III. Chapter on Capital - Section 3: Capital as Fructiferous. Transformation of Surplus Value into Profit
- II. Chapter on Money
- III. Chapter on Capital - Section 1: Production process of Capital
- III. Chapter on Capital - Section 2: Circulation process of Capital
- III. Chapter on Capital - Section 3: Capital as Fructiferous. Transformation of Surplus Value into Profit
- Addenda to the Chapters on Money and on Capital
We now come to the
THIRD SECTION. CAPITAL AS FRUCTIFEROUS. INTEREST. PROFIT. (PRODUCTION COSTS ETC.)
Rate of profit. – Fall of the rate of profit. – Rate of profit. – Sum of profit. – Atkinson. A. Smith. Ramsay. Ricardo. – Surplus value as profit always expresses a lesser proportion. – Wakefield. Carey. Bastiat[edit source]
Capital is now posited as the unity of production and circulation; and the surplus value it creates in a given period of time, e.g. in one year, is = ST/(p + c) = ST/R or = S(T/p - T/p × c/(c + p)). Capital is now realized not only as value which reproduces itself and is hence perennial, but also as value which posits value. Through the absorption of living labour time and through the movement of its own circulation (in which the movement of exchange is posited as its own, as the inherent process of objectified labour), it relates to itself as positing new value, as producer of value. It relates as the foundation to surplus value as that which it founded. Its movement consists of relating to itself, while it produces itself, at the same time as the foundation of what it has founded, as value presupposed to itself as surplus value, or to the surplus value as posited by it. In a definite period of time which is posited as the unit measure of its turnovers because it is the natural measure of its reproduction in agriculture, capital produces a definite surplus value, which is determined not only by the surplus value it posits in one production process, but rather by the number of repetitions of the production process, or of its reproductions in a specified period of time. Because of the inclusion of circulation, of its movement outside the immediate production process, within the reproduction process, surplus value appears no longer to be posited by its simple, direct relation to living labour; this relation appears, rather, as merely a moment of its total movement. Proceeding from itself as the active subject, the subject of the process – and, in the turnover, the direct production process indeed appears determined by its movement as capital, independent of its relation to labour – capital relates to itself as self-increasing value; i.e. it relates to surplus value as something posited and founded by it; it relates as well-spring of production, to itself as product; it relates as producing value to itself as produced value. It therefore no longer measures the newly produced value by its real measure, the relation of surplus labour to necessary labour, but rather by itself as its presupposition. A capital of a certain value produces in a certain period of time a certain surplus value. Surplus value thus measured by the value of the presupposed capital, capital thus posited as self-realizing value – is profit; regarded not sub specie aeternitatis, but sub specie – capitalis, the surplus value is profit; and capital as capital, the producing and reproducing value, distinguishes itself within itself from itself as profit, the newly produced value. The product of capital is profit. The magnitude, surplus value, is therefore measured by the value-magnitude of the capital, and the rate of profit is therefore determined by the proportion between its value and the value of capital. A very large part of what belongs here has been developed above. But the anticipated material is to be put here. In so far as the newly posited value, which is of the same nature as the capital, is itself in turn taken up into the production process, itself in turn maintains itself as capital, to that extent the capital itself has grown, and now acts as a capital of greater value. After it has distinguished the profit, as newly reproduced value, from itself as presupposed, self-realizing value, and has posited profit as the measure of its realization, it suspends the separation again, and posits it in its identity to itself as capital which, grown by the amount of the profit, now begins the same process anew in larger dimensions. By describing its circle it expands itself as the subject of the circle and thus describes a self-expanding circle, a spiral.
The general laws developed previously here briefly summarized thus: The real surplus value is determined by the relation of surplus labour to necessary labour, or by the portion of the capital, the portion of objectified labour, which exchanges for living labour, relative to the portion of objectified labour by which it is replaced. But surplus value in the form of profit is measured by the total value of the capital presupposed to the production process. Presupposing the same surplus value, the same surplus labour in proportion to necessary labour, then, the rate of profit depends on the relation between the part of capital exchanged for living labour and the part existing in the form of raw material and means of production. Hence, the smaller the portion exchanged for living labour becomes, the smaller becomes the rate of profit. Thus, in the same proportion as capital takes up a larger place as capital in the production process relative to immediate labour, i.e. the more the relative surplus value grows – the value-creating power of capital – the more does the rate of profit fall. We have seen that the magnitude of the capital already presupposed, presupposed to reproduction, is specifically expressed in the growth of fixed capital, as the produced productive force, objectified labour endowed with apparent life. The total value of the producing capital will express itself in each of its portions as a diminished proportion of the capital exchanged for living labour relative to the part of capital existing as constant value. Take e.g. manufacturing industry. In the same proportion as fixed capital grows here, machinery etc., the part of capital existing in raw materials must grow, while the part exchanged for living labour decreases. Hence, the rate of profit falls relative to the total value of the capital presupposed to production – and of the part of capital acting as capital in production. The wider the existence already achieved by capital, the narrower the relation of newly created value to presupposed value (reproduced value). Presupposing equal surplus value, i.e. equal relation of surplus labour and necessary labour, there can therefore be an unequal profit, and it must be unequal relative to the size of the capitals. The rate of profit can rise although real surplus value falls. Indeed, the capital can grow and the rate of profit can grow in the same relation if the relation of the part of capital presupposed as value and existing in the form of raw materials and fixed capital rises at an equal rate relative to the part of the capital exchanged for living labour. But this equality of rates presupposes growth of the capital without growth and development of the productive power of labour. One presupposition suspends the other. This contradicts the law of the development of capital, and especially of the development of fixed capital. Such a progression can take place only at stages where the mode of production of capital is not yet adequate to it, or in spheres of production where it has assumed predominance only formally, e.g. in agriculture. Here, natural fertility of the soil can act like an increase of fixed capital – i.e. relative surplus labour can grow – without the amount of necessary labour diminishing. (E.g. in the United States.) The gross profit, i.e. the surplus value, regarded apart from its formal relation, not as a proportion but rather as a simple magnitude of value without connection with any other, will grow on the average not as does the rate of profit, but as does the size of the capital. Thus, while the rate of profit will be inversely related to the value of the capital, the sum of profit will be directly related to it. However, even this statement is true only for a restricted stage of the development of the productive power of capital or of labour. A capital of 100 with a profit of 10% yields a smaller sum of profit than a capital of 1,000 with a profit of 2%. In the first case the sum is 10, in the second 20, i.e. the gross profit of the larger capital is twice as large as that of the 10 times smaller capital, although the rate of the smaller capital’s profit is 5 times greater than that of the larger. But if the larger capital’s profit were only 1%, then the sum of its profit would be 10, like that for the 10 times smaller capital, because the rate of profit would have declined in the same relation as its size. If the rate of profit of the capital of 1,000 were only 1/2%, then the sum of its profit would be only half as large as that of the smaller capital, only 5, because the rate of profit would be 20 times smaller. Thus, expressed in general terms: if the rate of profit declines for the larger capital, but not in relation with its size, then the gross profit rises although the rate of profit declines. If the profit rate declines relative to its size, then the gross profit remains the same as that of the smaller capital; remains stationary. If the profit rate declines more than its size increases, then