or in the form of living labour. Thus if more or less of a product is given for a specific quantity of living labour, i.e. if wages rise and fall, then this comes about not because the value of labour rose or fell, for the value of a specific quantity of labour is always equal to the same specific quantity of labour, but rather because the products have cost more or less labour, because a greater or lesser quantity of the products thus represents the same quantity of labour. Thus the value of labour remains constant. Only the value of the products changes, i.e. the productivity of labour changes, not its values. This is the pith of the theory of Malthus, if you can call such a shallow fallacy a theory. First of all, a product which has cost only half a working day may suffice for me to live and work a whole day. Whether or not the product possesses this quality depends not on its value, i.e. the labour time bestowed on it, but rather on its use value, and the exchange which takes place in this regard between living labour and the product of labour is not an exchange between both as use values, but rather their relation lies on the one side in the use value of the product, on the other side in the conditions of the existence of living labour capacity. Now, if objectified labour were exchanged for living labour, then according to the laws of exchange value the product which = half a day of work could only buy half a day of living labour, even though the worker could live from it for a whole day of work; and if his entire working day were to be bought, then he would have to obtain a whole working day in the product, with which, according to the assumption, he could live for two working days. But on the basis of capital, living labour and done labour do not exchange with one another as exchange values, as identical quantities: the same quantity of labour in objectified form as value being equivalent to the same quantity of labour in living form. Rather, what is exchanged is a product, and labour capacity, which is itself a product. Labour capacity is not = to the living labour which it can do, = to the quantity of labour which it can get done – this is its use value. It is equal to the quantity of labour by means of which it must itself be produced and can be reproduced. The product is thus in fact exchanged not for living labour, but for objectified labour, labour objectified in labour capacity. Living labour itself is a use value possessed by the exchange value [, labour capacity,] which the possessor of the product [, the capitalist,] has acquired in trade, and whether he has acquired less or more of this living labour than he has spent in the form of the product [, wages,] for labour capacity depends on the amount of living labour paid to the worker in the product. If an amount of labour were exchanged for an amount of labour, regardless of whether it were living or objectified, then of course every amount of labour would be equal to itself and its value equal to its amount. The product of half a working day thus could buy only half a working day. But then in fact no wages would exist, and no value of labour. Labour would have no value distinct from that of its product or the equivalent of its product, no specific value, and it is precisely the latter which constitutes the value of labour, wages.

From the fact, therefore, that a specific quantity of labour = a specific quantity of labour, or also that a specific quantity = itself, from the great discovery that a specific quantity is a specific quantity, Mr Malthus concludes that wages are constant, that the value of labour is constant, namely = to the same amount of labour objectified. This would be correct if living labour and stored-up labour were exchanged for one another as exchange values. But then there would exist neither value of labour, nor wages, nor capital, nor wage labour, nor Malthus’s inquiries. All of these are based on the fact that living labour appears as a use value and living labour capacity as an exchange value opposite the labour stored up in capital. Malthus calmly proceeds: ‘The same holds if capital and profits enter into the computation of value and the demand for labour varies.’[110] Here we have the whole profundity. As soon as capital and profits are introduced, living labour capacity begins to be bought, and therefore a smaller portion of stored-up labour is exchanged for a larger portion of living labour. It is a general characteristic of this profundity that the entry of capital, which posits wage labour and which for the first time transforms labour into wage labour and labour capacity into a commodity, introduces no change whatever, either into the realization of labour or into the realization of stored-up labour. Capital, a specific form of the relation of labour to its product and to its value, is, according to Malthus, ‘entering’ without changing anything. It is just as if he allowed of no change in the constitution of the Roman Republic other than the introduction, the ‘entering of emperors’. He continues: ‘If an increased reward of the labourers takes place without an increase in the produce, this is possible only with a fall of profits … To obtain any given portion of the produce the same quantity of labour is necessary as before, but profit being diminished, the value of the produce is decreased; while this diminution of profits in reference to the value of wages is just counterbalanced by the increased quantity of labour necessary to procure the increased produce awarded to the labourer, leaving the value of labour the same as before.’ (p. 33, 34 loc. cit. Notebook IX, 29.) According to the presupposition, the product contains the same quantity of labour. But its value is supposed to have diminished because profits have fallen. However, if the labour time contained in the product has remained the same, how can profits fall? If wages rise while total labour time remains the same – not for momentary causes such as e.g. that competition has become favourable for the workers – then this means nothing other than that the productivity of labour has fallen, that a greater amount of time is necessary to reproduce labour capacity; that, therefore, a larger part of the living labour set in motion by capital falls to necessary labour and a smaller part to surplus labour. Let us leave these trivia for later. Only the following final quotation now for the sake of completeness: ‘Inversely in the opposite case. A smaller quantity of the produce would be awarded to the labourer and profits would rise. A given quantity of produce, which had been obtained by the same quantity of labour as before, would rise in value on account of the rise of profits; while this rise of profits, in reference to the wages of the labourer, would be balanced by the smaller quantity of labour necessary to obtain the diminished produce awarded to the labourer.’ (M. p. 35) (loc. cit. IX, 29.) What he says on this occasion about money prices in different countries, proceeding from his principles, to be looked at later. <For example, commodity A can buy one working day; it pays only a half (the necessary half), but it exchanges for the whole. The amount of the total labour purchased by the commodity is then equal to necessary + surplus time. Thus if I know the price of necessary labour = x, then the price of the whole labour = 2x, and I could in this way appraise the newly created commodity in terms of wages, and thus establish the prices of all commodities in wages. But this would indeed be anything but a constant value. Through the confusion that in civilized countries an average time must indeed be worked for wages, say 12 hours, regardless of the wages and regardless of how many of these 12 hours are necessary or surplus labour time, Mr Carey as well – who reduces the amount of labour to working days (and indeed they can be reduced to living work days) – is led to make the assertion that, because the same capital costs constantly less labour time to reproduce, a machine of £100 will, for example, cost after a time only £50 owing to the growth of the productive forces, and hence will be the result of half as much labour time, working days or hours, whichever you like. From this Mr Carey concludes that the worker can buy, can obtain this machine, with half as many working days as before.[111] He commits the little mistake of regarding the growth of surplus labour time as if it had been gained for the worker, whereas the whole matter comes down to just the opposite, namely that the worker spends less of his whole working day working for himself, and more for capital, hence that the objective power of capital grows rapidly over against him, in a specific relation with the increase of the productive forces. Mr Carey lets the worker buy or borrow the machine; in short, he transforms him into a capitalist. And he is supposed to achieve this increased power over capital precisely because the reproduction of a specific quantity of capital costs less necessary labour, i.e. less paid labour, thus wages fall in relation to profit. In America, as long as the worker there still appropriates a part of his surplus labour for himself, he may accumulate enough to become e.g. a farmer etc. (although that too is already coming to a halt now). In places where wage labour in America can still get somewhere rapidly, this happens through the reproduction of earlier modes of production and property on the foundation of capital (e.g. the independent peasantry). In short, he regards the working days as working days belonging to the worker, and instead of concluding that he has to produce more capital in order to be employed for the same labour time, he concludes that he has to work less in order to buy the capital (to appropriate the conditions of production for himself).[112] If he produced 20 machines and can now produce 40 owing to increased productivity, then indeed the single machine becomes cheaper, but, because a smaller part of the working day is necessary in order to produce a given quantity of it, it does not follow that the product of the working day rose for the worker, but rather the reverse, that less living labour is employed for the production of a given quantity of machinery. By the way, Mr Carey, whose aim is harmony, himself finds that if the rate of profit declines, then the gross profit rises, because an ever larger capital is required in proportion to employed living labour, and it therefore becomes ever more impossible for the worker to appropriate the necessary sum of capital, the minimum of capital required for the productive employment of labour at the new stage of production. A fractional part of the capital requires less labour time for its reproduction, but a larger mass of capital is required in order to realize the lesser labour time. The growth of the productive forces expresses itself in a continuous decline of the part of capital consisting of labour compared with that laid out in advances, machinery etc. Carey’s entire bad joke, which was of course grist to Bastiat’s mill, rests on his transformation of the labour time or working days necessary for production into labour time belonging to the worker, whereas this time belongs in fact to capital, and an ever smaller portion of it remains for the worker in proportion to the growth in the productive force of labour. The less living labour time a given capital has to buy – or, the greater the total sum of the capital and the less the living labour employed by it relative to its size – the greater, according to Mr Carey, the chance for the worker to become owner of capital, because capital is reproduced by less living labour. The greater the capital and the smaller the number of workers it employs, relatively, the greater the chance these workers have of becoming capitalists, for has not capital now been reproduced with fewer working days? Cannot it therefore also be bought, gained with fewer working days? Take a capital of £100, employing 50 on advances, 50 on labour, and making 50% profit, for the decline of the rate of profit is Carey’s chief hobby horse and belongs with his theory. Let each £ in wages be equal to 1 working day = 1 worker. Now take another capital of £16,000, which uses 14,500 in advances, 1,500 in wages (let this also = 1,500 workers) and makes only 20% profit. In the first case the product = 150; in the second (for convenient calculation’s sake let the fixed capital turn over in one year) = 19,200 (3,200 profit). Here we have the most advantageous case for Mr Carey. The rate of profit has declined from 50% to 20, i.e. by 3/5 or by 60%. In the one case, a product of 50 is the result of 50 living work days. In the other case, a product of 3,200 by 1,500 workers. In the first case the result of 1 working day a product of 1; in the second the result of 1 working day a product of 2 2/15. In the second case less than half the labour time is necessary to produce a value of 1 as in the first. Now, does this mean that in the second case half the worker’s day produces 1/15 for himself, while the other produces only 1 in twice the time, i.e. that he is on the high road to becoming a capitalist? He would first have to acquire a capital of £16,000, and buy alien labour instead of working himself, before this decrease in necessary labour time would aid him in the least. All it has done this way is created an infinite gap between his labour and the conditions of its employment, and decreased the rate of necessary labour, thus, in proportion to the first relation, thrown more than 6 times as many workers into the street. These workers thrown into the street are now supposed to console themselves with the thought that if they had the conditions to work independently, or rather to work as capitalists, then they themselves would have to hire fewer workers. In the first case the entire capital necessary is £100, and there is more of a chance here for the individual worker in an exceptional case to save up enough, and, with a special combination of luck, himself become a capitalist at the same level as capitalist A. The labour time which the worker works is the same with A and B, although the total sum of working days needed by the capitalists is essentially different. For every 6 workers needed by the first capitalist, the second needs not quite 1. The remainder therefore have to work just as much and more surplus time. That capital needs fewer living work days at the stage of production to which it has risen along with the forces of production is the same thing, according to Carey, as that the worker needs fewer working days to appropriate capital for himself; probably with the working days of the un-‘occupied’ workers.> Because the capitalist needs fewer workers to realize his immense capital, the worker employed by him can, with less labour, make the greater capital his own. Such is the logic of Mr Carey, the harmonizer.

In connection with Ricardo’s theory, Wakefield says (Notebook VII, p. 74) loc. cit. p. 231 note:

‘Treating labour as a commodity, and capital, the produce of labour, as another, then, if the value of these two commodities were regulated by equal quantities of labour, a given amount of labour would, under all circumstances, exchange for that quantity of capital which had been produced by the same amount of labour; antecedent labour would always exchange for the same amount as present labour … But the value of labour, in relation to other commodities, in so far, at least, as wages depend upon share, is determined, not by equal quantities of labour, but by the proportion between supply and demand.’[113]

Dormant capital. Increase of production without previous increase of capital. Bailey[edit source]

<Bailey: Money and its Vicissitudes in Value etc., London, 1837 (Notebook V, p. 26 seq.), has remarks about dormant capital which can be set in motion through faster circulation (according to him, through a greater volume of currency; he should have said money) and tries to demonstrate that if capital were always fully employed in a country, then no increase of demand could bring about an increase of supply. The concept of dormant capital belongs within circulation, since capital which is not in circulation is asleep. The relevant quotations are: ‘Much capital and productive skill may exist in an inert state. Those economists are wrong who believe that the number of labourers and the quantity of capital are certain definitive powers who ought inevitably to produce a determinate result in any country where they exist.’ (p. 54.) ‘Far from the amount of commodities which the existing producers and the existing capital bring to market, being fixed and determined, it is subject to a wide range of variation.’ (p. 55.) Thus ‘not essential to an increase of production that new capital or new labourers should arise’ (e.g. in a country where there is a want of precious metals) … ‘Some commodities or, what is the same, the power to produce them, may be in excess at one place, other commodities at another place likewise, and the holder of each wishing to exchange their articles for those held by the other, but kept in a state of non-intercourse for want of a common medium of exchange, and in a state of inaction because they have no motive for production.’ (55, 56.) In the circulation of capital, money appears doubly, as the transformation of capital into money as well as realization of the price of the commodity; but here this positing of prices is not a formality. The transformation of the product into money is here the retransformation of capital into value as such, independently existing value; capital as money or money as realized capital. Secondly, in the role of mere medium of circulation; this is where it serves merely to retransform capital into the conditions of production. In this second moment, a definite amount of money has to be present at once in the form of wages, as medium of circulation, means of payment. Now the fact that money plays this double role in the circulation of capital makes it appear in all crises as if money were lacking as medium of circulation, whereas capital lacks value and hence cannot monetize itself. The mass of circulating money may even increase at the same time. A particular section must be made for the new aspects of money when posited as moment of the circulation of capital, partly as the medium of its circulation, partly as capital’s realized value, as itself capital; when we speak of interest etc.> <Bailey continues: ‘The labour made active by no means depends on a country’s available capital alone. It depends on whether food, tools and raw materials are distributed slowly or rapidly to those parts where it is wanted; whether it circulates with difficulty or not, whether it exists for long intervals in inert masses, and so as a result does not furnish sufficient employment to the population.’ (56, 57.) (Gallatin’s example, loc. cit. 68, of the western counties of Pennsylvania.)[114] ‘Political economists are inclined to regard a given quantity of capital and a given number of workers as production instruments of a uniform power or operating with a certain uniform intensity … The producer who employs a certain capital may have his products on hand a long time or a short, and while he waits for the occasion to exchange them, his power of producing is stopped or retarded, so that in a given period, such as one year e.g., he may produce only half of what he would, had a prompt demand been present. This remark is equally appropriate to the labourer who is his instrument. The adjustment of the various occupations of men in society to each other must, at least imperfectly, be effected. But there is a wide distance between the stages in which it is realized – every expedient that facilitates traffic is a step towards this adjustment. The more unimpeded and easy the interchange of commodities becomes, the shorter will be those unproductive intervals, in which men, eager for work, seem separated by an impassable barrier from the capital … which, although close at hand, is condemned to barren inertness.’ (p. 59–60.) ‘General principle, that a new demand will be met by fresh exertions; by the active employment of capital and labour before dormant, and not by the diversion of productive power from other objects. The latter possible only if the employment of capital and labour in a country were capable of no further growth. The exportation of the goods perhaps does not directly set new labour in motion, but it does then absorb commodities on hand as dead stock, and sets at liberty capital tied up in an unproductive state.’ (p. 65.) ‘Those who assert that an influx of money cannot promote the production of other commodities, since these commodities are the sole agents of production, prove that production cannot be enlarged at all, for it is required for such an enlargement that food, raw materials, and tools should be previously augmented, which in fact is maintaining that no increase of production can take place without a previous increase’ (but is this not the economic theory of accumulation?) ‘or in other words, that an increase is impossible.’ (p. 70.) ‘Now it is admittedly argued that if the buyer goes to market with an increased quantity of money and if he does not raise the prices of the commodities he finds there, then he gives no additional encouragement to production: if he raises the prices, however, then if prices are proportionally enhanced, the purchasers have no greater power of demand than before.’ (73.) ‘It is to be denied as a general principle that a purchaser cannot give additional encouragement to production, unless his demand raise prices … Apart from the circumstance that the preparation of a larger quantity admits of a more effective division of labour and the employment of superior machinery, there is in this matter that sort of latitude, arising from a quantity of labour and capital lying unemployed, and ready to furnish additional commodities at the same rate. Thus does it happen that a considerable increase of demand often takes place without raising prices.’(73.)>

Wade’s explanation of capital.[115] Labour as mere agency of capital. Capital, collective force. Civilization, together with my remarks about it. (All social powers of labour as powers of capital. Manufacture. Industry. Division of labour. Formal unification of different branches of labour etc. by capital. Accumulation of capital. Transformation of money into capital. Science. Original accumulation and concentration the same. Free and coerced association. Capital as distinct from earlier forms)[edit source]

<John Wade: History of the Middle and Working Classes etc., 3rd ed., Lond., 1835 (Notebook p. 20) says: ‘Labour is the agency by which capital is made productive of wages, profit, or revenue.’ (p. 161.) ‘Capital is stored up industry, provided to develop itself in new and equivalent forms; it is collective force.’ (p. 162.) ‘Capital is only another name for civilization.’ (164.) Like all productive powers of labour, i.e. those which determine the degree of its intensity and hence of its extensive realization, the association of the workers – the cooperation and division of labour as fundamental conditions of the productivity of labour – appears as the productive power of capital. The collective power of labour, its character as social labour, is therefore the collective power of capital. Likewise science. Likewise the division of labour, as it appears as division of the occupations and of exchange corresponding to them. All social powers of production are productive powers of capital, and it appears as itself their subject. The association of the workers, as it appears in the factory, is therefore not posited by them but by capital. Their combination is not their being, but the being [Dasein] of capital. Vis-à-vis the individual worker, the combination appears accidental. He relates to his own combination and cooperation with other workers as alien, as modes of capital’s effectiveness. Unless it appears in an inadequate form – e.g. small, self-employed capital – capital already, at a certain greater or lesser stage, presupposes concentration both in objective form, i.e. as concentration in one hand, which here still coincides with accumulation, of the necessaries of life, of raw material and instruments, or, in a word, of money as the general form of wealth; and on the other side, in subjective form, the accumulation of labour powers and their concentration at a single point under the command of the capitalist. There cannot be one capitalist for every worker, but rather there has to be a certain quantity of workers per capitalist, not like one or two journeymen per master. Productive capital, or the mode of production corresponding to capital, can be present in only two forms: manufacture and large-scale industry. In the former, the division of labour is predominant; in the second, the combination of labour powers (with a regular mode of work) and the employment of scientific power, where the combination and, so to speak, the communal spirit of labour is transferred to the machine etc. In the first situation the mass of (accumulated) workers must be large in relation to the amount of capital; in the second the fixed capital must be large in relation to the number of the many cooperating workers. But the concentration of many, and their distribution among the machinery as so many cogs (why it is different in agriculture does not belong here), is, however, already presupposed here. Case II therefore does not need to be specially examined here, but only case I. The development proper to manufacture is the division of labour. But this presupposes the (preliminary) gathering-together of many workers under a single command, just as the process through which money becomes capital presupposes the previous liberation of a certain amount of necessaries of life, raw materials and instruments of labour. The division of labour is therefore also to be abstracted away here as a later moment. Certain branches of industry, e.g. mining, already presuppose cooperation from the beginning. Thus, so long as capital does not exist, this labour takes place as forced labour (serf or slave labour) under an overseer. Likewise road building etc. In order to take over these works, capital does not create but rather takes over the accumulation and concentration of workers. Nor is this in question. The simplest form, a form independent of the division of labour, is that capital employs different hand weavers, spinners etc. who live independently and are dispersed over the land. (This form still exists alongside industry.) Here, then, the mode of production is not yet determined by capital, but rather found on hand by it. The point of unity of all these scattered workers lies only in their mutual relation with capital, which accumulates the product of their production in its hands and, likewise, the surplus values which they created above and beyond their own revenue. The coordination of their work exists only in itself, in so far as each of them works for capital – hence possesses a centre in it – without working together. Their unification by capital is thus merely formal, and concerns only the product of labour, not labour itself. Instead of exchanging with many, they exchange only with the one capitalist. This is therefore a concentration of exchanges by capital. Capital engages in exchange not as an individual, but as representing the consumption and the needs of many. It no longer exchanges as individual exchanger, but rather, in the act of exchange, represents society. Collective exchange and concentrative exchange on the part of capital with the scattered working weavers etc., whose products are collected, united through this exchange, and whose labours are thereby also united, although they proceed independently of one another. The unification of their labours appears as a particular act, alongside which the independent fragmentation of their labours continues. This is the first condition necessary for money to be exchanged as capital for free labour. The second is the suspension of the independent fragmentation of these many workers., so that the individual capital no longer appears towards them merely as social collective power in the act of exchange, uniting many exchanges, but rather gathers them in one spot under its command, into one manufactory, and no longer leaves them in the mode of production found already in existence, establishing its power on that basis, but rather creates a mode of production corresponding to itself, as its basis. It posits the concentration of the workers in production, a unification which will occur initially only in a common location, under overseers, regimentation, greater discipline, regularity and the POSITED dependence in production itself on capital. Certain faux frais de production are thereby saved from the outset. (On this whole process compare Gaskell, where special regard is had to the development of large industry in England.)[116] Now capital appears as the collective force of the workers, their social force, as well as that which ties them together, and hence as the unity which creates this force. Afterwards as before, and at every stage of the development of capital, this all continues to be mediated through the many exchanging with it as the one, so that exchange itself is concentrated in it; the social character of exchange; it exchanges socially with the workers, but they individually with it. With craft production, the main concern is the quality of the product and the particular skill of the individual worker; the master, as master, is supposed to have achieved mastery in this skill. His position as master rests not only on his ownership of the conditions of production, but also on his own skill in the particular work. With the production of capital, and from the very outset, the point is not this half-artistic relation to labour – which corresponds generally with the development of the use value of labour, the development of particular abilities of direct manual work, the formation of the human hand etc. The point from the outset is mass, because the point is exchange value and surplus value. The principle of developed capital is precisely to make special skill superfluous, and to make manual work, directly physical labour, generally superfluous both as skill and as muscular exertion; to transfer skill, rather, into the dead forces of nature. Now, with the presupposition of the rise of manufacture as the rise of the mode of production of capital (slaves are combined in themselves, because under a single master), it is presupposed that the productive force of labour, still to be brought to life by capital, does not yet exist. It is a presupposition, therefore, that necessary labour still takes up a great portion of the entire available labour time in manufacture, hence that surplus labour per individual worker is still relatively small. Now, this is compensated on one side, and the progress of manufactures is correspondingly accelerated, by the fact that the rate of profit is higher, hence that capital accumulates more rapidly in relation to its already existing amount, than it does in big industry. If out of 100 thalers 50 go for labour and surplus time = 1/5, then the value created = 110 or 10%. If out of 100 only 20 went for labour and surplus time = 1/4, then the value created = 105 or 5%. On the other side, manufacture obtains this higher profit rate only through the employment of many workers at once. The greater surplus time can be gained only by collecting together the surplus time of many workers in relation to capital. Absolute, not relative surplus time predominates in manufacture. This is even more the case originally where the scattered, independent workers still realize a part of their own surplus labour for themselves. For capital to exist as capital, to be able to live off profit, as well as to accumulate, its gain must = the sum of the surplus time of many simultaneous living work days. In agriculture, the soil itself with its chemical etc. action is already a machine which makes direct labour more productive, and hence gives a surplus earlier, because work is done here at an earlier stage with a machine, namely a natural one. This the only correct basis of the doctrine of the Physiocrats, which in this respect considers agriculture in comparison with a still quite undeveloped system of manufacture. If the capitalist employed one worker in order to live from that one’s surplus time, then he would obviously gain doubly if he himself also worked, with his own funds, for then he would gain, in addition to the surplus time, the wage paid the worker. He would lose in the process. I.e. he would not yet be in the situation of working as a capitalist, or the worker would only be his helper, and thus he would not stand in relation to him as capital.

Thus, in order that money may become transformed into capital, it is necessary not only that it should be able to set surplus labour in motion, but also that there should be a certain quantity of surplus labour, the surplus labour of a given mass of necessary labour, i.e. of many workers at once, so that their combined sum is sufficient for it not only to lead an existence as capital, i.e. to represent wealth in consumption in contrast to the worker’s life, but also to set aside surplus labour for accumulation. From the outset, capital does not produce for use value, for immediate subsistence. Surplus labour must therefore be large enough from the beginning to allow a part of it to be re-employed as capital. Thus, whenever the stage is reached where a certain mass of social wealth is already concentrated in one hand, which is objectively capable of appearing as capital, first as the exchange with many workers, later as production by many workers in combination, and is capable of setting a certain quantity of living labour capacities to work simultaneously, then, at that point, production by capital begins, which thus from the outset appears as the collective force, the social force, the suspension of individual isolation, first that of exchange with the workers, then that of the workers themselves. The workers’ individual isolation still implies their relative independence. Hence their regroupment around the individual capital as the exclusive base of their subsistence implies full dependence on capital, complete dissolution of the ties between the workers and the conditions of production. The result will be the same – or it is the same in another form – when the point of departure is the particular form of exchange which is presupposed for capital to exchange as capital, where money must already represent many exchangers or possess a buying power surpassing that of the individual and his individual surplus, one which, while belonging to an individual, is already more than individual, and belongs to him as a social function, in his capacity as representative, within exchange, of the social wealth – and it arises on the other side from the conditions of free labour. The detachment of the individual from the production conditions of labour = the regroupment of many around one capital.[117]>

‘This continual progression of knowledge and of experience,’ says Babbage, ‘is our great power.’[118] This progression, this social progress belongs [to] and is exploited by capital. All earlier forms of property condemn the greater part of humanity, the slaves, to be pure instruments of labour. Historical development, political development, art, science etc. take place in higher circles over their heads. But only capital has subjugated historical progress to the service of wealth.

<Before accumulation by capital, there is presupposed an accumulation which constitutes capital, which is a part of its conceptual determination; we can hardly call it concentration yet, because this takes place in distinction to many capitals; but if one still speaks only of capital generally, then concentration still coincides with accumulation or with the concept of capital. I.e. it does not yet form a particular aspect. However, capital does indeed exist from the outset as One or Unity as opposed to the workers as Many. And it thus appears as the concentration of workers as distinct from that of work, as a unity falling outside them. In this respect, concentration is contained in the concept of capital – the concentration of many living labour capacities for one purpose; a concentration which does not in any way need to have been established in production, or penetrated production, at the origin. Centralizing effect of capital on labour capacities, or positing of itself as the independent and external unity of these many available existences.>

<Rossi says in his Cours d’économie politique[119] (Notebook, p. 26): ‘Social progress cannot consist in the dissolution of all association, but in the replacement of the forced and oppressive associations of times past by voluntary and equitable associations. The highest degree of isolation is the condition of the savage; the highest degree of forced, oppressive association is barbarism. Apart from these extremes, history shows us a great diversity of varieties and shadings. Perfection is found in voluntary associations, which by their union multiply the forces, without taking away the energy, the morality and the responsibility of individual authority.’ (p. 354.) Under capital, the association of workers is not compelled through direct physical force, forced labour, statute labour, slave labour; it is compelled by the fact that the conditions of production are alien property and are themselves present as objective association, which is the same as accumulation and concentration of the conditions of production.>

Rossi. What is capital? Is raw material capital? Wages necessary for it? (Approvisionnement, capital?)[edit source]

<The way of conceiving capital in its physical attribute only, as instrument of production, while entirely ignoring the economic form which makes the instrument of production into capital, entangles the economists in all manner of difficulties. Thus Rossi asks, loc. cit. (Notebook, 27): ‘Is the raw material truly an instrument of production? Is it not rather the object on which the productive instruments must act?’ (p. 367.) Thus capital is entirely identical for him here with the instrument of production in the technological sense, according to which every savage is a capitalist. (Which Mr Torrens in fact asserts in the case of the savage who throws a stone at a bird.)[120] Incidentally, even from the standpoint of the purely physical abstraction – i.e. of abstraction from the economic category itself – Rossi’s remark is one-sided and shows only that he has not understood his teachers in England. Accumulated labour used as instrument for new production; or produce pure and simple applied to production; the raw material is employed for production, i.e. submitted to transformation, just as well as the instrument, which is also a product. The finished result of production in turn becomes a moment of the production process. The statement means nothing more than that. Within the production process it may figure as raw material or as instrument. But it is an instrument of production not in so far as it serves as an instrument within the direct production process, but rather in so far as it is a means of the renewal of the production process itself – one of its presuppositions. More important and more to the point is the question whether the approvisionnement forms a part of capital, i.e. wages, and here the entire confusion of the economists is revealed. ‘It is said that the worker’s payment is capital, because the capitalist advances it him. If all workers’ families had enough to live for a year, there would be no wages. The worker could say to the capitalist: you advance the capital for our common project, and I contribute the labour; the product will be divided among us in such-and-such proportions. As soon as it is realized, each will take his share.’ (p. 369.) ‘Then there would be no advance to the workers. They would nevertheless consume even if the work stood still. What they would consume would belong to the consumption fund, and not at all to capital. Therefore: the advances to the workers are not necessary. Hence wages is not a constituent element of production. It is an accident, a form of our state of society. Capital, labour, land, by contrast, are necessary in order to produce. Secondly: the word wages is used in a double sense: one says that wages are a capital, but what do wages represent? Labour. He who says wages says labour and vice versa. Thus if the wages advanced are a component of capital, then there would be only two instruments of production to speak of: capital and land.’ (p. 370.) And further: ‘Basically the worker consumes not the capitalist’s possessions but his own; what is given to him as reward of labour is his proportional share of the product.’ (p. 370.) ‘The capitalist’s contract with the worker is not among the phenomena of production … The entrepreneur lends himself to this agreement, since it may facilitate production. But this agreement is nothing but a second operation, an operation of a quite different nature, grafted onto a productive operation. In another organization of labour it may disappear. Even today there are kinds of production where it has no place. The part of the fund which the entrepreneur devotes to the payment of wages does not make up a part of capital … It is a separate operation, which undoubtedly may speed the course of production, but which cannot be termed a direct instrument of production.’ (370.) ‘To conceive labour power, while abstracting from the workers’ means of subsistence during production, is to conceive a being existing only in the mind. He who says labour, who says labour power, thereby says worker and means of subsistence, labourer and wages … the same element reappears under the name of capital; as if the same thing could be simultaneously part of two different instruments of production.’ (370, 371.) Now here there is a great deal of confusion, legitimate because Rossi takes the economists at their word and equates the instrument of production as such with capital. First of all he is quite right that wage labour is not an absolute form of labour, but he forgets in the process that capital is not an absolute form of the means and materials of labour either, and that these two forms are two different moments of one and the same form, and hence rise and fall together; that it is nonsensical, therefore, for him to speak of capitalists without wage labourers. [Note] his example of the workers’ families who can live for a year without the capitalists, hence are owners of their conditions of production, who perform their necessary labour without the permission of Mr Capitalist. The capitalist whom Rossi has approaching the workers with his proposal thus is no other than a producer of instruments of production – the solicitation means nothing more than a division of labour mediated through exchange with the outside. The two then divide up the common product among themselves even without any agreement – through simple exchange. The exchange is the act of division. A further agreement is not necessary. What these worker families would then exchange would be surplus labour, absolute or relative, made possible for them by the instrument – either new secondary labour in addition to their old labour, from which they could live year after year before the appearance of the c[apitalist], or through the application of the instrument in their old branch of work. Here Mr Rossi makes the worker the owner and vendor of his surplus labour, and has thereby happily extinguished the last trace which might brand him a wage labourer, but has also thereby wiped out the last trace which makes the instrument of production into capital. It is true that the worker ‘basically does not consume the capitalist’s possessions, but his own’, but not exactly as Mr Rossi means, because it is only a proportional part of the product, but rather because it is a proportional part of his product, and because, if the semblance of exchange is stripped away, the payment consists of the fact that he works a part of the day for himself and another part for the capitalist, but only so long as he obtains permission to work at all, as his work permits this division. The act of exchange itself, as we have seen, is not a moment of the direct production process, but rather one of its conditions. Within the total production process of capital, which includes the different moments of its exchanges, its circulation, this exchange is, however, posited as a moment of the total process. But, says Rossi: wages appear twice in the account: once as capital, the other time as labour; thus the wage represents two distinct instruments of production. If the wage represents the instrument of production which is labour, then it cannot represent the instrument of production which is capital. Here another muddle, arising because Rossi takes the orthodox economic distinctions seriously. Wages figure only once in production, as a fund destined to be transformed into wages, as virtual wages. As soon as they have become real wages, they are paid out, and then only figure in consumption as the worker’s revenue. But what is exchanged for wages is labour capacity, and this does not figure in production at all, but only in the use made of it – labour. Labour appears as the instrument of the production of value because it is not paid for, hence not represented by wages. As the activity which creates use values, it likewise has nothing to do with itself as paid labour. In the hand of the worker, the wage is no longer a wage, but a consumption fund. It is wages only in the hand of the capitalist, i.e. the part of capital destined to be exchanged for labour capacity. It has reproduced a saleable labour capacity for the capitalist, so that in this regard even the worker’s consumption takes place in the service of the capitalist. He does not pay for labour itself at all, only for labour capacity. This he can do, however, only if this capacity is set to work. If the wage appears twice, it is not because it represents two different instruments of production, but because it appears the first time from the viewpoint of production, the second time from the viewpoint of distribution. This specific form of distribution, however, is not an arbitrary arrangement which could be different; it is, rather, posited by the form of production itself, is only one of its own moments considered from another angle. The value of the machine certainly forms a part of the capital laid out in it; but the machine does not produce, as value, although it brings the manufacturer income. The wage does not represent labour as an instrument of production, any more than value represents the machine as instrument of production. It represents only labour capacity, and, since the latter’s value exists separately from it as capital, a part of the capital. In so far as the capitalist appropriates alien labour and buys new alien labour with it, the wage – i.e. the representative of labour – does, if Mr Rossi wishes to put it this way, appear doubly, (1) as the property of capital, (2) as representative of labour. What actually worries Rossi is that the wage appears as the representative of two instruments of production, of capital and of labour; he forgets that labour as a productive force is incorporated in capital, and that, as labour in esse, not in posse,[121] it is in no way an instrument of production distinct from capital, but is, rather, that without which capital would not be an instrument of production. As for the distinction between wages as forming a part of capital and at the same time the worker’s revenue, we will come to that in the section on profit, interest, with which we shall conclude this first chapter on capital.>

Malthus. Theory of value and of wages. (Capital to do with proportion, labour only with portion. See my remarks on surplus value and profit.) Ricardo’s theory. (Carey contra Ricardo.) Malthus: the wage [has] nothing to [do] with proportion. Malthus’s theory of value[edit source]

<In connection with the above-mentioned work, The Measure of Value etc., Malthus returns to the theme again in his Definitions in Political Economy etc., London, 1827. He remarks in the latter: ‘No writer that I have met with, anterior to Mr Ricardo, ever used the term wages or real wages, as implying proportions. Profits, indeed, imply proportions; and the rate of profits had always justly been estimated by a percentage upon the value of the advances. But wages had uniformly been considered as rising and falling, not according to any proportion which they might bear to the whole produce obtained by a certain quantity of labour, but by the greater or smaller quantity of any particular produce received by the labourer, or by the greater or smaller power which such produce would carry of commanding the necessaries and conveniences of life.’ (M. 29, 30.) (Notebook X, p. 49.) The only value produced by capital in a given production is that added by the new amount of labour. This value, however, consists of necessary labour, which reproduces wages – the advances made by capital in the form of wages – and of surplus labour, hence surplus value above and beyond the necessary. The advances made in the form of material and machine are merely transposed from one form into another. The instrument passes into the product just as much as does the raw material, and its wearing-out is at the same time the product’s formation. If raw material and instrument cost nothing, as in some extractive industries where they are still almost = 0 (the raw material always, in every extractive industry, metal and coal mining, fishing, hunting, lumbering in virgin forests etc.), then they also add absolutely nothing to the value of the production. Their value is the result of previous production, not of the immediate production in which they serve as instrument and material. Surplus value can therefore be estimated only in proportion to necessary labour. Profits is only a secondary, derivative and transformed form of the surplus value, the bourgeois form, in which the traces of its origin are extinguished. Ricardo himself never grasped this, because he (1) always speaks only of the division of an available, ready amount, not of the original positing of this difference; (2) because this understanding would have forced him to see that there is a relation between capital and labour which is entirely different from that of exchange; and he was not allowed the insight that the bourgeois system of equivalents turns into appropriation without equivalent and is based on that; (3) his statement about proportionate profits and wages means only that [if] a certain total value is divided into two portions, any quantity at all is divided in two, then the magnitude of the two parts is necessarily in inverse relation.[122] And then his school justly reduced the matter to this triviality. His aim in asserting the proportionality of wages and profits was not to get to the bottom of the creation of surplus value – for since he begins with the presupposition that a given value is to be divided between wages and profit, between labour and capital, he thereby presupposes this division as self-evident – but rather, firstly, it was to counter the common determination of prices by asserting the correct one, of value, in that he showed that the limit of value is itself not affected by its distribution, different division among profits and wages; secondly: to explain not the merely transitory, but rather the continuing decline in the rate of profit, which was inexplicable to him on the presupposition that a fixed portion of value goes to labour; thirdly: in explaining the decline of profit by the rise of wages, and the latter in turn by the rise in value of agricultural products, i.e. the rising difficulty of their production, thereby at the same time to explain ground rent as not being in conflict with his determination of value. This at the same time furnished a polemical weapon for industrial capital, against the exploitation of the progress of industry by landed property. But at the same time, driven by simple logic, he had thereby proclaimed the contradictory nature of profit, of labour and of capital, despite his efforts to convince the worker afterwards that this contradictory character of profit and wages does not influence his real income, and that a proportional (not absolute) rise of wages is harmful to him, because it hinders accumulation, and the development of industry then benefits only the lazy landowner. Still, the contradictory form had been proclaimed, and Carey, who does not understand Ricardo, could therefore abuse him as the father of the communists etc., where he is again right in a sense he himself does not understand.[123] But the other economists, who, like Malthus, want to have absolutely nothing to do with the proportional (and hence contradictory) nature of wages, desire on the one hand to hush up the contradiction; on the other hand they cling to the notion that the worker simply exchanges a specific use value, his labour capacity, for capital, and hence gives up the productive force, the power of labour to create new value, and that he has nothing to do with the product, and hence the exchange between capitalists and workers, wages, is concerned, like every simple exchange where economic equivalents are presupposed, only with quantity, the quantity of use value. As correct as this is in one regard, it also introduces the apparent form of barter, of exchange, so that when competition permits the worker to bargain and to argue with the capitalists, he measures his demands against the capitalists’ profit and demands a certain share of the surplus value created by him; so that the proportion itself becomes a real moment of economic life itself. Further, in the struggle between the two classes – which necessarily arises with the development of the working class – the measurement of the distance between them, which, precisely, is expressed by wages itself as a proportion, becomes decisively important. The semblance of exchange vanishes in the course [Prozess] of the mode of production founded on capital. This course itself and its repetition posit what is the case in itself, namely that the worker receives as wages from the capitalist what is only a part of his own labour. This then also enters into the consciousness of the workers as well as of the capitalists. The question for Ricardo is actually only what proportion of the total value do necessary wages form in the course of development? It always remains only the necessary wage; hence its proportional nature does not interest the worker, who always obtains the same minimum, but only the capitalist, whose deductions from the total income vary, without the workers obtaining a greater amount of use values. But the fact that Ricardo formulated the contradictory nature of profit and wages, even if for quite different purposes, already shows by itself that the mode of production founded on capital had, by his time, taken on a form more and more adequate to its nature. In the cited Definitions (Notebook IX, p. 49, 50), Malthus remarks in regard to Ricardo’s theory of value: ‘Ricardo’s assertion, that as the value of wages rises, profits proportionally fall and vice versa, is true only on the presupposition that commodities in which the same amount of labour is contained, are always of the same value, and this is true in 1 case out of 500, and necessarily so, because with the progress of civilization and improvement, the quantity of fixed capital employed steadily grows, and makes more various and unequal the times of the returns of the circulating capital.’ (loc. cit. 31, 32.) (This concerns prices, not value.) Malthus remarks in connection with his own discovery of the true standard of value: ‘Firstly: I had nowhere seen it stated, that the ordinary quantity of labour which a commodity will command must represent and measure the quantity of labour worked up in it, with the addition of profits … By representing the labour worked up in a commodity, with the addition of profits, labour represents the natural and necessary conditions of its supply, or the elementary costs of its production … Secondly: I had nowhere seen it stated that, however the fertility of the soil might vary, the elementary costs of producing the wages of a given quantity of labour must always necessarily be the same.’ (196, 197.) Means only: wages always equal to the labour time necessary for their production, which varies with the productivity of labour. The quantity of commodities remains the same. ‘If one regards value as the general power of purchase of a commodity, then this relates to the purchase of all commodities, of the general mass of commodities. But this is quite unmanageable. … Now, if any one [should] object, it cannot for a moment be denied that labour best represents an average of the general mass of productions.’ (205.) ‘A large class of commodities, like raw produce, rise with the progress of society, compared with labour, while the manufactured articles fall. Thus not far from truth to say that the average mass of commodities which a given quantity of labour will command in the same country, during the course of some century, may not very essentially vary.’ (206.) ‘Value must always be value in exchange for labour.’ (224, note, loc. cit.) In other words, the doctrine is: the value of a commodity, the labour worked up in it, is represented by the living work days which it commands, for which it may be exchanged, and hence by wages. Living work days contain both time and surplus time. Let us do for Malthus the biggest favour we can do for him. Let us namely assume that the relation of surplus labour to necessary labour, hence the relation of wages to profit, always remains constant. To begin with, the fact that Mr Malthus speaks of the labour worked up in the commodity with the addition of profits already demonstrates his confusion, since these profits can form nothing other than a part of the labour worked up. What he has in mind with this is profits above and beyond labour worked up, which are supposed to come out of fixed capital etc. This can only affect the distribution of the total profit among the different shareholders, but not its total quantity, for if everyone obtained for his commodity the labour worked up in it + profits, then where would these latter come from, Mr Malthus? If one person obtains the labour worked up in his commodity + profit, then the other has to obtain labour worked up − profit, profit here regarded as the excess quantity of real surplus value. This is therefore null and void. Now posit that the labour worked up = 3 working days, and, if the proportion of surplus labour time is as 1:2, then these have been obtained in payment for 1 1/2 working days. The workers indeed worked 3 days, but each of them was paid only half a day. Or, the commodity which they obtain for their 3 days of labour had only 1 1/2 days worked up in it. Thus, all other relations being the same, the capitalist would obtain 6 working days for the 3 working days worked up in his commodity. (The matter is correct only because surplus labour time is posited as = to necessary labour time, hence in the second case only the first is repeated.) (Relative surplus value obviously restricted not only by the relation cited earlier, but also by the degree to which the product enters into the worker’s consumption. If the capitalist could obtain twice the number of cashmere shawls, owing to an increase in the productive forces, and if he sold them at their value, then he would have created no relative surplus value because the workers do not consume such shawls, and thus the time necessary for the reproduction of their labour capacity would remain the same as before. But this not so in practice, because in such cases the price rises above the value. At this point in the theory it does not concern us yet because capital is here regarded in itself, not in a particular branch.) That means, he will pay the wages of 3 days and get 6 days of work; with each 1/2 day he buys a day; hence with 6/2 days, = 3 days, 6 days. To assert, then, that the working days a commodity commands, or the wages it pays, express its value is to understand absolutely nothing of the nature of capital and wage labour. It is the pith of all value-creation and of capital-creation that objectified working days command a greater number of living ones. It would have been correct if Malthus had said that the living labour time a commodity commands expresses the measure of its realization, the measure of the surplus labour it posits. But this would only be the tautology that it posits more labour to the extent that it posits more, or it would be the expression of the opposite of what Malthus wants, that surplus value arises because the living labour time a commodity commands never represents the labour worked up in it. (Now we have finally done with Malthus.)>

Aim of capitalist production value (money), not commodity, use value etc. Chalmers.[124]Economic cycle. – Circulation process. Chalmers[edit source]

<We have demonstrated above, in the development of the concept of capital, that it is value as such, money, which both preserves itself through circulation and also increases itself through exchange with living labour. That, hence, the aim of producing capital is never use value, but rather the general form of wealth as wealth. The cleric Th. Chalmers, in the otherwise in many respects ridiculous and repulsive work: On Political Economy in Connection with the Moral State and Moral Prospects of Society, 2nd. ed., Lond., 1832, has correctly struck upon this point, without at the same time falling into the asininity of types like Ferrier etc., who confuse money as the value of capital with the really available metallic money.[125] In crises, capital (as commodity) is not exchangeable, not because too few means of circulation are available; but, rather, it does not circulate because it is not exchangeable. The importance assumed by cash in times of crisis arises only because, while capital is not exchangeable for its value – and only for that reason does its value appear opposite it in the money form – there are obligations to pay off; alongside the interrupted circulation a forced circulation takes place. Chalmers says (Notebook IX, p. 57): ‘When a consumer refuses certain commodities, it is not always, as is assumed by the new economists, because he wants to purchase others in preference, but because he wants to reserve entire the general power of purchasing. And when a merchant brings commodities to market, it is generally not in quest of other commodities to be given in return for them … he will extend his general power of purchase of all commodities. It is useless to say that money is also a commodity. The real metallic money for which a merchant has any use does not amount to more than a small fraction of his capital, even of his monied capital; all of which, though estimated in money, can be made, on the strength of written contracts, to describe its orbit, and be effective for all its purposes, with the aid of coin amounting to an insignificant proportion of the whole. The great object of the monied capitalist, in fact, is to add to the nominal amount of his fortune. It is that, if expressed pecuniarily this year by £20,000 e.g., it should be expressed pecuniarily next year by £24,000. To advance his capital, as estimated in money, is the only way in which he can advance his interest as a merchant. The importance of these objects for him is not affected by fluctuations in the currency or by a change in the real value of money. For example, in one year he comes from 20 to 24,000 pounds; through a fall in the value of money he may not have increased his command over the comforts etc. Nevertheless, this is his interest just as much as if money had not fallen; for else his monied fortune would have remained stationary and his real wealth would have declined in the proportion of 24 to 20 … Commodities’ (i.e. use value, real wealth) ‘thus not the terminating object of the trading capitalist.’ (The illusion of the Monetary System, however, was that it regarded real metallic money (or paper, would change nothing), in short, the form of value, as real money, as the general form of wealth and of self-enrichment, whereas precisely as money increases as the accumulation of general power of purchase, it undergoes a relative decline in its specific form as medium of exchange or also as realized hoard.) As assignation in real wealth or productive power [the capitalist’s money] gains a thousand forms, ‘quite apart from expenditure of his revenue in purchases for the sake of consumption. In the outlay of his capital, and when he purchases for the sake of production, money is his terminating object’ (not coin, nota bene). (164–6.)

‘Profit,’ says the same Chalmers, ‘has the effect of attaching the services of the disposable population to other masters, besides the mere landed proprietors, … while their expenditure reaches higher than the necessaries of life.’ (78. Notebook IX, p.53.)>

In the book just referred to, Chalmers calls the whole circulation process the economic cycle: ‘The world of trade may be conceived to revolve in what we shall call an economic cycle, which accomplishes one revolution by business coming round again, through its successive transactions, to the point from which it set out. Its commencement may be dated from the point at which the capitalist has obtained those returns by which his capital is replaced to him: whence he proceeds anew to engage his workmen; to distribute among them, in wages, their maintenance, or rather the power of lifting it; to obtain from them in finished work, the articles in which he specially deals; to bring these articles to market, and there terminate the orbit of one set of movements, by effecting a sale, and receiving in its proceeds, a return for the whole outlays of the period. The intervention of money alters nothing in the real character of this operation … ’ (85 loc. cit.) (Notebook, p. 54, 55.)

Difference in return. Interruption of the production process (or rather its failure to coincide with the labour process). Total duration of the production process. (Agriculture. Hodgskin.) Unequal periods of production[edit source]

The difference in the return, in so far as it depends on the phase of the circulation process which coincides with the direct production process, depends not only on the longer or shorter labour time required to complete the article (e.g. canal building etc.), but also, in certain branches of industry – agriculture – on the interruptions of the work which are due to the nature of the work itself, where on the one hand the capital lies fallow, and, on the other, labour stands still. Thus the example given by A. Smith, that wheat is a crop taking 1 year, the ox a crop taking 5 years, etc.[126] Therefore 5 years of labour are employed on the latter, only 1 on the former. Little labour is employed e.g. on cattle raised on pasture. At the same time, in agriculture, the labour applied e.g. during the winter is also little. In agriculture (and to a greater or lesser degree in many another branch of production) there are interruptions given by the conditions of the production process itself, pauses in labour time, which must be begun anew at the given point in order to continue or to complete the process; the constancy of the production process here does not coincide with the continuity of the labour process. This is one moment of the difference. Secondly: the product generally requires a longer time to be completed, to be put into its finished state; this is the total duration of the production process, regardless of whether interruptions take place in the operations of labour or not; the different duration of the production phase generally. Thirdly: after the product is finished, it may be necessary for it to lie idle for some time, during which it needs relatively little labour, in order to be left in the care of natural processes, e.g. wine. (This will be, conceptually, approximately the same case as I.) Fourthly: a longer time to be brought to market, because destined for a more distant market. (This coincides conceptually with case II.) Fifthly: The shorter or longer period of the total return of a capital (its total reproduction), in so far as it is determined by the relation of fixed capital and circulating capital, is concerned obviously not with the immediate production process and its duration, but rather takes its character from circulation. The total capital’s period of reproduction is determined by the total process, circulation included.

‘Inequality in the periods necessary for production.’[127]

‘The difference of time required to complete the products of agriculture, and of other species of labour, is the main cause of the great dependence of the agriculturists. They cannot bring their commodities to market in less time than a year. For that whole period they are obliged to borrow from the shoemaker, the tailor, the smith, the wheelwright and the various other labourers, whose products they need and which are completed in a few days or weeks. Owing to this natural circumstance, and owing to the more rapid increase of the wealth produced by other labour than that of agriculture, the monopolizers of all the land, although they have also monopolized the legislation, are unable to save themselves and their servants, the farmers, from being the most dependent class in the community.’ (Thomas Hodgskin, Popular Polit. Econ. Four lectures etc. London, 1827, p. 147 note.) (Notebook IX, p. 44.) ‘The natural circumstance of all commodities being produced in unequal periods, while the wants of the labourer must be supplied daily … This inequality in the time necessary to complete different commodities, would in the savage state cause the hunter etc. to have a surplus of game etc., before the maker of bows and arrows etc. had any commodity completed to give for the surplus game. No exchange could be made; the bow-maker must be also a hunter and division of labour impossible. This difficulty contributed to the invention of money.’ (179, 180.) (loc. cit.)

The concept of the free labourer contains the pauper. Population and overpopulation etc.[edit source]

<It is already contained in the concept of the free labourer, that he is a pauper: virtual pauper. According to his economic conditions he is merely a living labour capacity, hence equipped with the necessaries of life. Necessity on all sides, without the objectivities necessary to realize himself as labour capacity. If the capitalist has no use for his surplus labour, then the worker may not perform his necessary labour; not produce his necessaries. Then he cannot obtain them through exchange; rather, if he does obtain them, it is only because alms are thrown to him from revenue. He can live as a worker only in so far as he exchanges his labour capacity for that part of capital which forms the labour fund. This exchange is tied to conditions which are accidental for him, and indifferent to his organic presence. He is thus a virtual pauper. Since it is further the condition of production based on capital that he produces ever more surplus labour, it follows that ever more necessary labour is set free. Thus the chances of his pauperism increase. To the development of surplus labour corresponds that of the surplus population. In different modes of social production there are different laws of the increase of population and of overpopulation; the latter identical with pauperism. These different laws can simply be reduced to the different modes of relating to the conditions of production, or, in respect to the living individual, the conditions of his reproduction as a member of society, since he labours and appropriates only in society. The dissolution of these relations in regard to the single individual, or to part of the population, places them outside the reproductive conditions of this specific basis, and hence posits them as overpopulation, and not only lacking in means but incapable of appropriating the necessaries through labour, hence as paupers. Only in the mode of production based on capital does pauperism appear as the result of labour itself, of the development of the productive force of labour. Thus, what may be overpopulation in one stage of social production may not be so in another, and their effects may be different. E.g. the colonies sent out in antiquity were overpopulation, i.e. their members could not continue to live in the same space with the material basis of property, i.e. conditions of production. The number may appear very small compared with the modern conditions of production. They were, nevertheless, very far from being paupers. Such was, however, the Roman plebs with its bread and circuses. The overpopulation which leads to the great migrations presupposes different conditions again. Since in all previous forms of production the development of the forces of production is not the basis of appropriation, but a specific relation to the conditions of production (forms of property) appears as presupposed barrier to the forces of production, and is merely to be reproduced, it follows that the development of population, in which the development of all productive forces is summarized, must even more strongly encounter an external barrier and thus appear as something to be restricted. The conditions of the community [were] consistent only with a specific amount of population. On the other side, if the barriers to population posited by the elasticity of the specific form of the conditions of production change in consequence of the latter, if they contract or expand – thus overpopulation among hunting peoples was different from that among the Athenians, in turn different among the latter from that among the Germanic tribes – then so does the absolute rate of population increase, and hence the rate of overpopulation and population. The amount of overpopulation posited on the basis of a specific production is thus just as determinate as the adequate population. Overpopulation and population, taken together, are the population which a specific production basis can create. The extent to which it goes beyond its barrier is given by the barrier itself, or rather by the same base which posits the barrier. Just as necessary labour and surplus labour together [are] the whole of labour on a given base.

Malthus’s theory, which incidentally not his invention, but whose fame he appropriated through the clerical fanaticism with which he propounded it – actually only through the weight he placed on it – is significant in two respects: (1) because he gives brutal expression to the brutal viewpoint of capital; (2) because he asserted the fact of overpopulation in all forms of society. Proved it he has not, for there is nothing more uncritical than his motley compilations from historians and travellers’ descriptions. His conception is altogether false and childish (1) because he regards overpopulation as being of the same kind in all the different historic phases of economic development; does not understand their specific difference, and hence stupidly reduces these very complicated and varying relations to a single relation, two equations, in which the natural reproduction of humanity appears on the one side, and the natural reproduction of edible plants (or means of subsistence) on the other, as two natural series, the former geometric and the latter arithmetic in progression. In this way he transforms the historically distinct relations into an abstract numerical relation, which he has fished purely out of thin air, and which rests neither on natural nor on historical laws. There is allegedly a natural difference between the reproduction of mankind and e.g. grain. This baboon thereby implies that the increase of humanity is a purely natural process, which requires external restraints, checks, to prevent it from proceeding in geometrical progression. This geometrical reproduction is the natural reproduction process of mankind. He would find in history that population proceeds in very different relations, and that overpopulation is likewise a historically determined relation, in no way determined by abstract numbers or by the absolute limit of the productivity of the necessaries of life, but by limits posited rather by specific conditions of production. As well as restricted numerically. How small do the numbers which meant overpopulation for the Athenians appear to us! Secondly, restricted according to character. An overpopulation of free Athenians who become transformed into colonists is significantly different from an overpopulation of workers who become transformed into workhouse inmates. Similarly the begging overpopulation which consumes the surplus produce of a monastery is different from that which forms in a factory. It is Malthus who abstracts from these specific historic laws of the movement of population, which are indeed the history of the nature of humanity, the natural laws, but natural laws of humanity only at a specific historic development, with a development of the forces of production determined by humanity’s own process of history. Malthusian man, abstracted from historically determined man, exists only in his brain; hence also the geometric method of reproduction corresponding to this natural Malthusian man. Real history thus appears to him in such a way that the reproduction of his natural humanity is not an abstraction from the historic process of real reproduction, but just the contrary, that real reproduction is an application of the Malthusian theory. Hence the inherent conditions of population as well as of overpopulation at every stage of history appear to him as a series of external checks which have prevented the population from developing in the Malthusian form. The conditions in which mankind historically produces and reproduces itself appear as barriers to the reproduction of the Malthusian natural man, who is a Malthusian creature. On the other hand, the production of the necessaries of life – as it is checked, determined by human action – appears as a check which it posits to itself. The ferns would cover the entire earth. Their reproduction would stop only where space for them ceased. They would obey no arithmetic proportion. It is hard to say where Malthus has discovered that the reproduction of voluntary natural products would stop for intrinsic reasons, without external checks. He transforms the immanent, historically changing limits of the human reproduction process into outer barriers; and the outer barriers to natural reproduction into immanent limits or natural laws of reproduction.

(2) He stupidly relates a specific quantity of people to a specific quantity of necessaries.[128] Ricardo immediately and correctly confronted him with the fact that the quantity of grain available is completely irrelevant to the worker if he has no employment; that it is therefore the means of employment and not of subsistence which put him into the category of surplus population.[129] But this should be conceived more generally, and relates to the social mediation as such, through which the individual gains access to the means of his reproduction and creates them; hence it relates to the conditions of production and his relation to them. There was no barrier to the reproduction of the Athenian slave other than the producible necessaries. And we never hear that there were surplus slaves in antiquity. The call for them increased, rather. There was, however, a surplus population of non-workers (in the immediate sense), who were not too many in relation to the necessaries available, but who had lost the conditions under which they could appropriate them. The invention of surplus labourers, i.e. of propertyless people who work, belongs to the period of capital. The beggars who fastened themselves to the monasteries and helped them eat up their surplus product are in the same class as the feudal retainers, and this shows that the surplus produce could not be eaten up by the small number of its owners. It is only another form of the retainers of old, or of the menial servants of today. The overpopulation e.g. among hunting peoples, which shows itself in the warfare between the tribes, proves not that the earth could not support their small numbers, but rather that the condition of their reproduction required a great amount of territory for few people. Never a relation to a non-existent absolute mass of means of subsistence, but rather relation to the conditions of reproduction, of the production of these means, including likewise the conditions of reproduction of human beings, of the total population, of relative surplus population. This surplus purely relative: in no way related to the means of subsistence as such, but rather to the mode of producing them. Hence also only a surplus at this state of development.

(3) What is not actually proper to Malthus at all, the introduction of the theory of rent – at bottom only a formula for saying that in the stage of industry familiar to Ricardo etc., agriculture remained behind industry, which incidentally inherent in bourgeois production although in varying relations – does not belong here.>

Necessary labour. Surplus labour. Surplus population. Surplus capital[edit source]

<As to production founded on capital, the greatest absolute mass of necessary labour together with the greatest relative mass of surplus labour appears as a condition, regarded absolutely. Hence, as a fundamental condition, maximum growth of population – of living labour capacities. If we further examine the conditions of the development of the productive forces as well as of exchange, division of labour, cooperation, all-sided observation, which can only proceed from many heads, science, as many centres of exchange as possible – all of it identical with growth of population. On another side, it is also inherent in the condition of the appropriation of alien surplus labour that, in addition to the necessary population – i.e. that which represents necessary labour, labour necessary for production – there should be a surplus population, which does not work. The further development of capital shows that besides the industrial part of this surplus population – the industrial capitalist – a purely consuming part branches off: idlers, whose business it is to consume alien products and who, since crude consumption has its limits, must have the products furnished to them partly in refined form, as luxury products. This idle surplus population is not what the economists have in mind when they speak of surplus population. On the contrary, it – and its business of consuming – is treated by the population fanatics as precisely the necessary population, and justly (logically) so. The expression, surplus population, concerns exclusively labour capacities, i.e. the necessary population; surplus of labour capacities. But this arises simply from the nature of capital. Labour capacity can perform its necessary labour only if its surplus labour has value for capital, if it can be realized by capital. Thus, if this realizability is blocked by one or another barrier, then (1) labour capacity itself appears outside the conditions of the reproduction of its existence; it exists without the conditions of its existence, and is therefore a mere encumbrance; needs without the means to satisfy them; (2) necessary labour appears as superfluous, because the superfluous is not necessary. It is necessary only to the extent that it is the condition for the realization of capital. Thus the relation of necessary and surplus labour, as it is posited by capital, turns into its opposite, so that a part of necessary labour – i.e. of the labour reproducing labour capacity – is superfluous, and this labour capacity itself is therefore used as a surplus of the necessary working population, i.e. of the portion of the working population whose necessary labour is not superfluous but necessary for capital. Since the necessary development of the productive forces as posited by capital consists in increasing the relation of surplus labour to necessary labour, or in decreasing the portion of necessary labour required for a given amount of surplus labour, then, if a definite amount of labour capacity is given, the relation of necessary labour needed by capital must necessarily continuously decline, i.e. part of these labour capacities must become superfluous, since a portion of them suffices to perform the quantity of surplus labour for which the whole amount was required previously. The positing of a specific portion of labour capacities as superfluous, i.e. of the labour required for their reproduction as superfluous, is therefore a necessary consequence of the growth of surplus labour relative to necessary. The decrease of relatively necessary labour appears as increase of the relatively superfluous labouring capacities – i.e. as the positing of surplus population. If the latter is supported, then this comes not out of the labour fund but out of the revenue of all classes. It takes place not through the labour of the labour capacity itself – no longer through its normal reproduction as worker, but rather the worker is maintained as a living being through the mercy of others; hence becomes a tramp and a pauper; because he no longer sustains himself through his necessary labour; hence, through the exchange with a part of capital; he has fallen out of the conditions of the relation of apparent exchange and apparent independence; secondly: society in its fractional parts undertakes for Mr Capitalist the business of keeping his virtual instrument of labour – its wear and tear – intact as reserve for later use. He shifts a part of the reproduction costs of the working class off his own shoulders and thus pauperizes a part of the remaining population for his own profit. At the same time, capital has the tendency both to posit and equally to suspend this pauperism, because it constantly reproduces itself as surplus capital. It acts in opposite directions, so that sometimes one, sometimes the other is predominant. Finally, the positing of surplus capital contains a double moment: (1) It requires a growing population in order to be set into motion; if the relative population it requires has become smaller, then it has itself become correspondingly larger; (2) it requires a part of the population which is unemployed (at least relatively); i.e. a relative surplus population, in order to find the readily available population for the growth of surplus capital; (3) at a given stage of the productive forces, the surplus value may be present, but not yet in the proportions sufficient to be employed as capital. Not only a minimum of the stage of production, but posited for its expansion. In this case surplus capital and surplus population. Likewise, a surplus population may be present, but not enough, not in the proportions required for more production. In all these investigations, the variations in sales, contraction of the market etc., in short, everything which presupposes the process of many capitals, has been intentionally abstracted away.>

A. Smith. Work as sacrifice. (Senior’s theory of the capitalist’s sacrifice.) (Proudhon’s surplus.) – A. Smith. Origin of profit. Original accumulation. Wakefield. – Slave and free labour. – Atkinson. – Profit. – Origin of profit. MacCulloch.[edit source]

<A. Smith’s view, [is] that labour never changes its value, in the sense that a definite amount of labour is always a definite amount of labour for the worker, i.e., with A. Smith, a sacrifice of the same quantitative magnitude. Whether I obtain much or little for an hour of work – which depends on its productivity and other circumstances – I have worked one hour. What I have had to pay for the result of my work, my wages, is always the same hour of work, let the result vary as it may. ‘Equal quantities of labour must at all times and in all places have the same value for the worker. In his normal state of health, strength and activity, and with the common degree of skill and facility which he may possess, he must always give up the identical portion of his tranquillity, his freedom, and his happiness. Whatever may be the quantity or composition of the commodities he obtains in reward of his work, the price he pays is always the same. Of course, this price may buy sometimes a lesser, sometimes a greater quantity of these commodities, but only because their value changes, not the value of the labour which buys them. Labour alone, therefore, never changes its own value. It is therefore the real price of commodities, money is only their nominal value.’ (ed. by Garnier, Vol. I, pp. 64–6.) (Notebook, p. 7.)[130] In the sweat of thy brow shalt thou labour! was Jehovah’s curse on Adam.[131] And this is labour for Smith, a curse. ‘Tranquillity’ appears as the adequate state, as identical with ‘freedom’ and ‘happiness’. It seems quite far from Smith’s mind that the individual, ‘in his normal state of health, strength, activity, skill, facility’, also needs a normal portion of work, and of the suspension of tranquillity. Certainly, labour obtains its measure from the outside, through the aim to be attained and the obstacles to be overcome in attaining it. But Smith has no inkling whatever that this overcoming of obstacles is in itself a liberating activity – and that, further, the external aims become stripped of the semblance of merely external natural urgencies, and become posited as aims which the individual himself posits – hence as self-realization, objectification of the subject, hence real freedom, whose action is, precisely, labour. He is right, of course, that, in its historic forms as slave-labour, serf-labour, and wage-labour, labour always appears as repulsive, always as external forced labour; and not-labour, by contrast, as ‘freedom, and happiness’. This holds doubly: for this contradictory labour; and, relatedly, for labour which has not yet created the subjective and objective conditions for itself (or also, in contrast to the pastoral etc. state, which it has lost), in which labour becomes attractive work, the individual’s self-realization, which in no way means that it becomes mere fun, mere amusement, as Fourier, with grisette-like[132] naïveté, conceives it.[133] Really free working, e.g. composing, is at the same time precisely the most damned seriousness, the most intense exertion. The work of material production can achieve this character only (1) when its social character is posited, (2) when it is of a scientific and at the same time general character, not merely human exertion as a specifically harnessed natural force, but exertion as subject, which appears in the production process not in a merely natural, spontaneous form, but as an activity regulating all the forces of nature. A. Smith, by the way, has only the slaves of capital in mind. For example, even the semi-artistic worker of the Middle Ages does not fit into his definition. But what we want here initially is not to go into his view on labour, his philosophical view, but into the economic moment. Labour regarded merely as a sacrifice, and hence value-positing, as a price paid for things and hence giving them price depending on whether they cost more or less labour, is a purely negative characterization. This is why Mr Senior, for example, was able to make capital into a source of production in the same sense as labour, a source sui generis of the production of value, because the capitalist too brings a sacrifice, the sacrifice of abstinence, in that he grows wealthy instead of eating up his product directly.[134] Something that is merely negative creates nothing. If the worker should, e.g. enjoy his work – as the miser certainly enjoys Senior’s abstinence – then the product does not lose any of its value. Labour alone produces; it is the only substance of products as values.[135] Its measure, labour time – presupposing equal intensity – is therefore the measure of values. The qualitative difference between workers, in so far as it is not natural, posited by sex, age, physical strength etc. – and thus basically expresses not the qualitative value of labour, but rather the division and differentiation of labour – is itself only a product of history, and is in turn suspended for the great mass of labour, in that the latter is itself simple; while the qualitatively higher takes its economic measure from the simple. The statement that labour time, or the amount of labour, is the measure of values means nothing other than that the measure of labour is the measure of values. Two things are only commensurable if they are of the same nature. Products can be measured with the measure of labour – labour time – only because they are, by their nature, labour. They are objectified labour. As objects they assume forms in which their being as labour may certainly be apparent in their form (as a purposiveness posited in them from outside; however, this is not at all apparent with e.g. the ox, or with reproduced natural products generally), but in which this being has, apart from itself, no other features in common. They exist as equals as long as they exist as activity. The latter is measured by time, which therefore also becomes the measure of objectified labour. We will examine elsewhere to what extent this measurement is linked with exchange, not with organized social labour – a definite stage of the social production process. Use value is not concerned with human activity as the source of the product, with its having been posited by human activity, but with its being for mankind. In so far as the product has a measure for itself, it is its natural measure as natural object, mass, weight, length, volume etc. Measure of utility etc. But as effect, or as static presence of the force which created it, it is measured only by the measure of this force itself. The measure of labour is time. Only because products ARE labour can they be measured by the measure of labour, by labour time, the amount of labour consumed in them. The negation of tranquillity, as mere negation, ascetic sacrifice, creates nothing. Someone may castigate and flagellate himself all day long like the monks etc., and this quantity of sacrifice he contributes will remain totally worthless. The natural price of things is not the sacrifice made for them. This recalls, rather, the pre-industrial view which wants to achieve wealth by sacrificing to the gods. There has to be something besides sacrifice. The sacrifice of tranquillity can also be called the sacrifice of laziness, unfreedom, unhappiness, i.e. negation of a negative state. A. Smith considers labour psychologically, as to the fun or displeasure it holds for the individual. But it is something else, too, in addition to this emotional relation with his activity – firstly, for others, since A’s mere sacrifice would be of no use for B; secondly, a definite relation by his own self to the thing he works on, and to his own working capabilities. It is a positive, creative activity. The measure of labour – time – of course does not depend on labour’s productivity; its measure is precisely nothing but a unit of which the proportional parts of labour express a certain multiple. It certainly does not follow from this that the value of labour is constant; or, follows only in so far as equal quantities of labour are of the same measured magnitude. It is then found upon further examination that the values of products are measured not by the labour employed in them, but by the labour necessary for their production. Hence not sacrifice, but labour as a condition of production. The equivalent expresses the condition of the products’ reproduction, as given to them through exchange, i.e. the possibility of repeating productive activity anew, as posited by its own product.> <By the way, Smith’s view of labour as a sacrifice, which incidentally correctly expresses the subjective relation of the wage worker to his own activity, still does not lead to what he wants – namely the determination of value by labour time. An hour of work may always be an equal sacrifice for the worker. But the value of commodities in no way depends on his feelings; nor does the value of his hour of work. Since A. Smith admits that one can buy this sacrifice sometimes more cheaply, sometimes more dearly, it becomes distinctly peculiar that it is supposed always to be sold for the same price. And he is indeed inconsistent. Later he makes wages the measure of value, not the amount of labour. The slaughter of the ox is always the same sacrifice, for the ox. But this does not mean that the value of beef is constant.> <’Now, although equal quantities of labour always have the same value as regards the worker, they appear sometimes of smaller, sometimes of larger value for him who employs the worker. He purchases them sometimes with a smaller, sometimes a larger quantity of commodities. For him, therefore, the price of labour varies like that of any other thing, although in reality it is only the commodities which are sometimes dearer, sometimes cheaper.’ (p. 66 A. Smith, loc. cit. Vol. I.) (Notebook, p. 8.)>

<The way in which A. Smith lets profit arise is very naïve. ‘In the primitive state, the product of labour belongs wholly to the worker. The quantity’ (including also the greater difficulty etc.) ‘of labour employed to obtain or to produce an exchangeable object is the only circumstance which governs the quantity of labour which this object can on the average buy, command or obtain in exchange … BUT as soon as a stock accumulates in the hands of private persons, the value which the workers add to the object dissolves into two parts, of which one pays their wages, the other the profit which the entrepreneur makes on the sum of the stock which has served him to advance these wages and the materials of labour. He would have no interest in employing these workers if he did not expect from the sale of their works something more than is necessary to replace this fund, and he would have no interest in employing a larger in preference over a small amount of funds if his profit did not stand in some proportion to the volume of the funds employed.’ (loc. cit. p. 96, 97.) (N., p. 9.) (See A. Smith’s peculiar view that before the division of labour, ‘where every one produced everything necessary, no stock was necessary’. As if, in this state, while he finds no stock in nature, he would not have to find the objective conditions of life, in order to work. Even the savage, even animals, set aside a reserve. Smith can at most have in mind a situation in which the impulse to labour is still a direct, momentary instinct, and then a stock still has to be present in nature in one way or another without labour. (Notebook, p. 19.) (Smith is confused here. Concentration of the stock in a single hand then not necessary.)>

<In Vol. III of his edition of A. Smith, Wakefield remarks: ‘The labour of slaves being combined, is more productive than the much divided labour of freemen. The labour of freemen is more productive than that of slaves, only when it comes to be combined by means of greater dearness of land, and the system of hiring for wages.’ (Note to p. 18.) (Notebook VIII, p. 1.) ‘In countries where land remains very cheap, either all the people are in a state of barbarism, or some of them are in a state of slavery.’ (Note to p. 20.)>

<‘Profit is a term signifying the increase of capital or wealth; so, failing to find the laws which govern the rate of profit, is failing to find the laws of the formation of capital.’ (p. 55. Atkinson (W.), Principles of Political Economy, London, 1840.) (Notebook, p. 2.)>

<’Man is as much the produce of labour as any of the machines constructed by his agency; and it appears to us that in all economical investigations he ought to be considered in precisely the same point of view. Every individual who has arrived at maturity … may, with perfect propriety, be viewed as a machine which it has cost 20 years of assiduous attention and the expenditure of a considerable capital to construct. And if a further sum is laid out for his education or qualification for the exercise of a business etc., his value is proportionally increased, just as a machine is made more valuable through the expenditure of additional capital or labour in its construction, in order to give it new powers.’ (McCulloch, The Principles of Pol. Econ., London, 1825, p. 115.) (Notebook, p. 9.)> <’In point of fact, a commodity will always exchange for more’ labour (than it was produced by): ‘and it is this excess that constitutes profits.’ (p. 221, McCulloch loc. cit.) (Notebook, p. 13.) The same gentle McCulloch, about whom Malthus rightly says that he sees it as the proper task of science to equate everything with everything else,[136] says: ‘the profits of capital are only another name for the wages of accumulated labour’ (p. 291) (loc. cit. Notebook, 14) and hence no doubt the wages of labour are only another name for the profits of living capital. ‘Wages … really consist of a part of the produce of the industry of the labourer; consequently, they have a high real value if the labourer receives a comparatively high share of the product of his industry, and vice versa.’ (295 loc. cit.) (Notebook, p. 15.)>

Surplus labour. Profit. Wages. Economists. Ramsay. Wade[edit source]

The positing of surplus labour through capital has on the whole been so little understood by the economists that they present striking phenomena of its occurrence as something special, as a curiosity. Thus Ramsay, with night work. Likewise John Wade e.g., in History of the Middle and Working Classes, 3rd ed., London, 1835 (p. 241) (Notebook, p. 21) says: ‘The standard of wages is also connected with the hours of work and rest periods. It was the policy of the masters in recent years’ (before 1835) ‘to usurp on operatives in this respect, by cutting or abridging holidays and mealtimes and gradually stretching the hours of work; knowing that an increase of 1/4 in the time of work is equivalent to a reduction in wages by the same amount.’

Immovable capital. Return of capital. Fixed capital. John St. Mill[edit source]

John St. Mill: Essays on Some Unsettled Questions of Political Economy, London, 1844. (The few original ideas of Mill Junior are contained in this narrow little volume, not in his fat, pedantic magnum opus.)

‘Whatever is destined to be employed reproductively, be it in its existing form, or indirectly by a previous (or even subsequent) exchange, is capital. Suppose I have laid out all my money in wages and machinery, and the article I produce is just finished: in the interval, before I can sell these articles, realize the gain, and lay it out again in wages and tools, will it be said that I have no capital? Certainly not: I have the same capital as before, perhaps a larger one, but it is tied down, and is not disposable.’ (p. 55.) (Notebook, p. 36.) ‘At all times a very large part of the capital in a country lies idle. The annual product of a country never achieves in height what it could, if all resources were devoted to reproduction, if, in short, all the country’s capital were in full employment. If every commodity on the average remained unsold for a length of time equal to that required for its production, then it is clear that at any one time not more than a half of the productive capital of the country would in reality perform the function of capital. The employed half is a fluctuating portion, composed of various elements; but the result would be that every producer would be capable of producing each year only half the supply of commodities which he could produce if he were sure of selling them at the moment of their completion.’ (loc. cit. p. 55, 56.) ‘This, or something similar, is, however, the usual state of a very great part of all capitalists in the world.’ (p. 56.) ‘The number of producers or vendors who turn over their capital in the very shortest time is very small. Few have so rapid a sale of their commodities that all goods which their own or borrowed capital can supply them can be cleared out as quickly as supplied. The majority do not have an extent of business at all adequate to the amount of capital they dispose of. It is true that in communities where industry and trade are practised with the greatest success, the contrivances of banking enable the owner of a capital greater than he can himself employ, to apply it productively and to derive a revenue from it. Still, even then, there is a great quantity of capital which remains fixed in the form of implements, machinery, buildings etc., whether only half employed or in complete employment: and every dealer keeps a stock in trade, to be ready for a possible sudden demand, although he may not be able to dispose of it for an indefinite period.’ (p. 56.) ‘This constant non-employment of a large part of capital is the price we pay for the division of labour. The purchase is worth what it costs; but the price is considerable.’ (56.) If I have 1,500 thalers in the shop and take in 10%, while 500 lie idle to ornament the shop, it is the same as if I invest 1,000 thalers at 7 1/2% … ‘In many trades there are a few dealers who sell articles of equal quality at a lower price than other dealers. This is not a voluntary sacrifice of profits; from the consequent overflow of customers they expect to turn over their capital more rapidly, and to be the winners by keeping the whole of their capital in more constant employment, although on a given operation their gains are smaller.’ (p. 56, 57.) ‘It is questionable whether there are any dealers for whom one additional buyer is of no use; and for the great majority, this hypothesis altogether inapplicable. An additional customer is for most dealers equivalent to a growth of their productive capital. It enables them to transform a part of their capital, which lay idle (and perhaps would never have become productive in their hands until a customer had been found), into wages and instruments of production … A country’s aggregate product for the following year is hence increased; not through pure exchange, but by calling into activity a portion of the national capital which, had it not been for the exchange, would have remained unemployed for some time longer.’ (57, 58.) ‘The advantages gained from a new customer are, for the producer or dealer: (1) say, a part of his capital lies in the form of unsold goods, producing (during a longer or shorter time) nothing at all; then a part thereof is called into greater activity and becomes more constantly productive. (2) If the additional demand exceeds what can be supplied through liberation of capital existing as unsold goods, and if the dealer has additional resources (e.g. in government bonds), but not in his own trade, then he is enabled to obtain on a portion of these, no longer interest, but profit, and thus to gain the difference between the rate of interest and of profits. (3) If all his capital is employed in his own business and no part stored up as unsold goods, then he can conduct a surplus business with borrowed capital and gain the difference between interest and profit.’ (59.)

Turnover of capital. Circulation process. Production process. Turnover. Capital circulates. Likewise fixed capital. Circulation costs. Circulation time and labour time. (Capitalist’s free time.) (Transport costs)[edit source]

Now back to our subject.

The phases through which capital travels, which form one turnover of capital, begin conceptually with the transformation of money into the conditions of production. Now, however, that we begin not with capital in the process of becoming, but capital which has become, [we can see that] it travels through the following phases: (1) Creation of surplus value, or immediate production process. Its result, the product. (2) Bringing the product to market. Transformation of product into commodity. (3) (α) Entry of the commodity into ordinary circulation. Circulation of the commodity. Its result: transformation into money. This appears as the first moment of ordinary circulation. (β) Retransformation of money into the conditions of production: money circulation; in ordinary circulation, the circulation of commodities and the circulation of money always appear distributed among two different subjects. Capital circulates first as a commodity, then as money, and vice versa. (4) Renewal of the production process, which appears here as reproduction of the original capital, and production process of surplus capital.

The costs of circulation break down into costs of movement; costs to bring the product to market; the labour time required to effect the transformation from one state to the other; all of which actually come down to accounting operations and the time they cost (this is the foundation of a special, technical money trade). (Whether the latter costs are to be considered deductions from the surplus value or not will be seen later.)