the gross profit of the larger capital decreases relative to the smaller one in proportion as its rate of profit declines. This is in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law which, despite its simplicity, has never before been grasped and, even less, consciously articulated. Since this decline in the rate of profit is identical in meaning (1) with the productive power already produced, and the foundation formed by it for new production; this simultaneously presupposing an enormous development of scientific powers; (2) with the decline of the part of the capital already produced which must be exchanged for immediate labour, i.e. with the decline in the immediate labour required for the reproduction of an immense value, expressing itself in a great mass of products, great mass of products with low prices, because the total sum of prices is = to the reproduced capital + profit; (3) [with] the dimension of capital generally, including the portion of it which is not fixed capital; hence intercourse on a magnificent scale, immense sum of exchange operations, large size of the market and all-sidedness of simultaneous labour; means of communication etc., presence of the necessary consumption fund to undertake this gigantic process (workers’ food, housing etc.); hence it is evident that the material productive power already present, already worked out, existing in the form of fixed capital, together with the population etc., in short all conditions of wealth, that the greatest conditions for the reproduction of wealth, i.e. the abundant development of the social individual – that the development of the productive forces brought about by the historical development of capital itself, when it reaches a certain point, suspends the self-realization of capital, instead of positing it. Beyond a certain point, the development of the powers of production becomes a barrier for capital; hence the capital relation a barrier for the development of the productive powers of labour. When it has reached this point, capital, i.e. wage labour, enters into the same relation towards the development of social wealth and of the forces of production as the guild system, serfdom, slavery, and is necessarily stripped off as a fetter. The last form of servitude assumed by human activity, that of wage labour on one side, capital on the other, is thereby cast off like a skin, and this casting-off itself is the result of the mode of production corresponding to capital; the material and mental conditions of the negation of wage labour and of capital, themselves already the negation of earlier forms of unfree social production, are themselves results of its production process. The growing incompatibility between the productive development of society and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone and to give room to a higher state of social production. It is not only the growth of scientific power, but the measure in which it is already posited as fixed capital, the scope and width in which it is realized and has conquered the totality of production. It is, likewise, the development of the population etc., in short, of all moments of production; in that the productive power of labour, like the application of machinery, is related to the population; whose growth in and for itself already the presupposition as well as the result of the growth of the use values to be reproduced and hence also to be consumed. Since this decline of profit signifies the same as the decrease of immediate labour relative to the size of the objectified labour which it reproduces and newly posits, capital will attempt every means of checking the smallness of the relation of living labour to the size of the capital generally, hence also of the surplus value, if expressed as profit, relative to the presupposed capital, by reducing the allotment made to necessary labour and by still more expanding the quantity of surplus labour with regard to the whole labour employed. Hence the highest development of productive power together with the greatest expansion of existing wealth will coincide with depreciation of capital, degradation of the labourer, and a most straitened exhaustion of his vital powers. These contradictions lead to explosions, cataclysms, crises, in which by momentaneous suspension of labour and annihilation of a great portion of capital the latter is violently reduced to the point where it can go on. These contradictions, of course, lead to explosions, crises, in which momentary suspension of all labour and annihilation of a great part of the capital violently lead it back to the point where it is enabled [to go on] fully employing its productive powers without committing suicide. Yet, these regularly recurring catastrophes lead to their repetition on a higher scale, and finally to its violent overthrow. There are moments in the developed movement of capital which delay this movement other than by crises; such as e.g. the constant devaluation of a part of the existing capital: the transformation of a great part of capital into fixed capital which does not serve as agency of direct production; unproductive waste of a great portion of capital etc. (Productively employed capital is always replaced doubly, as we have seen, in that the positing of value by a productive capital presupposes a counter-value. The unproductive consumption of capital replaces it on one side, annihilates it on the other. That the fall of the rate of profit can further be delayed by the omission of existing deductions from profit, e.g. by a lowering of taxes, reduction of ground rent etc., is actually not our concern here, although of importance in practice, for these are themselves portions of the profit under another name, and are appropriated by persons other than the capitalists themselves. † The fall [in the rate of profit] likewise delayed by creation of new branches of production in which more direct labour in relation to capital is needed, or where the productive power of labour is not yet developed, i.e. the productive power of capital.) (Likewise, monopolies.) ‘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.’ (William Atkinson, Principles of Political Economy etc., London, 1840, p. 55.) He has however failed to understand even what the rate of profit is. A. Smith explained the fall of the rate of profit, as capital grows, by the competition among capitals. To which Ricardo replied that competition can indeed reduce profits in the various branches of business to an average level, can equalize the rate, but cannot depress this average rate itself. A. Smith’s phrase is correct to the extent that only in competition – the action of capital upon capital – are the inherent laws of capital, its tendencies, realized. But it is false in the sense in which he understands it, as if competition imposed laws on capital from the outside, laws not its own. Competition can permanently depress the rate of profit in all branches of industry, i.e. the average rate of profit, only if and in so far as a general and permanent fall of the rate of profit, having the force of a law, is conceivable prior to competition and regardless of competition. Competition executes the inner laws of capital; makes them into compulsory laws towards the individual capital, but it does not invent them. It realizes them. To try to explain them simply as results of competition therefore means to concede that one does not understand them. Ricardo, for his part, says: ‘No accumulation of capitals can permanently reduce profits unless an equally permanent cause raises wages.’ (p. 92, tome II, Paris 1835, translated by Constancio.) He finds this cause in the growing, relatively growing unproductivity of agriculture, ‘the growing difficulty of increasing the quantity of subsistence’, i.e. in the growth of proportionate wages, so that labour’s real wage is no greater, but the product obtains more labour; in a word, a greater portion of necessary labour is required for the production of agricultural products. The falling rate of profit hence corresponds, with him, to the nominal growth of wages and real growth of ground rent. His one-sided mode of conceiving it, which seizes on only one single case, just as the rate of profit can fall because wages momentarily rise etc., and which elevates a historical relation holding for a period of 50 years and reversed in the following 50 years to the level of a general law, and rests generally on the historical disproportion between the developments of industry and agriculture – in and for itself it was strange that Ricardo, Malthus, etc. constructed general and eternal laws about physiological chemistry at a time where the latter hardly existed – this method that Ricardo has of conceiving the matter has therefore been attacked from all sides, partly because of an instinct that it is wrong and unsatisfactory; but mostly for its true rather than for its false aspects.
† The other way in which this same law also expresses itself, in the relation among many capitals, i.e. in competition, likewise belongs in another section. It can also be formulated as a law of the accumulation of capitals; as e.g. by Fullarton. We shall come to this in the next section. It is important to call attention to the point that this law deals not simply with the development of productive power δυνάμει, but at the same time with the scope in which this productive power acts as capital, and is realized as fixed capital above all in one respect, and as population in the other.