If we examine this movement, we find that the circulation of capital, through the operation of exchanges, opens up at one point to release the product into general circulation, and to constitute itself out of the latter as equivalent in money. What happens to this product, which has in this way fallen out of the circulation of capital and into ordinary circulation, is here beside the point. On the other side, capital throws its form as money out of its circulation process again (partially, that is, in so far as it is not wages), or, after having realized itself as value in ordinary circulation and at the same time posited itself as the measure of its own realization, it then moves in the money form only as medium of circulation, and thus sucks into itself out of general circulation the commodities necessary for production (conditions of production). As commodity, capital throws itself out of its own circulation into general circulation; and, again as commodity, capital leaves general circulation and enters its own course, issuing into the production process. The circulation of capital thus contains a relation to general circulation, of which its own circulation forms a moment, while the latter likewise appears as posited by capital. This to be examined later.

The total production process of capital includes both the circulation process proper and the actual production process. These form the two great sections of its movement, which appears as the totality of these two processes. On one side, labour time, on the other, circulation time. And the whole of the movement appears as unity of labour time and circulation time, as unity of production and circulation. This unity itself is motion, process. Capital appears as this unity-in-process of production and circulation, a unity which can be regarded both as the totality of the process of its production, as well as the specific completion of one turnover of the capital, one movement returning into itself.

The condition, for capital, of circulation time is – besides labour time – only the same as the condition of production based on division of labour and exchange, in adequate form, in the highest form. The costs of circulation are costs of the division of labour and of exchange, which are necessarily found in every previous, pre-capitalist form of production resting on this basis.

As the subject predominant [übergreifend] over the different phases of this movement, as value sustaining and multiplying itself in it, as the subject of these metamorphoses proceeding in a circular course – as a spiral, as an expanding circle – capital is circulating capital. Circulating capital is therefore initially not a particular form of capital, but is rather capital itself, in a further developed aspect, as subject of the movement just described, which it, itself, is as its own realization process. In this respect, therefore, every capital is circulating capital. In simple circulation, circulation itself appears as the subject. One commodity is thrown out of it, another enters into it. But the same commodity is within it only fleetingly. Money itself, in so far as it ceases to be a medium of circulation and posits itself as independent value, withdraws from circulation. Capital, however, exists as the subject of circulation; circulation is posited as its own life’s course. But while capital thus, as the whole of circulation, is circulating capital, is the process of going from one phase into the other, it is at the same time, within each phase, posited in a specific aspect, restricted to a particular form, which is the negation of itself as the subject of the whole movement. Therefore, capital in each of its particular phases is the negation of itself as the subject of all the various metamorphoses. Not-circulating capital. Fixed capital, actually fixated capital, fixated in one of the different particular aspects, phases, through which it must move. As long as it persists in one of these phases – [as long as] the phase itself does not appear as fluid transition – and each of them has its duration, [then] it is not circulating, [but] fixated. As long as it remains in the production process it is not capable of circulating; and it is virtually devalued. As long as it remains in circulation, it is not capable of producing, not capable of positing surplus value, not capable of engaging in the process as capital. As long as it cannot be brought to market, it is fixated as product. As long as it has to remain on the market, it is fixated as commodity. As long as it cannot be exchanged for conditions of production, it is fixated as money. Finally, if the conditions of production remain in their form as conditions and do not enter into the production process, it is again fixated and devalued. As the subject moving through all phases, as the moving unity, the unity-in-process of circulation and production, capital is circulating capital; capital as restricted into any of these phases, as posited in its divisions, is fixated capital, tied-down capital. As circulating capital it fixates itself, and as fixated capital it circulates. The distinction between circulating capital and fixed capital thus appears initially as a formal characteristic of capital, depending on whether it appears as the unity of the process or as one of its specific moments. The concept of dormant capital, capital lying fallow, can refer only to its barren existence in one of these aspects, and it is a condition of capital that part of it always lies fallow. This takes the visible form that a part of the national capital is always stuck in one of the phases through which capital has to move. Money itself, to the extent that it forms a particular part of the nation’s capital, but always remains in the form of medium of circulation, i.e. never goes through the other phases, is therefore regarded by A. Smith as a subordinate form of fixed capital.[137] Capital can likewise lie fallow, be fixated in the form of money, of value withdrawn from circulation. During crises – after the moment of panic – during the standstill of industry, money is immobilized in the hands of bankers, billbrokers etc.; and, just as the stag cries out for fresh water, money cries out for a field of employment where it may be realized as capital.

Much confusion in political economy has been caused by this, that the aspects of circulating and fixed are initially nothing more than capital itself posited in the two aspects, first as the unity of the process, then as a particular one of its phases, itself in distinction to itself as unity – not as two particular kinds of capital, not capital of two particular kinds, but rather as different characteristic forms of the same capital. While some held fast to the aspect of a material product in which it was supposed to be circulating capital, others had no difficulty in pointing out the opposite aspect, and vice versa. Capital as the unity of circulation and production is at the same time the division between them, and a division whose aspects are separated in space and time, at that. In each moment it has an indifferent form towards the other. For the individual capital, the transition from one into the other appears as chance, as dependent on external, uncontrollable circumstances. One and the same capital therefore always appears in both states; this is expressed by the appearance of one part of it in one [phase], another in another; one part tied down, another part circulating; circulating, here, not in the sense that it is in the circulatory phase proper as opposed to the production phase, but rather in the sense that in the phase in which it finds itself it is in a fluid phase, a phase in-process, a phase in transition to the next phase; not stuck in one of them as such and hence delayed in its total process. For example: the industrialist uses only a part of the capital at his disposal (whether borrowed or owned is beside the point here, nor, if we consider capital as a whole, does it affect the economic process) in production, because another part requires a certain amount of time before it comes back out of circulation. The part moving [prozessierend] within production is then the circulating part; the part in circulation is the immobilized part. His total productivity is thereby restricted; the reproduced part restricted, hence also the part thrown on to the market restricted. Thus the merchant; a part of his capital is tied down as stock in trade, the other part moves. To be sure, sometimes one and sometimes another part is in this phase, as with the industrialist, but his total capital is always posited in both aspects. Then again, since this limit arising out of the nature of the realization process itself is not fixed, but changes with circumstances, and since capital can approach its adequate character as that which circulates, to a greater or lesser degree; since the decomposition into these two aspects, in which the realization process appears at the same time as the devaluation process, contradicts the tendency of capital towards maximum realization, it therefore invents contrivances to abbreviate the phase of fixity; and at the same time also, instead of the simultaneous coexistence of both states, they alternate. In one period the process appears as altogether fluid – the period of the maximum realization of capital; in another, a reaction to the first, the other moment asserts itself all the more forcibly – the period of the maximum devaluation of capital and congestion of the production process. The moments in which both aspects appear alongside one another themselves only form interludes between these violent transitions and turnings-over. It is extremely important to grasp these aspects of circulating and fixated capital as specific characteristic forms of capital generally, since a great many phenomena of the bourgeois economy – the period of the economic cycle, which is essentially different from the single turnover period of capital; the effect of new demand; even the effect of new gold- and silver-producing countries on general production – [would otherwise be] incomprehensible. It is futile to speak of the stimulus given by Australian gold or a newly discovered market. If it were not in the nature of capital to be never completely occupied, i.e. always partially fixated, devalued, unproductive, then no stimuli could drive it to greater production. At the same time, [note] the senseless contradictions into which the economists stray – even Ricardo – when they presuppose that capital is always fully occupied; hence explain an increase of production by referring exclusively to the creation of new capital. Every increase would then presuppose an earlier increase or growth of the productive forces.

These barriers to production based on capital are even more strongly inherent in the earlier modes of production, in so far as they rest on exchange. But they do not form a law of production pure and simple; [and,] as soon as exchange value no longer forms a barrier to material production, as soon as its barrier is rather posited by the total development of the individual, the whole story with its spasms and convulsions is left behind. As we saw earlier that money suspends the barriers of barter only by generalizing them – i.e. separating purchase and sale entirely – so shall we see later that credit likewise suspends these barriers to the realization of capital only by raising them to their most general form, positing one period of overproduction and one of underproduction as two periods.

The value which capital posits in one cycle, one revolution, one turnover, is = to the value posited in the production process, i.e. = to the value reproduced + the new value. Whether we regard the turnover as completed at the point where the commodity is transformed into money, or at the point where the money is transformed back into conditions of production, the result, whether expressed in money or in conditions of production, is always absolutely equal to the value posited in the production process. We count the physical bringing of the product to market as = to 0; or, rather, we include it in the direct production process. The economic circulation of the product begins only when it is on the market as a commodity – only then does it circulate. We are dealing here only with the economic differences, aspects, moments of circulation; not with the physical conditions for bringing the finished product into the second phase, that of circulation as commodity; nor are we concerned with the technological process by which the raw material is transformed into product. The greater or lesser distance of the market from the producer etc. does not concern us here yet. What we want to determine here first of all is that the costs arising from the motion through the different economic moments as such, the costs of circulation as such, do not add anything to the value of the product, are not value-positing costs, regardless of how much labour they may involve. They are merely deductions from the created value. If, of two individuals, each one were the producer of his own product, but their labour rested on division of labour, so that they exchanged with each other, and the realization of their product depended on the satisfaction of their needs through this exchange, then obviously the time which this exchange would cost them, e.g. the mutual bargaining, calculating before closing the deal, would make not the slightest addition either to their products or to the latter’s exchange values. If A were to argue that the exchange takes up so much time, then B would respond in kind. Each of them loses just as much time in the exchange as the other. The exchange time is their common time. If A demanded 10 thalers for the product – its equivalent – and 10 thalers for the time it costs him to get the 10 thalers from B, then the latter would declare him a candidate for the madhouse. This loss of time arises from the division of labour and the necessity of exchange. If A produced everything himself, then he would lose no part of his time in exchanging with B, or in transforming his product into money and the money into product again. The costs of circulation proper (and they achieve a significant independent development in the money trade) are not reducible to productive labour time. But they are also by nature restricted to the time it necessarily costs to transform the commodity into money and the money back into commodity; i.e. to the time it costs to transpose capital from one form into the other. B and A might now find that they could save time by inserting a third person C as middleman between them, who consumed his time in this circulation process – circumstances which would arise e.g. if there were enough exchangers, enough subjects of the circulation processes, so that the time needed by each pair of them alternately over a year = one year; each individual, say, had to spend 1/50 of a year alternately in circulation, and there are 50 of them, then 1 individual could spend his entire time in this occupation. For this individual, if only his necessary labour time were paid him, i.e. if he had to give up his entire time in exchange for the necessaries of life, then the reward which he would obtain would be wages. But if it amounted to his entire time, then the wage he would obtain would be an equivalent, objectified labour time. This individual then, would have added nothing to the value, but would, rather, have obtained a share of the surplus value belonging to capitalists A, B, etc. They would have gained, since, according to the presupposition, a lesser deduction from their surplus value would have taken place. (Capital is not a quantity simply, nor an operation simply; but both at the same time.) Money itself, to the extent that it consists of precious metals, or its production generally – e.g. in paper circulation – creates expense, to the extent that it also costs labour time, adds no value to the exchanged objects – to the exchange values; rather, its costs are a deduction from these values, a deduction which must be borne in proportional parts by the exchangers. The preciousness of the instrument of circulation, of the instrument of exchange, expresses only the costs of exchange. Instead of adding to value, they subtract from it. Gold money and silver money, e.g., are themselves values, like others (not in the sense of money), in so far as labour is objectified in them. But that these values serve as medium of circulation is a deduction from disposable wealth. The same relation holds for the production costs of the circulation of capital. This adds nothing to the values. The costs of circulation as such do not posit value, they are costs of the realization of values – deductions from them. Circulation as a series of transformations, in which capital posits itself; but, as regards value, circulation does not add to it, but posits it, rather, in the form of value. The potential value which is transformed into money through circulation is presupposed as a result of the production process. In so far as this series of processes takes place in time and involves costs, costs labour time, or objectified labour time, these circulation costs are deductions from the sum of value. When circulation costs are posited = 0, then the result of one turnover of capital, as regards value, = the value posited in the production process. That is, the value presupposed to circulation is the same as emerges from it. The most that can happen is that – owing to the circulation costs – a smaller value can come out than went in. In this respect, circulation time adds nothing to value; circulation time does not appear as value-positing time, the same as labour time. If production has created a commodity = to the value of £10, then circulation is necessary in order to equate this commodity to the £10, its value, which exists as money. The costs involved in this process, caused by this change of form, are a deduction from the value of the commodity. The circulation of capital is the change of forms by means of which value passes through different phases. The time which this process lasts or costs to bring about belongs among the production costs of circulation, of the division of labour, of production based on exchange.

This holds for one turnover of capital, i.e. for the single course of capital through this, its different moments. The process of capital as value has its point of departure in money and ends in money, but in a greater quantity of money. The difference is only quantitative. M–C–C–M has thus obtained a content. If we examine the cycle up to this point, we stand at the point of departure again. Capital has become money again. But it is now at the same time posited, it has now become a condition for this money that it becomes capital again, money which preserves and multiplies itself through the purchase of labour, by passing through the production process. Its form as money is posited as mere form; one of the many forms through which it moves in its metamorphosis. If we regard this point now not as a terminal point, but rather – as we must now regard it – as transition point, or new point of departure, itself posited by the production process as a vanishing terminal point and only a seeming point of departure, then it is clear that the retransformation of value, posited as money, into value-in-process, into value entering into the production process, can only proceed – that the renewal of the production process can only take place – when the part of the circulation process which is distinct from the production process has been completed. The second turnover of capital – the retransformation of money into capital as such, or the renewal of the production process – depends on the time capital requires to complete its circulation; i.e. on its circulation time, the latter here as distinct from production time. But since we have seen that the total value created by capital (reproduced value as well as newly created), which is realized in circulation as such, is exclusively determined by the production process, it follows that the sum of values which can be created in a given period of time depends on the number of repetitions of the production process within this period. The repetition of the production process, however, is determined by circulation time, which is equal to the velocity of circulation. The more rapid the circulation, the shorter the circulation time, the more often can the same capital repeat the production process. Hence, in a specific cycle of turnovers of capital, the sum of values created by it (hence surplus values as well, for it posits necessary labour always merely as labour necessary for surplus labour) is directly proportional to the labour time and inversely proportional to the circulation time. In a given cycle, the total value (consequently also the sum of newly posited surplus values) = labour time multiplied by the number of turnovers of the capital. Or, the surplus value posited by capital now no longer appears as simply determined by the surplus labour appropriated by it in the production process, but rather [it is determined] by the coefficient of the production process; i.e. the number which expresses how often it is repeated in a given period of time. This coefficient, in turn, is determined by the circulation time required by the capital for one turnover. The sum of values (surplus values) is thus determined by the value posited in one turnover multiplied by the number of turnovers in a given period of time. One turnover of capital is = to the production time + the circulation time. If circulation time is presupposed as given, then the total time required for one turnover depends on the production time. If production time is given, the duration of the turnover depends on the circulation time. Hence, to the extent that circulation time determines the total mass of production time in a given period of time, and to the extent that the repetition of the production process, its renewal in a given period depends on the circulation time, to that extent is it itself a moment of production, or rather appears as a limit of production. This is the nature of capital, of production founded on capital, that circulation time becomes a determinant moment for labour time, for the creation of value. The independence of labour time is thereby negated, and the production process is itself posited as determined by exchange, so that immediate production is socially linked to it and dependent on this link – not only as a material moment, but also as an economic moment, a determinant, characteristic form. The maximum of circulation – the limit of the renewal of the production process through it – is obviously determined by the duration of production time during one turnover. Suppose the production process of a specific capital, i.e. the time it needs to reproduce its value and to posit surplus value, lasts 3 months. (Or, the time required to complete a quantity of product = to the total value of the producing capital + the surplus value.) Then this capital could under no circumstances renew the production or realization process more often than 4 times a year. The maximum turnover of this capital would be 4 turnovers per year; i.e. if no interruptions took place between the completion of one production phase and the renewal. The maximum number of turnovers would be = to the continuity of the production process, so that, as soon as the product was finished, new raw material would be worked up into product again. This continuity would extend not only to the continuity within a single production phase, but to the continuity of these phases themselves. But supposing now that this capital required one month of circulation time at the end of each phase – time to return to the form of conditions of production – then it could effect only 3 turnovers. In the first case the number of turnovers was = 1 phase × 4; or 12 months divided by 3. The maximum value-creation by capital in a given space of time is this space of time divide d by the duration of the production process (by production time). In the second case, the capital would effect only 3 turnovers a year; it would repeat the realization process only 3 times. The sum of its realization process would be, then, = 12/4 = 3. The divisor here is the total circulation time it requires: 4 months; or the circulation time required for one circulation phase, multiplied by the number of times this circulation time is contained in a year. In the first case, the number of turnovers = 12 months, a year, a given time, divided by the time of one production phase, or by the duration of production time itself; in the second case, it equals the same time divided by circulation time. The maximum realization of capital, as also the maximum continuity of the production process, is circulation time posited as = 0; i.e. then, the conditions under which capital produces, its restriction by circulation time, the necessity of going through the different phases of its metamorphosis, are suspended. It is the necessary tendency of capital to strive to equate circulation time to 0; i.e. to suspend itself, since it is capital itself alone which posits circulation time as a determinant moment of production time. It is the same as to suspend the necessity of exchange, of money, and of the division of labour resting on them, hence capital itself. If we ignore for a moment the transformation of surplus value into surplus capital, then a capital of 100 thalers, which produced a surplus value of 4% on the total capital in the production process, would, in the first case, reproduce itself 4 times and would at the end of the year have posited a surplus value of 16. At the end of the year, the capital would be = 116. It would be the same as if a capital of 400 had turned over once a year, likewise with a surplus value of 4%. As regards the total production of commodities and values, these would have quadrupled. In the other case, a capital of 100 thalers only created a surplus value of 12; the total capital at the end of the year = 112. As regards total production – in respect of either values or use values – the difference still more significant. In the first case e.g. a capital of 100 transformed 400 thalers of leather into boots, in the second only 300 thalers of leather.

The total realization of capital is hence determined by the duration of the production phase – which we posit as identical with labour time, for the moment – multiplied by the number of turnovers, or renewals of this production phase in a given period of time. If the turnovers were determined only by the duration of one production phase, then the total realization would be simply determined by the number of production phases contained in a given period of time; or, the turnovers would be absolutely determined by production time itself. This would be the maximum of realization. It is clear, therefore, that circulation time, regarded absolutely, is a deduction from the maximum of realization, is < absolute realization. It is therefore impossible for any velocity of circulation or any abbreviation of circulation to create a realization > that posited by the production phase itself. The maximum that the velocity of circulation could effect, if it rose to ∞, would be to posit circulation time = 0, i.e. to abolish itself. It can therefore not be a positive, value-creating moment, since its abolition – circulation without circulation time – would be the maximum of realization; its negation = to the highest position of the productivity of capital.[138] The total productivity of capital is = the duration of one production phase multiplied by the number of times it is repeated in a certain period of time. But this number is determined by circulation time.

Let us assume a capital of 100 turned over 4 times a year; posited the production process 4 times; then, if the surplus value = 5% each time, at the end of the year the surplus value created by the capital of 100 would = 20; then, for a capital of 400, which turned over once a year at the same percentage, would likewise = 20. So that a capital of 100, circulating 4 times, would give a gain of 20% a year, while a 4 times greater capital with a single turnover would give a profit of only 5%. (We shall see shortly, in more detail, that the surplus value is exactly the same.) It seems, therefore, that the magnitude of the capital can be replaced by the velocity of turnover, and the velocity of turnover by the magnitude of the capital. This is how it comes to appear as though circulation time were in itself productive. We must therefore clarify the matter by discussing this case.

Another question which arises: If the turnover of 100 thalers 4 times a year brings 5% each time, say, then at the beginning of the second turnover, the production process could be begun with 105 thalers, and the product would be 110 1/4; at the beginning of the third turnover, 110 1/4, of which the product would be 115 61/80 at the beginning of the fourth turnover, 115 61/80, and at its end, 121 881/1600. The number itself here is beside the point. The point is that, in the case of a capital of 400 which turns over once a year at 5%, the total gain can only be 20; while, by contrast, a 4 times smaller capital turning over 4 times at the same percentage makes a gain of 1 + 881/1600 more. In this way it appears as if the mere moment of turnover – repetition – i.e. a moment determined by circulation time, or rather a moment determined by circulation, not only realized value, but brought about an absolute growth of value. This also to be examined.

Circulation time only expresses the velocity of circulation; the velocity of circulation only the barrier to circulation. Circulation without circulation time – i.e. the transition of capital from one phase to the next at the speed of thought – would be the maximum, i.e. the identity of the renewal of the production process with its termination.

The act of exchange – and the economic operations through which circulation proceeds are reducible to a succession of acts of exchange – up to the point at which capital does not relate as commodity to money or as money to commodity, but as value to its specific use value, labour – the act of the exchange of value in one form for value in the other, money for commodity, commodity for money (and these are the moments of simple circulation), posits the value of one commodity in the other, and thus realizes it as exchange; or, also, posits the commodities as equivalents. The act of exchange is thus value-positing in so far as values are presupposed to it; it realizes the value-character of the subjects of exchange. But an act which posits a commodity as value, or, what is the same, which posits another commodity as its equivalent – or, again the same, posits the equivalence of both commodities, obviously for its part adds nothing to value, as little as the sign ± increases or decreases the number coming after it. If I posit 4 as plus or as minus – through this operation, 4, independently of the sign, remains equal to itself, 4, becomes neither 3 nor 5. Likewise, if I exchange a lb. of cotton with an exchange value of 6d. for 6d., then it is posited as value; and it can equally be said that the 6d, are posited as value in the lb. of cotton; i.e. the labour time contained in the 6d. (here 6d. regarded as value) is now expressed in another materialization of the same amount of labour time. But, since through this act of exchange the lb. of cotton as well as the 6d. of copper are each posited at = to their value, it is impossible that through this exchange the value either of the cotton, or of the 6d. or of the sum of both values should increase quantitatively. As the positing of equivalents, exchange only changes the form; realizes the potentially existing values; realizes the prices, if you like. To posit equivalents, e.g. A and B as equivalents, cannot raise the value of A, for it is the act in which A is posited as = to its own value, hence not as unequal to it; unequal only where the form is concerned, in so far as it was previously not posited as value; it is at the same time the act by means of which the value of A is posited as = to the value of B, and the value of B as = the value of A. The sum of the values transposed in the exchange = value A + value B. Each remains = to its own value; hence their sum remains equal to the sum of their values. Exchange as the positing of equivalents cannot therefore by its nature increase the sum of values, nor the value of the commodities exchanged. (The fact that it is different with the exchange with labour arises because the use value of labour is itself value-positing, but is not directly connected with its exchange value.) And if a single operation of exchange cannot increase the value of the thing exchanged, neither can a sum of exchanges do it.[139] Whether I repeat an act which creates no value once or an infinite number of times, the repetition cannot change its nature. The repetition of a non-value-creating act can never become an act of value-creation. E.g. 1/4 expresses a specific proportion. If I transform this 1/4 into a decimal fraction, i.e. posit it = 0.25, then its form has been changed. This transformation leaves the value the same. Similarly, when I transform a commodity into the form of money, or money into the form of the commodity, then the value remains the same, but the form is changed. It is clear, therefore, that circulation – since it consists of a series of exchange operations with equivalents – cannot increase the value of circulating commodities. Therefore, if labour time is required to undertake this operation, i.e. if values have to be consumed, for all consumption of values reduces itself to the consumption of labour time or of objectified labour time, products; i.e. if circulation entails costs, and if circulation time costs labour time, then this is a deduction from, a relative suspension of the circulating values; their devaluation by the amount of the circulation costs. If one imagines two workers who exchange with each other, a fisherman and a hunter; then the time which both lose in exchanging would create neither fish nor game, but would be rather a deduction from the time in which both of them can create values, the one fish, the other hunt, objectify their labour time in a use value. If the fisherman wanted to get compensation for this loss from the hunter: demand more game, or give him fewer fish, then the latter would have the same right to compensation. The loss would be common to both of them. These costs of circulation, costs of exchange, could appear only as a deduction from the total production and value-creation of both of them. If they commissioned a third, C, with these exchanges, and thus lost no labour time directly, then each of them would have to cede a proportional share of his product to C. What they could gain thereby would only be a greater or lesser loss. But if they worked as joint proprietors, then no exchange would take place, only communal consumption. The costs of exchange would therefore vanish. Not the division of labour; but the division of labour founded on exchange. It is wrong, therefore, for J. St. Mill to regard the cost of circulation as necessary price of the division of labour.[140] It is the cost only of the [not-] spontaneous division of labour resting not on community of property, but on private property.

Circulation costs as such, i.e. the consumption of labour time or of objectified labour time, of values, in connection with the operation of exchange and a series of exchange operations, are therefore a deduction either from the time employed on production, or from the values posited by production. They can never increase the value. They belong among the faux frais de production, and these faux frais de production belong to the inherent costs of production resting on capital. The merchant’s trade and still more the money trade proper – in so far as they do nothing but carry on the operations of circulation as such, e.g. the determination of prices (measurement of values and their calculation), these exchange operations generally, as a function which has gained independence through the division of labour, in so far as they represent this function of the total process of capital – represent merely the faux frais de production of capital. In so far as they reduce these faux frais, they add to production, not by creating value, but by reducing the negation of created values. If they operate purely as such a function, then they would always only represent the minimum of faux frais de production. If they enable the producers to create more values than they could without this division of labour, and, more precisely, so much more that a surplus remains after the payment of this function, then they have in fact increased production. Values are then increased, however, not because the operations of circulation have created value, but because they have absorbed less value than they would have done otherwise. But they are a necessary condition for capital’s production.

The time a capitalist loses during exchange is as such not a deduction from labour time. He is a capitalist – i.e. representative of capital, personified capital, only by virtue of the fact that he relates to labour as alien labour, and appropriates and posits alien labour for himself. The costs of circulation therefore do not exist in so far as they take away the capitalist’s time. His time is posited as superfluous time: not-labour time, not-value-creating time, although it is capital which realizes the created value. The fact that the worker must work surplus labour time is identical with the fact that the capitalist does not need to work, and his time is thus posited as not-labour time; that he does not work the necessary time, either. The worker must work surplus time in order to be allowed to objectify, to realize the labour time necessary for his reproduction. On the other side, therefore, the capitalist’s necessary labour time is free time, not time required for direct subsistence. Since all free time is time for free development, the capitalist usurps the free time created by the workers for society, i.e. civilization, and Wade is again correct in this sense, in so far as he posits capital = civilization.[141]

Circulation time – to the extent that it takes up the time of the capitalist as such – concerns us here exactly as much as the time he spends with his mistress. If time is money, then from the standpoint of capital it is only alien labour time, which is of course in the most literal sense the capitalist’s money. In regard to capital as such, circulation time can coincide with labour time only in so far as it interrupts the time during which capital can appropriate alien labour time, and it is clear that this relative devaluation of capital cannot add to its realization, but can only detract from it; or, in so far as circulation costs capital objectified alien labour time, values. (For example because it has to pay someone who takes over this function.) In both cases, circulation time is of interest only in so far as it is the suspension, the negation of alien labour time; either because it interrupts capital in the process of its appropriation; or because it forces it to consume a part of the created value, to consume it in order to accomplish the operations of circulation, i.e. to posit itself as capital. (Very much to be distinguished from the private consumption of the capitalist.) Circulation time is of interest only in its relation – as barrier, negation – to the production time of capital; this production time, however, is the time during which it appropriates alien labour, the alien labour time posited by it. To regard the time the capitalist spends in circulation as value-creating time or even surplus-value-creating time is to fall into the greatest confusion. Capital as such has no labour time apart from its production time. The capitalist absolutely does not concern us here except as capital. And he functions as such only in the total process we are examining. Otherwise, it could still be imagined that the capitalist draws compensation for the time during which he does not earn money as another capitalist’s wage labourer – or that he loses this time. [Or] that it belongs together with the costs of production. The time which he employs or loses as capitalist is lost time altogether, sunk and unrecoverable from this standpoint. We will later look at the capitalist’s so-called labour time as distinct from the worker’s labour time, which former is alleged to form the basis of his profits, as a wage of its own type.

Nothing is more common than to bring transport etc., to the extent that they are connected with trade, into the pure circulation costs. In so far as trade brings a product to market, it gives it a new form. True, all it does is change the location. But the mode of the transformation does not concern us. It gives the product a new use value (and this holds right down to and including the retail grocer, who weighs, measures, wraps the product and thus gives it a form for consumption), and this new use value costs labour time, is therefore at the same time exchange value. Bringing to market is part of the production process itself. The product is a commodity, is in circulation only when it is on the market.

Circulation. Storch. – Metamorphosis of capital and metamorphosis of the commodity. – Capital’s change of form and of substance. Different forms of capital. – Turnover in a given period. – Circulating capital as general character of capital. – Year the measure of turnovers of circulating capital. Day the measure of labour time[edit source]

<’In every species of industry, the entrepreneurs become sellers of products, while the entire remainder of the nation and often even other nations are the buyers of these products … the constant and incessantly repeated path which circulating capital describes in order to take leave of the entrepreneur and in order to return to him in the first form is comparable to a circle; hence the name circulant given to this capital, and the use of the word circulation for its movement.’ (p. [404,] 405.) (Storch. Cours d’économie politique, Paris, 1823, Vol. I, p. 405, Notebook, p. 34.) ‘In the broad sense, circulation includes the motion of every commodity exchanged.’ (p. 405, loc. cit.) ‘Circulation proceeds by exchanges … from the instant of [the introduction of] currency, they [the commodities] are no longer exchanged but sold.’ (p. 406, loc. cit.) ‘For a commodity to be in circulation, it is sufficient that it be in supply … Wealth in circulation: commodity.’ (p. 407, loc. cit.) ‘Commerce only a part of circulation; the former includes only merchants’ purchases and sales; the latter, those of all entrepreneurs and even of all … inhabitants.’ (p. 408, loc. cit.) ‘Only so long as the costs of circulation are indispensable to allow the commodities to reach the consumers is circulation real, and does its value increase the annual product. From the instant when it exceeds this degree, circulation is artificial and no longer contributes anything to the wealth of the nation.’ (p. 409.) ‘In recent years we saw examples of artificial circulation in St Petersburg in Russia. The slack state of foreign trade had led the merchants to realize their unemployed capitals in another way; no longer being able to employ them to bring in foreign commodities and to export domestic ones, they decided to take advantage of this by buying and reselling the commodities on hand. Monstrous quantities of sugar, coffee, hemp, iron etc. rapidly passed from one hand to the other, and a commodity often changed proprietors twenty times, without leaving the warehouse. This kind of circulation offers the dealers all manner of speculative opportunities; but while it enriches some, it ruins the others, and the nation’s wealth gains nothing thereby. Likewise with the circulation of money … This kind of artificial circulation, based simply on a variation of prices, is termed agiotage.’ (p. 410, 411.) ‘Circulation brings no profit for society except in so far as it is indispensable to bring the commodity to the consumer. Every detour, delay, intermediate exchange which is not absolutely necessary for this purpose, or which does not contribute to diminishing the circulation costs, harms the national wealth, by uselessly raising the prices of commodities.’ (p. 411.) ‘Circulation is the more productive the more rapid it is; i.e. the less time it requires to relieve the entrepreneur of the finished product and bring it to market, and to bring the capital back to him in its first form.’ (p. 411.) ‘The entrepreneur can begin production again only after he has sold the completed product and has employed the price in purchasing new materials and new wages: hence, the more promptly circulation acts to bring about these two effects, the sooner is he in a position to begin his production anew, and the more profits does his capital bring in a given period of time.’ (p. 412.) ‘The nation whose capital circulates with a proper speed, so as to return several times a year to him who set it into motion, is in the same situation as the labourer of the happy climates who can raise three or four harvests in succession from the same soil in one year.’ (p. 412, 413.) ‘A slow circulation makes the objects of consumption more expensive (1) indirectly, through diminution of the mass of commodities which can exist; (2) directly because, as long as a product is in circulation, its value progressively increases by the interest of capital employed on its production; the slower the production, the more do these interest charges accumulate, which uselessly elevates the price of commodities.’ ‘Means for the abbreviation and acceleration of circulation: (1) the separating-out of a class of workers occupied exclusively with trade; (2) ease of transport; (3) currency; (4) credit.’ (p. 413.)>

Simple circulation consisted of a great number of simultaneous or successive exchanges. Their unity, regarded as circulation, was actually present only from the observer’s standpoint. (The exchange can be accidental, and it more or less has this character where it is restricted to the exchange of the excess product, and has not seized upon the totality of the production process.) In the circulation of capital we have a series of exchange operations, acts of exchange, each of which represents a qualitatively different moment towards the other, a moment in the reproduction and growth of capital. A system of exchanges, changes of substance, from the standpoint of value as such. Changes of form, from the standpoint of use value. The product relates to the commodity as use value to exchange value; thus the commodity to money. Here one series attains its peak. Money relates to the commodity into which it is retransformed as exchange value to use value; even more so, money to labour.

In so far as capital in every moment of the process is itself the possibility of going over into its other, next phase, and is thus the possibility of the whole process, which expresses capital’s act of life, to that extent each of the moments appears potentially as capital – hence commodity capital, money capital – along with the value positing itself in the production process as capital. The commodity can represent money as long as it can transform itself into money, i.e. can buy wage labour (surplus labour); this in respect of the formal side, which emerges from the circulation of capital. On the material, physical side, it remains capital as long as it consists of raw material (proper or semi-fabricated), instrument, or necessaries for the workers. Each of these forms is potential capital. Money is in one respect the realized capital, capital as realized value. In this respect (regarded as a terminal point of circulation, where it then has to be regarded as a point of departure as well), it is capital, ϰατ᾽ ἐξοχήν. It is then especially capital again in regard to the part of the production process in which it exchanges itself for living labour. By contrast, in its exchange for the commodity (new purchase of raw material etc.) by the capitalist, it appears not as capital, but as medium of circulation; merely a vanishing mediation, through which the capitalist exchanges his product for the latter’s original elements.

Circulation is not merely an external operation for capital. Just as it only becomes capital through the production process, in that value immortalizes and increases itself through that process, so does it become retransformed into the pure form of value – in which the traces of its becoming, as well as its specific presence in use value, have been extinguished —only through the first act of circulation; while the repetition of this act, i.e. the life process [of capital] is made possible only through the second act of circulation, which consists of the exchange of money for the conditions of production and forms the introduction to the act of production. Circulation therefore belongs within the concept of capital. Just as, originally, money or stockpiled labour appeared as presupposition before the exchange with free labour; the seeming independence of the objective moment of capital towards labour, however, was suspended, and objectified labour, become independent as value, appeared on all sides as the product of alien labour, the alienated product of labour itself; so does capital only now appear as presupposed to its circulation (capital as money was presupposed to its becoming capital; but capital as the result of value which has absorbed and assimilated living labour appeared as the point of departure not of circulation generally, but of the circulation of capital), so that it would exist independently and indifferently, even without this process. However, the movement of the metamorphoses through which it must pass now appears as a condition of the production process itself; just as much as its result. Capital, in its reality, therefore appears as a series of turnovers in a given period. It is no longer merely one turnover, one circulation; but rather the positing of turnovers; positing of the whole process. Its value-positing therefore appears as conditioned (and value is capital only as self-immortalizing and self-multiplying value) (1) qualitatively; in that it cannot renew the production phase without passing through the phases of circulation; (2) quantitatively; in that the mass of the values it posits depends on the number of its turnovers in a given period; (3) in that circulation time appears in both respects as limiting principle, as barrier of production time, and vice versa. Capital is therefore essentially circulating capital. While in the workshop of the production process capital appears as proprietor and master, in respect of circulation it appears as dependent and determined by social connections, which, from our present standpoint, make it enter into and figure in simple circulation alternately as C towards M and M towards C. But this circulation is a haze under which yet another whole world conceals itself, the world of the interconnections of capital, which binds this quality originating in circulation – in social intercourse – to itself, and robs it of the independence of self-sustaining property, as well as of its character. Two vistas into this presently still distant world have already opened up, at the two points at which the circulation of capital pushes the value posited and circulated by it in the form of the product out of its path, and, secondly, the point at which it pulls another product out of circulation into its own orbit; transforms this product itself into one of the moments of its presence [Dasein]. At the second point it presupposes production; not its own immediate production; at the first point it may presuppose production, if its product is itself raw material for other production; or consumption if it has obtained the final form for consumption. This much is clear, that consumption need not enter into its circle directly. The actual circulation of capital, as we shall see later, is still circulation between dealers and dealers. The circulation between dealers and consumers, identical with the retail trade, is a second circle which does not fall within the immediate circulation sphere of capital. An orbit which it describes after the first is described, and simultaneously alongside it. The simultaneity of the different orbits of capital, like that of its different aspects, becomes clear only after many capitals are presupposed. Likewise, the course of human life consists of passing through different ages. But at the same time all ages exist side by side, distributed among different individuals.

Considering that the production process of capital is at the same time a technological process – production process absolutely – namely [the process] of the production of specific use values through specific labour, in short, in a manner determined by this aim itself; considering that the most fundamental of these production processes is that through which the body reproduces its necessary metabolism, i.e. creates the necessaries of life in the physiological sense; considering that this production process coincides with agriculture; and the latter also at the same time directly (as with cotton, flax etc.) or indirectly, through the animals it feeds (silk, wool, etc.), furnishes a large part of the raw materials for industry (actually all except those belonging to the extractive industries); considering that reproduction in agriculture in the temperate zone (the home of capital) is bound up with general terrestrial circulation; i.e. harvests are mostly annual; it follows that the year (except that it is figured differently for various productions) has been adopted as the general period of time by which the sum of the turnovers of capital is calculated and measured; just as the natural working day provided such a natural unit as measure of labour time. In the calculation of profit, and even more of interest, we consequently see the unity of circulation time and production time – capital – posited as such, and as its own measure. Capital itself as in process – hence, as accomplishing one turnover – is regarded as working capital, and the fruits, which it is supposed to yield, are calculated according to its working time – the total circulation time of one turnover. The mystification which thereby takes place lies in the nature of capital.

Fixed (tied down) capital and circulating capital. – (Surplus. Proudhon. Bastiat.) – Mill. Anderson. Say. Quincey. Ramsay. – Difficulty with interest on interest. – Creating market through trade. – Fixed and circulating capital. Ricardo. Money and capital. Eternity of value. – Necessity of rapid or less rapid reproduction. Sismondi. Cherbuliez. Storch. – Capital’s advance to labour[edit source]

Now, before we go more closely into the above-mentioned considerations, we want to see what distinctions the economists draw between fixed capital and circulating capital. We have already found, above, a new moment which enters with the calculation of profit as distinct from surplus value. Likewise already at this point a new moment has to arise between profit and interest. Surplus value in connection with circulating capital obviously appears as profit, in distinction to interest as the surplus value in connection with fixed capital. Profit and interest are both forms of the surplus value. Profit contained in the price. Hence, profit comes to an end and is realized as soon as capital has come to the point of its circulation where it is retransformed into money or passes from its form as commodity into the form of money. The striking ignorance on which Proudhon’s polemic against interest rests, later. (Here one more time, so as not to forget, in regard to Proudhon: the surplus value which causes all Ricardians and anti-Ricardians so much worry is solved by this fearless thinker simply by mystifying it, ‘all work leaves a surplus’, ‘I posit it as an axiom … ‘[142] The actual formulation to be looked up in the notebook. The fact that work goes on beyond necessary labour is transformed by Proudhon into a mystical quality of labour. This not to be explained by the mere growth of the productive force of labour; this may increase the products of a given labour time; but it cannot give a surplus value. It enters only in so far as it liberates surplus time, time for labour beyond the necessary. The only extra-economic fact in this is that the human being does not need his entire time for the production of the necessaries, that he has free time at his disposal above and beyond the labour time necessary for subsistence, and hence can also employ it for surplus labour. But this is in no way something mystical, since his necessaries are small to the same degree that his labour power is in a primitive state. But wage labour as such enters only where the development of the productive force has already advanced so far that a significant amount of time has become free; this liberation is here already a historic product. Proudhon’s ignorance only equalled by Bastiat’s decreasing rate of profit which is supposed to be the equivalent of a rising rate of wages.[143] Bastiat expresses this nonsense, borrowed from Carey, in a double way: first, the rate of profit falls (i.e. the proportion of surplus value in relation to the employed capital); secondly: prices decline, but value, i.e. the total sum of prices, rises, which is only another way of saying that the gross profit rises, not the rate of profit.)

Firstly, in the sense used by us above, of fixated capital, John St. Mill (Essays on some Unsettled Questions of Political Econ., Lond., 1844, p. 55), [speaks of it] as tied-down, not disposable, not available capital. Stuck in one phase of its total circulation process. In this sense he says correctly, like Bailey in the above quotations, that a great part of the capital of a nation always lies idle.

‘The difference between fixed and circulating capital is more apparent than real; e.g. gold is fixed capital; floating only in so far as it is consumed for gilding etc. Ships are fixed capital, although literally floating. Foreign railway shares are articles of commerce in our markets; so may our railways be in the markets of the world; and so far they are floating capital, on a par with gold.’ (Anderson, The Recent Commercial Distress etc., London, 1847, p. 4.) (Notebook I, 27.)[144]

According to Say: capital ‘so much involved in one kind of production that it can no longer be diverted from it to be devoted to another kind of production’.[145] The identification of capital with a specific use value, use value for the production process. This quality of capital, being tied down as value to a particular use value – use value within production – is, however, an important aspect. This expresses more than the inability to circulate, which actually only says that fixed capital is the opposite of circulating capital.

In his Logic of Political Economy (p. 114) (Notebook X, 4), de Quincey says: ‘Circulating capital, in its normal idea, means any agent whatever’ (beautiful logician) ‘used productively which perishes in the very act of being used.’ (According to this, coal would be circulating capital, and oil, but not cotton etc. It cannot be said that cotton perishes by being transformed into twist or calico, and such transformation certainly means using it productively); ‘capital is fixed when the thing serves repeatedly always for the same operation, and by how much larger has been the range of iterations, by so much more intensely is the tool, engine, or machinery entitled to the denomination of fixed.’ (p. 114.) (Notebook X, 4.) According to this, the circulating capital would die out, be consumed in the act of production; the fixed capital – which, for greater clarity, is characterized as tool, engine, or machinery (thus improvements incorporated in the soil are, for instance, excluded) – would serve repeatedly, always for the same operation. The distinction here concerns only technological differences in the act of production, not in the least the form-relation; circulating and fixed capital, in the differences here indicated, do have distinguishing features by means of which one particular agent is fixed and the other circulating, but neither of them any qualification which would entitle it to the ‘denomination’ of capital.

According to Ramsay (IX, 84)[146] only ‘the approvisionnement is circulating capital, because the capitalist must part with it immediately, and it does not enter into the reproduction process at all, but is rather exchanged directly for living labour, for consumption. All other capital (including raw material) remains in the possession of its owner or employer until the produce is completed.’ (loc. cit. p. 21.) ‘Circulating capital consists only of subsistence and other necessaries advanced to the workman, previous to the completion of the produce of his labour.’ (loc. cit. p. 23.) In regard to approvisionnement he is correct in so far as it is the only part of capital which circulates during the production phase itself, and which is in this respect circulating capital par excellence. In another respect it is false to say that fixed capital remains in the possession of its owner or employer ‘until the produce is completed’ and no longer than that. He consequently also later explains fixed capital as ‘any portion of that labour (bestowed upon any commodity) in a form in which, though assisting to raise the future commodity, it does not maintain labour’. (But how many commodities do not maintain labour! I.e. do not belong among the workers’ articles of consumption. These, according to Ramsay, are all fixed capital.)

(If the interest on £100 at the end of the first year or of the first 3 months is £5, then the capital at the end of the first year 105 or 100(1 + 0.05); at the end of the 4th year = 100(1 + 0.05)4 = £121. £55/100 and £1/1600 = £121 11s. 3/20 farthing or £121 11s. 0.15 farthing. Hence £1 11s. 3/20 farthing more than 20.)

(In the question posed above, assume that a first capital of 400 turns over only once a year, a second [capital of 100,] 4 times, both at 5%. In the first case the capital would make 5% once a year, = 20 on 400; in the second case 4 × 5%, likewise = 20 per year on 100. The velocity of turnover would substitute for the size of the capital; just as in simple money circulation 100,000 thalers which circulate 3 times a year = 300,000, while 3,000 which circulate 100 times = 300,000 also. But if the capital circulates 4 times a year, then it is possible that the surplus gain itself is ploughed into the capital for the second turnover, and turned over with it, producing thereby the difference of £1 11s. 0.15 farthing. But this difference in no way follows from the presupposition. All that is there is the abstract possibility. What would follow, rather, from the presupposition is that 3 months are required for the turnover of a capital of £100. E.g. therefore, if the month = 30 days, then for £105 – with the same turnover relation, with the same relation between the turnover time and the size of the capital – not 3 months are required,[147] but rather 105:x = 100:90; x = (90 × 105)/100 = 9450/100 = 94 5/10 days = 3 months, 4 1/2 days. With that, the first difficulty is completely solved.)

(From the fact that a larger capital with a slower turnover does not create more surplus value than a smaller with a relatively more rapid turnover, it does not in the least automatically follow that a smaller capital turns over more rapidly than a larger. This is indeed the case in so far as the larger capital consists of more fixed capital and in so far as it has to search out more distant markets. The size of the market and the velocity of turnover are not necessarily inversely related. This occurs only as soon as the present, physical market is not the economic market; i.e. as the economic market becomes more and more distant from the place of production. To the extent, by the way, that [this relation] does not arise purely from the distinction between fixed and circulating capital, the moments which determine the circulation of different capitals cannot be at all developed yet here. An incidental remark: to the extent that trade posits new points of circulation, i.e. brings different countries into intercourse, discovers new markets etc., this is something entirely different from the mere costs of circulation required to carry out a given mass of exchange operations; it is the positing not of the operations of exchange, but of the exchange itself. Creation of markets. This point will have to be examined in particular before we have done with circulation.)

Now let us continue with our review of the opinions about ‘fixed’ and ‘circulating capital’. ‘Depending on whether capital is more or less transitory, hence must be more or less frequently reproduced in a given time, it is called circulating or fixed capital. Furthermore, capital circulates or returns to its employer in very unequal times; e.g. wheat which the farmer buys to sow is relatively fixed capital compared to the wheat a baker buys to make bread.’ (Ricardo VIII, 19.) Then he remarks also: ‘Different proportions of fixed capital and circulating capital in different trades; different durability of fixed capital itself.’ (Ricardo, loc. cit.)[148] ‘Two kinds of commerce can employ a capital of equal value, but which may be divided in a very different way as regards the fixed part and the circulating part. They may even employ an equal value of fixed capital and circulating capital, but the durability of the fixed capital may be very unequal. For example, one a steam engine of £10,000, the other, ships.’ (This out of Say’s translation of Ricardo, Vol. I, p. 29, 30.) The error from the outset is that, according to Ricardo, capital is supposed to be ‘more or less transitory’. Capital as capital – value – is not transitory. But the use value in which the value is fixated, in which it exists, is ‘more or less transitory’, and must therefore be ‘more or less frequently reproduced in a given time’. The difference between fixed capital and circulating capital is therefore reduced here to the greater or lesser necessity for reproducing the given capital in a given time. This is one distinction made by Ricardo. The other distinction concerns the different degrees of durability, or different degrees of fixed capital, i.e. different degrees, relative durability of the relatively fixed. So that fixed capital is itself more or less fixed. The same capital appears in the same business in the two different forms, the particular modes of existence of fixed and circulating, hence exists doubly. To be fixed or circulating appears as a particular aspect of capital apart from that of being capital. It must, however, proceed to this particularization. Finally, as for the third distinction, ‘that capital circulates or returns in very unequal times’, what Ricardo means by this, as his example of the baker and the farmer shows, is nothing more than the difference in the time during which capital is fixed, tied up in the production phase as distinct from the circulation phase, in different branches of business. Hence, fixed capital occurs here in the same way as we had it previously, as being fixated in each phase; except that the specifically longer or shorter fixation in the production phase, this phase in particular, is regarded as a peculiarity, particularity of capital [as value-] positing. Money attempted to posit itself as imperishable value, as eternal value, by relating negatively towards circulation, i.e. towards the exchange with real wealth, with transitory commodities, which, as Petty describes very prettily and very naïvely, dissolve in fleeting pleasures.[149] Capital posits the permanence of value (to a certain degree) by incarnating itself in fleeting commodities and taking on their form, but at the same time changing them just as constantly; alternates between its eternal form in money and its passing form in commodities; permanence is posited as the only thing it can be, a passing passage – process – life. But capital obtains this ability only by constantly sucking in living labour as its soul, vampire-like. The permanence – the duration of value in its form as capital – is posited only through reproduction, which is itself double, reproduction as commodity, reproduction as money, and unity of both these reproduction processes. In its reproduction as commodity, capital is fixated in a particular form of use value, and is thus not general exchange value, even less realized value, as it is supposed to be. The fact that it has posited itself as such in the act of reproduction, the production phase, is proved only through circulation. The greater or lesser perishability of the commodity in which value exists requires a slower or faster reproduction; i.e. repetition of the labour process. The particular nature of use value, in which the value exists, or which now appears as capital’s body, here appears as itself a determinant of the form and of the action of capital; as giving one capital a particular property as against another; as particularizing it. As we have already seen in several instances, nothing is therefore more erroneous than to assert that the distinction between use value and exchange value, which falls outside the characteristic economic form in simple circulation, to the extent that it is realized there, falls outside it in general. We found, rather, that in the different stages of the development of economic relations, exchange value and use value were determined in different relations, and that this determination itself appeared as a different determination of value as such. Use value itself plays a role as an economic category. Where it plays this role is given by the development itself. Ricardo, e.g., who believes that the bourgeois economy deals only with exchange value, and is concerned with use value only exoterically, derives the most important determinations of exchange value precisely from use value, from the relation between the two of them: for instance, ground rent, wage minimum, distinction between fixed capital and circulating capital, to which he imputes precisely the most significant influence on the determination of prices (through the different reaction produced upon them by a rise or fall in the rate of wages); likewise in the relation of demand and supply etc. One and the same relation appears sometimes in the form of use value and sometimes in that of exchange value, but at different stages and with a different meaning. To use is to consume, whether for production or consumption. Exchange is the mediation of this act through a social process. Use can be posited as, and be, a mere consequence of exchange; then again, exchange can appear as merely a moment of use, etc. From the standpoint of capital (in circulation), exchange appears as the positing of its use value, while on the other side its use (in the act of production) appears as positing for exchange, as positing its exchange value. Likewise with production and consumption. In the bourgeois economy (as in every economy), they are posited in specific distinctions and specific unities. The point is to understand precisely these specific, distinguishing characteristics. Nothing is accomplished by the [assertions of] Mr Proudhon or of the social sentimentalists that they are the same.

The good thing in Ricardo’s explanation is that it begins by emphasizing the moment of the necessity of quicker or slower reproduction; hence that the greater or lesser durability – consumption (in the sense of self-consumption), slower or more rapid – is regarded in connection with capital itself. Hence a relation of use value for capital itself. Sismondi by contrast immediately introduces a determinant initially exoteric to capital; direct or indirect human consumption: whether the article is a direct or an indirect necessary of life for the human consumer; he thereby joins this with the quicker or slower consumption of the object itself. The objects which serve directly as necessaries of life are more perishable, because designed to perish, than those which help to produce the necessaries of life. With the latter, their duration is their character; their transitoriness – fate. He says: ‘Fixed, indirect capital is slowly consumed, in order to assist in consuming that which man destines for his use; circulating capital does not cease to be directly applied to the use of man … Whenever a thing is consumed, it never returns for him who consumes it; while a thing consumed for reproduction is there for him at the same time.’ (Sismondi VI.) He also presents the relation in such a way that: ‘the first transformation of annual consumption into durable foundations, suitable for increasing the productive powers of future labour – fixed capital; this first labour always accomplished by labour, represented by a wage, exchanged for necessaries which the worker consumes during labour. Fixed capital is consumed slowly’ (i.e. is slowly worn out). Second transformation: ‘Circulating capital consists of labour-seeds (raw material) and of the worker’s consumption.’ (loc. cit.)[150] This is more concerned with the origin. Firstly the transformation, that fixed capital is itself only circulating capital which has assumed a stationary form, fixated circulating capital; second, the destination: the one destined to be consumed as means of production, the other as product; or the different mode of its consumption, determined by its role among the conditions of production in the production process. Cherbuliez simplifies the matter to the point where circulating capital is the consumable, fixed capital the not consumable part of capital.[151] (One you can eat, the other not. A very easy method of taking the thing.) In a quotation already given above[152] (29 in the Notebook), Storch vindicates for circulating capital generally the circulating nature of capital. He contradicts himself by saying: ‘all fixed capital comes originally from a circulating capital, and needs continually to be maintained at the latter’s expense’ (hence comes out of circulation, or is itself circulating in its first moment and constantly renews itself through circulation; thus although it does not go into circulation, circulation goes into it). As for what Storch adds further: ‘NO fixed capital can give a revenue EXCEPT by means of a circulating capital’ (26a. Notebook),[153] we shall return to that later.

<’Reproductive consumption is not properly an expense, but only an advance, because it is reimbursed to its agent’; p. 54 in Storch’s polemic against Say[154] (p. 5b. Second notebook on Storch). (The capitalist gives the worker a part of the latter’s own surplus labour in the form of advance, as something for which he must reimburse the capitalist not merely with an equivalent, but with surplus labour as well.)>

(The formula for computing compound interest is: S = c(1 + i)n. (S, the total magnitude of capital c after n years at an interest rate i.)

The formula for computing an annuity is:

c(1 + i)n
x (the annuity) =

1 + (1 + i) + (1 + i)2 + (1 + i)n − 1
Constant and variable capital[edit source]

We divided capital above into constant and variable value; this is always correct as regards capital within the production phase, i.e. in its immediate realization process. How it is that capital itself, as presupposed value, can change its value as its reproduction costs rise or fall, or as a consequence of a decline in props also etc., evidently belongs to the section where capital is regarded as real capital, as the interaction of many capitals on one another, not here in its general concept.

Competition[edit source]

<Because competition appears historically as the dissolution of compulsory guild membership, government regulation, internal tariffs and the like within a country, as the lifting of blockades, prohibitions, protection on the world market – because it appears historically, in short, as the negation of the limits and barriers peculiar to the stages of production preceding capital; because it was quite correctly, from the historical standpoint, designated and promoted by the Physiocrats as laissez faire, laissez passer; it has [therefore] never been examined even for this merely negative side, this, its merely historical side, and this has led at the same time to the even greater absurdity of regarding it as the collision of unfettered individuals who are determined only by their own interests – as the mutual repulsion and attraction of free individuals, and hence as the absolute mode of existence of free individuality in the sphere of consumption and of exchange. Nothing can be more mistaken. While free competition has dissolved the barriers of earlier relations and modes of production, it is necessary to observe first of all that the things which were a barrier to it were the inherent limits of earlier modes of production, within which they spontaneously developed and moved. These limits became barriers only after the forces of production and the relations of intercourse had developed sufficiently to enable capital as such to emerge as the dominant principle of production. The limits which it tore down were barriers to its motion, its development and realization. It is by no means the case that it thereby suspended all limits, nor all barriers, but rather only the limits not corresponding to it, which were barriers to it. Within its own limits – however much they may appear as barriers from a higher standpoint, and are posited as such by its own historic development – it feels free, and free of barriers, i.e. as limited only by itself, only by its own conditions of life. Exactly as guild industry, in its heyday, found in the guild organization all the fullness of freedom it required, i.e. the relations of production corresponding to it. After all, it posited these out of itself, and developed them as its inherent conditions, and hence in no way as external and constricting barriers. The historical side of the negation of the guild system etc. by capital through free competition signifies nothing more than that capital, having become sufficiently strong, by means of the mode of intercourse adequate to itself, tore down the historic barriers which hindered and blocked the movement adequate to it. But competition is very far from having only this historic significance, or merely being this negative force. Free competition is the relation of capital to itself as another capital, i.e. the real conduct of capital as capital. The inner laws of capital – which appear merely as tendencies in the preliminary historic stages of its development – are for the first time posited as laws; production founded on capital for the first time posits itself in the forms adequate to it only in so far as and to the extent that free competition develops, for it is the free development of the mode of production founded on capital; the free development of its conditions and of itself as the process which constantly reproduces these conditions. It is not individuals who are set free by free competition; it is, rather, capital which is set free. As long as production resting on capital is the necessary, hence the fittest form for the development of the force of social production, the movement of individuals within the pure conditions of capital appears as their freedom; which is then also again dogmatically propounded as such through constant reflection back on the barriers torn down by free competition. Free competition is the real development of capital. By its means, what corresponds to the nature of capital is posited as external necessity for the individual capital; what corresponds to the concept of capital, is posited as external necessity for the mode of production founded on capital. The reciprocal compulsion which the capitals within it practice upon one another, on labour etc. (the competition among workers is only another form of the competition among capitals), is the free, at the same time the real development of wealth as capital. So much is this the case that the most profound economic thinkers, such as e.g. Ricardo, presuppose the absolute predominance of free competition[155] in order to be able to study and to formulate the adequate laws of capital – which appear at the same time as the vital tendencies governing over it. But free competition is the adequate form of the productive process of capital. The further it is developed, the purer the forms in which its motion appear. What Ricardo has thereby admitted, despite himself, is the historic nature of capital, and the limited character of free competition, which is just the free movement of capitals and nothing else, i.e. their movement within conditions which belong to no previous, dissolved stages, but are its own conditions. The predominance of capital is the presupposition of free competition, just as the despotism of the Roman Caesars was the presupposition of the free Roman ‘private law’. As long as capital is weak, it still itself relies on the crutches of past modes of production, or of those which will pass with its rise. As soon as it feels strong, it throws away the crutches, and moves in accordance with its own laws. As soon as it begins to sense itself and become conscious of itself as a barrier to development, it seeks refuge in forms which, by restricting free competition, seem to make the rule of capital more perfect, but are at the same time the heralds of its dissolution and of the dissolution of the mode of production resting on it. Competition merely expresses as real, posits as an external necessity, that which lies within the nature of capital; competition is nothing more than the way in which the many capitals force the inherent determinants of capital upon one another and upon themselves. Hence not a single category of the bourgeois economy, not even the most basic, e.g. the determination of value, becomes real through free competition alone; i.e. through the real process of capital, which appears as the interaction of capitals and of all other relations of production and intercourse determined by capital. Hence, on the other side, the insipidity of the view that free competition is the ultimate development of human freedom; and that the negation of free competition = negation of individual freedom and of social production founded on individual freedom. It is nothing more than free development on a limited basis – the basis of the rule of capital. This kind of individual freedom is therefore at the same time the most complete suspension of all individual freedom, and the most complete subjugation of individuality under social conditions which assume the form of objective powers, even of overpowering objects – of things independent of the relations among individuals themselves. The analysis of what free competition really is, is the only rational reply to the middle-class prophets who laud it to the skies or to the socialists who damn it to hell. The statement that, within free competition, the individuals, in following purely their private interest, realize the communal or rather the general interest means nothing other than that they collide with one another under the conditions of capitalist production, and hence that the impact between them is itself nothing more than the recreation of the conditions under which this interaction takes place. By the way, when the illusion about competition as the so-called absolute form of free individuality vanishes, this is evidence that the conditions of competition, i.e. of production founded on capital, are already felt and thought of as barriers, and hence already are such, and more and more become such. The assertion that free competition = the ultimate form of the development of the forces of production and hence of human freedom means nothing other than that middle-class rule is the culmination of world history – certainly an agreeable thought for the parvenus of the day before yesterday.>

Surplus value. Production time. Circulation time. Turnover time[edit source]

<Before we go further with the review of opinions about fixed capital and circulating capital, we return for a moment to something developed earlier.

We assume for the time being that production time and labour time coincide. The case where interruptions take place within the production phase itself, owing to the technological process, will be looked at later.

Suppose the production phase of a capital equal to 60 working days; of which 40 are necessary labour time. Then, according to the law developed earlier, the surplus value, or the value newly posited by capital, i.e. appropriated alien labour time = 60 − 40; = 20. Let us call this surplus value (=20) S; the production phase – or the labour time employed in production – p. In a period of time which we shall call T – e.g. 360 days – the total value can never be greater than the number of production phases contained in, say, 360. The highest coefficient of S – i.e. the maximum of surplus value which capital can create on the given presuppositions – equals the number of times the creation of S is repeated in 360 days. The outer limit of this reproduction – the reproduction of capital, or rather, now, the reproduction of its production process – is determined by the relation of the production period to the total period of time in which the former can be repeated. If the given period = 360 days, and the duration of production = 60 days, then 360/60, or T/p, i.e. 6, is the coefficient indicating how many times p is contained in T, or how often, given its own inherent limits, the reproduction process of the capital can be repeated within 360 days. It goes without saying that the maximum of the creation of S, i.e. the positing of surplus value, is given by the number of processes in which S can be produced, in a given period of time. This relation is expressed by T/p. The quotient of T/p, or q, is the highest coefficient of S in the period of 360 days, in T generally. ST/p or Sq is the maximum of value. If T/p = q, then T = pq; i.e. the entire duration of T would be production time; the production phase, p, would be repeated as often as it is contained in T. The total value created by capital in a certain time would be = to the surplus labour it appropriates in one production phase, multiplied by the number of times this production phase is contained in the given time. Thus in the above example, = 20 × 360/60 = 20 × 6 = 120 days. q, i.e. T/p, would express the number of turnovers of the capital; but since T = pq, therefore p = T/q; i.e. the duration of one production phase would be equal to the total time divided by the number of turnovers. Thus one production phase of capital would be equal to one of its turnovers. Turnover time and production time would be completely identical; the number of turnovers therefore [would be] exclusively determined by the relation of one production phase to the total time.

However, on this assumption, circulation time is posited as = 0. Yet circulation time has a definite magnitude, which can never become = 0. Now assume additionally that there are 30 days for circulation for every 60 days of production time; call this circulation time added to p, c. In this case, one turnover of capital, i.e. the total time it requires before it can repeat the realization process – the positing of surplus value – would be = 30 + 60 = 90 days (= p + c) (1R (turnover) = p + c). One turnover of 90 days can be repeated in 360 days only 360/90 times, i.e. 4 times. The surplus value of 20 could therefore be posited only 4 times; 20 × 4 = 80. In 60 days the capital produces 20 surplus days; but it has to circulate for 30 days; i.e. during these 30 days it can posit no surplus labour, no surplus value. This is the same for it (as regards the result) as if it had posited a surplus value of only 20 in the period of 90 days. While previously the number of turnovers was determined by T/p, it is now determined by T/(p + c) or T/R; the maximum of value was ST/(p + c); (20 × (300/(60 + 30)) = 20 × (360/90) = 20 × 4 = 80). The number of turnovers hence = the total time divided by the sum of production time and circulation time, and the total value = S multiplied by the number of turnovers. But this formulation does not yet suffice for us to express the relations of surplus value, production time and circulation time.

The maximum of value creation contained in the formula ST/p; value creation restricted by circulation, ST/(p + c) (or ST/R); when we subtract the second amount from the first, then

pp + c
ST(p + c) − STp=STp + STc − STp= STc
p(p +c)p(p + c)p(p + c)

As difference we then obtain STc / p(p + c) or ST/p × c/(p + c); ST/(p + c) or S′, as we may call this value in the second form, S′ = ST/p − (ST/p × c/(p + c)). But before we develop this formula further, there are still others to be introduced.

If we call the quotient of T/(p + c) q′, then q′ expresses the number of times R = (p + c) is contained in T, the number of turnovers. T/(p + c) = q′ ; hence T = pq′ + cq′. pq′ then expresses the total production time and cq′ the total circulation time.

Let us call total circulation time C (hence cq′ = C). (T(360) = 4 × 60 (240) + 4 × 30 (120).) With our presupposition, q′ = 4, C = cq′ = 4c; 4 being = to the number of turnovers. We saw previously that the maximum of value-creation = ST/p; but in this case T was posited as = to production time. But the real production time is now T − q; as indeed follows from the equation. T = pq′ (total production time) + cq′ (total circulation time, or C ). Hence T − C = cq′. Hence S(T − C) / p the maximum value creation. Because production time not 360 days, but 360 − cq′, i.e. – 4 × 30 [=] 120; hence 20((360 − 120)/60); (20 × 240)/60 = 80.

Now, finally, as regards the formula

S′ = ST/p − (ST/p × c/(c + p)) = (360 × 20)/60 − 20(360/60 × 30/(30 + 60))

= 120 − (120 × 30/90) = 6 × 20 − (6 × 20 × 3/9)

= 20 × 6 − (20 × 6 × 1/3) or

= 120 − (120 × 1/3) = 120 − 40 = 80,

it signifies that value is equal to the maximum of value, i.e. to value determined only by the relation of production time to total time, minus the number which expresses how often the circulation time is contained in this maximum, plus c/(c + p) = c/R; c/R expresses the relation of circulation time to one turnover of capital. If we multiply numerator and denominator by q′ then cq′ / (c + p)q′ = C/T; c/(c + p) = 30/(30 + 60) = 1/3. c/(c + p) or 1/3 expresses the relation of circulation time to total time, for 360/3 = 120. The turnover (c + p) is contained in C, c/(c + p) or 1/3 times (or c/T times), and this number is the maximum itself multiplied by the number of times a turnover is contained in c, in the circulation time added to one turnover, or divided by the number which expresses how often c is contained in c + p or C in T. If c = 0, then S′ would be ST/p and would be at its maximum. S′ becomes smaller in the same degree as C grows, is inversely related to it, for the factor c/(c + p) and ST/p grows to the same degree. The number to be subtracted [from] the maximum value, ST/p × c/(c + p) or ST/p × c/R.

We have, then, the three equations: (1) S′ = ST/(p + c) = ST/R; (2) S′ = S(T − C) / p; (3) S′ = ST/p − (ST/p × c/(c + p)) = S[T/p − (T/p × c/(c + p))].

Hence: S:S′ = ST/p: S(T − C) / p; or S:S′ = T:(T − C). The maximum of value is to the real value as a given period of time is to this period of time minus total circulation time. Or, as well, S:S′ = pq′:(pq′ − q′c), i.e. = p:(p − c).

On (3) S′ = ST/p − (ST/p × c/(c + p)) = S[T/p − (T/p × c/(c + p))] or, since T/p = q,

S′ = S (q − q ⋅ c/(c + p)) = S(q − qc/R). The total surplus value, therefore, = to the surplus value posited in one production phase, whose coefficient is the number of times the production time is contained in the total time minus the number of times the circulation time of one turnover is contained in this latter number.

S(q − qc/R) = Sq(1 − 1c/R) = Sq((R − c)/R) = Sqp/R = ST/(p + c), which is the first equation. Thus equation 3 means … equation 1: the total surplus value equals the surplus value of one production phase multiplied by the total time, divided by turnover time or multiplied by the number of times the sum of production time and circulation time is contained in total time.

Equation 2: The total value equals surplus value multiplied by total time minus the total circulation time, divided by the duration of one production phase.>

Competition[edit source]

(The fundamental law in competition, as distinct from that advanced about value and surplus value, is that it is determined not by the labour contained in it, or by the labour time in which it is produced, but rather by the labour time in which it can be produced, or, the labour time necessary for reproduction. By this means, the individual capital is in reality only placed within the conditions of capital as such, although it seems as if the original law were overturned. Necessary labour time as determined by the movement of capital itself; but only in this way is it posited. This is the fundamental law of competition. Demand, supply, price (production costs) are further specific forms; price as market price; or general price. Then the positing of a general rate of profit. As a consequence of the market price, the capitals then distribute themselves among different branches. Reduction of production costs etc. In short, here all determinants appear in a position which is the inverse of their position in capital in general. There price determined by labour, here labour determined by price etc. etc. The influence of individual capitals on one another has the effect precisely that they must conduct themselves as capital; the seemingly independent influence of the individuals, and their chaotic collisions, are precisely the positing of their general law. Market here obtains yet another significance. The influence of capitals as individuals on each other thus becomes precisely their positing as general beings, and the suspension of the seeming independence and independent survival of the individuals. This suspension takes place even more in credit. And the most extreme form to which the suspension proceeds, which is however at the same time the ultimate positing of capital in the form adequate to it – is joint-stock capital.) (Demand, supply, price, production costs, contradiction of profit and interest, different relations of exchange value and use value, consumption and production.)

Surplus value. Production time. Circulation time. Turnover time. Part of capital in production time, part in circulation time. – Circulation time. – Surplus value and production phase. Number of reproductions of capital = number of turnovers. – Total surplus value etc.[edit source]

We have seen, then, that the surplus value a capital can posit in a given period of time is determined by the number of times the realization process can be repeated, or the capital can be reproduced in a given period of time; and that the number of these reproductions is determined by the relation of the duration of the production phase not to the total period of time, but rather to this total time minus circulation time. Circulation time thus appears as time during which the ability of capital to reproduce itself, and hence to reproduce surplus value, is suspended. Its productivity – i.e. its creation of surplus values – is therefore inversely related to circulation time, and would reach its maximum if the latter declined to 0. Circulation is an inescapable condition for capital, a condition posited by its own nature, since circulation is the passing of capital through the various conceptually determined moments of its necessary metamorphosis – its life process. In so far as it costs time for capital to run through this course, in this time capital cannot increase its value, because it is not-production time, time in which it does not appropriate living labour. Hence this circulation time can never increase the value created by capital, but can only posit not-value-positing time, hence appear as barrier to the increase of value, in the same relation as it stands towards labour time. This circulation time cannot be counted as part of value-creating time, for the latter is labour time which objectifies itself in value, and nothing else. It does not belong to the production costs of value, nor to the production costs of capital; but it is a condition which makes its self-reproduction more difficult. The obstacles which capital encounters in the path of its realization – i.e. its appropriation of living labour – do not, of course, form a moment of its realization, of its value-creation. Hence it is ridiculous to take production costs here in the original sense. Or we have to distinguish production costs as a particular form from the labour time which objectifies itself in value (as we must distinguish profit from surplus value). But even then, circulation time does not belong among capital’s production costs in the same sense as wages etc.; but rather it is an item which comes into consideration as part of the capitalists’ settling of accounts with one another, because they distribute the surplus value among themselves according to certain general proportions. Circulation time is not time during which capital creates value, but rather during which it realizes the value created in the production process. It does not increase its quantity, but rather transposes it into another form, from the form of product into that of commodity, from commodity to that of money etc.; the fact that the price which previously existed ideally in the commodity is now really posited, that it is now really exchanged for its price – money – does not, of course, increase this price. Thus circulation time appears as time which does not determine the price; and the number of turnovers, in so far as it is determined by circulation time, appears not in such a way that capital brings in a new value-determining element, an element proper to it, sui generis, as distinct from labour; but rather as a limiting, negative principle. The necessary tendency of capital is therefore circulation without circulation time, and this tendency is the fundamental determinant of credit and of capital’s credit contrivances. At the same time, credit is then also a form in which capital tries to posit itself as distinct from the individual capitals, or the individual capital [tries to posit] itself as capital as distinct from its quantitative barrier. But the highest result it achieves in this line is, on one side, fictitious capital; on the other side, credit only appears as a new element of concentration, of the destruction of capitals by individual, centralizing capitals. Circulation time is in one respect objectified in money. Attempt by credit to posit money as a merely formal moment; so that it mediates the formal transformation without itself being capital, i.e. value. This is one form, of circulation without circulation time. Money is itself a product of circulation. It will be shown how capital, in credit, creates new products of circulation. But if the striving of capital in one direction is circulation without circulation time, it strives in the other direction to give circulation time value, the value of production time, in the various organs which mediate the process of circulation time and of circulation; to posit them all as money, and, more broadly, as capital. This is another side of credit. All this springs from the same source. All the requirements of circulation, money, transformation of commodity into money, transformation of money into commodity etc. – although they take on different and seemingly quite heterogeneous forms, are all derived from circulation time. The machinery for abbreviating it is itself a part of it. Circulation time is that part of capital which may be regarded as the time it takes to perform its specific motion as capital, as distinct from production time, in which it reproduces itself; and in which it lives not as finished capital which must merely pass through formal metamorphoses, but as capital-in-process, creative capital, sucking its living soul out of labour.

The contradiction of labour time and circulation time contains the entire doctrine of credit, to the extent, namely, that the history of currency etc. enters here. Now, of course, later, where circulation time is not the only deduction from possible production time, there also appear real costs of circulation, i.e. values which have already been really posited must be spent on circulation. But these are all in fact only costs – deductions from already created surplus values – which capital undertakes in order to increase the sum of surplus values possible e.g. in a year, i.e. to increase the proportion of production time out of a given total time – i.e. to abbreviate circulation time. Of course, in practice, production time does not really appear interrupted by circulation time (except in crises and depressions of trade). But this is only because every capital is divided into parts, one part in the production phase, the other in the circulation phase. Thus, for example, it is not the entire capital that is active (depending on the relation of circulation time to production time), but only 1/3, 1/x of it; the other is engaged in circulation. Or the matter can further take the form that a given capital doubles (through credit, e.g.). For this capital – the original capital – it is then the same as if circulation time did not exist at all. But then the capital borrowed by it is in this plight. And if ownership is disregarded, again exactly the same as if one capital were divided in two. Instead of a dividing into two and b dividing into two, a absorbs b and divides into a and b. Illusions about this process frequent among credit-mystics[156] (who are rarely creditors, but rather debtors).

We already pointed out above that the double and contradictory condition of capital, the continuity of production and the necessity of circulation time, and also the continuity of circulation (not circulation time) and the necessity of production time, can be mediated only by capital dividing itself into parts, of which one circulates as finished product, and the other reproduces itself in the production process. These parts alternate; when one part returns into phase P (production process), the other departs. This process takes place daily, as well as at longer intervals (dimensions of time). The whole capital and the total value are reproduced as soon as both parts have passed through the production process and circulation process, or as soon as the second part enters anew into circulation. The point of departure is thereby the terminal point. The turnover therefore depends on the size of the capital, or rather, here, still on the total sum of these two parts. Only when the total sum is reproduced has the entire turnover been completed; otherwise only 1/2, 1/3, 1/x, depending on the relation of the constantly circulating part.

It has further been emphasized that each part can be regarded as fixed or as circulating in contrast to the other, and that they really relate to each other in this alternating way. The simultaneity of the process of capital in different phases of the process is possible only through its division and break-up into parts, each of which is capital, but capital in a different aspect. This change of form and matter is like that in the organic body. If one says e.g. the body reproduces itself in 24 hours, this does not mean it does it all at once, but rather the shedding in one form and renewal in the other is distributed, takes place simultaneously. Incidentally, in the body the skeleton is the fixed capital; it does not renew itself in the same period of time as flesh, blood. There are different degrees of speed of consumption (self-consumption) and hence of reproduction. (Here, then, already transition to many capitals.) The important thing here above all is to examine capital as such for itself first of all; since the aspects being developed here are those which make value in general into capital; which constitute the specific distinguishing characteristics of capital as such.

Before we go further, let us call attention once more to the important point that circulation time – i.e. the time during which capital is separated from the process in which it absorbs labour, i.e. the labour time of capital as capital – is only the transposition of previously created value from one form into the other, but not a value-creating, value-increasing element. The transformation of a value of 4 working days existing in the form of twist into the form of 4 working days existing as money, or of a symbol recognized as the representative of 4 working days as such, 4 working days in general, transposes the previously created and measured value from one form into another, but that value is not increased. The exchange of equivalents leaves the working days after the exchange just as they were before, qua amounts of value. If one thinks of one capital, or one thinks of the various capitals of a country as one capital (national capital) as distinct from that of other countries, then it is clear that the time during which this capital does not act as productive capital, i.e. posits no surplus value, is a deduction from the realization time available to this capital. In this abstract conception, still without any regard to the costs of circulation itself, it appears as the negation not of the really posited realization time, but of the possible realization time, i.e. possible if circulation time = 0. It is clear, now, that the national capital cannot regard the time during which it does not multiply itself as time in which it does multiply itself, no more than e.g. an isolated peasant can regard the time during which he can neither harvest nor sow, during which his labour generally is interrupted, as time which makes him rich. The fact that capital regards itself, and necessarily so, as productive and fruit-bearing independently of labour, of the absorption of labour, assumes itself as fertile at all times, and calculates its circulation time as value-creating time – as production cost – is quite another thing. In this way one can see what is wrong when e.g. Ramsay says: ‘the use of fixed capital modifies to a considerable extent the principle that value depends on quantity of labour. For some commodities on which the same quantity of labour has been expended require very different periods before they are fit for consumption. But as during this time the capital brings no return, in order that the employment in question should not be less lucrative than others in which the produce is sooner ready for use, it is necessary that the commodity, when at last brought to market, should be increased in value by all the amount of profit withheld.’ (This already assumes that capital as such regularly brings profit, like a healthy tree brings fruit.) ‘This shews … how capital may regulate value independently of labour.’[157] E.g. wine in the cellar. (Ramsay, IX, 84.) Here as if circulation time as well as labour time – or on the same level with it – produced value. Capital, of course, contains both moments in itself. (1) Labour time as a value-creating moment. (2) Circulation time as a moment which restricts labour time and thus restricts the total value creation of capital; as necessary, because value, or capital, as an immediate result of the production process, is indeed value, but value not posited in its adequate form. The time which is required for these changes of form – i.e. which elapses between production and reproduction – is time which devalues capital. Thus, like continuity, so is the interruption of continuity contained in the character of capital as circulating, in process.

The economists who correctly characterize circulation, the revolution which capital must go through to fire itself up for new production, as a series of exchanges thereby admit that this circulation time is not time which increases the quantity of values – hence it cannot be time which posits new values – because a series of exchanges, no matter how many exchanges it may include, and how much time the completion of these operations may cost, is merely the exchange of equivalents. The positing of values – the extremes of the mediation – as equivalents naturally cannot posit them as non-equivalents. Regarded quantitatively, they can have neither increased nor diminished through the exchange.

The surplus value of a production phase is determined by the surplus labour set in motion (appropriated) by capital during it; the sum of the surplus values a capital can create in a given period of time is determined by the repetition of the production phase in this period of time; or by the turnover of capital. The turnover, however, equals the duration of the production phase plus the duration of circulation, equals the sum of circulation time and production time. The turnover approaches production time as circulation time diminishes, i.e. the time which elapses between capital’s departure from production and its return to it.

Surplus value is in fact determined by the labour time objectified during one production phase. The more frequent the reproduction of capital, the more often does the production of surplus value take place. The number of reproductions = the number of turnovers. Hence the total surplus value = S × nR (if n is the number of turnovers). S′ = S × nR; hence S = S′/nR. If the production time required by a capital of £100 in a certain branch of industry equals 3 months, then it could turn over 4 times a year, and if the S-value created each time = 5, then the total surplus value = 5 (the S created in one production phase) × 4 (the number of turnovers, determined by the relation of production time to the year) = 20. But if circulation time = e.g. 1/4 of production time, then 1 turnover would = 3 + 1 months, equals 4 months, and the capital of 100 could turn over only 3 times a year = 15. Hence, although the capital posits an S-value of £5 in 3 months, it is the same for it as if it posited a value of 5 in only 4 months, because it can only posit 5 × 3 per year. It is the same for it as if it produced an S of 5 every 4 months; hence produced only 15/4 or 3 3/4 in 3 months, and in the one circulation month, 1 1/4. In so far as turnover is distinct from the duration posited by the conditions of production, it is = to circulation time. The latter, however, is not determined by labour time. In this way the sum of surplus values which capital posits in a given period of time appears determined not simply by labour time, but by labour time as well as circulation time, in the relations indicated above. But, as shown above, the determination which capital here brings into the positing of value is negative, limiting.