‘A. Smith thought that accumulation or increase of stock in general lowered the rate of profits in general, on the same principle which makes the increase of stock in any particular trade lower the profits of that trade. But such increase of stock in a particular trade means an increase in a greater proportion than stock is at the same time increased in other trades. It is relative.’ (p. 9, An Inquiry into those Principles respecting the Nature of Demand and the Necessity of Consumption, lately advocated by Mr Malthus. London, 1821.) ‘The competition among the industrial capitalists can level profits which rise particularly above the level, but cannot lower this ordinary level.’ (Ramsay, IX, 88.) (Ramsay and other economists correctly distinguish between whether productivity grows in the branches of industry which make fixed capital, and naturally wages, or in other industries, e.g. luxury-goods industries. The latter cannot diminish necessary labour time. This they can do only through exchange for agricultural products of other countries, which is then the same as if productivity had increased in agriculture. Hence the importance of free trade in grain for the industrial capitalists.) Ricardo says (English edition On the Principles of Political Economy and Taxation. 3rd edition, London, 1821): ‘The farmer and manufacturer can no more live without profits, than the labourer without wages.’ (p. 23 loc. cit.) ‘There is a natural tendency for profits to fall, because in the progress of society and of wealth, the additional food requires more and more labour. This tendency, this gravitation of profits, is delayed in repeated intervals by improvement of the machinery involved in the production of necessaries, as well as by discoveries in the science of agriculture, which reduce the costs of production.’ (loc. cit. p. 121.) Ricardo at once identifies profit directly with surplus value; he did not make this distinction at all. But whereas the rate of surplus value is determined by the relation of surplus labour employed by the capital to necessary labour, the rate of profit is nothing but the relation of the surplus value to the total value of the capital presupposed to production. Its proportion falls and rises, hence, in relation with the part of the capital exchanged for living labour relative to the part existing as material and fixed capital. Under ALL circumstances, the surplus value regarded as profit must express a smaller proportion of the gain than the real proportion of the surplus value. For, under all circumstances, it is measured by the total capital, which is always larger than that employed for wages and exchanged for living labour. Since Ricardo simply mixes surplus value and profit together in this way, and since the surplus value can constantly decline, can tendentially decline only if the relation of surplus labour to necessary labour, i.e. to the labour required for the reproduction of labouring capacity, declines, but since the latter is possible only if the productive force of labour declines, Ricardo assumes that the productive force of labour decreases in agriculture, although it grows in industry, with the accumulation of capital. He flees from economics to seek refuge in organic chemistry. We have demonstrated the necessity of this tendency without any reference to ground rent, nor did we have to refer e.g. to rising demand for labour etc. The connection between ground rent and profit is to be treated only in the examination of ground rent itself, does not belong here. But modern chemistry has demonstrated that Ricardo’s physiological postulate, expressed as a general law, is false. As for Ricardo’s disciples, in so far as they are more than his pious echoes, they have quietly let drop whatever is unpleasant to them in their master’s principles, as has the newer economics generally. To drop the problem is their general method of solving it. Other economists, such as e.g. Wakefield, seek refuge in the examination of the field of employment for the growing capital. This belongs in the examination of competition, and is rather the difficulty for capital to realize the growing profit, hence denial of the inherent tendency towards the fall of the rate of profit. But the need for capital to seek a constantly more extensive field of employment is itself again a consequence. One cannot count Wakefield and similar people among those who have posed the question itself. (Is in certain respects a reproduction of A. Smith’s view.) Finally, the harmonists among the most modern economists, at their head the American, Carey, whose most obnoxious adherent was the Frenchman Bastiat (by the way, it is the nicest irony of history that the Continental free-traders worship Mr Bastiat, who, for his part, gets his wisdom from the protectionist, Carey), accept the fact of the tendency of the rate of profit to fall in measure as productive capital grows. But they explain it simply and entirely as due to growth in the value of labour’s share; growth of the proportion of the total product obtained by the worker, while the capital is allegedly compensated for this by the growth of gross profits. The unpleasant contradictions, antagonisms within which classical economics moves, and which Ricardo emphasizes with scientific ruthlessness, are thus watered down into well-to-do harmonies. In Carey’s development, it sometimes seems as if he still had a mind of his own. This concerns a law which we need look at only in the doctrine of competition, where we will then settle accounts with him. We can finish up here with the witlessness of Bastiat, who expresses commonplaces in a paradoxical way, grinds and polishes them into facets, and hides an utter poverty of ideas under a cover of formal logic. In the Gratuité du Crédit. Discussion entre M. Fr. Bastiat et M. Proudhon, Paris, 1850 (Proudhon, by the way, cuts a highly ridiculous figure in this polemic, where he hides his dialectical feebleness under a great show of rhetoric), it says in Bastiat’s letter No. VIII (where this noble spirit, by the way, simply transforms, with his conciliatory dialectic, the gain resulting from the simple division of labour both for the road-builder and for the road-user into a gain owed to the ‘road’ (i.e. to capital) itself): ‘To the degree that capitals increase (and the products with them), the absolute part returning to capital increases, and its proportional part diminishes. To the degree that capitals increase (and the products with them), labour’s proportional part and its absolute part increase … Since capital’s absolute part grows even while it successively obtains only 1/2, 1/3, 1/4, 1/5 of the total product, it follows that labour, which successively obtains 1/2, 2/3, 3/4, 4/5, evidently receives a progressively increasing share of the whole, both in the proportional and in the absolute sense.’ He gives as illustration:
|Total product||Capital’s share||Labour’s share|
|1st period||1,000||1/2 or 500||1/2 or 500|
|2nd||1,800||1/3 or 600||2/3 or 1,200|
|3rd||2,800||1/4 or 700||3/4 or 2,100|
|4th||4,000||1/5 or 800||4/5 or 3,200
(p. 130, 131.)
The same joke is repeated (p. 288) in the form of increasing gross profit with declining rate of profit, but increasing mass of products sold at lower prices, and weighty words are spoken on that occasion about ‘the law of unlimited decline which never reaches zero, a law well known to mathematicians’. (p. 288.) ‘Here we have’ (hawking his wares) ‘an endlessly decreasing multiplier, because the multiplicand is ever growing.’ (p. 288 loc. cit.)
Ricardo had anticipated his Bastiat. Emphasizing that the sum of profit grows as capital grows despite the decline of the rate of profit – thus anticipating Bastiat’s whole profundity – he does not fail to note that this progression ‘is true only for a certain time’. He says, word for word: ‘Regardless of how the rate of profit on stock may decline in consequence of the accumulation of capital on the land and of a rise of wages’ (by which Ricardo understands, N.B., the rise of the cost of production of the agricultural products necessary for the maintenance of labour capacity), ‘the aggregate amount of profits must nevertheless grow. Supposing, then, that in repeated accumulations of £100,000 the rate of profits fell from 20 to 19, 18, 17%, we should expect that the whole amount of profits received by the successive owners of capital would be always progressive; that it would be greater with the capital of £200,000 than with that of 100,000; yet greater with 300,000; and so on, increasing, although at a decreasing rate, with every increase of capital. However, this progress is true only for a certain time: thus 19% on £200,000 is more than 20 on 100,000; 18% on 300,000 more than 19% on 200,000; but after capital has accumulated to a large amount and profits have fallen, further accumulation diminishes the sum of profits. Thus, supposing the accumulation of 1,000,000 and profits of 7%, then the total amount of profit will be £70,000; now if an addition of 100,000 is made to the million, and profits fall to 6%, then £66,000 or a decrease of £4,000 will be received by the owners of the stock, although the amount of capital will be increased from 1,000,000 to 1,100,000.’ (loc. cit. p. 124, 125.) Of course this does not prevent Mr Bastiat from undertaking the operation of making a growing multiplicand grow in such a way that, with the declining multiplier, it produces a growing product, in true elementary-school pupil style, just as the laws of production did not prevent Dr Price from constructing his compound interest calculations. Because the rate of profit declines, it declines relative to wages, which must consequently grow proportionally and absolutely. So reasons Bastiat. (Ricardo observed this tendency towards the decline of the profit rate with the growth of capital; and since he confuses profit with surplus value, he was forced to make wages rise in order to let profits fall. But since he saw at the same time that wages really declined more than they rose, he let the value of wages grow, i.e. the quantity of necessary labour, without letting its use value grow. Thus in fact he only let ground rent increase. The harmonic Mr Bastiat discovers, however, that, with the accumulation of capitals, wages rise proportionally and absolutely.) He assumes what he has to prove, that the decline of the profit rate is identical with the increase in the rate of wages, and then ‘illustrates’ his presupposition with an arithmetical example which appears to have amused him greatly. If the decline of the profit rate expresses nothing more than the decline of the relation in which the total capital requires living labour for its reproduction, then it is another matter. Mr Bastiat overlooks the trifling circumstance that, in his presupposition, while the profit rate on capital declines, the capital itself increases, the capital presupposed to production. Now even Mr Bastiat ought to have had an inkling that the value of the capital cannot grow without appropriating surplus labour. The misery of agricultural overproduction, recorded in French history, could have shown him that the mere increase of products does not increase their value. The question would then revolve simply around an investigation of whether the fall of the profit rate is identical with the growth of the rate of surplus labour relative to necessary labour, or, instead, with the fall of the total rate of living labour employed relative to the reproduced capital. Mr Bastiat also therefore divides the product simply between capitalist and worker, instead of dividing it into raw material, instrument of production and labour, and asking himself in what proportional parts its value in exchange is applied against these different portions. The part of the product exchanged for raw material and instrument of production is obviously none of the workers’ business. What they divide with capital, as wages and profit, is nothing other than the newly added living labour itself. But what particularly worries Bastiat is who, after all, is to eat up the increased product? Since the capitalist eats up a relatively small part, does not the worker have to eat up a relatively large one? Particularly in France, whose total production is sufficient only in Bastiat’s fantasy to give anyone at all very much to eat, Mr Bastiat could have found convincing testimony that a mass of parasitic bodies come to cluster around capital, and, under one or another title, they lay hands on so much of the total production as to leave little danger of the workers being overwhelmed by abundance. It is clear, of course, that with large-scale production the total mass of labour employed can increase although the proportion of labour employed relative to capital decreases, and that there is no obstacle, therefore, which prevents an increasing working population from requiring a greater mass of products as capital increases. Incidentally, Bastiat – in whose harmonic brain all cows are grey – (see above, wages), confuses the decline of interest with the increase of wages, since this is rather an increase of industrial profit, which concerns the workers not at all, but concerns only the relation in which different species of capitalists divide up the total profit among themselves.
Capital and revenue (profit). Production and distribution. Sismondi. – Production costs from capital’s viewpoint. Profit, ditto. – Inequality of profits. Equalization and communal rate of profit. – Transformation of surplus value into profit. – Laws[edit source]
Back to our topic. The product of capital, then, is profit. By relating to itself as profit, it relates to itself as the source of the production of value, and the rate of profit expresses the proportion to which it has increased its own value. But the capitalist is not merely capital. He has to live, and since he does not live by working he must live from profit, i.e. from the alien labour he appropriates. Thus capital is posited as the source of wealth. Since capital has incorporated productivity into itself as its inherent quality, capital relates to profit as revenue. It can consume a part of it (seemingly all of it, but this will prove to be false) without ceasing to be capital. After consumption of this fruit it can bear new fruit. It can represent consumption wealth without ceasing to represent the general form of wealth, something which money in simple circulation could not possibly do. The latter had to abstain in order to remain the general form of wealth; or, if it exchanged for real wealth, for consumer gratifications, it ceased to be the general form of wealth. Thus profit appears as a form of distribution, like wages. But since capital can grow only through the retransformation of profit into capital – into surplus capital – profit is at the same time a form of production for capital; just exactly as wages are a mere relation of production from the standpoint of capital, a relation of distribution from the worker’s standpoint. This shows that the relations of distribution are themselves produced by the relations of production, and represent the latter themselves from another point of view. It shows further that the relation of production to consumption is posited by production itself. Note the fatuousness of all bourgeois economists, including e.g. J. St. Mill, who considers the bourgeois relations of production as eternal, but their forms of distribution as historical, and thereby shows that he understands neither the one nor the other. As to simple exchange, Sismondi correctly remarks: ‘An exchange always presupposes two values; each may have a different share; but the quality of capital and revenue does not follow from the object exchanged; it attaches to the person who is its owner.’ (Sismondi, VI.) Hence the simple exchange relation provides no basis for the explanation of revenue. The quality of a value obtained in exchange, whether it represents capital or revenue, is determined by relations lying outside simple exchange. Absurd, therefore, to want to reduce these more complex forms to the earlier, simpler exchange relations, as do the harmonic freetraders. From the standpoint of simple exchange, and considering accumulation as the mere accumulation of money (exchange value), capital’s profit and revenue are impossible. ‘If the rich spend the accumulated wealth for luxury products – and they can obtain commodities only through exchange – then their funds would soon be exhausted … But, in the social order, wealth has achieved the quality of reproducing itself through alien labour. Wealth, like labour, and through labour, yields an annual fruit which may be destroyed each year without the rich man thereby becoming poorer. This fruit is the revenue springing from capital.’ (Sismondi, IV.) While profit thus appears in one respect as the result of capital, it appears in the other as the presupposition of capital formation. Thus is posited anew the circular movement in which the result appears as presupposition. ‘Thus a part of the revenue became transformed into capital, into a permanent, self-multiplying value, which did not perish; this value tore itself free from the commodity which created it; like a metaphysical, insubstantial quality it always remained in possession of the same cultivateur’ (capitalist), ‘assuming various forms for him.’ (Sismondi, VI)
When capital is posited as profit-creating, as a source of wealth independently of labour, each part of the capital is thereby assumed to be equally productive. Just as surplus value in the form of profit is measured against the total value of the capital, so does it appear to be created by its different components to an equal degree. Thus its circulating part (the part consisting of raw materials and approvisionnement) brings no more profit than the component which consists of the fixed capital, and, more particularly, profit accrues to these component parts in proportion to their magnitude.
Since the profit of capital is realized only in the price which is paid for it, for the use value created by it, profit is determined by the excess of the price obtained over the price which covers outlays. Since, furthermore, this realization proceeds only through exchange, the individual capital’s profit is not necessarily restricted by its surplus value, by the surplus labour contained in it; but is relative, rather, to the excess of price obtained in exchange. It can exchange more than its equivalent, and then its profit is greater than its surplus value. This can be the case only to the extent that the other party to the exchange does not obtain an equivalent. The total surplus value, as well as the total profit, which is only surplus value itself, computed differently, can neither grow nor decrease through this operation, ever; what is modified thereby is not it, but only its distribution among the different capitals. However, this examination belongs only with that of the many capitals, it does not yet belong here. In relation to profit, the value of the capital presupposed in production appears as advances – production costs which must be replaced in the product. After deduction of the part of the price which replaces them, the excess forms the profit. Since surplus labour – of which profit and interest are, both, only portions – costs capital nothing, hence does not figure as part of the value advanced by it – not as part of the value which it possessed before the production process and the realization of the product – it follows that this surplus labour, which is included in the production costs of the product and forms the source of surplus value and hence of profit as well, does not figure as part of the production costs of capital. The latter are equal only to the values actually advanced by it, not including the surplus value appropriated in production and realized in circulation. The production costs from the standpoint of capital are therefore not the real production costs, precisely because surplus labour does not cost it anything. The excess of the price of the product over the price of the production costs gives it its profit. Thus profit can exist for capital even without the realization of the real production costs – i.e. the whole surplus labour set to work by capital. Profit – the excess over the advances made by capital – may be smaller than surplus value – the surplus of living labour gained in exchange by capital in excess of the objectified labour it has given in exchange for labour capacity. However, through the separation of interest from profit – which we will look at immediately – a part of the surplus value is posited as production cost even for productive capital itself. The confusion of production costs from the standpoint of capital with the amount of labour objectified in capital’s product, surplus labour included, has given rise to statements such as that ‘profit is not included in the natural price’. It is allegedly ‘absurd to call the excess, or profit, a part of the expenditure’. (Torrens, IX, 30.) This then leads to a mass of confusion; either by having profit not realized in, but rather arising from, exchange (which can always be the case only relatively, if one of the parties to the exchange does not obtain his equivalent), or by ascribing to capital some magic power which makes something out of nothing. Since the value posited in the production process realizes its price through exchange, the price of the product appears in fact determined by the sum of money which expresses an equivalent for the total quantity of labour contained in raw material, machinery, wages and in unpaid surplus labour. Thus price still appears here merely as a formal modification of value; as value expressed in money; but the magnitude of this price is presupposed in the production process of capital. Capital thereby appears as a determinant of price, so that price is determined by the advances made by capital + the surplus labour realized by it in the product. We shall see later that price, on the contrary, appears as determining profit. And, while here the total real production costs appear as determining price, price appears later as determining the production costs. So as to impose the inherent laws of capital upon it as external necessity, competition seemingly turns all of them over. Inverts them.
To repeat once more: the profit of capital does not depend on its magnitude; but rather, given an equal magnitude, on the relation between its component parts (the constant and the variable part); and then on the productivity of labour (which is expressed, however, in the above proportion, since, with diminished productivity, the same capital could not work up the same material with the same portion of living labour); on the turnover time, which is determined by the different proportions between fixed and circulating capital, different durability of fixed capital, etc. etc. (see above). The inequality of profit in different branches of industry with capitals of equal magnitudes is the condition and presupposition for their equalization through competition.
In so far as capital obtains raw material, instrument, labour, through exchange, buys them, its elements are themselves already present in the form of prices; already posited as prices; presupposed to it. The comparison of the market price of its product with the prices of its elements then becomes decisive for it. But this belongs only in the chapter on competition.
Thus the surplus value which capital posits in a given turnover period obtains the form of profit in so far as it is measured against the total value of the capital presupposed to production. While surplus value is measured directly by the surplus labour time which capital gains in the exchange with living labour. Profit is nothing but another form of surplus value, a form developed further in the sense of capital. Surplus value no longer regarded here as exchanged for capital itself in the production process; not for labour. Hence capital appears as capital, as presupposed value relating to itself, through the mediation of its own process, as posited, produced value, and the value posited by it is called profit.