If e.g. a capital of £100 needs 3 months for production, say 90 days, then, if circulation time = 0, the capital could turn over 4 times a year; and it would be entirely active as capital the whole time, i.e. positing surplus labour, multiplying its value. If 80 of the 90 days represented necessary labour, then 10, surplus labour. Now posit that circulation time amounts to 33 1/3% of production time, or 1/3 of it. Hence 1 month for every 3. Circulation time then = 90/3; a third of production time = 30 days, c = 1/3 p; (c = p/3). Well. The question is, what part of the capital can now continuously be occupied in production (during the whole year)? If the capital of 100 had worked 90 days, and then circulated as a product of 105 for one month, then during this month it could employ no labour at all. (The 90 working days can of course equal 3, 4, 5, x times 90, depending on the number of workers employed during the 90 days. These would be = to only 90 days if only 1 worker were employed. But this is beside the point for now.) (In all these calculations it is presupposed that the surplus value is not in turn capitalized, but that capital rather continues to work with the same number of workers; but at the same time as the surplus is realized, the entire capital is only then realized as money.) That is, during one month the capital could not be employed at all. (The capital of 100 employs e.g. 5 workers continuously; this contains their surplus labour, and the product which is circulated is never the original capital, but rather that which has absorbed this surplus labour and hence has a surplus value. Hence the circulation of a capital of 100 actually means e.g. circulation of the capital of 105; i.e. of capital together with the profit posited in one act of production. But this error irrelevant here, particularly in the above question.)

(Posit that at the end of 3 months £100 worth of twist have been produced.) Now it will be 1 month before the money comes in and I can begin production again. Now, in order to set the same number of workers to work during the I month while the capital is circulating, I would have to have a surplus capital of £33 1/3; for if £100 set a given quantity of labour in motion for 3 months, then 1/3 of £100 would set it in motion for 1 month. At the end of the fourth month, the capital of 100 would return to the production phase, and that of 33 1/3 would enter the circulation phase. The latter would require 1/3 of a month for circulation, given the same relations; would hence return into production after 10 days. The first capital could enter into circulation again only at the end of the seventh month. The second, which entered into circulation at the beginning of the fifth month, would have returned say on the 10th of the fifth month, would re-enter circulation on the 10th of the sixth month and would return on the 20th of the sixth month, to re-enter circulation on the 20th of the seventh month; at the end of the seventh month it would be back again, at which time the first capital would just be beginning its course again at the same moment when the second was returning. Beginning of the eighth month, and return on the etc. Beginning of the ninth etc. In a word: if the capital were 1/3 larger – just the amount the circulation time adds up to – then it could continuously employ the same number of workers. Or, alternately, it could continuously remain in the production phase if it continuously employed 1/3 less labour. If the capitalist began with a capital of only 75, then production would finish at the end of the third month; then the capital would circulate for one month; but during this month he could continue production because he would have retained a capital of 25, and, if he needs 75 to set a given mass of labour in motion during 3 months, he needs 25 to set the same in motion for 1 month. He would continuously have the same number of workers at work. Each of his commodities requires 1/12 of a year before it is sold.

If he always needs 1/3 of the production time to sell his commodities, then etc. This matter must be reducible to a very simple equation, to which we shall return later. It does not actually belong here. But the question is important because of the credit questions later. This much is clear, however. Call production time pt, circulation time ct. Capital, C. C cannot be in its production phase and its circulation phase at the same time. If it is to continue to produce while it circulates, then it must break into two parts, of which one in the production phase, while the other in the circulation phase, and the continuity of the process is maintained by part a being posited in the former aspect, part b in the latter. Let the portion which is always in production be x; then x = C − b (let b be the part of the capital always in circulation). C = b + x. If ct, circulation time, were = 0, then b likewise would be = 0, and x = C. b (the part of the capital in circulation):C (the total capital) = ct (circulation time):pt (production time); b:C = ct:pt; i.e. the relation of circulation time to production time is the relation of the part of capital in circulation to the total capital.

If a capital of 100 at a profit of 5% turns over every 4 months, so that there is 1 month of circulation time for every 3 months of production time, then the total surplus value, as we saw, will be = (5 × 12)/4 M (month) = 5 × 3 = 15; instead of 20 as when c = 0; for then S′ = (5 × 12)/3 = 20. But now 15 is the gain on a capital of 75 at 5% whose circulation time = 0; which turned over 4 times a year; was continuously occupied. At the end of the first quarter 3 3/4; at the end of the year 15. (But only a total capital of 300 would turn over; while one of 400 if in the above case ct = 0.) Hence a capital of 100, with respect to which circulation time amounts to 1 month on every 3 M production time, can constantly employ productively a capital of 75; a capital of 25 is constantly circulating and unproductive. 75:25 = 3 M:1 M, or, if we call the part of the capital occupied in production p, the part in circulation c, and the corresponding times c′ and p′, then p:c = p′:c′ (p:c = 1:1/3). The part of the C in production constantly relates to the part in circulation as 1:1/3; this 1/3 constantly represented by changing component parts. But p:C = 75:100 = 3/4; c = 1/4; p:C = 1:4/3 and c:C = 1:4. The total turnover = 4 M, p:R = 3 M:4 M = 1:4/3.

Change of form and of matter in the circulation of capital. – C–M–C. M–C–M.[edit source]

A change of form [Formwechsel] and a change of matter [Stoffwechsel] take place simultaneously in the circulation of capital. We must begin here not with the presupposition of M, but with the production process. In production, as regards the material side, the instrument is used up and the raw material is worked up. The result is the product – a newly created use value, different from its elemental presuppositions. As regards the material side, a product is created only in the production process. This is the first and essential material change. On the market, in the exchange for money, the product is expelled from the circulation of capital and falls prey to consumption, becomes object of consumption, whether for the final satisfaction of an individual need or as raw material for another capital. In the exchange of the commodity for money, the material and the formal changes coincide; for, in money, precisely the content itself is part of the economic form. The retransformation of money into commodity is here, however, at the same time present in the retransformation of capital into the material conditions of production. The reproduction of a specific use value takes place, just as well as of value as such. But, just as the material element here was posited, from the outset, at its entry into circulation, as a product, so the commodity in turn was posited as a condition of production at the end of it. To the extent that money figures here as medium of circulation, it does so indeed only as mediation of production, on one side with consumption, in the exchange where capital discharges value in the form of the product, and as mediation, on the other side, between production and production, where capital discharges itself in the form of money and draws the commodity in the form of the condition of production into its circulation. Regarded from the material side of capital, money appears merely as a medium of circulation; from the formal side, as the nominal measure of its realization, and, for a specific phase, as value-for-itself; capital is therefore C–M–M–C just as much as it is M–C–C–M, and this in such a way, specifically, that both forms of simple circulation here continue to be determinants, since M–M is money, which creates money, and C–C a commodity whose use value is both reproduced and increased. In regard to money circulation, which appears here as being absorbed into and determined by the circulation of capital, we want only to remark in passing – for the matter can be thoroughly treated only after the many capitals have been examined in their action and reaction upon one another – that money is obviously posited in different aspects here.

Difference between production time and labour time. – Storch. Money. Mercantile estate. Credit. Circulation[edit source]

Until now it has been assumed that production time coincides with labour time. But now there take place, e.g. in agriculture, interruptions of work within the production process itself, before the product is finished. The same labour time may be applied and the duration of the production phase may differ, because work is interrupted. If the difference is only that the product in one case requires a longer working time in order to be finished than in another case, then no case at all is constituted, because it is then clear according to the general law that the product in which a greater quantity of labour is contained is of that much greater value, and if the reproduction is less frequent in a given period of time, then the reproduced value is all the greater. And 2 × 100 is just as much as 4 × 50. As with the total value, then, so with the surplus value. The question is constituted by the unequal duration required by different products, although the same amount of labour time (namely stored-up and living labour together) is employed upon them. The fixed capital here allegedly acts quite by itself, without human labour, like e.g. the seed entrusted to the earth’s womb. In so far as additional labour is required, this is to be deducted. The question to be posed in pure form. If circulation time here the same, then the turnover is less frequent because the production phase longer. Hence production time + turnover time = 1R, larger than in the case where production time coincides with labour time. The time required here for the product to reach maturity, the interruptions of work, here constitute conditions of production. Not-labour time constitutes a condition for labour time, in order to turn the latter really into production time. The question obviously belongs only with the equalization of the rate of profit. Still, the ground must be cleared here. The slower return – this is the essential part – here arises not from circulation time, but rather from the conditions themselves in which labour becomes productive; it belongs with the technological conditions of the production process. It must absolutely be denied, it is downright nonsensical to claim, that a natural circumstance which hinders a capital in a specific branch of production from exchanging with the same amount of labour time in the same amount of time as another capital in another branch of production can in any way contribute to increasing the former’s value. Value, hence also surplus value, is not = to the time which the production phase lasts, but rather to the labour time, objectified and living, employed during this production phase. The living labour time alone – and, indeed, in the proportion in which it is employed relative to objectified labour time – can create surplus value, because [it creates] surplus labour time.[158] It has therefore correctly been asserted that in this regard agriculture for instance is less productive (productivity is concerned here with the production of values) than other industries. Just as in another respect – in so far as a growth of productivity in it DIRECTLY reduces necessary labour time – it is more productive than all the others. But this circumstance can accrue to its advantage only where capital already rules, together with the general form of production corresponding to it. This interruption in the production phase already signifies that agriculture can never be the sphere in which capital starts; the sphere in which it takes up its original residence. This contradicts the primary fundamental conditions of industrial labour. Hence agriculture is claimed for capital and becomes industrial only retroactively. Requires a high development of competition on one side, on the other a great development of chemistry, mechanics etc., i.e. of manufacturing industry. History shows, consequently, that agriculture never appears in pure form in the modes of production preceding capital, or which correspond to its own undeveloped stages. A rural secondary industry, such as spinning, weaving etc. must make up for the limit on the employment of labour time posited here – and located in these interruptions. The non-identity of production time with labour time can be due generally only to natural conditions, which stand directly in the path of the realization of labour, i.e. the appropriation of surplus labour by capital. These obstacles in its path do not of course constitute advantages, but rather, from its point of view, losses. The whole case is worth mentioning here actually only as an example of fixated capital, capital fixated in one phase. The point to remember here is only that capital creates no surplus value as long as it employs no living labour. The reproduction of the employed fixed capital itself is of course not the positing of surplus value.

(In the human body, as with capital, the different elements are not exchanged at the same rate of reproduction, blood renews itself more rapidly than muscle, muscle than bone, which in this respect may be regarded as the fixed capital of the human body.)

As means of speeding up circulation, Storch lists: (1) formation of a class of ‘workers’ who busy themselves only with trade; (2) easy means of transport; (3) money; (4) credit. (See above.)[159]

This motley combination reveals the whole confusion of the political economists. Money and money circulation – what we called simple circulation – is the presupposition, condition, of capital itself, as well as of the circulation of capital. Money as it exists, hence, as a relation of intercourse belonging to a stage of production preceding capital, money as money, in its immediate form, can therefore not be said to speed up the circulation of capital, but is rather its presupposition. When we speak of capital and of its circulation, we stand on a stage of social development where the introduction of money does not enter as a discovery etc., but is rather a presupposition. To the extent that money in its immediate form itself has value, and is not merely the value of other commodities, the symbol of their value – for, if something which is itself immediate is supposed to be something else which is also immediate, then it can only represent the latter, in one way or another, as symbol – but rather, itself has value, is itself objectified labour in a specific use value, to that extent, money, so far from speeding up the circulation of capital, rather delays it. Regarded in both of the aspects in which it occurs in the circulation of capital, both as medium of circulation and as the realized value of capital, money belongs among the costs of circulation in so far as it is itself labour time employed to abbreviate circulation time on the one hand, and, on the other hand, to represent a qualitative moment of circulation – the retransformation of capital into itself as value-for-itself. In neither aspect does it increase the value. In one aspect it is a precious form of representing value, i.e. a costly form, costing labour time, hence representing a deduction from surplus value. In the other aspect it can be regarded as a machine which saves circulation time, and hence frees time for production. But, in so far as it itself, as such a machine, costs labour and is a product of labour, it represents for capital faux frais de production. It figures among the costs of circulation. The original cost of circulation is circulation time itself as opposed to labour time. The real costs of circulation are themselves objectified labour time – machinery for the purpose of abbreviating the original costs of circulation. Money in its immediate form, as it belongs to a historic stage of production preceding capital, thus appears to capital as a cost of circulation, and the efforts of capital hence tend in the direction of transforming it into a form adequate for its own ends; hence attempting to make it into a representative of one moment of circulation which does not itself cost labour, and has itself no value. Capital hence tends in the direction of suspending money in its inherited, immediate reality, and transforming it into something merely posited and at the same time suspended by capital, into something purely ideal. It cannot be said, therefore, as does Storch, that money as such is a means of speeding up the circulation of capital; it must rather be said to the contrary that capital attempts to transform money into a merely ideal moment of its circulation, and first to raise it into the adequate form corresponding to it. Suspension of money in its immediate form appears as a demand made by money circulation once it has become a moment of the circulation of capital; because in its immediate, presupposed form it is a barrier to the circulation of capital. The tendency of capital is circulation without circulation time; hence also the positing of the instruments which merely serve to abbreviate circulation time as mere formal aspects posited by it, just as the different moments through which capital passes in its circulation are qualitative aspects of its own metamorphosis.

As regards the formation of a special mercantile estate – i.e. a development of the division of labour which has transformed the business of exchanging into a particular kind of work – for which, of course, the sum of exchange operations must already have reached a certain height – (if the exchange among 100 people occupied the 100th part of their labour time, then each man is 1/100 of an exchanger; 100/100 exchangers would represent one single man. Then one merchant could arise per 100. The separation of commerce from production itself, or the development of exchange itself as a representation opposite the exchangers, requires as such that exchange and intercourse have developed to a certain degree. The merchant represents all buyers to the seller, all sellers to the buyer and vice versa, hence he is not an extreme, but rather the middle of the exchange itself; appears hence as mediator, middleman) – the formation of the merchant estate, which presupposes that of money, even if not developed in all its moments, is likewise a presupposition for capital, and hence cannot be listed as being a mediator of its specific circulation. Since commerce is both historically as well as conceptually a presupposition for the rise of capital, we shall have to return to it before concluding this chapter, since it belongs before or in the section on the origin of capital.

The facilitation of the means of transport, to the extent that it means facilitation of the physical circulation of commodities, does not belong here, where we are examining merely the characteristic forms of the circulation of capital. The product becomes a commodity, leaves the production phase, only when it is on the market. On the other side, the means of transportation do belong here in so far as the returns of capital – i.e. circulation time – must grow with the distance of the market from the point of production. Its abbreviation by means of transport thus appears as belonging directly, in this respect directly, to the examination of the circulation of capital. But this actually belongs to the doctrine of the market, which itself belongs to the section on capital.

Finally, credit. This form of circulation etc. directly posited by capital – which arises, hence, specifically from the nature of capital, this specific characteristic of capital – is mixed up here by Storch etc. together with money, mercantile estate, etc., which belong generally with the development of exchange and of the production more or less founded on it. The presentation of the specific, distinguishing characteristics is here both the logical development and the key to the understanding of the historical development. Thus we find in history, too, e.g. in England (likewise in France), [attempts] to replace money by paper; then also to give capital, in so far as it exists in the form of value, a form purely posited by itself; finally attempts to found credit directly with the rise of capital. (E.g. Petty, Boisguillebert.)

Small-scale circulation. The process of exchange between capital and labour capacity generally. Capital in the reproduction of labour capacities[edit source]

Within circulation as the total process, we can distinguish between large-scale and small-scale circulation. The former spans the entire period from the moment when capital exits from the production process until it enters it again. The second is continuous and constantly proceeds simultaneously with the production process. It is the part of capital which is paid out as wages, exchanged for labouring capacity. The circulation process of capital, which is posited in the form of an exchange of equivalents, but is in fact suspended as such, and posited as such only formally (the transition from value to capital, where the exchange of equivalents turns into its opposite, and where, on the basis of exchange, exchange becomes purely formal, and the mutuality is all on one side), is to be developed in this way: Values which become exchanged are always objectified labour time, an objectively available, reciprocally presupposed quantity of labour (present in a use value). Value as such is always an effect, never a cause. It expresses the amount of labour by which an object is produced, hence – presupposing the same stage of the productive forces – the amount of labour by which it can be reproduced. The capitalist does not exchange capital directly for labour or labour time; but rather time contained, worked up in commodities, for time contained, worked up in living labour capacity. The living labour time he gets in exchange is not the exchange value, but the use value of labour capacity. Just as a machine is not exchanged, paid for as cause of effects, but as itself an effect; not according to its use value in the production process, but rather as product – definite amount of objectified labour. The labour time contained in labour capacity, i.e. the time required to produce living labour capacity, is the same as is required – presupposing the same stage of the productive forces – to reproduce it, i.e. to maintain it. Hence, the exchange which proceeds between capitalist and worker thus corresponds completely to the laws of exchange; it not only corresponds to them, but also is their highest development. For, as long as labour capacity does not itself exchange itself, the foundation of production does not yet rest on exchange, but exchange is rather merely a narrow circle resting on a foundation of non-exchange, as in all stages preceding bourgeois production. But the use value of the value the capitalist has acquired through exchange is itself the element of realization and its measure, living labour and labour time, and, specifically, more labour time than is objectified in labour capacity, i.e. more labour time than the reproduction of the living worker costs. Hence, by virtue of having acquired labour capacity in exchange as an equivalent, capital has acquired labour time – to the extent that it exceeds the labour time contained in labour capacity – in exchange without equivalent; it has appropriated alien labour time without exchange by means of the form of exchange. This is why exchange becomes merely formal, and, as we saw, in the further development of capital even the semblance is suspended that capital exchanges for labour capacity anything other than the latter’s own objectified labour; i.e. that it exchanges anything at all for it. The turn into its opposite [Umschlag] therefore comes about because the ultimate stage of free exchange is the exchange of labour capacity as a commodity, as value, for a commodity, for value; because it is given in exchange as objectified labour, while its use value, by contrast, consists of living labour, i.e. of the positing of exchange value. The turn into its opposite arises from the fact that the use value of labour capacity, as value, is itself the value-creating force; the substance of value, and the value-increasing substance. In this exchange, then, the worker receives the equivalent of the labour time objectified in him, and gives his value-creating, value-increasing living labour time. He sells himself as an effect. He is absorbed into the body of capital as a cause, as activity. Thus the exchange turns into its opposite, and the laws of private property – liberty, equality, property – property in one’s own labour, and free disposition over it – turn into the worker’s propertylessness, and the dispossession [Entäusserung] of his labour, [i.e.] the fact that he relates to it as alien property and vice versa.

The circulation of the part of capital which is posited as wages accompanies the production process, appears as an economic form-relation alongside it, and is simultaneous and interwoven with it. This circulation alone posits capital as such; is the condition of its realization process, and posits not only the latter’s characteristic form, but also its substance. This is the constantly circulating part of capital, which at no time enters into the production process itself, [but] constantly accompanies it. It is the part of capital which does not even for a single instant enter into its reproduction process, which is not the case with raw material. The worker’s approvisionnement arises out of the production process, as product, as result; but it never enters as such into the production process, because it is a finished product for individual consumption, enters directly into the worker’s consumption, and is directly exchanged for it. This, therefore, as distinct from raw material as well as instrument, is the circulating capital ϰατ᾽ ἐξοχήν. Here is the only moment in the circulation of capital where consumption enters directly. At the point where the commodity becomes exchanged for money, it may be acquired by another capital as raw material for new production. Further, given the presuppositions, capital encounters not the individual consumer but rather the merchant; someone who buys the commodity itself in order to sell it for money. (This presupposition is to be developed in connection with the merchant estate in general. The circulation among dealers thereby different from that between dealers and consumers.) Thus the circulating capital here appears directly as that which is specified for the workers’ individual consumption; specified for direct consumption generally, and hence existing in the form of finished product. Thus, while in one respect capital appears as the presupposition of the product, the finished product also at the same time appears as the presupposition of capital – which means, historically, that capital did not begin the world from the beginning, but rather encountered production and products already present, before it subjugated them beneath its process. Once in motion, proceeding from itself as basis, it constantly posits itself ahead of itself in its various forms as consumable product, raw material and instrument of labour, in order constantly to reproduce itself in these forms. They appear initially as the conditions presupposed by it, and then as its result. In its reproduction it produces its own conditions. Here, then – through the relation of capital to living labour capacity and to the natural conditions of the latter’s maintenance – we find circulating capital specified in respect of its use value as well, as that which enters directly into individual consumption, to be directly used up by the latter. It is a mistake to conclude from this, as has been done,[160] that circulating capital is therefore consumable capital generally, as if coal, oil, dye etc., instruments etc., improvements of the land etc. factories etc. were not all consumed likewise, if by consumption is meant the suspension of their use value and of their form; however, one could just as well say that none of them is consumed, if this is taken to mean individual consumption, i.e. consumption in the proper sense. In this circulation, capital constantly expels itself as objectified labour, in order to assimilate living labour power, its life’s breath. Now, as regards the worker’s consumption, this reproduces one thing – namely himself, as living labour capacity. Because this, his reproduction, is itself a condition for capital, therefore the worker’s consumption also appears as the reproduction not of capital directly, but of the relations under which alone it is capital. Living labour capacity belongs just as much among capital’s conditions of existence as do raw material and instrument. Thus it reproduces itself doubly, in its own form, [and] in the worker’s consumption, but only to the extent that it reproduces him as living labour capacity. Capital therefore calls this consumption productive consumption – productive not in so far as it reproduces the individual, but rather individuals as labour capacities. If Rossi is offended that wages are allegedly counted twice, first as the worker’s revenue, then as reproductive consumption of capital,[161] then the objection holds only against those who let wages enter directly into the production process of capital as value. For the payment of wages is an act of circulation which proceeds simultaneously with and alongside the act of production. Or, as Sismondi says from this perspective – the worker consumes his wages unreproductively; but the capitalist consumes them productively, since he gets labour in the exchange, which reproduces the wages and more than the wages. This concerns capital itself regarded merely as an object. But in so far as capital is a relation, and, specifically, a relation to living labour capacity, [to that extent] the worker’s consumption reproduces this relation; or, capital reproduces itself doubly, as value through purchase of labour – as a possibility of beginning the realization process anew, of acting as capital anew – and as a relation through the worker’s consumption, which reproduces him as labour capacity exchangeable for capital – wages as part of capital.

This circulation between capital and labour, then, yields the characterization of one part of capital as constantly circulating, the approvisionnement; constantly consumed; constantly to reproduce. This circulation strikingly reveals the difference between capital and money; the circulation of capital and the circulation of money. Capital pays wages e.g. weekly; the worker takes his wages to the grocer etc.; the latter directly or indirectly deposits them with the banker; and the following week the manufacturer takes them from the banker again, in order to distribute them among the same workers again, etc. and so forth. The same sum of money constantly circulates new portions of capital. The sum of money itself, however, does not determine the portions of capital which are thus circulated. If the money value of wages rises, then the circulating medium will increase, but the mass of the medium does not determine the rise. If the production costs of money did not fall, then no increase of money would exercise an influence on the portion of it entering into this circulation. Here money appears as mere medium of circulation. Since many workers are to be paid at the same time, a certain sum of money is required at one time, which grows with the number of workers. Then, however, the velocity of the circulation of the money makes a lesser sum necessary than in situations where there are fewer workers but the machinery of monetary circulation is not so arranged. This circulation is a condition of the production process and thereby of the circulation process as well. On the other hand, if capital does not return from circulation, then this circulation between worker and capital could not begin anew; hence it is itself conditional upon capital passing through the various moments of its metamorphosis outside the production process. If this did not happen, it would be not because there was not enough money as medium of circulation, but rather either because capital was not available in the form of products, because this part of circulating capital was lacking, or because capital did not posit itself in the form of money, i.e. did not realize itself as capital, which in turn, however, would arise not from the quantity of the medium of circulation, but because capital did not posit itself in the qualitative aspect of money, which in no way requires that it posit itself in the form of hard cash, in the immediate money form; and whether or not it posited itself in that form would again depend not on the quantity of money circulating as medium of circulation, but rather on the exchange of capital for value as such; again a qualitative, not a quantitative, moment, as we shall point out in more detail when we speak of capital as money. (Interest etc.)

Threefold character, or mode, of circulation. – Fixed capital and circulating capital. – Turnover time of the total capital divided into circulating and fixed capital. – Average turnover time of such a capital. – Influence of fixed capital on the total turnover time of capital. – Circulating fixed capital. Say. Smith. Lauderdale. (Lauderdale on the origin of profit)[edit source]

Regarded as a whole, circulation thus appears threefold: (1) the total process – the course of capital through its different moments; accordingly, it is posited as being in flow; as circulating; in so far as the continuity is virtually interrupted, and may resist the passage into the next phase, capital here likewise appears as fixated in different relations, and the various modes of this fixation constitute different capitals, commodity capital, money capital, capital as conditions of production.

(2) Small-scale circulation between capital and labour capacity. This accompanies the production process and appears as contract, exchange, form of intercourse; these things are presupposed before the production process can be set going. The part of capital entering into this circulation – the approvisionnement – is circulating capital ϰατ᾽ ἐξοχήν. It is specified not only in respect to its form; in addition to this, its use value, i.e. its material character as a consumable product entering directly into individual consumption, itself constitutes a part of its form.

(3) Large-scale circulation; the movement of capital outside the production phase, where its time appears in antithesis to labour time, as circulation time. The distinction between fluid and fixed capital is the product of this opposition between the capital engaged in the production phase and the capital which issues from it. Fixed is that which is fixated in the production process and is consumed within it; comes out of large-scale circulation, certainly, but does not return into it, and, in so far as it circulates, circulates only in order to be consumed in, confined to, the consumption process.

The three different distinctions in the circulation of capital yield the three distinctions between circulating and fixated capital; they posit one part of capital as circulating ϰατ᾽ ἐξοχήν, because it never enters into the production process, but constantly accompanies it; and thirdly, [they yield] the distinction between fluid and fixed capital. Circulating capital in form No. 3 also includes No. 2, since the latter is also in antithesis to the fixed; but No. 2 does not include No. 3. The part of capital which belongs as such to the production process is the part of it which serves, materially, only as means of production; forms the link between living labour and the material to be worked on. A part of the liquid capital, such as coal, oil etc., also serves merely as means of production. Everything which serves merely as a means to keep the machine, or the engine, running. This distinction will have to be examined yet more closely. First of all, this does not contradict aspect 1, since the fixed capital as value also circulates in proportion as it is worn out. Precisely in this aspect as fixed capital – i.e. in the character in which capital has lost its fluidity and become identified with a specific use value, which robs it of its ability to transform itself – does developed capital – to the extent we know it so far, as productive capital – most strikingly manifest itself, and it is precisely in this seemingly inadequate form, and in the latter’s increasing relation to the form of circulating capital in No. 2, that the development of capital as capital is measured. This contradiction pretty. To be developed.

The different kinds of capital, which, in economics, fall out of the sky, here appear as so many precipitates of the movements arising out of the nature of capital itself, or rather of this movement itself in its different moments.

Circulating capital constantly ‘parts’ from the capitalist, in order to return to him in the first form. Fixed capital does not (Storch).[162] ‘Circulating capital is that portion of the capital which does not yield profit till it is parted with; fixed etc. yields such profit, while it remains in the possession of the owner.’ (Malthus.)[163] ‘Circulating capital gives its master no revenue or profit, so long as it remains in his possession; fixed capital gives this profit without changing masters, and without requiring circulation.’ (A. Smith.)[164]

In this respect, since capital’s departure on a voyage away from its owner (‘partir de son possesseur’)[165] means nothing more than the sale of property or possessions which takes place in the act of exchange, and since it is the nature of all exchange value, hence all capital, to become value for its owner by means of sale, the definition in its above formulation cannot be correct. If fixed capital were [capital] for its owner without the mediation of exchange and of the use value included in it, then, in fact, fixed capital would be a mere use value, hence not capital. But the basis of the above definition is this: fixed capital circulates as value (even if only in portions, successively, as we shall see). It does not circulate as use value. As far as its material aspect is concerned, as a moment of the production process, fixed capital never leaves its boundaries; is not sold by its possessor; remains in his hand. It circulates as capital only in its formal aspect, as self-eternalizing value. This distinction between form and content, use value and exchange value, does not take place in circulating capital. In order to circulate, to exist, as the latter, it has to step into circulation as the former, must be sold. Use value for capital as such is only value itself. Circulating capital realizes itself as value for capital as such only when it is sold. As long as it remains in its hand, it only has value in itself; but it is not posited; only in potency – but not in act. Fixed capital, by contrast, realizes itself as value only as long as it remains in the capitalist’s hand as a use value, or, expressed as an objective relation, as long as it remains in the production process, which may be regarded as the inner organic movement of capital, its relation to itself, as opposed to its animal movement, its presence for another. Hence, since fixed capital, once it has entered the production process, remains in it, it also passes away in it, is consumed in it. The duration of this consumption does not yet concern us here. In this respect, then, fixed capital also includes what Cherbuliez calls the matières instrumentales,[166] such as coal, oil, wood, grease etc., which are completely destroyed in the production process, which only have a use value for the process of production itself. The same materials, however, also have a use value outside production, and can also be consumed in another way, just as buildings, houses, etc. are not necessarily specified for production. They are fixed capital not because of the specific mode of their being, but rather because of their use. They become fixed capital as soon as they step into the production process. They are fixed capital, as soon as they are posited as moments of the production process of capital; because they then lose their property of being potentially circulating capital.

Therefore, just as the part of capital entering into the small-scale circulation of capital – or capital, in so far as it enters into this movement – circulation between capital and labour capacity, the part of capital circulating as wages – never leaves the circulation process and never enters into the production process of capital, as regards its material aspect, as use value, but rather is always ejected from a previous production process as its product, result, so, inversely, does the part of capital specified as fixed capital, as a use value, as regards its material presence, never leave the production process and never go back into circulation. While the latter only enters into circulation as value (as part of the value of the finished product), the former only enters into the production process as value, in that necessary labour is the reproduction of wages, of the part of the capital’s value which circulates as wages. This, then, is the first characteristic of fixed capital, and in this respect it also includes the matières instrumentales.

Secondly: Fixed capital can enter into circulation as value, however, only to the extent that it passes away as use value in the production process. It passes, as value, into the product – i.e. as labour time worked up or stored up in it – in so far as it passes away in its independent form as use value. In being used, it is used up, but in such a way that its value is carried over from its form into the form of the product. If it is not used, not consumed in the production process itself – if the machinery stands still, the iron rusts, the wood rots – then of course its value passes away together with its transitory presence as use value. Its circulation as value corresponds to its consumption in the production process as use value. Its total value is completely reproduced, i.e. is fully returned via circulation only when it has been completely consumed as use value in the production process. As soon as it is completely dissolved into value, and hence completely absorbed into circulation, it has completely passed away as use value and hence must be replaced, as a necessary moment of production, by a new use value of the same kind, i.e. must be reproduced. The necessity of reproducing it, i.e. its reproduction time, is determined by the time in which it is used up, consumed within the production process. With circulating capital, reproduction is determined by circulation time; with fixed capital, circulation is determined by the time in which it is consumed as use value, in its material presence, within the act of production, i.e. by the period of time within which it must be reproduced. A thousand pounds of twist can be reproduced as soon as they are sold and the money obtained for them is again exchanged for cotton, in short, for the elements of the production of twist. Their reproduction is determined, hence, by circulation time. A machine of a value of £1,000 which lasts 5 years, which is used up in 5 years and then becomes nothing more than scrap iron, is used up, say, by 1/5 per year, if we take the average consumption in the production process. Hence every year only 1/5 of its value enters into circulation, and only with the passing of the 5 years has it completely gone into circulation and returned from it. Its entry into circulation is thus purely determined by the time of its wearing out; and the time which its value needs to enter totally into circulation and to return from it is determined by its total reproduction time, the time in which it must be reproduced. Fixed capital enters into the product only as value; while the use value of circulating capital has remained in the product as the latter’s substance, and has merely obtained another form. This distinction essentially modifies the turnover time of a total capital divided into circulating and fixed capital. Let total capital = S; its circulating part = c; its fixed part = f; let the fixed capital form 1/x S; the circulating capital S/y. Let the circulating capital turn over 3 times a year, the fixed capital only twice every 10 years. In 10 years, f or S/x will turn over twice; while in the same 10 years S/y will turn over 3 × 10 = 30 times. If S were = S/y, i.e. circulating capital only, then R, its turnover, would be = 30; and the total capital turned over = 30 × S/y; the total capital turned over in 10 years. But the fixed capital turns over only twice in 10 years. Its R′ = 2; and the total fixed capital turned over = 2S/x. But S = S/y + S/x and its total turnover time = the total turnover time of both these parts. If the fixed capital turns over twice in 10 years, then in one year 2/10 or 1/5 of it turns over; while in one year the circulating capital turns over 3 times. S/5x turns over once a year.

The question simply this: if a capital of 1,000 thalers = 600 circulating capital and 400 fixed capital; thus 3/5 circulating and 2/5 fixed capital; if the fixed capital lasts 5 years, hence turns over once in 5 years and the circulating turns over 3 times a year, then what is the average turnover or turnover time of the total capital? If it were circulating capital only, then it would turn over 5 × 3, 15 times; the total capital turned over in the 5 years would be 15,000. But 2/5 of it turn over only once in 5 years. Hence, of the 400 thalers, 400/5 = 80 thalers turn over in one year. Of the 1,000 thalers, 600 annually turn over 3 times, 80 once; or, in one year, only 1,880 would turn over; hence in 5 years 5 ×1,880 = 9,400 turn over; i.e. 5,600 less than if the total capital consisted only of circulating capital. If the entire capital consisted only of circulating capital, then it would turn over once in 1/3 of a year.

If the capital = 1,000; c = 600, turns over twice a year; f = 400, turns over once a year; then 600 (3/5 S) turns over in half a year; 400/2 or 2S/(5 × 2) likewise in half a year. Hence in half a year, 600 + 200 = 800 (i.e. c + f/2) turns over. IN A WHOLE YEAR, hence, 2 × 800 or 1,600 turn over; 1,600 thalers in 1 year; hence 100 in 12/16 months, hence 1,000 in 120/16 months = 7 1/2 months. The total capital of 1,000 thus turns over in 7 1/2 months, while it would turn over in 6 months if it consisted of circulating capital only. 7 1/2: 6 = 1:1 1/4 or as 1:5/4. If the capital = 100, circulating = 50, fixed = 50; the former turns over twice a year, the latter once; then 1/2 100 turns over once in 6 months; and 1/4 100 likewise once in 6 months; hence in 6 months 3/4 of the capital turns over, 3/4 100 in 6 months; or 75 in 6 months, and 100 in 8 months. If 2/4 100 turn over in 6 months, and in the same 6 months 1/4 100 (1/2 of the fixed capital), then 3/4 100 turn over in 6 months. Hence 1/4 in 6/3 = 2 [months]; hence 4/4 100 or 100 in 6 + 2, in 8 months. The total turnover time of the capital = 6 (the turnover time of the entire circulating capital and 1/2; of the fixed capital or 1/4 of the total capital) + 6/3 i.e. + this turnover time divided by the number expressing the ratio of the remaining fixed capital to the capital turned over in the turnover time of circulating capital. Thus in the above example: 3/5 100 turns over in 6 months; ditto 1/5 100; hence 4/5 100 in 6 months; hence the remaining 1/5 100 in 6/4 months; hence the total capital in 6 + 6/4 months = 6 + 1 1/2 or 7 1/2 months. Thus, expressed in general terms:

Average turnover time = the turnover time of circulating capital + this turnover time divided by the number which expresses how often the remaining part of the fixed capital is contained in the total sum of the capital which was circulated in this turnover time.

If there are two capitals of 100 thalers, one of them entirely composed of circulating capital, the other half fixed capital, each at 5% profit, the one turning over twice a year, and in the other the circulating capital likewise twice, but the fixed capital only once; then the total capital turning over would be = 200 in the first case, and the profit = 10; in the second = 3 turnovers in 8 months, 1 1/2 in 4; or 150 would turn over in 12 months; profit then = 7 1/2. This kind of calculation has strengthened the common prejudice that circulating capital or fixed capital through some mysterious innate power brings a gain, as even in Malthus’s phrase ‘the circulating capital brings a gain when its possessors part with it etc.’;[167] likewise, in the above-quoted lines from his Measure of Value etc., the way in which he makes fixed capital accumulate profits.[168] The greatest confusion and mystification has arisen because the doctrine of surplus profit has not been examined in its pure form by previous economists, but rather mixed in together with the doctrine of real profit, which leads up to distribution, where the various capitals participate in the general rate of profit. The profit of the capitalists as a class, or the profit of capital as such, has to exist before it can be distributed, and it is extremely absurd to try to explain its origin by its distribution. According to the above, profit declines because the turnover time of capital increases[169] in proportion as the component part of it which is called fixed capital increases. A capital of the same size, 100 in the above case, would turn over entirely twice a year if it consisted only of a circulating capital. But it turns over only twice in 16 months, or only 150 thalers are turned over in one year, because half of it consists of fixed capital. As the number of its reproductions in a given period declines, or the amount of it reproduced in this given time declines, so does the production of surplus time or surplus value decline, since capital posits value at all only in so far as it posits surplus value. (This at least is its tendency, its adequate action.)

Fixed capital, as we saw, circulates as value only to the degree that it is used up or consumed as use value in the production process. But the time in which it is consumed and in which it must be reproduced in its form as use value depends on its relative durability. Hence its durability, or its greater or lesser perishability – the greater or smaller amount of time during which it can continue to perform its function within the repeated production processes of capital – this aspect of its use value here becomes a form-determining moment, i.e. a determinant for capital as regards its form, not as regards its matter. The necessary reproduction time of fixed capital, together with the proportion of the total capital consisting of it, here modify, therefore, the turnover time of the total capital, and thereby its realization. The greater durability of capital (the diminution (duration) of its necessary reproduction time) and the proportion of fixed capital to the total capital, then, here influence realization just as does a slower turnover due either to a greater distance in space of the market from which the capital returns as money, so that a longer time is required to complete the path of circulation (as e.g. capitals working in England for the East India market return more slowly than those working for nearer foreign markets or for the domestic market), or to the production phase being itself interrupted by natural conditions, as in agriculture. Ricardo, who was the first to emphasize the influence of fixed capital on the realization process, throws all these aspects into one motley heap, as one can see from the excerpts quoted above.[170]

In the first case (fixed capital), the turnover of capital is reduced because the fixed capital is consumed slowly within the production process; or the cause lies in the duration of the time required for its reproduction. In the second case the reduced turnover arises from the prolongation of circulation time (in the first case the fixed capital necessarily always circulates as rapidly as the product, in so far as it circulates, enters circulation at all, because it circulates not in its material existence, but only as value, i.e. as an ideal component part of the total value of the product) and, specifically, from the circulation time of the second half of the circulation process proper, the retransformation into money; in the third case the reduced turnover arises from the longer time the capital requires, not, as in the first case, to pass away in the production process, but rather to emerge from it as product. The first case is peculiar specifically to fixed capital; the other belongs to the category of capital which is not liquid, but fixated, fixated in one or another phase of the total circulation process (fixed capital of a considerable degree of durability, or circulating capital returnable at distant periods. McCulloch, Principles of Political Economy. Notebook, p. 15.)[171]

Thirdly: We have regarded fixed capital so far only from the aspect in which its particular relation, its specific relation, distinguishes it from the circulation process proper. Still further distinctions will arise in this respect. Firstly, the return of its value in successive parts, whereas each part of circulating capital is exchanged in its entirety; this because in the former, the existence of the value coincides with that of the use value. Secondly, not merely [because of] its influence on the average turnover time of a given capital, as we have indicated up to now, but also [because of] its own turnover time. The latter circumstance becomes important where the fixed capital appears not as a mere instrument of production within the production process, but rather as an independent form of capital, e.g. in the form of railways, canals, roads, aqueducts, improvements of the land, etc. This latter aspect becomes notably important for the proportion in which the total capital of a country is divided into these two forms. Then, the way in which it is renewed and maintained; which the economists formulate in the form that it can bring revenue only by means of circulating capital etc. This last is basically nothing but the examination of the moment where it appears, not as a particular independent existence alongside and outside circulating capital, but rather as circulating capital transformed into fixed capital. But what we want to examine here first of all is the relation of fixed capital not towards the outside, but rather the extent to which the relation is given through its continued enclosure within the production process. It is thereby posited that it is a definite moment of the production process itself.