The two immediate laws which this transformation of surplus value into the shape of profit yields for us are these: (1) Surplus value expressed as profit always appears as a smaller proportion than surplus value in its immediate reality actually amounts to. For, instead of being measured by a part of the capital, the part exchanged for living labour (a relation which turns out to be that of necessary to surplus labour), it is measured against the whole. Whatever may be the surplus value which a capital A posits, and whatever may be the proportion within A of c and v, the constant and the variable part of the capital, the surplus value s must appear smaller when measured against c + v than when measured against its real measure, v. Profit, or – if it is regarded not as an absolute sum but rather, as is usually done, as a proportion (the rate of profit is profit expressed as the relation in which capital has posited surplus value) – the rate of profit never expresses the real rate at which capital exploits labour, but always a much smaller relation, and the larger the capital, the more false is the relation it expresses. The rate of profit could express the real rate of surplus value only if the entire capital were transformed solely into wages; if the entire capital were exchanged for living labour, i.e. if the approvisionnement alone existed, and if it not only existed not in the form of already produced raw material (which has happened in extractive industry), hence if not only the raw material were = 0, but if the means of production, also, whether in the form of instruments or in the form of developed fixed capital, were = 0. The latter case cannot occur on the basis of the mode of production corresponding to capital. If A = c + v, whatever the numerical value of s, then s/(c + v) < s/v.
(2) The second great law is that the rate of profit declines to the degree that capital has already appropriated living labour in the form of objectified labour, hence to the degree that labour is already capitalized and hence also acts increasingly in the form of fixed capital in the production process, or to the degree that the productive power of labour grows. The growth of the productive power of labour is identical in meaning with (a) the growth of relative surplus value or of the relative surplus labour time which the worker gives to capital; (b) the decline of the labour time necessary for the reproduction of labour capacity; (c) the decline of the part of capital which exchanges at all for living labour relative to the parts of it which participate in the production process as objectified labour and as presupposed value. The profit rate is therefore inversely related to the growth of relative surplus value or of relative surplus labour, to the development of the powers of production, and to the magnitude of the capital employed as [constant] capital within production. In other words, the second law is the tendency of the profit rate to decline with the development of capital, both of its productive power and of the extent in which it has already posited itself as objectified value; of the extent within which labour as well as productive power is capitalized.
Other causes which additionally act upon the rate of profit, which can depress it for longer or shorter periods, do not yet belong here. It is quite correct, as regards the production process as a whole, that the capital acting as material and as fixed capital not only is objectified labour, but must also be reproduced, and continuously reproduced, by new labour. Its presence assumes, therefore – the extent which its presence has attained assumes, therefore, the extent of the labouring population, population on a large scale, which in and for itself is the condition of all productive power – but this reproduction everywhere proceeds on the presupposition of the action of fixed capital and of raw material and of scientific power, both as such, and as appropriated within production and already realized within it. This point is to be developed in more detail only in the examination of accumulation.
It is clear, further, that although the part of capital exchanged for living labour declines in relation to the total capital, the total mass of living labour employed can increase or remain the same if capital grows in the same or a larger relation. Hence a constant growth in the population may accompany a relative decline in necessary labour. If capital A lays out 1/2 in c and 1/2 in v, while capital A′ lays out 3/4 in c and 1/4 in v, then capital A′ could employ 2/4 v for 6/4 c. But if it was originally = 3/4 c + 1/4 v, then it is now = 6/4 c + 2/4 v, or it grew by 4/4; i.e. it doubled. However, this relation also is to be examined more closely only in connection with the theory of accumulation and population. All in all we must not at this point be sidetracked by drawing the consequences which follow from the laws, and by turning them over in the mind from one angle or another.
The rate of profit is determined, then, not only by the relation of surplus labour to necessary labour, or by the relation in which objectified labour is exchanged for living labour, but by the overall relation of living labour employed to objective labour; by the portion of capital exchanged for living labour relative to the part which participates in the production process as objectified labour. This portion, however, declines in the same relation as surplus labour increases in relation to necessary labour.
Surplus value = relation of surplus labour to necessary labour[edit source]
(Since the worker must reproduce the part of the capital which is exchanged for his labour capacity just as much as he must reproduce the other parts of the capital, the relation in which the capitalist gains from the exchange with labour capacity appears as determined by the relation of surplus labour to necessary labour. Originally this appears in such a way that the necessary labour only replaces his outlay. But since he lays out nothing other than labour itself – as is shown in reproduction – the relation can be expressed simply in this way – the relation of surplus value as the relation of surplus labour to necessary labour.)
Value of fixed capital and its productive power. Durability of fixed capital, ditto. – The powers of society, division of labour etc. cost capital nothing. – Distinction between this and machinery (capitalist’s economy in the employment of machinery). – Profit and surplus value[edit source]
<We have still to note in regard to fixed capital – and its durability, as one of its conditions which does not enter in from the outside: To the extent that the instrument of production is itself a value, objectified labour, it does not contribute as a productive force. If a machine which cost 100 working days to make replaced only 100 working days, then it would in no way increase the productive power of labour and in no way decrease the cost of the product. The more durable the machine, the more often can the same quantity of product be created with it, or the more often can the circulating capital be renewed, its reproduction be repeated, and the smaller is the value-share (that required to replace the depreciation, the wear and tear of the machine); i.e. the more is the price of the product and its unit production cost decreased. However, we may not introduce the price relation at this point in the development. The reduction of the price as condition for conquest of the market belongs only to competition. It must therefore be developed in a different way. If capital could obtain the instrument of production at no cost, for 0, what would be the consequence? The same as if the cost of circulation = 0. That is, the labour necessary for the maintenance of labour capacity would be diminished, and thus surplus labour, i.e. surplus value, [increased], without the slightest cost to capital. Such an increase of the force of production, a piece of machinery which costs capital nothing, is the division of labour and the combination of labour within the production process. This assumes, however, work proceeding on a large scale, i.e. development of capital and wage labour. Another productive force which costs it nothing is scientific power. (It goes without saying that it must always pay a certain contribution for parsons, schoolmasters and scholars, whether the scientific power they develop is great or small.) But it can appropriate the latter only through the employment of machinery (and in part through the chemical process). The growth of population is a productive force of this kind, and it costs it nothing. In short, all the social powers developing with the growth of population and with the historic development of society cost it nothing. To the extent, however, that a substratum which itself exists in the form of objectified labour, i.e. is itself produced by labour, is required to employ them within the direct production process, hence to the extent that they are themselves values, it can appropriate them only through equivalents. Well. Fixed capital whose employment required more labour for its production or maintenance than it replaced would be a nuisance. The kind that would cost nothing, but merely needed to be appropriated by capital, would have the maximum value for capital. It follows from the simple proposition that machinery is most valuable for capital when its value = 0, that every reduction of its cost is a gain for capital. While it is the tendency of capital, on one side, to increase the total value of the fixed capital, [so], at the same time, [is its tendency] to decrease the value of each of its fractional parts. To the extent that fixed capital enters into circulation as value, it ceases to act as use value within the production process. Its use value is precisely that it increases the productive power of labour, decreases necessary labour, and increases relative surplus labour and hence surplus value. To the extent that it enters into circulation, its value is merely replaced, not increased. By contrast, the product, the circulating capital, is the vehicle of the surplus value, which is realized only when it steps outside the production process and into circulation. If machinery lasted for ever, if it did not itself consist of transitory material which must be reproduced (quite apart from the invention of more perfect machines which would rob it of the character of being a machine), if it were a perpetuum mobile, then it would most completely correspond to its concept. Its value would not need to be replaced because it would continue to last in an indestructible materiality. Since fixed capital is employed only to the extent that its value is smaller than the value it posits, it follows that, even if it never itself entered into circulation as value, the surplus value realized in the circulating capital would nevertheless soon replace the advances, and it would thus act to posit value after its costs for the capitalist, as well as the cost of the surplus labour he appropriates, were = 0. It would continue to act as a productive power of labour and at the same time be money in the third sense, constant value for-itself. Take a capital of £1,000. Let one-fourth be machinery; the sum of surplus value = 50. The value of the machinery then equal to 200. After 4 turnovers the machinery would be paid for. And, in addition, since the capital would continue to possess, in the machine, objectified labour to the amount of 200, then, beginning with the fifth turnover, it would be the same as if it made 50 on a capital which only costs it 800; hence 6 1/4% instead of 5%. As soon as fixed capital enters into circulation as value, its use value for the capital realization process ceases, or, it enters into it only as soon as the latter ceases. Hence, the more durable, the less it requires repair, total or partial reproduction, the longer its circulation time, the more does it act as productive power of labour, as capital; i.e. as objectified labour, which posits living surplus labour. The durability of fixed capital, which is identical with the circulation time of its value, or with the time required for its reproduction, arises from its concept itself, as its value-moment. (That in and for itself, as regards its material side only, it lies in the concept of the means of production is something which needs no elucidation.) The rate of surplus value is determined simply by the relation of surplus labour to necessary labour; the rate of profit is determined not only by the relation of surplus to necessary labour, but by the relation of the part of capital exchanged for living labour to the total capital entering into production.>
Profit as we still regard it here, i.e. as the profit of capital as such, not of an individual capital at the expense of another, but rather as the profit of the capitalist class, concretely expressed, can never be greater than the sum of the surplus value. As a sum, it is the sum of the surplus value, but it is this same sum of values as a proportion relative to the total value of the capital, instead of to that part of it whose value really grows, i.e. is exchanged for living labour. In its immediate form, profit is nothing but the sum of the surplus value expressed as a proportion of the total value of the capital.
Machinery and surplus labour. Recapitulation of the doctrine of surplus value generally[edit source]
The transformation of surplus value into the form of profit, this method by which capital calculates surplus value, is necessary from the standpoint of capital, regardless of how much it rests on an illusion about the nature of surplus value, or rather veils this nature.
If we look at a single worker’s day, then the decrease of necessary labour relative to surplus labour expresses itself in the appropriation of a larger part of the working day by capital. The living labour employed here remains the same. Suppose that an increase of the force of production, e.g. employment of machinery, made 3 workers superfluous out of 6, each of whom worked 6 days a week. If these 6 workers themselves possessed the machinery, then each of them would thereafter work only half a day. Now, instead, 3 continue to work a whole day every day of the week. If capital were to continue to employ the 6, then each of them would work only half a day, but perform no surplus labour. Suppose that necessary labour amounted to 10 hours previously, the surplus labour to 2 hours per day, then the total surplus labour of the 6 workers was 2 × 6 daily, equal to a whole day, and was equal to 6 days a week = 72 hours. Each one worked one day a week for nothing. Or it would be the same as if the sixth worker had worked the whole week long for nothing. The 5 workers represent necessary labour, and if they could be reduced to 4, and if the one worker worked for nothing as before – then the relative surplus value would have grown. Its relation previously was = 1:6, and would now be 1:5. The previous law, of an increase in the number of hours of surplus labour, thus now obtains the form of a reduction in the number of necessary workers. If it were possible for this same capital to employ the 6 workers at this new rate, then the surplus value would have increased not only relatively, but absolutely as well. Surplus labour time would amount to 14 2/5 hours. 2 2/5 hours [each] performed by 6 workers is of course more than 2 2/5 performed by 5.
If we look at absolute surplus value, it appears determined by the absolute lengthening of the working day above and beyond necessary labour time. Necessary labour time works for mere use value, for subsistence. Surplus labour time is work for exchange value, for wealth. It is the first moment of industrial labour. The natural limit is posited – presupposing that the conditions of labour are on hand, raw material and instrument of labour, or one of them, depending on whether the work is merely extractive or formative, whether it merely isolates the use value from nature or whether it shapes it – the natural limit is posited by the number of simultaneous work days or of living labour capacities, i.e. by the labouring population. At this stage the difference between the production of capital and earlier stages of production is still merely formal. With kidnapping, slavery, the slave trade and forced labour, the increase of these labouring machines, machines producing surplus product, is posited directly by force; with capital, it is mediated through exchange.
Use values grow here in the same simple relation as exchange values, and for that reason this form of surplus labour appears in the slave and serf modes of production etc., where use value is the chief and predominant concern, as well as in the mode of production of capital, which is oriented directly towards exchange value, and only indirectly towards use value. This use value may be purely imaginary, as e.g. with the Egyptian pyramids, in short, with the works of religious ostentation which the mass of the nation in Egypt, India etc. was forced [to undertake]; or may be directed at immediate utility as e.g. with the ancient Etruscans.
In the second form of surplus value, however, as relative surplus value, which appears as the development of the workers’ productive power, as the reduction of necessary labour time relative to the working day, and as the reduction of the necessary labouring population relative to the population (this is the antithetical form), in this form there directly appears the industrial and the distinguishing historic character of the mode of production founded on capital.
The forcible transformation of the greater part of the population into wage labourers, and the discipline which transforms their existence into that of mere labourers, correspond to the first form. Throughout a period of 150 years, e.g. from Henry VII on, the annals of English legislation contain the bloody handwriting of coercive measures employed to transform the mass of the population, after they had become propertyless and free, into free wage labourers. The dissolution of the monastic orders, the confiscation of church lands, the abolition of the guilds and confiscation of their property, the forcible ejection of the population from the land through the transformation of tillage into pasture, enclosures of commons etc., had posited the labourers as mere labour capacities. But they now of course preferred vagabondage, beggary etc. to wage labour, and had still to be accustomed forcibly to the latter. This is repeated in a similar fashion with the introduction of large industry, of factories operating with machines. Cf. Owen.
Only at a certain stage of the development of capital does the exchange of capital and labour become in fact formally free. One can say that wage labour is completely realized in form in England only at the end of the eighteenth century, with the repeal of the law of apprenticeship.
The tendency of capital is, of course, to link up absolute with relative surplus value; hence greatest stretching of the working day with greatest number of simultaneous working days, together with reduction of necessary labour time to the minimum, on one side, and of the number of necessary workers to the minimum, on the other. This contradictory requirement, whose development will show itself in different forms as overproduction, over-population etc., asserts itself in the form of a process in which the contradictory aspects follow closely upon each other in time. A necessary consequence of them is the greatest possible diversification of the use value of labour – or of the branches of production—so that the production of capital constantly and necessarily creates, on one side, the development of the intensity of the productive power of labour, on the other side, the unlimited diversity of the branches of labour, i.e. thus the most universal wealth, in form and content, of production, bringing all sides of nature under its domination.
Capital pays nothing for the increase of the productive force arising by itself, in large-scale production, from division and combination of labour, from savings on certain expenses – conditions for the labour process – which remain the same or diminish when labour is done in common, such as heating etc., industrial buildings etc.; it obtains this increased productive power of labour free of charge. If the force of production increased simultaneously in the production of the different conditions of production, raw material, means of production and means of subsistence, and in the [branches of production] determined [by them], then their growth would bring about no change in the relation between the different component parts of the capital. If e.g. the productive force of labour grows simultaneously in the production of flax and of looms and of weaving itself (by division of labour), then a greater quantity of raw material etc. would correspond to the greater quantity woven in a day. In extractive work, e.g. the mining industry, it is not necessary for raw materials to increase when labour becomes more productive, since no raw material is used. To make harvests more productive, it is not even necessary for the number of instruments to have grown, but rather merely for them to be concentrated and for the work, previously done fragmentarily by hundreds, to be done communally. However, what is required for all forms of surplus labour is growth of population; of the labouring population for the first form; of population generally for the second, since it requires the development of science etc. Population, however, appears here as the basic source of wealth.