<It is not necessarily the case that fixed capital is capital which in all its aspects serves not for individual consumption, but only for production. A house can serve for production as well as for consumption; likewise all vehicles, a ship and a wagon, for pleasure outings as well as a means of transport; a street as a means of communication for production proper, as well as for taking walks etc. Fixed capital in this second aspect does not concern us here at all, since we regard capital here only as process of realization and process of production. The second aspect will enter when we study interest. Ricardo can have only this aspect in mind when he says: ‘Depending on whether the capital is more or less perishable, hence must be more or less frequently reproduced in a given time, it is called circulating or fixed capital.’ (Ricardo, VIII, 19.)[172] According to this, a coffee-pot would be fixed capital, but coffee circulating capital. The crude materialism of the economists who regard as the natural properties of things what are social relations of production among people, and qualities which things obtain because they are subsumed under these relations, is at the same time just as crude an idealism, even fetishism, since it imputes social relations to things as inherent characteristics, and thus mystifies them. (The difficulty of defining a thing as fixed capital or circulating capital on the basis of its natural qualities has here, by way of exception, led the economists to the discovery that things in themselves are neither fixed nor circulating, hence not capital at all, any more than it is a natural quality of gold to be money.)>

(Also included in the points listed above, so that it is not forgotten, is the circulation of fixed capital as circulating capital, i.e. transactions through which it changes its owners.)

‘Fixed capital – tied up: capital so tied up in one kind of production that it can no longer be diverted to another kind of production.’ (Say, 24.)[173] ‘Fixed capital is consumed in order to help produce the things useful to man … it consists of durable foundations which increase the productive powers of future labour.’ (Sismondi, VI)[174] ‘Fixed capital the capital necessary to maintain the instruments, machines etc. of labour.’ (Smith, Vol. II, p. 226.) ‘Floating capital is consumed, fixed capital merely used in the great work of production.’ (Economist, Notebook VI, p. 1.)[175] ‘We shall show that the first stick or the first stone which he took in his hand to assist him in the pursuit of these objects, by accomplishing a part of his labour, performed precisely the function of the capitals presently employed by the commercial nations.’ (Lauderdale, p. 120. Notebook, 8a.) ‘It is one of the characteristic and distinguishing traits of the human species to replace labour in this way with a capital transformed into machines.’ (p. 120.) (p. 9, Notebook Lauderdale.) ‘It may now be seen that the profit of capitals always arises either because they replace a portion of the work which man must do by hand, or because they accomplish a portion of work which is beyond the personal effort of man, and which he could not perform by himself.’ (p. 119 loc. cit.) Lauderdale polemicizes against Smith and Locke, whose view that labour is the creator of profit, has the following result, according to him: ‘if this idea of capital’s benefits were rigorously correct, then it would follow that it would not be an original source of wealth, but rather a derived one; and one could not consider capital as one of the principles of wealth, its profit being nothing more than a transfer from the worker’s pocket to that of the capitalist.’ (loc. cit. 116, 117.) ‘The profit of capitals always arises either because they replace a portion of the work which man must do by hand, or because they accomplish a portion of work which is beyond the personal effort of man, and which he could not perform by himself.’ (p. 119, loc. cit., p. 9b.) ‘It is well to remark that while the capitalist, with the use he makes of his money, saves the class of consumers a certain amount of labour, he does not substitute for it an equal portion of his own; which proves that his capital performs it, and not he himself.’ (10, Notebook, loc. cit., p. 132.) ‘If Adam Smith, instead of imagining that the effect of a machine is to facilitate labour, or, as he expresses it, to increase the productive power of labour (it is only through a strange confusion of ideas that Mr Smith has been able to assert that the effect of capital is to increase the productive power of labour. With the same logic one could very well claim that to shorten by half a roundabout path between two points is to double the walker’s speed) had perceived that the money spent on machinery brings a profit by replacing labour, he would have attributed the origin of profit to the same circumstance.’ (p. 11, p. 137.) ‘Capitals in domestic commerce, whether fixed or circulating, far from serving to set labour in motion, far from increasing its productive power, are, on the contrary, useful and profitable only in two circumstances, either when they obviate the necessity of a portion of the work which man would otherwise have to do with his hands; or when they perform a particular piece of work which man does not have the power to do unaided.’ This, says Lauderdale, is not merely a semantic difference. ‘The idea that capital sets labour into action, and adds to its productive power, gives rise to the opinion that labour is everywhere proportional to the quantity of existing capitals; that a country’s industry is always in proportion to the funds employed: from which it would follow that the increase of capital is the sovereign and unlimited means of increasing wealth. Instead of that, if one admits that capital can have no profitable or useful employment other than to replace a certain work, or to perform it, then one will draw the natural conclusion that the State would gain no benefit whatever from the possession of more capitals than it can employ in doing the work or in substituting for it in the production and fabrication of the things the consumer demands.’ (p. 151, 152, pp. 11, 12.) To prove his view that capital is a source sui generis of profit and hence of wealth, independently of labour, he points to the surplus profits which the owner of a newly invented machine has before his patent runs out and competition presses down the prices, and concludes then with the words: ‘This change of rule for the price does not prevent the benefit’ (as regards use value) ‘of the machine from coming from a fund of the same nature as that from which it came before the expiration of the patent: this fund is always that part of a country’s revenues which was formerly destined to pay the wages of the labour which the new invention replaces.’ (loc. cit. 125, p. 10b.) By contrast, Ravenstone (IX, 32): ‘Machinery can seldom be applied with success to abridge the labours of an individual; more time would be lost in its construction than could be saved by its application. It is only really useful when it acts on great masses, when a single machine can assist the labours of thousands. It is accordingly in the most populous countries where there are most idle men that it is always most abundant. It is not called into action by a scarcity of men, but by the facility with which they are brought together.’ (loc. cit.)[176]

‘Division of machines into (1) machines employed to produce power; (2) machines whose purpose is simply to transmit power and to perform the work.’ (Babbage, Notebook, p. 10.)[177] ‘Factory signifies the cooperation of several classes of workers, adults and non-adults, watching attentively and assiduously over a system of productive mechanisms, continually kept in action by a central force … excludes any workshop whose mechanism does not form a continuous system, or which does not depend on a single source of power. Examples of this latter class among textile factories, copper foundries etc. … In its most rigorous sense, this term conveys the idea of a vast automaton, composed of numerous mechanical and intellectual organs operating in concert and without interruption, towards one and the same aim, all these organs being subordinated to a motive force which moves itself.’ (Ure, 13.)[178]

The labour process. – Fixed capital. Means of labour. Machine. – Fixed capital. Transposition of powers of labour into powers of capital both in fixed and in circulating capital. – To what extent fixed capital (machine) creates value. – Lauderdale. Machine presupposes a mass of workers.[edit source]

Capital which consumes itself in the production process, or fixed capital, is the means of production in the strict sense. In a broader sense the entire production process and each of its moments, such as circulation – as regards its material side – is only a means of production for capital, for which value alone is the end in itself. Regarded as a physical substance, the raw material itself is a means of production for the product etc.

But the determination that the use value of fixed capital is that which eats itself up in the production process is identical to the proposition that it is used in this process only as a means, and itself exists merely as an agency for the transformation of the raw material into the product. As such a means of production, its use value can be that it is merely the technological condition for the occurrence of the process (the site where the production process proceeds), as with buildings etc., or that it is a direct condition of the action of the means of production proper, like all matières instrumentales. Both are in turn only the material presuppositions for the production process generally, or for the employment and maintenance of the means of labour. The latter, however, in the proper sense, serves only within production and for production, and has no other use value.

Originally, when we examined the development of value into capital, the labour process was simply included within capital, and, as regards its physical conditions, its material presence, capital appeared as the totality of the conditions of this process, and correspondingly sorted itself out into certain qualitatively different parts, material of labour (this, not raw material, is the correct expression of the concept), means of labour and living labour. On one side, capital was divided into these three elements in accordance with its material composition; on the other, the labour process (or the merging of these elements into each other within the process) was their moving unity, the product their static unity. In this form, the material elements – material of labour, means of labour and living labour – appeared merely as the essential moments of the labour process itself, which capital appropriates. But this material side – or, its character as use value and as real process – did not at all coincide with its formal side. In the latter,

(1) the three elements in which it appears before the exchange with labour capacity, before the real process, appeared merely as quantitatively different portions of itself, as quantities of value of which it, itself, as sum, forms the unity. The physical form, the use value, in which these different portions existed did not in any way alter their formal identity from this side. As far as their formal side was concerned, they appeared only as quantitative subdivisions of capital;

(2) within the process itself, as regards the form, the elements of labour and the two others were distinct only in so far as the latter were specified as constant values, and the former as value-positing. But as far as their distinctness as use values, their material side was concerned, this fell entirely outside the capital’s specific character as form. Now, however, with the distinction between circulating capital (raw material and product) and fixed capital (means of labour), the distinctness of the elements as use values is posited simultaneously as a distinction within capital as capital, on its formal side. The relation between the factors, which had been merely quantitative, now appears as a qualitative division within capital itself, and as a determinant of its total movement (turnover). Likewise, the material of labour and the product of labour, this neutral precipitate of the labour process, are already, as raw material and product, materially specified no longer as material and product of labour, but rather as the use value of capital itself in different phases.

As long as the means of labour remains a means of labour in the proper sense of the term, such as it is directly, historically, adopted by capital and included in its realization process, it undergoes a merely formal modification, by appearing now as a means of labour not only in regard to its material side, but also at the same time as a particular mode of the presence of capital, determined by its total process – as fixed capital. But, once adopted into the production process of capital, the means of labour passes through different metamorphoses, whose culmination is the machine, or rather, an automatic system of machinery (system of machinery: the automatic one is merely its most complete, most adequate form, and alone transforms machinery into a system), set in motion by an automaton, a moving power that moves itself; this automaton consisting of numerous mechanical and intellectual organs, so that the workers themselves are cast merely as its conscious linkages. In the machine, and even more in machinery as an automatic system, the use value, i.e. the material quality of the means of labour, is transformed into an existence adequate to fixed capital and to capital as such; and the form in which it was adopted into the production process of capital, the direct means of labour, is superseded by a form posited by capital itself and corresponding to it. In no way does the machine appear as the individual worker’s means of labour. Its distinguishing characteristic is not in the least, as with the means of labour, to transmit the worker’s activity to the object; this activity, rather, is posited in such a way that it merely transmits the machine’s work, the machine’s action, on to the raw material – supervises it and guards against interruptions. Not as with the instrument, which the worker animates and makes into his organ with his skill and strength, and whose handling therefore depends on his virtuosity. Rather, it is the machine which possesses skill and strength in place of the worker, is itself the virtuoso, with a soul of its own in the mechanical laws acting through it; and it consumes coal, oil etc. (matières instrumentales), just as the worker consumes food, to keep up its perpetual motion. The worker’s activity, reduced to a mere abstraction of activity, is determined and regulated on all sides by the movement of the machinery, and not the opposite. The science which compels the inanimate limbs of the machinery, by their construction, to act purposefully, as an automaton, does not exist in the worker’s consciousness, but rather acts upon him through the machine as an alien power, as the power of the machine itself. The appropriation of living labour by objectified labour – of the power or activity which creates value by value existing for-itself – which lies in the concept of capital, is posited, in production resting on machinery, as the character of the production process itself, including its material elements and its material motion. The production process has ceased to be a labour process in the sense of a process dominated by labour as its governing unity. Labour appears, rather, merely as a conscious organ, scattered among the individual living workers at numerous points of the mechanical system; subsumed under the total process of the machinery itself, as itself only a link of the system, whose unity exists not in the living workers, but rather in the living (active) machinery, which confronts his individual, insignificant doings as a mighty organism. In machinery, objectified labour confronts living labour within the labour process itself as the power which rules it; a power which, as the appropriation of living labour, is the form of capital. The transformation of the means of labour into machinery, and of living labour into a mere living accessory of this machinery, as the means of its action, also posits the absorption of the labour process in its material character as a mere moment of the realization process of capital. The increase of the productive force of labour and the greatest possible negation of necessary labour is the necessary tendency of capital, as we have seen. The transformation of the means of labour into machinery is the realization of this tendency. In machinery, objectified labour materially confronts living labour as a ruling power and as an active subsumption of the latter under itself, not only by appropriating it, but in the real production process itself; the relation of capital as value which appropriates value-creating activity is, in fixed capital existing as machinery, posited at the same time as the relation of the use value of capital to the use value of labour capacity; further, the value objectified in machinery appears as a presupposition against which the value-creating power of the individual labour capacity is an infinitesimal, vanishing magnitude; the production in enormous mass quantities which is posited with machinery destroys every connection of the product with the direct need of the producer, and hence with direct use value; it is already posited in the form of the product’s production and in the relations in which it is produced that it is produced only as a conveyor of value, and its use value only as condition to that end. In machinery, objectified labour itself appears not only in the form of product or of the product employed as means of labour, but in the form of the force of production itself. The development of the means of labour into machinery is not an accidental moment of capital, but is rather the historical reshaping of the traditional, inherited means of labour into a form adequate to capital. The accumulation of knowledge and of skill, of the general productive forces of the social brain, is thus absorbed into capital, as opposed to labour, and hence appears as an attribute of capital, and more specifically of fixed capital, in so far as it enters into the production process as a means of production proper. Machinery appears, then, as the most adequate form of fixed capital, and fixed capital, in so far as capital’s relations with itself are concerned, appears as the most adequate form of capital as such. In another respect, however, in so far as fixed capital is condemned to an existence within the confines of a specific use value, it does not correspond to the concept of capital, which, as value, is indifferent to every specific form of use value, and can adopt or shed any of them as equivalent incarnations. In this respect, as regards capital’s external relations, it is circulating capital which appears as the adequate form of capital, and not fixed capital.

Further, in so far as machinery develops with the accumulation of society’s science, of productive force generally, general social labour presents itself not in labour but in capital. The productive force of society is measured in fixed capital, exists there in its objective form; and, inversely, the productive force of capital grows with this general progress, which capital appropriates free of charge. This is not the place to go into the development of machinery in detail; rather only in its general aspect; in so far as the means of labour, as a physical thing, loses its direct form, becomes fixed capital, and confronts the worker physically as capital. In machinery, knowledge appears as alien, external to him; and living labour [as] subsumed under self-activating objectified labour. The worker appears as superfluous to the extent that his action is not determined by [capital’s] requirements.

Notebook VII (End of February. March. End of May – Beginning of June 1858)[edit source]

The full development of capital, therefore, takes place – or capital has posited the mode of production corresponding to it – only when the means of labour has not only taken the economic form of fixed capital, but has also been suspended in its immediate form, and when fixed capital appears as a machine within the production process, opposite labour; and the entire production process appears as not subsumed under the direct skilfulness of the worker, but rather as the technological application of science. [It is,] hence, the tendency of capital to give production a scientific character; direct labour [is] reduced to a mere moment of this process. As with the transformation of value into capital, so does it appear in the further development of capital, that it presupposes a certain given historical development of the productive forces on one side – science too [is] among these productive forces – and, on the other, drives and forces them further onwards.

Thus the quantitative extent and the effectiveness (intensity) to which capital is developed as fixed capital indicate the general degree to which capital is developed as capital, as power over living labour, and to which it has conquered the production process as such. Also, in the sense that it expresses the accumulation of objectified productive forces, and likewise of objectified labour. However, while capital gives itself its adequate form as use value within the production process only in the form of machinery and other material manifestations of fixed capital, such as railways etc. (to which we shall return later), this in no way means that this use value – machinery as such – is capital, or that its existence as machinery is identical with its existence as capital; any more than gold would cease to have use value as gold if it were no longer money. Machinery does not lose its use value as soon as it ceases to be capital. While machinery is the most appropriate form of the use value of fixed capital, it does not at all follow that therefore subsumption under the social relation of capital is the most appropriate and ultimate social relation of production for the application of machinery.

To the degree that labour time – the mere quantity of labour – is posited by capital as the sole determinant element, to that degree does direct labour and its quantity disappear as the determinant principle of production – of the creation of use values – and is reduced both quantitatively, to a smaller proportion, and qualitatively, as an, of course, indispensable but subordinate moment, compared to general scientific labour, technological application of natural sciences, on one side, and to the general productive force arising from social combination [Gliederung] in total production on the other side – a combination which appears as a natural fruit of social labour (although it is a historic product). Capital thus works towards its own dissolution as the form dominating production.

While, then, in one respect the transformation of the production process from the simple labour process into a scientific process, which subjugates the forces of nature and compels them to work in the service of human needs, appears as a quality of fixed capital in contrast to living labour; while individual labour as such has ceased altogether to appear as productive, is productive, rather, only in these common labours which subordinate the forces of nature to themselves, and while this elevation of direct labour into social labour appears as a reduction of individual labour to the level of helplessness in face of the communality [Gemeinsamkeit] represented by and concentrated in capital; so does it now appear, in another respect, as a quality of circulating capital, to maintain labour in one branch of production by means of co-existing labour in another. In small-scale circulation, capital advances the worker the wages which the latter exchanges for products necessary for his consumption. The money he obtains has this power only because others are working alongside him at the same time; and capital can give him claims on alien labour, in the form of money, only because it has appropriated his own labour. This exchange of one’s own labour with alien labour appears here not as mediated and determined by the simultaneous existence of the labour of others, but rather by the advance which capital makes. The worker’s ability to engage in the exchange of substances necessary for his consumption during production appears as due to an attribute of the part of circulating capital which is paid to the worker, and of circulating capital generally. It appears not as an exchange of substances between the simultaneous labour powers, but as the metabolism [Stoffwechsel] of capital; as the existence of circulating capital. Thus all powers of labour are transposed into powers of capital; the productive power of labour into fixed capital (posited as external to labour and as existing independently of it (as object [sachlich]); and, in circulating capital, the fact that the worker himself has created the conditions for the repetition of his labour, and that the exchange of this, his labour, is mediated by the co-existing labour of others, appears in such a way that capital gives him an advance and posits the simultaneity of the branches of labour. (These last two aspects actually belong to accumulation.) Capital in the form of circulating capital posits itself as mediator between the different workers.

Fixed capital, in its character as means of production, whose most adequate form [is] machinery, produces value, i.e. increases the value of the product, in only two respects: (1) in so far as it has value; i.e. is itself the product of labour, a certain quantity of labour in objectified form; (2) in so far as it increases the relation of surplus labour to necessary labour, by enabling labour, through an increase of its productive power, to create a greater mass of the products required for the maintenance of living labour capacity in a shorter time. It is therefore a highly absurd bourgeois assertion that the worker shares with the capitalist, because the latter, with fixed capital (which is, as far as that goes, itself a product of labour, and of alien labour merely appropriated by capital) makes labour easier for him (rather, he robs it of all independence and attractive character, by means of the machine), or makes his labour shorter. Capital employs machinery, rather, only to the extent that it enables the worker to work a larger part of his time for capital, to relate to a larger part of his time as time which does not belong to him, to work longer for another. Through this process, the amount of labour necessary for the production of a given object is indeed reduced to a minimum, but only in order to realize a maximum of labour in the maximum number of such objects. The first aspect is important, because capital here – quite unintentionally – reduces human labour, expenditure of energy, to a minimum. This will redound to the benefit of emancipated labour, and is the condition of its emancipation. From what has been said, it is clear how absurd Lauderdale is when he wants to make fixed capital into an independent source of value, independent of labour time. It is such a source only in so far as it is itself objectified labour time, and in so far as it posits surplus labour time. The employment of machinery itself historically presupposes – see above, Ravenstone – superfluous hands. Machinery inserts itself to replace labour only where there is an overflow of labour powers. Only in the imagination of economists does it leap to the aid of the individual worker. It can be effective only with masses of workers, whose concentration relative to capital is one of its historic presuppositions, as we have seen. It enters not in order to replace labour power where this is lacking, but rather in order to reduce massively available labour power to its necessary measure. Machinery enters only where labour capacity is on hand in masses. (Return to this.)

Lauderdale believes himself to have made the great discovery that machinery does not increase the productive power of labour, because it rather replaces the latter, or does what labour cannot do with its own power. It belongs to the concept of capital that the increased productive force of labour is posited rather as the increase of a force [Kraft] outside itself, and as labour’s own debilitation [Entkräftung]. The hand tool makes the worker independent – posits him as proprietor. Machinery – as fixed capital – posits him as dependent, posits him as appropriated. This effect of machinery holds only in so far as it is cast into the role of fixed capital, and this it is only because the worker relates to it as wage-worker, and the active individual generally, as mere worker.

Fixed capital and circulating capital as two particular kinds of capital. Fixed capital and continuity of the production process. – Machinery and living labour. (Business of inventing)[edit source]

While, up to now, fixed capital and circulating capital appeared merely as different passing aspects of capital, they have now hardened into two particular modes of its existence, and fixed capital appears separately alongside circulating capital. They are now two particular kinds of capital. In so far as a capital is examined in a particular branch of production, it appears as divided into these two portions, or splits into these two kinds of capital in certain p[rop]ortions.

The division within the production process, originally between means of labour and material of labour, and finally product of labour, now appears as circulating capital (the last two) and fixed capital [the first].[179] The split within capital as regards its merely physical aspect has now entered into its form itself, and appears as differentiating it.

From a viewpoint such as Lauderdale’s etc., who would like to have capital as such, separately from labour, create value and hence also surplus value (or profit), fixed capital – namely that whose physical presence or use value is machinery – is the form which gives their superficial fallacies still the greatest semblance of validity. The answer to them, e.g. in Labour Defended, [is] that the road-builder may share [profits] with the road-user, but the ‘road’ itself cannot do so.[180]

Circulating capital – presupposing that it really passes through its different phases – brings about the decrease or increase, the brevity or length of circulation time, the easier or more troublesome completion of the different stages of circulation, a decrease of the surplus value which could be created in a given period of time without these interruptions – either because the number of reproductions grows smaller, or because the quantity of capital continuously engaged in the production process is reduced. In both cases this is not a reduction of the initial value, but rather a reduction of the rate of its growth. From the moment, however, when fixed capital has developed to a certain extent – and this extent, as we indicated, is the measure of the development of large industry generally – hence fixed capital increases in proportion to the development of large industry’s productive forces – it is itself the objectification of these productive forces, as presupposed product – from this instant on, every interruption of the production process acts as a direct reduction of capital itself, of its initial value. The value of fixed capital is reproduced only in so far as it is used up in the production process. Through disuse it loses its use value without its value passing on to the product. Hence, the greater the scale on which fixed capital develops, in the sense in which we regard it here, the more does the continuity of the production process or the constant flow of reproduction become an externally compelling condition for the mode of production founded on capital.

In machinery, the appropriation of living labour by capital achieves a direct reality in this respect as well: It is, firstly, the analysis and application of mechanical and chemical laws, arising directly out of science, which enables the machine to perform the same labour as that previously performed by the worker. However, the development of machinery along this path occurs only when large industry has already reached a higher stage, and all the sciences have been pressed into the service of capital; and when, secondly, the available machinery itself already provides great capabilities. Invention then becomes a business, and the application of science to direct production itself becomes a prospect which determines and solicits it. But this is not the road along which machinery, by and large, arose, and even less the road on which it progresses in detail. This road is, rather, dissection [Analyse] – through the division of labour, which gradually transforms the workers’ operations into more and more mechanical ones, so that at a certain point a mechanism can step into their places. (See under economy of power.) Thus, the specific mode of working here appears directly as becoming transferred from the worker to capital in the form of the machine, and his own labour capacity devalued thereby. Hence the workers’ struggle against machinery. What was the living worker’s activity becomes the activity of the machine. Thus the appropriation of labour by capital confronts the worker in a coarsely sensuous form; capital absorbs labour into itself – ‘as though its body were by love possessed’.[181]

Contradiction between the foundation of bourgeois production (value as measure) and its development. Machines etc.[edit source]

The exchange of living labour for objectified labour – i.e. the positing of social labour in the form of the contradiction of capital and wage labour – is the ultimate development of the value-relation and of production resting on value. Its presupposition is – and remains – the mass of direct labour time, the quantity of labour employed, as the determinant factor in the production of wealth. But to the degree that large industry develops, the creation of real wealth comes to depend less on labour time and on the amount of labour employed than on the power of the agencies set in motion during labour time, whose ‘powerful effectiveness’ is itself in turn out of all proportion to the direct labour time spent on their production, but depends rather on the general state of science and on the progress of technology, or the application of this science to production. (The development of this science, especially natural science, and all others with the latter, is itself in turn related to the development of material production.) Agriculture, e.g., becomes merely the application of the science of material metabolism, its regulation for the greatest advantage of the entire body of society. Real wealth manifests itself, rather – and large industry reveals this – in the monstrous disproportion between the labour time applied, and its product, as well as in the qualitative imbalance between labour, reduced to a pure abstraction, and the power of the production process it superintends. Labour no longer appears so much to be included within the production process; rather, the human being comes to relate more as watchman and regulator to the production process itself. (What holds for machinery holds likewise for the combination of human activities and the development of human intercourse.) No longer does the worker insert a modified natural thing [Naturgegenstand] as middle link between the object [Objekt] and himself; rather, he inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor. In this transformation, it is neither the direct human labour he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body – it is, in a word, the development of the social individual which appears as the great foundation-stone of production and of wealth. The theft of alien labour time, on which the present wealth is based, appears a miserable foundation in face of this new one, created by large-scale industry itself. As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis. The free development of individualities, and hence not the reduction of necessary labour time so as to posit surplus labour, but rather the general reduction of the necessary labour of society to a minimum, which then corresponds to the artistic, scientific etc. development of the individuals in the time set free, and with the means created, for all of them. Capital itself is the moving contradiction, [in] that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary. On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. Forces of production and social relations – two different sides of the development of the social individual – appear to capital as mere means, and are merely means for it to produce on its limited foundation. In fact, however, they are the material conditions to blow this foundation sky-high. ‘Truly wealthy a nation, when the working day is 6 rather than 12 hours. Wealth is not command over surplus labour time’ (real wealth), ‘but rather, disposable time outside that needed in direct production, for every individual and the whole society.’ (The Source and Remedy etc. 1821, p. 6.)

Nature builds no machines, no locomotives, railways, electric telegraphs, self-acting mules etc. These are products of human industry; natural material transformed into organs of the human will over nature, or of human participation in nature. They are organs of the human brain, created by the human hand; the power of knowledge, objectified. The development of fixed capital indicates to what degree general social knowledge has become a direct force of production, and to what degree, hence, the conditions of the process of social life itself have come under the control of the general intellect and been transformed in accordance with it. To what degree the powers of social production have been produced, not only in the form of knowledge, but also as immediate organs of social practice, of the real life process.

Significance of the development of fixed capital (for the development of capital generally). Relation between the creation of fixed capital and circulating capital. Disposable time. To create it, chief role of capital. Contradictory form of the same in capital. – Productivity of labour and production of fixed capital. (The Source and Remedy.) – Use and consume: Economist. Durability of fixed capital[edit source]

The development of fixed capital indicates in still another respect the degree of development of wealth generally, or of capital. The aim of production oriented directly towards use value, as well as of that directly oriented towards exchange value, is the product itself, destined for consumption. The part of production which is oriented towards the production of fixed capital does not produce direct objects of individual gratification, nor direct exchange values; at least not directly realizable exchange values. Hence, only when a certain degree of productivity has already been reached – so that a part of production time is sufficient for immediate production – can an increasingly large part be applied to the production of the means of production. This requires that society be able to wait; that a large part of the wealth already created can be withdrawn both from immediate consumption and from production for immediate consumption, in order to employ this part for labour which is not immediately productive (within the material production process itself). This requires a certain level of productivity and of relative overabundance, and, more specifically, a level directly related to the transformation of circulating capital into fixed capital. As the magnitude of relative surplus labour depends on the productivity of necessary labour, so does the magnitude of labour time – living as well as objectified – employed on the production of fixed capital depend on the productivity of the labour time spent in the direct production of products. Surplus population (from this standpoint), as well as surplus production, is a condition for this. That is, the output of the time employed in direct production must be larger, relatively, than is directly required for the reproduction of the capital employed in these branches of industry. The smaller the direct fruits borne by fixed capital, the less it intervenes in the direct production process, the greater must be this relative surplus population and surplus production; thus, more to build railways, canals, aqueducts, telegraphs etc. than to build the machinery directly active in the direct production process. Hence – a subject to which we will return later – in the constant under- and over-production of modern industry – constant fluctuations and convulsions arise from the disproportion, when sometimes too little, then again too much circulating capital is transformed into fixed capital.

<The creation of a large quantity of disposable time apart from necessary labour time for society generally and each of its members (i.e. room for the development of the individuals’ full productive forces, hence those of society also), this creation of not-labour time appears in the stage of capital, as of all earlier ones, as not-labour time, free time, for a few. What capital adds is that it increases the surplus labour time of the mass by all the means of art and science, because its wealth consists directly in the appropriation of surplus labour time; since value directly its purpose, not use value. It is thus, despite itself, instrumental in creating the means of social disposable time, in order to reduce labour time for the whole society to a diminishing minimum, and thus to free everyone’s time for their own development. But its tendency always, on the one side, to create disposable time, on the other, to convert it into surplus labour. If it succeeds too well at the first, then it suffers from surplus production, and then necessary labour is interrupted, because no surplus labour can be realized by capital. The more this contradiction develops, the more does it become evident that the growth of the forces of production can no longer be bound up with the appropriation of alien labour, but that the mass of workers must themselves appropriate their own surplus labour. Once they have done so – and disposable time thereby ceases to have an antithetical existence – then, on one side, necessary labour time will be measured by the needs of the social individual, and, on the other, the development of the power of social production will grow so rapidly that, even though production is now calculated for the wealth of all, disposable time will grow for all. For real wealth is the developed productive power of all individuals. The measure of wealth is then not any longer, in any way, labour time, but rather disposable time. Labour time as the measure of value posits wealth itself as founded on poverty, and disposable time as existing in and because of the antithesis to surplus labour time; or, the positing of an individual’s entire time as labour time, and his degradation therefore to mere worker, subsumption under labour. The most developed machinery thus forces the worker to work longer than the savage does, or than he himself did with the simplest, crudest tools.>

‘If the entire labour of a country were sufficient only to raise the support of the whole population, there would be no surplus labour, consequently nothing that could be allowed to accumulate as capital. If in one year the people raises enough for the support of two years, one year’s consumption must perish, or for one year men must cease from productive labour. But the possessors of [the] surplus produce or capital … employ people upon something not directly and immediately productive, e.g. in the erection of machinery. So it goes on.’ (The Source and Remedy of the National Difficulties, p. 4.)

<As the basis on which large industry rests, the appropriation of alien labour time, ceases, with its development, to make up or to create wealth, so does direct labour as such cease to be the basis of production, since, in one respect, it is transformed more into a supervisory and regulatory activity; but then also because the product ceases to be the product of isolated direct labour, and the combination of social activity appears, rather, as the producer. ‘As soon as the division of labour is developed, almost every piece of work done by a single individual is a part of a whole, having no value or utility of itself. There is nothing on which the labourer can seize: this is my produce, this I will keep to myself.’ (Labour Defended, p. 25, 1, 2, XI.) In direct exchange, individual direct labour appears as realized in a particular product or part of the product, and its communal, social character – its character as objectification of general labour and satisfaction of the general need – as posited through exchange alone. In the production process of large-scale industry, by contrast, just as the conquest of the forces of nature by the social intellect is the precondition of the productive power of the means of labour as developed into the automatic process, on one side, so, on the other, is the labour of the individual in its direct presence posited as suspended individual, i.e. as social, labour. Thus the other basis of this mode of production falls away.>

The labour time employed in the production of fixed capital relates to that employed in the production of circulating capital, within the production process of capital itself, as does surplus labour time to necessary labour time. To the degree that production aimed at the satisfaction of immediate need becomes more productive, a greater part of production can be directed towards the need of production itself, or the production of means of production. In so far as the production of fixed capital, even in its physical aspect, is directed immediately not towards the production of direct use values, or towards the production of values required for the direct reproduction of capital – i.e. those which themselves in turn represent use value in the value-creation process – but rather towards the production of the means of value creation, that is, not towards value as an immediate object, but rather towards value creation, towards the means of realization, as an immediate object of production – the production of value posited physically in the object of production itself, as the aim of production, the objectification of productive force, the value-producing power of capital – to that extent, it is in the production of fixed capital that capital posits itself as end-in-itself and appears active as capital, to a higher power than it does in the production of circulating capital. Hence, in this respect as well, the dimension already possessed by fixed capital, which its production occupies within total production, is the measuring rod of the development of wealth founded on the mode of production of capital.

‘The number of workers depends as much on circulating capital as it depends on the quantity of products of co-existing labour, which labourers are allowed to consume.’ (Labour Defended, p. 20.)

In all the excerpts cited above from various economists fixed capital is regarded as the part of capital which is locked into the production process. ‘Floating capital is consumed; fixed capital is merely used in the great process of production.’ (Economist, VI, 1.)[182] This wrong, and holds only for the part of circulating capital which is itself consumed by the fixed capital, the matières instrumentales. The only thing consumed ‘in the great process of production’, if this means the immediate production process, is fixed capital. Consumption within the production process is, however, in fact use, wearing-out. Furthermore, the greater durability of fixed capital must not be conceived as a purely physical quality. The iron and the wood which make up the bed I sleep in, or the stones making up the house I live in, or the marble statue which decorates a palace, are just as durable as iron and wood etc. used for machinery. But durability is a condition for the instrument, the means of production, not only on the technical ground that metals etc. are the chief material of all machinery, but rather because the instrument is destined to play the same role constantly in repeated processes of production. Its durability as means of production is a required quality of its use value. The more often it must be replaced, the costlier it is; the larger the part of capital which would have to be spent on it uselessly. Its durability is its existence as means of production. Its duration is an increase of its productive force. With circulating capital, by contrast, in so far as it is not transformed into fixed capital, durability is in no way connected with the act of production itself and is therefore not a conceptually posited moment. The fact that among the articles thrown into the consumption fund there are some which are in turn characterized as fixed capital because they are consumed slowly, and can be consumed by many individuals in series, is connected with further determinations (renting rather than buying, interest etc.) with which we are not yet here concerned.

‘Since the general introduction of soulless mechanism in British manufactures, people have with rare exceptions been treated as a secondary and subordinate machine, and far more attention has been given to the perfection of the raw materials of wood and metals than to those of body and spirit.’ (p. 31. Robert Owen: Essays on the Formation of the Human Character, 1840, London.)

Real saving – economy – = saving of labour time = development of productive force. Suspension of the contradiction between free time and labour time. – True conception of the process of social production[edit source]

<Real economy – saving – consists of the saving of labour time (minimum (and minimization) of production costs); but this saving identical with development of the productive force. Hence in no way abstinence from consumption, but rather the development of power, of capabilities of production, and hence both of the capabilities as well as the means of consumption. The capability to consume is a condition of consumption, hence its primary means, and this capability is the development of an individual potential, a force of production. The saving of labour time [is] equal to an increase of free time, i.e. time for the full development of the individual, which in turn reacts back upon the productive power of labour as itself the greatest productive power. From the standpoint of the direct production process it can be regarded as the production of fixed capital, this fixed capital being man himself. It goes without saying, by the way, that direct labour time itself cannot remain in the abstract antithesis to free time in which it appears from the perspective of bourgeois economy. Labour cannot become play, as Fourier would like,[183] although it remains his great contribution to have expressed the suspension not of distribution, but of the mode of production itself, in a higher form, as the ultimate object. Free time – which is both idle time and time for higher activity – has naturally transformed its possessor into a different subject, and he then enters into the direct production process as this different subject. This process is then both discipline, as regards the human being in the process of becoming; and, at the same time, practice [Ausübung], experimental science, materially creative and objectifying science, as regards the human being who has become, in whose head exists the accumulated knowledge of society. For both, in so far as labour requires practical use of the hands and free bodily movement, as in agriculture, at the same time exercise.

As the system of bourgeois economy has developed for us only by degrees, so too its negation, which is its ultimate result. We are still concerned now with the direct production process. When we consider bourgeois society in the long view and as a whole, then the final result of the process of social production always appears as the society itself, i.e. the human being itself in its social relations. Everything that has a fixed form, such as the product etc., appears as merely a moment, a vanishing moment, in this movement. The direct production process itself here appears only as a moment. The conditions and objectifications of the process are themselves equally moments of it, and its only subjects are the individuals, but individuals in mutual relationships, which they equally reproduce and produce anew. The constant process of their own movement, in which they renew themselves even as they renew the world of wealth they create.>

Owen’s historical conception of industrial (capitalist) production[edit source]

(In his Six Lectures Delivered at Manchester, 1837, Owen speaks about the difference which capital, by its very growth (and widespread appearance, and it obtains the latter only with large-scale industry, which is connected with the development of fixed capital), creates between workers and capitalists; but formulates the development of capital as a necessary condition for the recreation of society, and recounts about himself: ‘It was by being gradually trained to create and conduct some of these large’ (manufacturing) ‘establishments, that your lecturer’ (Owen himself) ‘was taught to understand the great errors and disadvantages of the past and present attempts to ameliorate the character and situation of his fellow beings.’ (p. 58.) We here put down the entire excerpt, to be used on another occasion.

‘The producers of developed wealth can be divided into workers in soft and workers in hard materials, under the immediate direction generally of masters whose object it is to make money through the labour of those they employ. Before the introduction of the chemical and mechanical manufacturing system, operations were carried out on a limited scale; there were many small masters, each with a few day-labourers, who expected in due time to become small masters themselves. They usually ate at the same table and lived together; a spirit and feeling of equality reigned among them. Since the period when scientific power began by and large to be employed in the business of manufacturing, a gradual change has taken place in this regard. Almost all manufactures, to be successful, must now be carried out extensively and with a great capital; small masters with small capitals have only little chance of success, particularly in the manufactures of soft materials, such as cotton, wool, flax etc.; and it is indeed evident now, that so long as the present classification of society and the mode of directing business life should endure, the small masters will be increasingly displaced by those who possess great capitals, and that the former relatively happier equality among the producers must give way to the greatest inequality between master and worker, such as has never before occurred in the history of mankind. The large capitalist is now elevated to the position of a commanding lord, treating the health, the life and death, indirectly, of his slaves, as he likes. He obtains this power through combination with other great capitalists, engaged in the same interest with himself, and thus effectively bends to his purpose those he employs. The large capitalist now swims in wealth, whose proper use he has not been taught and does not know. Through his wealth, he has gained power. His wealth and his power blind his reason; and when he oppresses altogether grievously, he believes he is bestowing favours … His servants, as they are called, his slaves in fact, are reduced to the most hopeless degradation; the majority robbed of health, of domestic comfort, of the leisure and healthy open-air pleasures of earlier days. Through excessive exhaustion of their powers, brought about by lengthy, drawn-out monotonous occupations, they are seduced into habits of intemperance, and made unfit for thinking or reflection. They can have no physical, intellectual or moral amusements other than of the worst sort; all real pleasures of life are far distant from them. The life which a very large part of the workers lead under the present system is, in a word, not worth having. But the individuals are not to blame for the changes of which these are the result; they proceed in the regular order of nature and are preparatory and necessary stages towards the great and important social revolution now in progress. Without great capitals no great establishments can be founded; men cannot be brought to understand the practicability of effecting new combinations, in order to ensure a superior character to all and the production of more annual wealth than can be consumed by all; and that wealth, too, should be of a higher kind than that hitherto generally produced.’ (loc. cit. 56, 57.) ‘It is this new chemical and mechanical manufacturing system which now expands human abilities, and prepares men to understand and to adopt other principles and practices, and thus to effect the most beneficial change in affairs which the world has yet known. And it is this new manufacturing system which now creates the necessity for another and higher classification of society.’ (loc. cit. 58.))