Relation between the objective conditions of production. Change in the proportion of the component parts of capital[edit source]
But as we regard capital originally, raw material and instrument appear to come out of circulation, not to be produced by capital itself; just as, in reality, the individual capital obtains the condition of its production from circulation, although they are in turn produced by capital, but by another capital. From this follows, on one side, capital’s necessary tendency to subjugate production to itself on all sides; its tendency to posit the production of labour materials and of raw materials, as well as instruments, as likewise produced by capital, even if it is a different capital; the propagandistic tendency of capital. Secondly, however, it is clear that if the objective conditions of production which it obtains from circulation remain unchanged in value, i.e. if the same amount of labour objectifies itself in the same amount of use value, then a lesser part of the capital can be laid out for living labour, or, there is a change in the proportion of the component parts of capital. If the capital amounts to e.g. 100, raw material 2/5, the instrument 1/5, labour 2/5, and if, owing to a doubling of the productive force (division of labour), the same labour using the same instrument could work up double the raw material, then the capital would have to grow by 40; hence a capital of 140 would have to work; of which 80 in raw material, 20 in instrument, 40 for labour. Labour would now relate 40:140 (previously = 40:100); labour previously related as 4:10; now only as 4:14. Or, of the same capital of 100, now 3/5 would go for raw material, 1/5 for the instrument, and 1/5 for labour. The gain would be 20, as before. But surplus labour would be 60%, whereas it was 50 earlier. It now only takes 20 in labour for 60 in raw material and 20 in instrument. 80/20/100. A capital of 80 gives the capitalist a profit of 20. Now if the capital were to employ all the labour at this stage of production, it would have to grow to 160; namely 80 for raw material, instrument 40, and 40 for labour. This would give a surplus value of 40. At the earlier stage, where the capital of 100 gives a surplus value of only 20, a capital of 160 would give a surplus value of only 32, i.e. 8 less, and the capital would have to grow to 200 in order to produce the same surplus value of 40.
The following distinctions must be drawn: (1) Labour, increasing (or intensity, speed of labour), requires no greater advance in material or instrument of labour. E.g. the same 100 workers with instruments of the same value catch more fish, or till the soil better, or draw more ores from the mines or coal from the pits, or beat more leaf from the same amount of gold as a result of greater skill, better combination and division of labour etc., or waste less raw material, hence get further with the same value of raw materials. In this case then, if we assume either that their products enter into their own consumption, then their necessary labour time diminishes; they perform a greater amount of work at the same maintenance costs. Or, a smaller part of their labour is necessary for the reproduction of labour capacity. The necessary part of labour time diminishes relative to surplus labour time, and, although the value of the product remains the same 100 working days, the part going to capital, the surplus value, increases. If the total surplus worker was = 1/10, i.e. = 10 working days, and if it is now 1/5, then surplus labour time has grown by 10 days. The workers work 80 days for themselves and 20 for the capitalists, whereas in the first case 90 for themselves and only 10 for the capitalist. (This calculation by working days, and labour time as the only substance of value, shows itself in this open way where relations of bondage exist. With capital, covered up by money.) Of the newly created value, a greater portion accrues to capital. But the relations between the various component parts of the invariable capital remain the same, on this presupposition. That is, although the capitalist employs a greater mass of surplus labour, because he pays less wages, he does not employ more capital in raw materials and instruments. He gives a smaller part of objectified labour in exchange for the same amount of living labour, or the same amount of objectified for a greater amount of living labour. This possible only in extractive industry; in manufacturing, only in so far as there is greater economy in use of raw materials; further, where chemical processes increase the material, in agriculture; in the transporting industry.
(2) Productivity increases at the same time not only in the given branch of production, but also in its conditions; in the case, namely, where raw material or instrument or both must be increased along with an increase in the intensity of labour, the increase of the number of products produced by labour in the same time. (The raw material need not cost anything, e.g. reeds for basket-making; free wood etc.) In this case the relation of capital remains the same. That is, with the growing productivity of labour the capital need not lay out a greater value in raw material and instruments.
(3) The increased productivity of labour requires a greater outlay of capital for raw material and instrument. If an unchanged number of workers has become more productive merely through division of labour etc., then the instrument remains the same; the raw material alone must grow; since the same labour time processes a greater amount of it in the same time; and, according to the presupposition, the productivity arose only from greater skill on the part of the workers, division and combination of labour etc. In this case the part of the capital exchanged for living labour not only diminishes (it remains the same if absolute labour time alone increases; decreases, if relative time grows) relative to the other component parts of capital, which remain the same, by an amount equal to its own decline, but likewise by an amount equal to their growth.
If it was
in the first case: so that out of 90 working days, 10 are surplus working days; surplus labour 12 1/2%. In the second case, the relation of the raw material rose in the same proportion as the relation of surplus labour rose, compared to the first case.
While the growth of the surplus value in all cases presupposes growth of the population, in this case [it presupposes] additionally accumulation, or a greater capital entering into production. (This ultimately comes down to a larger population of workers occupied in the production of raw material.) In the first case the total part of the capital employed for labour forms 1/4 of the total capital, and relates to the constant part of the capital as = 1:3; in the second case capital employed for labour forms less than 1/6 of the total capital, and the total part of the capital employed for labour relates as less than 1:5 to the constant part of the capital. Hence, although the increase of productive power resting on division and combination of labour rests on absolute increase of the labour power employed, it is necessarily linked with a decrease of the latter, relative to the capital which sets it in motion. And while, in the first form, the form of absolute surplus labour, the mass of labour employed must grow in the same relation as the capital employed, in the second case it grows in a lesser relation, and, more precisely, in inverse relation to the growth of the force of production.
If the productivity of the soil doubled owing to employment of the latter method of agricultural labour, if the same amount of labour yielded 1 quarter of wheat instead of 1/2, then necessary labour would fall by 1/2, and capital could employ twice the number for the same wages. (This, if expressed in grain only.) But the capitalist would not need additional workers to work his land. Hence he will employ the same labour with half the previous wages; a part of his capital, the part earlier laid out in money, becomes free; the labour time employed has remained the same relative to the capital employed, but its surplus part has risen relative to the necessary part. If the relation of necessary labour to the total working day was = 3/4 of the working day or 9 hours, before, then it will now be equal to 3/8 or = 4 1/2 hours. In the first case the surplus value was 3 hours; in the second = 7 1/2.
The course of the process is this: With a given population of workers and length of the working day, i.e. length of the working day multiplied by the number of simultaneous working days, surplus labour can be increased only relatively, by means of greater productive power of labour, the possibility of which is already posited in the presupposed growth of the population and [its] training for labour (including thereby also a certain amount of free time for non-labouring, not directly labouring population, hence development of mental capacities etc.; mental appropriation of nature). Given a certain stage of the development of the productive forces, surplus labour can be absolutely increased only through transformation of a greater part of the population into workers, and increase of the number of simultaneous working days. The first process is decrease of the relative working population, although it remains the same in absolute terms; the second is its increase. Both tendencies necessary tendencies of capital. The unity of these contradictory tendencies, hence the living contradiction, only with machinery, which we will discuss in a moment. The first form obviously allows only a small non-labouring population relative to the labouring one. The second, since the quota of living labour required in it increases more slowly than the quota of capital employed, allows a larger non-labouring population relative to the labouring one.
During the formative stages of capital, where it obtains raw material and instrument, the conditions of the product, from circulation, it relates to these component parts and to their relations as given presuppositions. Although this appearance vanishes on closer examination, since all these moments appear as equally the products of capital, and since it would otherwise not have conquered the total conditions of its production, they nevertheless remain always in the same relation for the individual capital. Hence, one part of it can always be regarded as constant value, and only the part laid out in labour varies. These component parts do not develop evenly, but, as will be seen in competition, [it is] the tendency of capital to distribute the force of production evenly.
Since the growing productivity of labour would lead capital to encounter a barrier in the not-growing mass of raw material and machinery, industrial development takes the following course: the introduction of labour on a large scale, as well as the employment of machinery, begins in the branches which are closest to being production of raw materials for industry, raw material both for the material of labour and [for the] instrument, where the material of labour most closely approaches mere raw material. Thus, in spinning before in weaving, in weaving before printing etc. First of all in the production of metals, which are the chief raw material for the instruments of labour themselves. If the actual raw product which makes up the raw material for industry at the lowest stage cannot itself be rapidly increased – then refuge is sought in more rapidly increasable substitutes. (Cotton for linen, wool and silk.) The same happens for the necessaries of life in the substitution of potatoes for grain. The higher productivity in the latter case through production of a worse article containing fewer nourishing substances and hence cheaper organic conditions of the worker’s reproduction. The latter belongs in the examination of wages. In the discussion of the minimum wage, not to forget Rumford.