Capital and value of natural agencies. – Scope of fixed capital indicates the level of capitalist production. – Determination of raw material, product, instrument of production, consumption. – Is money fixed capital or circulating capital? – Fixed capital and circulating capital in regard to individual consumption[edit source]

We remarked earlier that the force of production (fixed capital) only has value, hence only imparts value, in so far as it is itself produced, itself a given quantity of objectified labour time. But now natural agencies enter in, such as water, land (this notably), mines etc., which are appropriated, hence possess exchange value, and hence come as values into the calculation of production costs. This is, in a word, the entry of landed property (which includes earth, mines, water). The value of means of production which are not the product of labour does not belong here yet, since it does not arise out of the examination of capital itself. They appear for capital, initially, as given, historic presupposition. And we leave them as such, here. Only the form of landed property – or of natural agencies as value-determining magnitudes – modified to correspond to capital belongs within the examination of the system of bourgeois economy. It does not affect the examination of capital at the point we have so far reached, to regard land etc. as a form of fixed capital.

Since fixed capital, in the sense of a produced production force, as agency of production, increases the mass of use values created in a given time, it cannot grow without the raw material it works on also growing (in manufacturing industry. In the extractive industries, such as fishery, mining, labour merely consists in overpowering the obstacles in the way of the seizure and appropriation of the raw products or primary products. There is no raw material to be worked up for production; rather, the existing raw product is appropriated. By contrast, in agriculture the raw material is the earth itself; seed the circulating capital etc.). Its employment on a larger scale thus presupposes expansion of the part of circulating capital consisting of raw materials; hence growth of capital generally. It likewise presupposes (relative) decrease of the portion of capital exchanged for living labour.

In fixed capital, capital exists materially, too, not only as objectified labour, destined to serve as the means of new labour, but rather as value, whose use value is to create new values. The existence of fixed capital is therefore ϰατ᾽ ἐξοχήν its existence as productive capital. Hence the stage of development reached by the mode of production based on capital – or the extent to which capital itself is already presupposed as the condition of its own production, has presupposed itself – is measured by the existing scope of fixed capital; not only by its quantity, but just as much by its quality.

Finally: in fixed capital, the social productivity of labour [is] posited as a property inherent in capital; including the scientific power as well as the combination of social powers within the production process, and finally, the skill transposed from direct labour into the machine, into the dead productive force. In circulating capital, by contrast, it is the exchange of labours, of the different branches of labour, their interlacing and system-forming quality, the co-existence of productive labour, which appear as property of capital.[184]


We have now to examine the other relations of fixed capital and circulating capital.

We said above that the social relation between different labours is posited as a property of capital in circulating capital, as the social productive power of labour in fixed capital.

‘The circulating capital of a nation is: money, necessaries of life, raw materials, and finished products.’ (Adam Smith, tome II, p. 218.) Smith is in a quandary whether he should call money circulating or fixed capital. In so far as it always serves merely as instrument of circulation, which is itself a moment of the total reproduction process, it is fixed capital – as instrument of circulation. But its use value itself is only to circulate and never to be absorbed either into the production process proper nor into individual consumption. It is the part of capital constantly fixed in the circulation phase, and in this respect it is the most perfect form of circulating capital; in the other respect, because it is fixed as an instrument, it is fixed capital.

In so far as a distinction between fixed capital and circulating capital enters in from the perspective of individual consumption, this is already given in the fact that fixed capital does not enter into circulation as use value. (A part of the seed in agriculture does enter into circulation as use value, because it multiplies itself.) This non-entry-into-circulation supposes that it does not become the object of individual consumption.

Turnover time of capital consisting of fixed capital and circulating capital. Reproduction time of fixed capital. With circulating capital, the only requirement is that the interruption should be not so great as to ruin its use value. With fixed capital, continuity of production absolutely necessary etc. – Unit of labour time the day; for circulating capital, the year. Longer total period as unit with the entry of fixed capital. – Industrial cycle. – Circulation of fixed capital. – The so-called risk. – All parts of capital yield an equal profit – false. Ricardo etc. – The same commodity sometimes fixed capital, sometimes circulating capital. – Sale of capital as capital. – Fixed capital which enters into circulation as use value. – Every moment which a presupposition of production, at the same time its result. Reproduction of its own conditions. Reproduction of capital as fixed capital and circulating capital[edit source]

‘Fixed capital’ serves over and over again for the same operation, ‘and by how much larger has been the range of these iterations, by so much [the] more intensely is the tool, engine, or machinery, entitled to the denomination of fixed’. (De Quincey, X, 4.)[185] If a capital consists of £10,000, of which 5,000 is fixed and 5,000 circulating; the latter turns over 1 time in 1 year, the former 1 time in 5 years; then 5,000 turn over, or 1/2 of the total capital, 1 time in one year. During the same year, 1/5 of the fixed capital or £1,000 turn over; hence in 1 year £6,000 or 3/5 of the total capital turn over. Hence 1/5 of the total capital turns over in 12/3 months and the total capital, in (12 × 5)/3 months, in 60/3 = 20 months = 1 year and 8 months. In 20 months the total capital of £10,000 is turned over, although the fixed capital is replaced only in 5 years. This turnover time holds, however, only for the repetition of the production process and thus for the creation of surplus value; not for the reproduction of the capital itself. If the capital begins the process anew less frequently – returns from circulation into the form of fixed capital – then it returns all the more often into the form of circulating capital. But the capital itself is not replaced thereby. So with the circulating capital itself. If a capital of 100 returns 4 times a year and hence brings in 20%, like a capital of 400 which circulates only once, then the capital remains 100 at the end of the year as at the beginning, and the other capital remains 400, although it has effected a production of use values and a positing of surplus value equal to a 4 times larger capital. The fact that the velocity of turnover here substitutes for the magnitude of the capital shows strikingly that it is only the amount of surplus labour set into motion, and of labour generally, which determines the creation of value as well as the creation of surplus value, and not the magnitude of the capital for itself. The capital of 100 has, during the year, set in motion successively as much labour as one of 400, and hence created the same surplus value.

But the issue here is this. In the above example, the circulating capital of 5,000 first returns in the middle of the first year; then at the end of the second half; in the middle of the second; in the second half of the second (in the first 4 months) £3,333 2/6 of it have returned and the rest will have come back at the end of this half year.

But, of the fixed capital, only 1/5 was returned in the first year, 1/5 in the second. At the end of the first year, the owner has on hand £6,000; at the end of the second, 7,000; the third, 8,000; the fourth, 9,000; the fifth, 10,000. Only at the end of the fifth is he again in possession of his total capital, with which he began the production process; although in the creation of surplus value his capital acted as if it had wholly turned over in 20 months; thus the total capital itself is only reproduced in 5 years. The former aspect of turnover important for the relation of its realization; the latter, however, brings in a new relation which does not take place with circulating capital at all. Since circulating capital is completely absorbed into circulation and returns from it as a whole, it follows that it is reproduced as capital as many times as it is realized as surplus value or as surplus capital. But since fixed capital never enters circulation as a use value, and enters it as value only to the extent that it is consumed as a use value, it follows that it is by no means reproduced as soon as the surplus value determined by the average turnover time of the total capital is posited. The turnover of the circulating capital must take place 10 times in the 5 years before the fixed capital is reproduced; i.e. the period of the revulsions of circulating capital must be repeated 10 times while that of fixed capital is repeated once, and the total average turnover of the capital – 20 months – has to be repeated 2 times before the fixed capital is reproduced. Hence, the larger is the part of the capital consisting of fixed capital – i.e. the more capital acts in the mode of production corresponding to it, with great employment of produced productive force – and the more durable the fixed capital is, i.e. the longer its reproduction time, the more its use value corresponds to its specific economic role – the more often must the part of capital which is determined as circulating repeat the period of its turnover, and the longer is the total time the capital requires for the achievement of its total circulation. Hence the continuity of production becomes an external necessity for capital with the development of that portion of it which is determined as fixed capital. For circulating capital, an interruption, if it does not last so long as to ruin its use value, is only an interruption in the creation of surplus value. But with fixed capital, the interruption, in so far as in the meantime its use value is necessarily destroyed relatively unproductively, i.e. without replacing itself as value, is the destruction of its original value itself. Hence the continuity of the production process which corresponds to the concept of capital is posited as conditio sine qua [non] for its maintenance only with the development of fixed capital; hence likewise the continuity and the constant growth of consumption.

This is No. I. But No. II, the formal side, even more important. The total time in which we measured the return of capital was the year, while the time unit in which we measure labour is the day. We did [so] firstly because the year is more or less the natural reproduction time, or duration of the production phase, for the reproduction of the largest part of the vegetable raw materials used in industry. The turnover of circulating capital was determined, therefore, by the number of turnovers in the total time of a year. In fact, the circulating capital begins its reproduction at the end of each turnover, and while the number of turnovers during the year affects the total value, and the fate it encounters during each turnover appears as a determinant of the conditions under which it begins reproduction anew, yet each of them for itself is a complete lifespan for the circulating capital. As soon as capital is transformed back into money, it can transform itself e.g. into conditions of production other than the original ones, throw itself from one branch of production into another one, so that reproduction, regarded materially, is not repeated in the same form.

The introduction of fixed capital changes this; and neither the turnover time of capital, nor the unit in which their number is measured, the year, henceforth appear as the measure of time for the motion of capital. This unit is now determined, rather, by the reproduction time required for fixed capital, and hence the total circulation time it needs to enter into circulation as value, and to come back from it in the totality of its value. The reproduction of the circulating capital must also proceed in the same material form during this whole time, and the number of its necessary turnovers, i.e. the turnovers necessary for the reproduction of the original capital, is distributed over a longer or shorter series of years. Hence a longer total period is posited as the unit in which its turnovers are measured, and their repetition is now not merely externally, but rather necessarily connected with this unit. According to Babbage, the average reproduction of machinery in England 5 years;[186] the real one hence perhaps 10 years. There can be no doubt whatever that the cycle which industry has passed through since the development of fixed capital on a large scale, at more or less 10-yearly intervals, is connected with this total reproduction phase of capital. We shall find other determinant causes as well. But this is one of them. There were good and bad times for industry before, too, as well as for harvests (agriculture). But the industrial cycle of a number of years, divided into characteristic periods, epochs, is peculiar to large-scale industry.

Now the new distinction, No. III, appears.

Circulating capital was ejected from the production process in the form of the product, of the newly created use value, and thrown wholly into circulation; when transformed back into money, the entire value of the product (the entire labour time objectified in it, necessary and surplus labour time) was realized, and thereby the surplus value realized and all conditions of reproduction fulfilled. With the realization of the price of the commodity, all these conditions were fulfilled, and the process could begin anew. This holds, however, only for that part of the circulating capital which entered into large-scale circulation. As to the other portion of it, which continuously accompanies the process of production itself, the circulation of that part of it which is transformed into wages, it naturally depends on whether the labour is used for the production of fixed capital or of circulating capital whether these wages themselves are replaced by a use value entering into circulation or not.

Fixed capital, by contrast, does not itself circulate as a use value, but rather enters as value into the manufactured raw material (in manufactures and agriculture) or into the directly extracted raw material (mining industry etc.) only to the extent that it is used up as use value in the production process. Fixed capital in its developed form hence only returns in a cycle of years which embraces a series of turnovers of circulating capital. It is not at once exchanged as product for money, in such a way that its reproduction process might coincide with the turnovers of circulating capital. It enters into the price of the product only in successive bits, and hence returns as value only successively. It returns fragmentarily over longer periods, while circulating capital circulates wholly in shorter periods. To the extent that fixed capital remains as such, [it] does not return, because it does not enter into circulation; to the extent that it enters into circulation, it no longer remains as fixed capital, but rather forms an ideal value-component of the circulating capital. It returns in principle only to the extent that it transposes itself directly or indirectly into the product, hence into circulating capital. Because it is not a direct use value for consumption, it does not enter into circulation as use value.

This different kind of return of fixed and circulating capital will appear significant later as the difference between selling and renting, annuity, interest and profit, rent in its different forms, and profit; and the incomprehension of this merely formal distinction has led Proudhon and his gang to the most confused conclusions; as we shall see.[187] In its observations on the last crisis, the Economist reduces the whole difference between fixed capital and circulating capital to the ‘resale of articles within a short period and at a profit’ (Economist No. 754, 6 Feb. 1858) and ‘production of a revenue large enough to provide for expenses, risk, wear and tear, and the market rate of interest’.[188] The shorter return through the sale of the whole article, and the merely annual return of a part of the fixed capital, analysed above. As to profit – merchant’s profit does not concern us here – each part of the circulating capital which leaves and returns to the production process, i.e. contains objectified labour (the value of the advances), necessary labour (the value of wages) and surplus labour – brings profit as soon as it passes fully through circulation, because the surplus labour which the product contains is realized with it. But it is neither the circulating capital nor the fixed capital which create the profit, but rather the appropriation of alien labour which both of them mediate, hence at bottom only the part of circulating capital which enters into small-scale circulation. This profit is realized in practice, however, only through the entry of capital into circulation, hence only in its form as circulating capital, never in its form as fixed capital. But what the economist here understands by fixed capital is – as far as revenues from it are concerned – the form of fixed capital in which it does not directly enter into the production process as machinery, but rather in railways, buildings, agricultural improvements, drainings etc., where, hence, the realization of the value and surplus value contained in it appears in the form of an annuity, where interest represents the surplus value and the annuity the successive return of the value advanced. This is therefore not in fact a case (although it is the case with agricultural improvements) of fixed capital entering into circulation as value by forming a part of the product, but rather of the sale of fixed capital in the form of its use value. It is here sold not all at once, but as an annuity. Now, it is clear, firstly, that some forms of fixed capital figure initially as circulating capital, and become fixed capital only when they become fixed in the production process; e.g. the circulating products of a machine-maker are machines just as those of a cotton-weaver are calico, and they enter into circulation in just the same way, for him. For him they are circulating capital; for the manufacturer who uses them in the production process, fixed capital; because product for the former, and instrument of production only for the latter. Likewise even houses, despite their immovability, are circulating capital for the building-trade; for him who buys them to rent them out again, or to use them as buildings for production, they are fixed capital. Now in so far as fixed capital itself circulates as use value, i.e. is sold, changes hands, we shall speak of it further, below.

We are not concerned here with the illusion that all parts of capital equally bring a profit, an illusion arising out of the division of the surplus value into average portions, independently of the relations of the component parts of capital as circulating and fixed, and the part of it transformed into living labour. Because Ricardo half shares this illusion, he considers the influence of the proportions of fixed and circulating capital from the start of his determination of value as such, and the reverend parson Malthus stupidly and simple-mindedly speaks of the profits accruing to fixed capital, as if capital grew organically by some power of nature.

But the viewpoint that capital is sold as capital – whether as money or in the form of fixed capital – is obviously not relevant here, where we are considering circulation as the movement of capital in which it posits itself in its various conceptually specific moments. Productive capital becomes product, commodity, money, and is transformed back into the conditions of production. It remains capital in each of these forms, and it becomes capital only by realizing itself as such. So long as it remains in one of these phases, it is fixed as commodity capital, money capital, or industrial capital. But each of these phases forms only one moment of its movement, and in the form from which it must propel itself to pass over into another phase it ceases to be capital. If it rejects itself as commodity and becomes money, or vice versa, then it does not exist as capital in the rejected form, but rather in the newly reached one. Of course, the rejected form can in turn become the form of another capital, or it can be the direct form of the consumable product. But this does not concern us and does not concern capital as far as the course it traces out in its internal circulation is concerned. Rather, it rejects each of the forms as its not-capital-being, so as to assume them again later. But if capital is lent out as money, as land and soil, house etc., then it becomes a commodity as capital, or, the commodity put into circulation is capital as capital. This to be further pursued in the next section.

What is paid for in the transposition of the commodity into money, as far as the part of the price which is the value of part of the fixed capital is concerned, is the part required for its partial reproduction, the part worn out and used up in the production process. What the buyer pays, then, is the use or wear of the fixed capital, in so far as it is itself value, objectified labour. Since this wear takes place successively, he pays it in portions in the product, whereas in the price he pays for the product he replaces the whole value of the fractional part of the raw material contained in the product. The worn-out, used-up fractional part of fixed capital is paid for not only successively, but also by a mass of buyers simultaneously, in relation as they buy products. Since capital appears in the first half of its circulation as C and the buyer as M, since its aim is value while the buyer’s is use (whether in turn productive, no matter here, where we are examining only the formal aspect such as it appears towards capital in its circulation), it follows that the relation of the buyer to the product is that of the consumer generally. Indirectly, then, in all commodities the buyer successively and bit by bit pays for the wear and use of fixed capital, even though the latter does not enter into circulation as use value. But there are forms of fixed capital where he pays directly for its use value – as with means of communication, transport etc. In all these cases the fixed capital in fact never leaves the production process, as with railways etc. But while it serves for some as means of communication within the production process itself, to bring the product to market, and for the producers themselves [as] means of circulation, it can serve others as means of consumption, as use value, for holiday travel, etc. Regarded as a means of production, it distinguishes itself from machinery etc. here in that it is used up by various capitals at the same time, as a common condition for their production and circulation. (We are not yet concerned with consumption as such here.) It does not appear as locked within a particular production process, but rather as the connecting artery of a mass of such production processes of particular capitals, who use it up only in portions. In contrast to all these particular capitals and their particular production processes, then, fixed capital is here cast as the product of a particular branch of production separate from them, in which, however, it is not sold by one producer as circulating capital and bought by another as fixed capital, as with machinery, but, rather, in which it can be sold only in the form of fixed capital itself. Then its successive return, hidden in the commodity, becomes apparent. But this fixed capital then also includes the surplus value, since it is itself a sold product (for the industrialist, the machine he uses is not a product), hence the return of interest and profit, if any. Since it can be consumed in the same common and successive form, can be use value for direct consumption, it follows that its sale – not as an instrument of production but as a commodity generally – also appears in the same form. But in so far as it is sold as an instrument of production – a machine is sold as a mere commodity and only becomes an instrument of production in the industrial process – i.e. as its sale directly coincides with its use in the general social production process, this is a determination which has no place within the examination of the simple circulation of capital. In the latter, fixed capital, in so far as it enters as an agency of production, appears as a presupposition of the production process, not as its result. It can therefore only be a matter of the replacement of its value, in which no surplus value for the user is included. What is rather the case is that he has paid this surplus value to the machine-maker. Railways, however, or buildings rented for production, are simultaneously instruments of production, and are simultaneously realized by their seller as product, as capital.

Since each moment which appears as presupposition of production is at the same time its result – in that it reproduces its own conditions – the original division of the capital within the production process now appears in such a way that the production process divides into three production processes, in which different portions of the capital – which now also appear as particular capitals – are at work. (Here we can still assume a form in which one capital is at work, because we are examining capital as such, and this way of looking at it simplifies what needs to be said about the proportion of these different kinds.) The capital is annually reproduced in different and changing portions as raw material, as product, and as means of production; in a word, as fixed capital and as circulating capital. The minimum presupposition which appears in all of these production processes is the part of circulating capital destined for exchange with labouring capacity and for the maintenance and consumption of the machinery or the instrument, and the means of production. In purely extractive industries, e.g. mining, the mine itself exists as the material of labour, but not as raw material passing over into product, which latter must, in the manufacturing industry, by contrast, have a particular existence in all forms. In agriculture, seed, fertilizer, cattle etc., may be regarded as raw material as well as matières instrumentales. Agriculture forms a mode of production sui generis, because the organic process is involved, in addition to the mechanical and chemical process, and the natural reproduction process is merely controlled and guided; extractive industry (mining the most important) is likewise an industry sui generis, because no reproduction process whatever takes place in it, at least not one under our control or known to us. (Fishery, hunting etc. can involve a reproduction process; likewise forestry; this is therefore not necessarily purely extractive industry.) Now, in so far as the means of production, fixed capital as the product of capital and hence containing objectified surplus time, is itself constituted in such a way that it can be ejected by its producer as circulating capital, e.g. like machinery by the machine builder, before it becomes fixed capital, i.e. first enters into circulation as use value, [to that extent] its circulation contains no new aspect whatever. But in so far as it can never be sold while it serves at the same time as instrument of production, as e.g. railways, or in proportion as it is used up as such, it shares with fixed capital generally the quality that its value returns only successively; but there is also the addition that this return of its value includes the return of its surplus value, of the surplus labour objectified in it. It then has a special form of return.

The important thing now is that the production of capital thus appears as the production in definite portions of circulating capital and fixed capital, so that capital itself produces its double way of circulating as fixed capital and circulating capital.

Fixed capital and circulating capital. Economist. Smith. Counter-value of circulating capital must be produced within the year. Not so for fixed capital. It engages the production of subsequent years[edit source]

Before we settle the last point, first a few secondary matters. ‘Floating capital is consumed, fixed capital merely used, in the great work of production.’ (Economist, VI, p. 1.) The distinction between consume and use dissolves into gradual or rapid destruction. We need dwell on this point no further.

‘Floating capital assumes an infinite variety of forms, fixed capital has only one.’ (Economist, VI, p. 1.)[189] This ‘infinite variety of forms’, as regards the production process of capital itself, is much more correctly reduced by Adam Smith to a mere change of form. Fixed capital is of use to its master ‘so long as it continues to remain in the same form’. That means it remains within the production process as use value, in a specific material presence. Circulating capital, by contrast (A. Smith, tome II, p. 197, 198) ‘constantly passes out of his hands in a specific form’ (as product) ‘to return in another’ (as condition of production) ‘and brings profit only by means of this circulation and successive changes’. Smith does not speak here of the ‘infinite variety of forms’ in which circulating capital appears. Regarded materially, ‘fixed capital’ also assumes ‘an infinite variety of forms’; but this proceeds from the metamorphoses which circulating capital passes through as itself a use value, and the ‘infinite variety of forms’ reduces itself, therefore, to the qualitative differences of the various phases of circulation. Regarded within a specific production process, circulating capital always returns in the same form of raw materials and money for wages., The material presence is the same at the end of the process as at the beginning. Incidentally, elsewhere the Economist itself reduces the ‘infinite variety of forms’ to the conceptually determined change of forms in circulation. ‘The commodity is wholly consumed in the shape in which it is produced’ (i.e. enters into circulation as use value and is ejected from it) ‘and replaced in his hands in a new shape’ (as raw material and wages), ‘ready to repeat a similar operation’ (rather, the same operation). (loc. cit. VI, p. 1.)[190] Smith also says explicitly that fixed capital ‘requires no circulation’. (tome II, 197, 198.) With fixed capital, the value is imprisoned within a specific use value; with circulating capital, value takes the form of various different use values, likewise assumes as well as rejects the independent form distinct from every particular use value (as money); hence constant change of matter and form goes on.

‘Circulating capital supplies him’ (the entrepreneur) ‘with the materials and wages of the workers, and sets industry into activity.’ (A. Smith, tome II, p. 226.) ‘Every fixed capital comes originally from a circulating capital, and needs to be continually maintained by means of a circulating capital.’ (loc. cit. p. 207.) ‘Since so great a part of the circulating capital is being withdrawn continuously to be spent in the other two branches of the general social fund, this capital needs in turn to be renewed by continual replenishment, otherwise it would soon be reduced to nothing. These replenishments are drawn from three principal sources: the produce of the soil, of mines, and of fisheries.’ (loc. cit. p. 208.)

<We have already developed one distinction emphasized by the Economist: ‘Every production the whole cost of which is returned to the producer out of the current income of the country is floating capital; but every production, in respect of which only an annual sum is paid for the use, is – fixed capital.’ (Notebook VI, p. 1.)[191] ‘In the first case, the producer is entirely dependent on the country’s current income.’ (loc. cit.) We have seen that only part of the fixed capital returns in the time determined by circulating capital, which serves as the unit of its turnovers because it is the natural unit for the reproduction of the greatest part of food products and raw materials, just as, and because, it appears as the natural epoch in the life process (cosmic process) of the earth. This unit is the year, whose bourgeois calculation deviates more or less, but insignificantly, from its natural magnitude. The more the material presence of fixed capital corresponds to its concept, the more adequate its material mode of existence is, the more does its turnover time span a cycle of years. Since circulating capital is wholly exchanged first for money, secondly for its elements, it presupposes that a countervalue has been produced equal to its whole value (including the surplus value). It cannot be said that it enters or can enter into consumption entirely; since it must also in part serve in turn as raw material, or as an element for fixed capital; in short itself, in turn, as an element of production – a counter-production. A part of the use value ejected by capital as the product, as the result of the production process, becomes an object of consumption and thus drops out of the circulation of capital altogether; another part enters into another capital as a condition of production. This is itself posited in the circulation of capital as such, since it ejects itself from itself in the first half of circulation, as commodity, i.e. as use value; i.e. dismisses itself with respect to itself in this form from its own circulation as use value, article of consumption; but exchanges itself as money for commodity as condition of production, in the second half of its circulation. Thus, as circulating use value itself, it posits its material presence both as an article of consumption and as a new element of production, or rather an element of reproduction. But in both cases the whole of its countervalue must be on hand; i.e. it must have been wholly produced during the year. For example, the sum of manufactured products which can be exchanged during a year for agricultural products is determined by the mass of the raw products produced in a year, counted from harvest to harvest. Since we speak here of capital as such, capital in the process of becoming, we are not yet concerned with anything else in addition – in that the many capitals are not yet present for us – nothing but it itself and simple circulation, out of which it absorbs value in the double form of money and commodity and into which it throws it in the double form of money and commodity. When an industrial people producing on the foundation of capital, such as the English, e.g., exchange with the Chinese, and absorb value in the form of money and commodity from out of their production process, or rather absorb value by drawing the latter within the sphere of the circulation of their capital, then one sees right away that the Chinese do not therefore need to produce as capitalists. Within a single society, such as the English, the mode of production of capital develops in one branch of industry, while in another, e.g. agriculture, modes of production predominate which more or less antedate capital. Nevertheless, it is (1) its necessary tendency to conquer the mode of production in all respects, to bring them under the rule of capital. Within a given national society this already necessarily arises from the transformation, by this means, of all labour into wage labour; (2) as to external markets, capital imposes this propagation of its mode of production through international competition. Competition is the mode generally in which capital secures the victory of its mode of production. Still, this much is clear: quite regardless of whether it is another capital or whether it is capital itself as another which stands on both sides of the successive exchanges, each time in the opposite aspect, both aspects are already posited before we proceed to examine this double movement from the circulation of capital as such itself. In the first phase it ejects itself out of the movement of capital as use value, as commodity, and exchanges itself for money. The commodity expelled from the circulation of capital is no longer the commodity as a moment of self-perpetuating value, as the presence of value. It is, thus, its presence as use value, its being for consumption. Capital is transposed out of the form of commodity into the form of money only because an exchanger appears opposite it in ordinary circulation as consumer, who transposes M into C; [completes] this transposition in its material aspect, so that he relates to the use value as use value, as consumer, and only in this way is the use value replaced for capital as value. Thus, capital creates articles of consumption, but ejects them from itself in this form, ejects them from its circulation. On the basis of the aspect developed so far, no other relations exist. The commodity which is ejected as such from the circulation of capital loses its character as value and fulfills the role of use value for consumption, as distinct from fulfilling it for production. But in the second phase of circulation, capital exchanges money for commodity, and its transformation into commodity now itself appears as a moment of value-positing, because the commodity is accepted as such into the circulation process of capital. While it presupposes consumption in the first phase, in the second it presupposes production, production for production; for value in the form of the commodity is here taken into the circulation of capital from the outside, or, the inverse process is undertaken in the first phase. The commodity, as use value for capital itself, can only be the commodity as an element, use value, for its production process. In its double form, the process presents itself in this way: capital a exchanges its product as C for capital b’s M in the first phase; in the second, capital b as C exchanges for capital a’s M. Or, in the first phase, capital b as M exchanges for capital a’s C, in the second, a as M for capital b’s C. That is, capital is simultaneously posited in each of the two circulation phases as M and C; but in two different capitals, which are always in the opposite phase of their circulation process. In the simple circulation process, the acts of exchange, C–M or M–C appear either as directly coinciding or as directly divided. Circulation is not only the succession of both forms of exchange, but it is at the same time each of them distributed to two different sides. But we are not yet concerned here with exchange among many capitals. This belongs to the theory of competition or to that of the circulation of capitals (of credit). What concerns us here is the presupposition of consumption on one side – of the commodity ejected from the movement of value as use value – and the presupposition of production for production – of value, posited as use value, as a condition of its reproduction posited externally to the circulation of capital on the other side – so that these two sides arise out of the examination of the simple form of the circulation of capital. This much is clear: Since the entire circulating capital exchanges as C for M in the first phase, and as M for C in the second, then, if we regard the year as the unit of time of its evolutions, its transformations are limited both by the annual reproduction of raw materials etc. (the commodity for which it exchanges as money must have been produced, a simultaneous production must correspond to it), and by the constant creation of an annual revenue (the part of M which exchanges for commodity as use value) to consume the product of capital which is ejected as use value. Since further-developed relations are not present yet, such revenues are only those of the capitalists themselves and those of the workers. The examination of the exchange of capital and revenue, by the way, another form of the relation of production and consumption, does not belong here yet. In another respect, since fixed capital is exchanged only to the extent it enters as value into circulating capital, since it is, thus, realized only in part during the year, it presupposes only a partial counter-value, i.e. only the partial production of this counter-value during the course of the year. It is paid for only in proportion to its wear. This much clear, then, which already follows from the difference introduced by fixed capital into the industrial cycle, namely that it engages the production of subsequent years, and, just as it contributes to the creation of a large revenue, it anticipates further labour as a counter-value. The anticipation of future fruits of labour is therefore in no way a consequence of the state debt etc., in short, not an invention of the credit system. It has its roots in the specific mode of realization, mode of turnover, mode of reproduction of fixed capital.>

Since we are essentially concerned here with grasping the pure, specific economic forms, hence with not joining together things that do not belong, it has thus become clear from the above that the different forms in which circulating capital and fixed capital bring revenue – as well as the examination of revenue generally – do not yet belong here at all; but only the different ways in which they return and affect the total turnover of capital, the movement of its reproduction generally. Nevertheless, the incidental points made here are important – in that they reject the economists’ motley compilations, which have no place yet in the examination of the simple distinction between fixed capital and circulating capital – and because they showed us that the differences in revenue etc. have their basis in the difference of form between the reproduction of fixed and circulating capital. The issue here is still only the simple return of the value. Only later will it be found how the latter becomes the return of revenue, and that in turn becomes the difference in the determination of revenue.

Maintenance costs[edit source]

We have said nothing so far about the maintenance costs, the frais d’entretien of fixed capital. These are partly the matières instrumentales it consumes in its action. They make up fixed capital in the first sense, as we have regarded it within the production process. These are circulating capital and may just as well serve for consumption. They become fixed capital only in so far as they are consumed in the production process, but do not have, like fixed capital proper, a material substance determined purely by their formal presence. The second part of these maintenance costs consists of the labour necessary for repairs.

Revenue of fixed capital and circulating capital[edit source]

A. Smith’s determination that every fixed capital comes originally from a circulating capital and must be constantly maintained by a circulating capital: ‘Every fixed capital originally comes from a circulating capital and must be continually kept up at the latter’s expense. No fixed capital can yield revenue except at the expense of a circulating capital.’ (Storch, 26a.)[192] As to Storch’s remark about revenue – an aspect which does not belong here – it is clear: fixed capital returns as value only in proportion as it becomes extinguished as use value, as fixed capital, and enters into circulating capital as value. Hence it can return in the form of a circulating capital only in so far as its value is concerned. But it does not circulate at all as use value. Further, since it has a use value only for production, it can return for individual use, for consumption, also only in the form of circulating capital. Improvements of the soil can directly enter chemically into the reproduction process and in this way be directly transformed into use values. But then they are consumed in their form as fixed capital. A capital can bring revenue at all only in the form in which it enters into and returns from circulation, because the production of revenue in direct use values, use values not mediated through circulation, contradicts the nature of capital. Hence, since fixed capital returns as value only in the form of circulating capital, it can bring revenue only in this form. Revenue is nothing whatsoever other than the part of the surplus value destined for immediate consumption. Its returns thus depend on the mode of return of value itself. Hence the different forms in which fixed capital and circulating capital bring revenue. Likewise, since fixed capital as such never enters circulation as use value, hence is never thrown out of the realization process as use value, it never serves for immediate consumption.

Now as to Smith, his view becomes clearer for us when he says that circulating capital must be annually replaced and constantly renewed by constantly drawing it from the sea, the soil, and from mines. Here, then, circulating capital becomes purely material for him; it is fished out by the hairs, chipped out, harvested; they are the movable primary products which are released from their connection with the earth, isolated, made movable thereby, or separated from their element in their ready-made individuality, like fish etc. Still regarded as pure material, it is further certain that, if Smith presupposes the production of capital and does not suppose himself at the beginning of the world, then every circulating capital likewise comes originally from a fixed capital. Without nets he can catch no fish; without a plough, till no fields; and without a hammer, etc., drive no mines. If he uses even so little as a stone for a hammer etc., then this stone is certainly no circulating capital, no capital of any sort, but rather a means of labour. As soon as he has to produce, man possesses the resolve to use a part of the available natural objects directly as means of labour, and, as Hegel correctly said it, subsumes them under his activity without further process of mediation.[193] The place where all capital, circulating as well as fixed, not only originally but continually comes from is the appropriation of alien labour. But this process presupposes, as we have seen, a continuous small-scale circulation, the exchange of wages for labour capacity, or approvisionnement. Assuming the production process of capital: All capital returns only in the form of a circulating capital; hence fixed capital can be renewed only by a process in which a part of circulating capital becomes fixed; hence, by the employment of part of the raw materials produced, and a part of labour consumed (hence also a part of the approvisionnement exchanged for living labour) for the production of fixed capital. In agriculture, e.g., part of the product is consumed by labour to build irrigation systems or a part of the grain is exchanged for guano, chemical substances etc., which are incorporated into the earth, but also in fact have no use value except in so far as they are surrendered to the chemical process of the soil. A part of the circulating capital has a use value only for the reproduction of the fixed capital, and is produced (even if its production consisted only of the labour time spent in changing its location) only for fixed capital. But fixed capital itself can be renewed as capital only by becoming a value-component of circulating capital, and its elements are thus reproduced through the transformation of circulating capital into fixed capital. Fixed capital is as much a presupposition for the production of circulating capital as circulating capital is for the production of fixed capital. Or, the reproduction of fixed capital requires: (1) the return of its value in the form of a circulating capital, for only in this way can it in turn be exchanged for the conditions of its production; (2) that a part of living labour and of the raw material be used to produce instruments of production, direct or indirect ones, instead of producing exchangeable products. Circulating capital enters as use value into fixed capital, just as does labour, while fixed capital enters as value into circulating capital; and, as movement (where it is direct machinery), as static motion, as form, into the use value.

Free labour = latent pauperism. Eden[194][edit source]

<In connection with our statements developed above, that pauperism latent in free labour, the following statements by Sir Fr. Morton Eden, Bt: The State of the Poor, or an History of the Labouring Classes in England from the Conquest etc., 3 vols., 4º, London, 1797. (The quotations from Vol. I, bk I.) (In book I, chapter I, it says: ‘Our zone requires labour for the satisfaction of needs, and therefore at least one part of society must always tirelessly labour; others labour in the arts etc., and some, who do not work, still have the products of diligence at their disposal. For this, these proprietors have only civilization and order to thank; they are purely the creatures of civilized institutions. For these have recognized that one can also obtain the fruits of labour through ways other than labour; the men of independent fortune owe their wealth almost entirely to the labour of others, not to their own ability, which is not at all better. What divides the rich from the poorer is not the ownership of land or of money, but rather the command of labour.’ Poverty as such begins with the tiller’s freedom – the feudal fetters to the soil, or at least the locality, had until then spared the legislature the task of occupying itself with the vagrants, poor etc. Eden believes that the various commercial guilds etc. also fed their own poor. He said: ‘Without the most distant idea, then, of disparaging the numberless benefits derived for the country from manufactures and commerce, the result of this investigation seems to lead to this inevitable conclusion that manufactures and commerce’ (i.e. the first sphere of production in which capital became predominant) ‘are the true parents of our national poor.’ In the same place: Beginning with Henry VII (where at the same time there began the clearing of the land of superfluous mouths through transformation of the tilled fields into pasture, continuing for more than 150 years, at least the litigation and legislative interference; hence the number of hands made available for industry grew), wages in industry were no longer fixed, only in agriculture. 11, Henry VII. (With free labour, wage labour is not yet completely posited. The labourers still have support in the feudal relations; their supply is still too small; capital hence still unable to reduce them to the minimum. Hence statutory determination of wages. So long as wages are still regulated by statute, it cannot yet be said either that capital has subsumed production under itself as capital, or that wage labour has attained the mode of existence adequate to it.) The act cited also mentions linen weavers, building craftsmen, shipwrights. The same act also fixes the hours of labour: ‘Because many day labourers waste half the day, arrive late, leave early, take a long afternoon nap, spend a long time at breakfast, lunch and dinner, etc. etc.,’ it ordains the following hours: ‘from 15 March to 15 September, from 5 a.m., 1/2 hour breakfast, 1 1/2 dinner and siesta, 1/2 hour for noon meal, and work until between 7 and 8 p.m. In winter, however, no siesta during daylight; this permitted only from 15 May to 15 August.’>

<Wages again regulated in 1514, almost like the previous time. Hours of work again fixed. Whoever will not work upon application, arrested. Hence still compulsory labour by free workers at the given wages. They must first be forced to work within the conditions posited by capital. The propertyless are more inclined to become vagabonds and robbers and beggars than workers. The last becomes normal only in the developed mode of capital’s production. In the prehistory of capital, state coercion to transform the propertyless into workers at conditions advantageous for capital, which are not yet here forced upon the workers by competition among one another.> (Very bloody means of coercion of this sort employed under Henry VIII et. al.) (Suppression of the monasteries under Henry VIII likewise frees many hands.) (Under Edward VI still sharper laws against able-bodied labourers who do not want to work. ‘1 Edw. VI, 3: Who is able to work, refuses to labour, and lives idle for 3 days, shall be branded with redhot iron on the breast with the letter V – and shall be adjudged the slave for two years of the person who should inform against such idler etc.’ ‘If he runs away from his master for 14 days he shall become his slave for life and be branded on forehead or cheek with letter S, and if he runs away a second time and shall be convicted thereof by two sufficient witnesses, he shall be taken as a felon and suffer pains of death.’ (1376 first mention of the vagrants, sturdy rogues, 1388 the paupers.) (Similar cruel statute 1572 under Elizabeth.)[195]

The smaller the value of fixed capital in relation to its product, the more useful. – Movable, immovable, fixed and circulating. – Connection of circulation and reproduction. Necessity of reproducing use value in definite time[edit source]

Circulating capital and fixed capital, which appeared earlier as changing forms of the same capital in the different phases of its turnover, are now, when fixed capital is developed to its highest form, posited at the same time as two different modes of the existence of capital. They become such through the difference in kind of their return. Circulating capital which returns slowly has a quality in common with fixed capital. But it distinguishes itself from it because its use value itself – its material presence – enters into circulation and is at the same time shed by it, thrown beyond the bounds of the turnover process; while fixed capital – to the extent that it has been developed at this point – enters into circulation only as value, and, as long as it is still in circulation as a use value, such as e.g. the machine in circulation, it is fixed capital only δυνάμει. However, this distinction between fixed capital and circulating capital, resting initially on the relation of the material presence of the capital, or of its presence as use value, towards circulation, must, with reproduction, be posited at the same time as the reproduction of the capital in the double form of fixed capital and circulating capital. In so far as the reproduction of capital in every form is the positing not only of objectified labour time, but rather of surplus labour time, not only reproduction of its value but of a surplus value, the production of fixed capital cannot therefore be different in this regard from the production of circulating capital. Hence, in the manufacture of instruments or machines – in all the forms where fixed capital appears first as circulating capital in its material presence, in its presence as use value before becoming fixed as fixed capital, i.e. before it is consumed, for it is precisely its consumption which binds it to the production phase and distinguishes it as fixed capital – there is no difference at all, as to the realization of capital, whether it reproduces itself in the form of fixed or of circulating capital. Hence no new economic determination enters here, either. But where fixed capital as such is thrown into circulation by its producer – and not as circulating capital – hence where its proportionate use is sold, either for production or for consumption – for in the transformation of C into M, which takes place in the first section of the circulation of capital, it is irrelevant to the latter whether the commodity in turn enters into the circulation sphere of another productive capital, or whether it serves the purpose of direct consumption; for the first capital, it is rather always determined as a use value whenever it ejects it from itself, exchanges it for M – there the mode of return must be different for the producer of fixed capital from that for the producer of circulating capital. The surplus value created by him can return only proportionately and successively with the value itself. This to be looked at in the next section. Finally, although circulating capital and fixed capital now appear as two different kinds, circulating capital is still posited through the consumption, the wear of fixed capital; while fixed capital, for its part, exists only as a circulating capital transformed into this specific form. All capital transformed into objectified productive power – all fixed capital – is a use value fixated in this form, and hence a use value snatched away from consumption as well as from circulation. The transformation of wood, iron, coal and living labour (hence also indirectly that of the products consumed by the worker) into the specific use values of a machine or a railway would not by itself turn them into fixed capital if the other determinants developed above were absent. When circulating capital is transformed into fixed capital, then a part of the use values in whose form capital circulated, as well as indirectly the part of the capital which exchanges for living labour, are transformed into capital whose counter-value is created only over a longer cycle; which enters into circulation as value only proportionately and successively; and which can be realized as value only through being used up in production. The transformation of circulating capital into fixed capital presupposes relative surplus capital, since it is capital employed not for direct production but rather for new means of production. Fixed capital itself can in turn serve as a direct instrument of production – as a means within the immediate production process. In this case its value enters into the product and is replaced by the successive return of the products. Or it does not enter into the immediate production process – appears rather as a general condition for production processes, such as buildings, railways etc., and its value can be replaced only through circulating capital, to whose creation it indirectly contributed. Questions of greater detail about the proportion in the production of fixed capital and circulating capital belong to the following section. If valuable machinery were employed to supply a small quantity of products, then it would not act as a force of production, but rather make the product infinitely more expensive than if the work had been done without machinery. It creates value not in so far as it has value – for the latter is simply replaced – but rather only in so far as it increases relative surplus time, or decreases necessary labour time. In the same proportion, then, as that in which its scope grows, the mass of products must increase, and the living labour employed relatively decrease. The less the value of the fixed capital in relation to its effectiveness, the more does it correspond to its purpose. All unnecessary fixed capital appears as faux frais de production, like all unnecessary circulation costs. If capital could possess the machinery without employing labour for the purpose, then it would raise the productive power of labour and diminish necessary labour without having to buy labour. The value of the fixed capital is therefore never an end in itself in the production of capital.

Circulating capital, then, is transformed into fixed capital, and fixed capital reproduces itself in circulating capital; both, only in so far as capital appropriates living labour.

‘Every saving in fixed capital is an increase in the net revenue of society.’ (A. Smith.)[196]

The final and last distinction cited by economists is that between movable and immovable; not in the sense that the former enters into the movement of circulation, the latter does not; rather in the sense that the former is physically fixed, immovable, in the same way as movable and immovable property is distinguished. For example, improvements sunk in the soil, aqueducts, buildings; and machinery itself in great part, since it must be physically fixed, to act; railways; in short, every form in which the product of industry is welded fast to the surface of the earth. This basically adds nothing to the determination of fixed capital; but it is indeed part of this character that it becomes fixed capital in a more eminent sense the more its use value, its material presence, corresponds to its specific economic form. The immovable use value, such as house, railway etc., is therefore the most tangible form of fixed capital. Of course, it can then still circulate in the same sense as immovable property generally – as title; but not as use value; it cannot circulate in the physical sense. Originally, the growth of movable property, its increase as against immovable, indicates the ascendant movement of capital as against landed property. But once the mode of production of capital is presupposed, the level to which it has conquered the conditions of production is indicated in the transformation of capital into immovable property. It thereby establishes its residence on the land itself, and the seemingly solid presuppositions given by nature, themselves [appear], in landed property, as merely posited by industry.

(Originally, life in the community and, through its mediation, the relationship to the earth as property, are basic presuppositions of the reproduction both of the individual and of the community. Among pastoral peoples, land and soil appear merely as precondition of the migratory life, hence appropriation does not take place. Fixed settlements with soil cultivation follow – thus landed property is initially held in common, and even where it advances to private property the individuals’ connection to it appears as posited by his relation to the community. It appears as a mere fief of the community; etc. etc. The transformation of the latter into mere exchangeable value – its mobilization – is the product of capital and of the complete subordination of the state organism to it. Land and soil, even where they have become private property, are therefore exchange value only in a restricted sense. Exchange value begins in the isolated natural product, separated from the earth and individualized through industry (or mere appropriation). Individual labour first arises here too. Exchange as such does not begin within the original communes, but on their boundaries, where they cease to be. Of course, to exchange the land, their residence, to pawn it to alien communes, would be treason. Exchange can expand only little by little from its original realm, movable property, to immovable property. Only through expansion of the former does it little by little gain control over the latter. Money is the chief agent in this process.)

A. Smith at first distinguishes circulating capital and fixed capital by their role in the production process. Only later does he adopt the expression: ‘One can gainfully lay out a capital in different ways, (1) as circulating capital, (2) as fixed capital.’[197] This second expression obviously does not belong to the examination of this distinction as such, since fixed capital and circulating capital first have to be presupposed as two kinds of capital before we can speak about how to lay out capital gainfully in both forms.

‘The total capital of each entrepreneur is necessarily divided into his fixed capital and his circulating capital. If the sum is equal, then the one becomes larger as the other diminishes.’ (A. Smith, tome II, p. 226.)

Since capitals are (1) divided into fixed and circulating capital in unequal portions; (2) [have] an interrupted or uninterrupted production phase and return from more distant or nearer markets, hence, unequal circulation time; it follows that the determination of the surplus value created in a given time, e.g. annually, must be unequal because the number of reproduction processes in the given period is unequal. The amount of value created appears determined not simply by the labour employed during the immediate production process, but by the degree to which this exploitation of labour can be repeated within a given period of time.

Finally, then: While, in the examination of the simple production process, capital appeared to realize itself as value only in connection with wage labour, and circulation lay alongside, without connection to it, here, in its reproduction process, circulation is included in it in both the moments of circulation, C–M–M–C (as a system of exchanges through which it must pass, and to which the same number of qualitative changes within it correspond). In so far as its form as money is the point of departure and hence of return, circulation appears included in it as M–C–C–M. It contains both circular courses, and not merely as either change of form or change of substance, but rather as both of them included within the determination of value itself. The production process, as containing within itself the conditions of its renewal, is a reproduction process whose speed is determined by various relations developed above, which all arise from differences of circulation. The reproduction of capital also contains the reproduction of the use values in which it is realized – or the constant renewal and reproduction by human labour of the use values which enter human consumption and are themselves perishable. The change of substance and of form subordinated to human need through human labour appears from the viewpoint of capital as its own reproduction. It is at bottom the constant reproduction of labour itself. ‘Capital values perpetuate themselves by reproduction: the products which compose a capital are consumed just like any others; but their value, at the same time as it is destroyed by consumption, is reproduced in other materials or in the same one.’ (Say, 14.)[198] Exchange and a system of exchanges, and, included in that, the transformation into money as independent value, appears as condition and barrier for the reproduction of capital. With capital, production itself is on all sides subordinate to exchange. These exchange operations, circulation as such, produce no surplus value, but are conditions for its realization. They are conditions of the production of capital itself, in so far as its form as capital is posited only to the extent that it passes through them. The reproduction of capital is at the same time the production of specific formal conditions; of specific modes of relationship in which personified objectified labour is posited. Circulation is thus not merely the exchange of the product for the conditions of production – i.e. of produced wheat, e.g., for seed, new labour etc. The worker must exchange his product for the conditions of production, so as to begin anew, in every form of production. The peasant producing for immediate consumption also transforms part of the product into seed, instrument of labour, beasts of burden, fertilizer etc., and begins his labour anew. The transformation into money is necessary for the reproduction of capital as such, and its reproduction is necessarily the production of surplus value.[199] Although labour must merely maintain the value of what we earlier called constant capital in one production process, it must constantly reproduce it in another, since what appears as presupposition of material and instrument in one production process is product in the other, and this renewal, reproduction, must constantly proceed simultaneously.

  1. Cf. Hegel, Science of Logic (tr. A. V. Miller), p. 71: ‘That into which the movement returns as into its ground is (also) result.
  2. *The transition to the relation of supply, demand, prices cannot be made yet, as their development proper presupposes capital. Should not demand and, supply, in so far as they are abstract categories and do not yet express any particular economic relations, perhaps be examined already together with simple circulation or production?
  3. *We saw earlier that the capital realization process presupposes the prior development of the simple production process. [20] This will be the case with demand and supply as well, to the extent that simple exchange presupposes a need for the product. The (direct) producer’s own need as the need for others’ demand. In the course of this development itself it will be seen what has to be presupposed to it, and all this is then to be thrown into the first chapters.
  4. *Of course, all production aimed at direct use value decreases the number of those engaged in exchange, as well as the sum of exchange values thrown into circulation, and above all the production of surplus values. Hence the tendency of capital (1) continually to enlarge the periphery of circulation; (2) to transform it at all points into production spurred on by capital. [21]
  5. *The role played by luxury in antiquity in contrast to its role among the moderns, to be alluded to later.
  6. J. R. MacCulloch (1789–1864), statistician and economist, editor of the Scotsman from 1818 to 1828, Professor of Political Economy in London from 1828 to 1832, ‘past master in pretentious cretinism’, ‘at once the vulgarizer of Ricardian economics and the most pitiful image of its dissolution’ (Marx).
  7. MacCulloch, The Principles of Political Economy, Edinburgh, 1825, pp. 166–90.
  8. James Mill, Éléments d’économie politique, Paris, 1823, pp. 250–60.
  9. Bastiat et Proudhon, Gratuité du crédit, pp. 65–74. For Marx’s later discussions of the polemic between Bastiat and Proudhon, see pp. 640–41, 754–8, 843–5.
  10. A reference to the pamphlet The Currency Question. The Gemini Letters, London, 1844, written by two upholders of the currency doctrines of the Birmingham banker Thomas Attwood, T. B. Wright and J. Harlow. See below, pp. 804–5.
  11. Heinrich Friedrich Storch (1766–1835), Professor of Political Economy in the Russian Academy of Sciences at St Petersburg. Say issued Storch’s work Cours d’économie politique with critical notes in 1823; he attacked Say’s interpretation of his views in Considérations sur la nature du revenu national, Paris, 1824, pp. 144–59.
  12. Malthus, Principles, p. 405; Definitions, pp. 258–9. Sismondi, Études, Vol. I, p. 61 n.
  13. ‘Socialistically’: in the manner of the early utopian socialists, in particular John Gray; see above, pp. 153–6.
  14. Ricardo, On the Principles of Political Economy, pp. 80–85.
  15. Adam Smith, Wealth of Nations, pp. 244–6.
  16. Thomas Hodgskin (1787–1869) was a socialist journalist and agitator active in the 1820s. In his economic works he developed the socialist implications in Ricardo’s theory of value, in particular in Labour Defended against the Claims of Capital (1825) and Popular Political Economy (1827).
  17. Hodgskin, Popular Political Economy, pp. 245–6.
  18. The Source and Remedy of the National Difficulties, London, 1821, pp. 17–18.
  19. An Inquiry into those Principles Respecting the Nature of Demand and the Necessity of Consumption Lately Advocated by Mr Malthus, anonymous pamphlet, London, 1821, p. 59.
  20. Hodgskin, Popular Political Economy, p. 238.
  21. ibid., p. 246.
  22. Malthus, Principles of Political Economy, pp. 266, 301, 302, 315, 372–82, in part paraphrased by Marx.
  23. ibid., p. 405, note by the editor, William Otter.
  24. ibid., p. 414, note by Malthus.
  25. *It is quite the same with the demand created by production itself for raw material, semi-finished goods, machinery, means of communication, and for the auxiliary materials consumed in production, such as dyes, coal, grease, soap, etc. This effective, exchange-value-positing demand is adequate and sufficient as long as the producers exchange among themselves. Its inadequacy shows itself as soon as the final product encounters its limit in direct and final consumption. This semblance, too, which drives beyond the correct proportion, is founded in the essence of capital, which, as will be developed more closely in connection with competition, is something which repels itself, is many capitals mutually quite indifferent to one another. In so far as one capitalist buys from others, buys commodities, or sells, they are within the simple exchange relation; and do not relate to one another as capital. The correct (imaginary) proportion in which they must exchange with one another in order to realize themselves at the end as capital lies outside their relation to one another.
  26. *Since value forms the foundation of capital, and since it therefore necessarily exists only through exchange for counter-value, it thus necessarily repels itself from itself. A universal capital, one without alien capitals confronting it, with which it exchanges – and from the present standpoint, nothing confronts it but wage labourers or itself – is therefore a non-thing. The reciprocal repulsion between capitals is already contained in capital as realized exchange value.
  27. See above, p. 411, and note 24.
  28. Say, Traité d’économie politique, pp. 142–56.
  29. Marx wrote ‘not else’ in English here.
  30. Bastiat et Proudhon, Gratuité du crédit, pp. 207–8.
  31. *It is beside the point here that capital, in practice as well as in general tendency, directly employs price, as e.g. in the truck system, to defraud necessary labour, and to reduce it below the standard given by nature as well as by a specific state of society. We must always presuppose here that the wage paid is economically just, i.e. that it is determined by the general laws of economics. The contradictions have to follow here from the general relations themselves, and not from fraud by individual capitalists. The further forms which this assumes in reality belong in the doctrine of wages.
  32. For Bastiat’s view, see Gratuité du crédit, pp. 127–32.
  33. Marx wrote 4 9/20 thalers when he meant to write 4 10/20 thalers. This naturally affects the subsequent calculations, which should be amended as follows: 80 lb. at 4 10/20 thalers a pound = 360 thalers. 360 thalers + 90 = 270. 270 − 216 = 54. 360 − 54 = 306. 54 represents 15% profit on 360 thalers.
  34. The substitution of ‘wheat’ for ‘grain’ here and at subsequent points has no bearing on Marx’s argument. He uses the two words interchangeably.
  35. Samuel Jones Loyd (1796–1883, banker and economist, expert witness before the Parliamentary Commissions of 1833, 1840, 1848, and 1857, author of numerous pamphlets on money and banking, leading theorist of the Currency School in the controversy over Peel’s Act of 1844, created Baron Overstone in 1860). The source of this quotation has not been found; it is most probably from the Evidence Presented to the House of Commons Select Committee of 1857, ed. J. R. MacCulloch, London, 1858.
  36. Cf. Hegel, Science of Logic, pp. 344–7.
  37. This sentence is in English in the original.
  38. Ricardo, On the Principles of Political Economy, p. 139.
  39. Cf. Hegel, Science of Logic, p. 600: ‘This universal Notion contains the three moments: universality, particularity, and individuality.’
  40. The original text has ‘personifications’, evidently referring back to ‘conditions’.
  41. Sein für andres is a basic concept of Hegel’s logic, described in the Science of Logic (p. 119 of the translation by A. V. Miller, London, 1969) as ‘a negation of the simple relation of being to itself which is supposed to be determinate being’. However, it is paired, not with Sein für sich, but with Sein in sich (being in itself, described as ‘something returned into itself out of the being for other’). In any case, it is difficult to detect any relation between Marx’s use of Sein für andres and Hegel’s use. The situation is different with the concept of Sein für sich, since Hegel described being for self in the Lesser Logic (p. 179 of the translation by W. Wallace, Oxford, 1892) in the following way: ‘Being for self is a self-subsistent, the One’, and added ‘The readiest instance of being for self is found in the “I”.’ This comes close to Marx’s ‘each individual … as an end in himself’.
  42. Having themselves become = having themselves undergone the process of becoming, as indicated on pp. 459–60.
  43. On 22 February 1858, Marx wrote to Lassalle that he was planning three works: (1) a critique of the economic categories or the system of bourgeois economy critically presented, (2) a critique and history of political economy and socialism, and (3) a short historical sketch of the development of economic relations or categories (Marx-Engels Selected Correspondence, Moscow n.d., p. 125). Marx referred here to the third work, which he never produced in a completed form. Pages 459–514 of the present edition would no doubt have formed part of it.
  44. Do ut facias: I give that you may do; facio ut des: I do that you may give; do ut des: I give that you may give. (Roman law.)
  45. That is, with the free workers in manufactures (hand crafts).
  46. Steuart, An Inquiry, Vol. I, p. 40.
  47. Marx did not in fact mention this in the Chapter on Money but rather on pp. 272–3, in the Chapter on Capital.
  48. Adam Smith, Wealth of Nations, Vol. I, pp. 104–5.
  49. State property.
  50. The word Stamm here refers broadly to any extended kinship grouping; e.g. clan, tribe, gens, etc.
  51. Geschlechter may also refer to the sexes, linguistic groups, generations, etc. It is not entirely certain which of these distinctions Marx had foremost in mind here.
  52. This is one possible reconstruction of the sentence beginning ‘The commune’, which has a number of grammatical loose ends in the original. Two other possible variants are presented in Pre-Capitalist Economic Formations, tr. J. Cohen, London, 1964, p. 73.
  53. Craftsmen, workers.
  54. Georg Niebuhr, Römische Geschichte. Erster Theil. Zweyte, völlig umgearbeitete, Ausgabe, Berlin, 1827, p. 245.
  55. The property of the quirites, i.e. the Romans.
  56. The passages in pointed brackets, on pp. 477–8, are taken from Niebuhr’s Römische Geschichte. Erster Theil, and in this order: (1) p. 148; (2) pp. 435–6; (3) pp. 614–15 and footnotes 1224 and 1225; (4) pp. 317–18; (5) pp. 326–35.
  57. Cicero, Letters to Atticus, Vol. V, 21, lines 10–13; Vol. VI, 1, lines 3–7; Vol. VI, 2, lines 7–10.
  58. P.-J. Proudhon, Système des contradictions économiques, Vol. II, p. 265.
  59. Latin plural of iugerum, a Roman measure of land.
  60. Political animal; literally, city-dweller.
  61. The term Gemeinwesen also carries the nuances ‘common essence’, ‘common system’ and ‘common being’.
  62. Aliens who resided in Athens but were not classed as citizens.
  63. According to Roman tradition, Numa Pompilius was the second king of Rome.
  64. Citizens of one Greek city-state who were granted full citizenship in another.
  65. *The dissolution of the still earlier forms of communal property and real community goes without saying.
  66. *For in that case the capital presupposed as condition of wage labour is wage labour’s own product, and is presupposed by it as its own presupposition, created by it as its own presupposition.
  67. Antoine Cherbuliez (1797–1869, Swiss lawyer and economist, follower of Sismondi, although he added some elements of Ricardian theory), Richesse ou pauvreté: Exposition des causes et des effets de la distribution actuelle des richesses sociales, Paris, 1841, p. 16.
  68. Bastiat et Proudhon, Gratuité du crédit, pp. 65–74. For Marx’s later discussions of the polemic between Bastiat and Proudhon, see pp. 640–41, 754–8, 843–5.
  69. *The first glance shows what a nonsensical circle it would be if on the one hand the workers whom capital has to put to work in order to posit itself as capital had first to be created, to be brought to life through its stockpiling if they waited for its command, Let There Be Workers!; while at the same time it were itself incapable of stockpiling without alien labour, could at most stockpile its own labour, i.e. could itself exist in the form of not-capital and not-money; since labour, before the existence of capital, can only realize itself in forms such as craft labour, petty agriculture etc., in short, all forms which can not stockpile, or only sparingly; in forms which allow of only a small surplus product and eat up most of it. We shall have to examine this notion of stockpiling [Aufhäufung] still more closely later on.
  70. Adam Smith, Wealth of Nations, Vol. III, Bk III, Ch. 4.
  71. *Although ἀρχεῖα among the Greeks, corresponding to the principalis summa rei creditae. [13]
  72. métairie: share-cropping, the modern métayage. Bail de bestes à cheptel: lease with livestock as capital. Cf. Du Cange, Glossarium, Vol. 2, p. 139.
  73. Adam H. Müller (1774–1829, leading advocate of the Romantic reaction in history and economics during the early nineteenth century; Austrian state official under Metternich, ennobled for his propagandistic activities), Die Elemente der Staatskunst, Erster Theil, Berlin, 1809, pp. 226–41.
  74. See above, pp. 457–8.
  75. In English in the original.
  76. Marx’s distinction between Rohstoff and Rohmaterial has no English equivalent. Rohstoff is the raw material in its pristine state, before being subjected to human labour; Rohmaterial is the raw material which has been formed by human labour but has yet to enter into the final product. Cf. Capital, Vol. I, Moscow, 1954, pp. 178–82.
  77. See above, p. 402.
  78. See above, pp. 256–7.
  79. par excellence.
  80. *It is here presupposed of course that it follows a correct instinct. It could eat up the seed grain, let the field lie fallow, and build roads. But it would thereby not have accomplished the necessary labour, because it would not reproduce itself, not maintain itself as living labour capacity through this labour. Alternatively the living labour capacities may be directly murdered, as e.g. by Peter I, to build Petersburg. This sort of thing does not belong here.
  81. *If the state lets this sort of matter be conducted through state-contractors, then this still always takes place indirectly through the corvée or taxes.
  82. Cf. Hegel, System of Philosophy, I, Logic, para. 161: ‘The concept remains at home with itself in its process; no new content is posited by the process, only an alteration of form is produced.’
  83. Sismondi, Nouveaux Principes d’économie politique, Vol. I, p. 89. See above, p. 261.
  84. ibid., Vol. I, pp. 91–2.
  85. Cherbuliez, Richesse ou pauvreté, p. 64.
  86. In Cherbuliez; raw material, instrument of labour, and supply of articles of consumption. See above, p. 299.
  87. Cherbuliez, Richesse ou pauvreté, pp. 25–6.
  88. William Thompson (1783–1833) was an Irish landowner who embraced Owenism, and criticized political economy from a utopian socialist position, but on the basis of Ricardo’s doctrines.
  89. Storch, Cours d’économie politique, Vol. I, pp. 411–12.
  90. Malthus, The Measure of Value Stated and Illustrated, with an Application of it to the Alterations in the Value of the English Currency since 1790, London, 1823, p. 17.
  91. William Thompson, An Inquiry into the Principles of the Distribution of Wealth, Most Conducive to Human Happiness, Applied to the Newly Proposed System of Voluntary Equality of Wealth, London, 1824, p. 176.
  92. *For from the present standpoint we still only have labour or capital at all points of circulation.
  93. Ramsay, An Essay on the Distribution of Wealth, p. 55.
  94. Incidental ‘false’ expenses of production: the category into which the political economists from Adam Smith onwards relegated the cost of maintaining necessary but unproductive workers, e.g. soldiers, doctors etc.
  95. *Except if one imagines that all capitals produce to order for each other, and that the product is therefore always immediately money, a notion which contradicts the nature of capital and hence also the practice of large-scale industry.
  96. Thomas de Quincey (1785–1859), the essayist, author of Confessions of an Opium Eater, was also a writer on political economy, and a follower of Ricardo.
  97. Ramsay, An Essay on the Distribution of Wealth, p. 43. The references are to the page numbers of Ramsay’s book. The quotations themselves are as usual in a mixture of English and German.
  98. ibid., p. 55.
  99. Misunderstandings on Ramsay’s part (cf. Ramsay, An Essay, p. 22 n.) in which he followed Ricardo’s own misunderstandings (cf. Ricardo, On the Principles of Political Economy, pp. 5, 7–8, 9).
  100. Adam Smith, Wealth of Nations, Vol. I, pp. 101–2, 131–4.
  101. Ricardo, On the Principles of Political Economy, pp. 338–9.
  102. ibid., p. 3: ‘In speaking of commodities … we mean commodities … on the production of which competition operates without restraint.’
  103. ibid., p. 86.
  104. De Quincey, The Logic of Political Economy, Edinburgh, 1844, p. 204.
  105. De Quincey, Logic of Political Economy, p. 204.
  106. Should read 4.7%, but the error has been taken over from Malthus himself. Cf. Malthus, Principles of Political Economy, pp. 269–70. Two other petty errors of arithmetic in these passages have been corrected as indicated by the MELI editors.
  107. Ravenstone, Thoughts on the Funding System, p. 11.
  108. Malthus, The Measure of Value, p. 33.
  109. ibid.
  110. Malthus, The Measure of Value, p. 29.
  111. Carey, Principles of Political Economy, Part I, pp. 76–8.
  112. ibid., p. 99.
  113. Adam Smith, Wealth of Nations, Vol. I, pp. 230–31, note by Wakefield the editor.
  114. Albert Gallatin (1761–1849; American public figure of Swiss origin, academic, diplomat, and banker, author of many books on financial questions), Considerations on the Currency and Banking System of the United States, Philadelphia, 1831, p. 68.
  115. John Wade (1788–1875) was a journalist and historian, and parliamentary reformer, who worked for a long time with the Spectator, and whose History of the Middle and Working Classes was described by Marx as ‘theoretically … original in some parts … historically … a shameless plagiarism from Sir F. M. Eden’.
  116. Gaskell, Artisans and Machinery, pp. 111–14.
  117. *Merchant capital also from the outset the concentration of many exchanges in one hand. It already represents a mass of exchangers both as M and as C.
  118. Babbage, Traité sur l’économie, p. 485.
  119. Pellegrino Rossi (1787–1848; Italian political economist, supporter of Napoleon I, in exile from 1815, first in Geneva then in France, professor of political economy at the Collège de France 1833–40, created a peer in 1844, returned to Italy as French ambassador, became prime minister of the Pope’s government in 1848, finally assassinated in the course of a speech in favour of moderation), Cours d’économie politique, Brussels, 1843.
  120. R. Torrens, An Essay on the Production of Wealth, London, 1821, pp. 70–71.
  121. Labour in being, not in potency.
  122. Cf. Ricardo, On the Principles of Political Economy, pp. 31–2, ‘There can be no rise in the value of labour without a fall of profits … If cloth … be divided between the workman and his employer, the larger the proportion given to the former, the less remains for the latter.’
  123. H. C. Carey, The Past, the Present, and the Future, Philadelphia, 1848, pp. 74–5.
  124. The Reverend Thomas Chalmers (1780–1847) was a Scottish Presbyterian minister who taught moral philosophy and divinity, as well as political economy; ‘one of the most fanatical Malthusians’ (Marx).
  125. F.-L.-A. Ferrier, Du gouvernement considéré dans ses rapports avec le commerce, Paris, 1805, p. 35. Ferrier (1777–1861) was a high French customs official who both operated and wrote in favour of Napoleon I’s protective system.
  126. Adam Smith, Wealth of Nations, Vol. II, p. 10.
  127. Hodgskin, Popular Political Economy, p. 140.
  128. T. R. Malthus, An Inquiry into the Nature and Progress of Rent, London, 1815, p. 7.
  129. Ricardo, On the Principles of Political Economy, p. 493.
  130. Recherches sur la nature et les causes de la richesse des nations; traduction nouvelle, avec des notes et observations; par Germain Garnier, Paris, 1802, 2 volumes. The French edition of Adam Smith, excerpted by Marx already in 1844; see MEGA. 1/3, pp. 457–93.
  131. Genesis iii, 19.
  132. grisette: young shop-girl.
  133. Fourier, Le Nouveau Monde industriel et sociétaire, in OEuvres complets, Paris, 1848, Vol. VI, pp. 245–52.
  134. Nassau Senior, Principes fondamentaux, pp. 309–35.
  135. *Proudhon’s lack of understanding of this matter is evident from his axiom that every labour leaves a surplus. [38] What he denies for capital, he transforms into a natural property of labour. The point is, rather, that the labour time necessary to meet absolute needs leaves free time (different at the different stages of the development of the productive forces), and that therefore a surplus product can be created if surplus labour is worked. The aim is to suspend the relation itself, so that the surplus product itself appears as necessary. Ultimately, material production leaves everyone surplus time for other activity. There is no longer anything mystical in this. Originally, the free gift of nature abundant, or at least merely to be appropriated. From the outset, naturally arisen association (family) and the division of labour and cooperation corresponding to it. For needs are themselves scant at the beginning. They too develop only with the forces of production.
  136. Malthus, Definitions in Political Economy, pp. 69–70.
  137. Adam Smith, Wealth of Nations, Vol. II, Bk II, Ch. 2, pp. 270–77.
  138. *The productivity of capital as capital is not the productive force which increases use values; but rather its capacity to create value; the degree to which it produces value.
  139. *It is altogether necessary to make this clear; because the distribution of the surplus value among the capitals, the calculation of the total surplus value among the individual capitals – this secondary economic operation – gives rise to phenomena which are confused, in the ordinary economics books, with the primary ones.
  140. See above, p. 617.
  141. See above, p. 585.
  142. Bastiat and Proudhon, Gratuité du crédit, p. 200.
  143. ibid., p. 288.
  144. A. Anderson (Scottish chemical manufacturer, not to be confused with James Anderson, Scottish farmer, and eighteenth-century originator of the theory of ground rent), The Recent Commercial Distress; or, the Panic, Analysed: Showing the Cause and Cure, London, 1847.
  145. Say, Traité d’économie politique, Vol. II, p. 430.
  146. Ramsay, An Essay on the Distribution of Wealth.
  147. *Otherwise it could also be assumed, alternatively, that, if the production process is continuous, the obtained surplus is re-transformed into capital every 3 months.
  148. Ricardo, On the Principles of Political Economy, pp. 26–7. The passage is sometimes compressed, sometimes expanded, in the quoting, in line with Marx’s usual method in the notebooks.
  149. Petty, Political Arithmetic, pp. 178–9.
  150. Sismondi, Nouveaux Principes d’économie politique, Vol. I, pp. 94–8.
  151. Cherbuliez, Richesse ou pauvreté, pp. 16–19.
  152. The number 29 refers to Notebook V, p. 29. See above, p. 543, and Storch, Cours d’économie politique, Vol. I, pp. 411–12.
  153. Storch, Cours d’économie politique, Vol. I, p. 246. The number 26a refers to an excerpt-book.
  154. Storch, Considérations sur la nature du revenu national, Paris, 1824.
  155. Ricardo, On the Principles of Political Economy, p. 3.
  156. A reference to the pamphlet The Currency Question. The Gemini Letters, London, 1844, written by two upholders of the currency doctrines of the Birmingham banker Thomas Attwood, T. B. Wright and J. Harlow. See below, pp. 804–5.
  157. Ramsay, An Essay on the Distribution of Wealth, p. 43.
  158. *It is clear that other aspects also enter in with the equalization of the rate of profit. Here, however, the issue is not the distribution of surplus value but its creation.
  159. The quotation from Storch is on p. 637.
  160. By de Quincey and Ramsay; see above, pp. 642–3.
  161. See above, p. 592, and Rossi, Cours d’économie politique, p. 370.
  162. Storch, Cours d’économie politique, Vol. I, p. 405.
  163. Malthus, Definitions in Political Economy, pp. 237–8.
  164. Adam Smith, Recherches sur la nature et les causes de la richesse des nations, Vol. II, pp. 197–8.
  165. ‘partir de son possesseur’. Storch, Cours d’économie politique, Vol. I, p. 405.
  166. Cherbuliez, Richesse au pauvreté, pp. 14–15.
  167. Malthus, Definitions in Political Economy, pp. 237–8.
  168. See above, p. 574, and Malthus, The Measure of Value, p. 33.
  169. *Its size posited as permanent – this does not concern us here at all, since the statement is true for a capital of any size. Capitals have different sizes. But the size of each individual capital is equal to itself, hence, in so far as only its quality as capital is concerned, any size. But if we examine two capitals in comparison to each other, then the difference in their size introduces a relation of a qualitative characters. Size becomes itself a distinguishing quality. This is an essential aspect, of which size is only one single instance, of how the study of capital as such differs from the study of one capital in relation to another capital, or the study of capital in its reality.
  170. See above, pp. 644–5.
  171. MacCulloch, The Principles of Political Economy, p. 300.
  172. Ricardo, On the Principles of Political Economy, p. 26.
  173. J.-B. Say, Traité d’économie politique, Vol. II, p. 430.
  174. Sismondi, Nouveaux Principes d’économie politique, Vol. I, pp. 94–8.
  175. The Economist, Vol. V, No. 219, 6 November 1847, p. 1271.
  176. Ravenstone, Thoughts on the Funding System, p. 45.
  177. Babbage, Traité sur l’économie des machines et des manufactures, pp. 20–21.
  178. Andrew Ure (1778–1857; Scottish doctor, chemist, astronomer, apologist for the factory system of the early nineteenth century and opponent of the Factory Acts), Philosophie des manufactures, Brussels, 1836 (French translation of the 2nd edition, London, 1835), Vol. I, pp. 18–19.
  179. The manuscript has: ‘… now appears as circulating capital (the first two) and fixed capital’.
  180. Hodgskin, Labour Defended, p. 16.
  181. ‘als hätt es Lieb im Leibe’, Goethe, Faust, Pt I, Act 5, Auerbach’s Cellar in Leipzig.
  182. See p. 688, n. 77.
  183. Fourier, Le Nouveau Monde industriel et sociétaire, Vol. VI, pp. 242–52.
  184. *The determinations of raw material, product, instrument of production, change according to the role which the use values play in the production process itself. What may be regarded as a mere raw material (certainly not agricultural products, which are all reproduced, and not only reproduced in their original form, but also modified in their natural being itself to correspond to human needs. Quote from Hodges etc. [6] The products of purely extractive industry such as e.g. coal, metals, are themselves the result of labour, not only to bring them to light, but also in order to give them the form, as with metals, in which they can serve as raw materials for industry. But they are not reproduced, since we do not yet know how to create metals) is itself the product of labour. The product of one industry is the raw material for another and vice versa. The instrument of production itself is the product of one industry, and serves as instrument of production only in the other. One industry’s waste is the raw material of the other. In agriculture, a part of the product (seed, cattle etc.) itself appears as raw material for the same industry; hence, like fixed capital, it never leaves the production process; the portion of the agricultural products destined for animal feed can be regarded as matière instrumentale; but seed is reproduced in the production process, while the instrument as such is consumed in it. Could not seed, considering that it always remains within the production process, like draught animals, be regarded as fixed capital, like draught animals? No; otherwise all raw materials would have to be so regarded. As raw material it is always comprised within the production process. Finally, products entering into direct consumption in turn come out of consumption as raw materials for production, fertilizer in the process of nature etc., paper out of rags etc.; but secondly, their consumption reproduces the individual himself in a specific mode of being, not only in his immediate quality of being alive, and in specific social relations. So that the ultimate appropriation by individuals taking place in the consumption process reproduces them in the original relations in which they move within the production process and towards each other; reproduces them in their social being, and hence reproduces their social being – society – which appears as much the subject as the result of this great total process.
  185. De Quincey, The Logic of Political Economy, p. 114.
  186. Babbage, Traité sur l’économie des machines et des manufactures, pp. 375–6.
  187. See below pp. 843–5.
  188. *Risk, which plays a role for the economists in the determination of profit – it can obviously play none in the surplus gain, because the creation of surplus value is not increased thereby, and possible that capital incurs risk in the realization of this surplus value – is the danger that the capital does not pass through the different phases of circulation, or remains fixated in one of them. We have seen that the surplus gain is part of the production costs, not of the capital, but of the product. The necessity for capital to realize this surplus gain or a part of it confronts it as a double external compulsion. As soon as profit and interest become separated, so that the industrial capitalist must pay interest, a portion of the surplus gain is cost of production from capital’s viewpoint, i.e. belongs itself among his outlays. In another respect, it is the average assecurance which it gives itself in order to cover the risk of devaluation which it runs in the metamorphoses of the total process. A part of the surplus gain appears to the capitalist only as a compensation for the risk he runs so as to make more money; a risk which can lead to the loss of the presupposed value itself. In this form, the necessity of realizing the surplus gain appears to him as means to ensure its reproduction. Both relations, of course, do not determine the surplus value, but rather make its positing appear as an external necessity for capital, and not only as the satisfaction of its tendency to seek riches.
  189. The Economist, Vol. V, No. 219, 6 November 1847, p.1271.
  190. The Economist, Vol. V, No. 219, 6 November 1847, p. 1271.
  191. ibid
  192. The first part of this quotation is taken over by Storch from the French edition of Adam Smith, Vol. II, p. 207 (see above, p. 728); the whole quotation, with the addition of Storch’s remark about revenue, is to be found in Storch, Cours d’économie politique, Vol. I, p. 246.
  193. Cf. Hegel, Science of Logic, p. 746: ‘The relation of the activity of the end through the means to the external object is … an immediate relation of the middle term to the other extreme. It is immediate because the middle term has an external object in it and the other extreme is another such object.’
  194. Sir Frederick Morton Eden, Bt (1766–1809) was inspired by the high prices of 1794 and 1795 to make the first ever investigation into working-class history. ‘The only disciple of Adam Smith throughout the eighteenth century who produced anything of importance’ (Marx).
  195. The passages from Eden’s book (Vol. I, Bk 1) are as follows, beginning with the passage on p. 735 of the present edition: pp. 1–2; pp. 57–61; pp. 75–6; p. 100; p. 101.
  196. Adam Smith, Recherches sur la nature et les causes de la richesse des nations, Vol. II, p. 226.
  197. Adam Smith, Recherches sur la nature et les causes de la richesse des nations, Vol. II, pp. 197–8.
  198. Say, Traité d’économie politique, Vol. II, p. 185.
  199. In regard to the reproduction phase (especially circulation time), note that use value itself places limits upon it. Wheat must be reproduced in a year. Perishable things like milk etc. must be reproduced more often. Meat on the hoof does not need to be reproduced quite so often, since the animal is alive and hence resists time; but slaughtered meat on the market has to be reproduced in the form of money in the very short term, or it rots. The reproduction of value and of use value partly coincide, partly not.