Now we come to the third case of relative surplus labour as it presents itself in the employment of machinery.
<It has become apparent in the course of our presentation that value, which appeared as an abstraction, is possible only as such an abstraction, as soon as money is posited; this circulation of money in turn leads to capital, hence can be fully developed only on the foundation of capital, just as, generally, only on this foundation can circulation seize hold of all moments of production. This development, therefore, not only makes visible the historic character of forms, such as capital, which belong to a specific epoch of history; but also, [in its course] categories such as value, which appear as purely abstract, show the historic foundation from which they are abstracted, and on whose basis alone they can appear, therefore, in this abstraction; and categories which belong more or less to all epochs, such as e.g. money, show the historic modifications which they undergo. The economic concept of value does not occur in antiquity. Value distinguished only juridically from pretium, against fraud etc. The concept of value is entirely peculiar to the most modern economy, since it is the most abstract expression of capital itself and of the production resting on it. In the concept of value, its secret betrayed.>
What distinguishes surplus labour founded on machinery is the reduction of necessary labour time, which takes the form that fewer simultaneous working days are employed, fewer workers. The second moment, that the increase in productive power must be paid for by capital itself, is not free of charge. The means by which this increase in the force of production is set to work is itself objectified direct labour time, value, and, in order to lay hands upon it, capital must exchange a part of its value for it. It is easy to develop the introduction of machinery out of competition and out of the law of the reduction of production costs which is triggered by competition. We are concerned here with developing it out of the relation of capital to living labour, without reference to other capitals.
If a capitalist annually employed 100 workers at spinning cotton, which annually cost him £2,400, and if he replaced 50 workers with a machine costing £1,200, but in such a way that the machine would likewise be worn out within the year and have to be replaced again at the beginning of the second year, then he would obviously have gained nothing; nor could he sell his product more cheaply. The remaining 50 workers would do the same work as 100 did earlier; each individual worker’s surplus labour would have increased in the same relation as their number had diminished, hence would have remained the same. If previously it was = 200 hours of work daily, i.e. 2 hours for each of the 100 working days, then it would now likewise be = 200 hours of work, i.e. = 4 for each of the 50 working days. Relative to the worker, his surplus time would have increased; for capital the matter would be unchanged, since it would now have to exchange 50 working days (necessary and surplus time together) for the machine. The 50 days of objectified labour which it exchanged for machinery would only give him an equivalent, hence no surplus time, as if it had exchanged 50 days of objectified labour for 50 living ones. This would be replaced, however, by the surplus labour time of the remaining 50 workers. If the form of exchange is stripped off, the matter would be the same as if the capitalist employed 50 workers whose entire working day were necessary labour only, and 50 additional ones whose working day made good this ‘loss’. But posit now that the machine cost only £960, i.e. only 40 working days, and that the remaining workers produce 4 hours of surplus labour time each, as before, i.e. 200 hours or 16 days, 4 hours (16 1/3 days), then the capitalist would have saved £240 on outlays. While he gained only 16 days 4 hours with his previous outlay of 2,400, he would now likewise gain 200 hours of work on an outlay of 960. 200 is to 2,400 as 1:12; while 200:2,160 = 20:216 = 1:10 4/5. Expressed in days of work, in the first case he would gain 16 days 4 hours per 100 working days, in the second, the same amount on 90; in the first, on 1,200 hours of work daily, 200; in the second, on 1,080. 200:1,200 = 1:6, 200:1,080 = 1:5 2/3. In the first case the individual worker’s surplus time = 1/6 working day = 2 hours. In the second case = 2 6/27 hours per worker. Furthermore, with the employment of machinery, the part of the capital which was previously employed in instruments must be deducted from the additional cost caused by the machinery.
Money and fixed capital: presupposes certain amount of wealth. (Economist.) – Relation of fixed capital and circulating capital. Cotton-spinner (Economist)[edit source]
<The money circulating in a country is a certain portion of the capital of the country, absolutely withdrawn from productive purposes, in order to facilitate or increase the productiveness of the remainder. A certain amount of wealth is, therefore, as necessary, in order to adopt gold as a circulating medium, as it is to make a machine, in order to facilitate any other production.’ (Economist, Vol. V, p. 520.)> <’What is the practice? A manufacturer obtains £500 from his banker on Saturday, for wages; he distributes these among his workers. On the same day the majority of money is brought to the shopkeepers, and through them returned to their various bankers.’ (loc. cit. p. 575.)>
<’A cotton spinner, with a capital of £100,000, who laid out £95,000 for his mill and machinery, would soon find he wanted means to buy cotton and pay wages. His trade would be hampered and his finances deranged. And yet men expect that a nation, which has recklessly sunk the bulk of its available means in railways, should nevertheless be able to conduct the infinite operations of manufacture and commerce.’ (loc. cit. p. 1271.)>
Slavery and wage labour (Steuart). – Profit upon alienation. Steuart[edit source]
‘Money … an adequate equivalent for any thing alienable.’ (J. Steuart.) (p. 13) (Vol. I, p. 32, ed. Dublin, 1770.)
<’In the old times to make mankind labour beyond their wants, to make one part of a state work, to maintain the other gratuitously, to be brought about only through slavery … If mankind be not forced to labour, they will only labour for themselves; and if they have few wants, there will be few [who] labour. But when states come to be formed and have occasion for idle hands to defend them against the violence of their enemies, food at any rate must be procured for those who do not labour; and as, by the supposition, the wants of the labourers are small, a method must be found to increase their labour above the proportion of their wants. For this purpose slavery was calculated … Here then was a violent method of making men laborious in raising food; … men were then forced to labour because they were slaves of others; men are now forced to labour because they are slaves to their own wants.’ (Steuart, Vol. I, p. 38–40.) ‘It is the infinite variety of wants, and of the kinds of commodities necessary to their gratification, which alone renders the passion for wealth indefinite and insatiable.’ (Wakefield on A. Smith, p. 64 note.)>
‘Machines I consider as a method of augmenting (virtually) the number of industrious, without the expense of feeding an additional number.’ (Steuart, Vol. I, p. 123.) ‘When manufacturers get together in bodies, they depend not directly upon consumers, but upon merchants.’ (Steuart, Vol. I, p. 154.) ‘The abusive agriculture is no trade, because it applies no alienation, but is purely a method of subsisting.’ (loc. cit. p. 156.) ‘Trade is an operation, by which the wealth, or work, either of individuals, or of societies, may be exchanged, by a set of men called merchants, for an equivalent, proper for supplying every want, without any interruption to industry, or any check upon consumption.’ (Steuart, I, p. 166.) ‘While wants continue simple and few, a workman finds time enough to distribute all his work; when wants become more multiplied, men must work harder: time becomes precious; hence trade is introduced. The merchant as mediator between the workman and consumer.’ (loc. cit. p. 171.) ‘Money the common price of all things.’ (loc. cit. p. 177.) ‘Money represented by the merchant. To the consumers, the merchant represents the totality of manufacturers, towards the latter, the totality of consumers, and to both classes his credit supplies the use of money. He represents wants, manufacturers and money by turns.’ (loc. cit. p. 177, 178.) (Steuart, see Vol. I, p. 181–3, regards profit as distinct from real value, which he defines very confusedly (has production costs in mind) as the amount of objectified labour (what a workman can perform in a day etc.), necessary expense of the workmen, price of the raw material, as profit upon alienation fluctuating with demand.) (With Steuart the categories still vary greatly; they have not yet become fixed, as with A. Smith. We just saw that real value identical with production costs, in which, besides the labour of the workmen and the value of the material, wages, also, confusingly, figure as a separate component part. At another point he takes the intrinsic value of a commodity to mean the value of its raw material or the raw material itself, while, by useful value, he understands the labour time employed on it. ‘The first is something real in itself; e.g. the silver in a silver lattice-work. The intrinsic worth of a silk, woollen or linen manufacture is less than the primitive value employed, because it is rendered almost unserviceable for any other use but that for which the manufacture is intended; the useful value by contrast must be estimated according to the labour it has cost to produce it. The labour employed in the modification represents a portion of a man’s time, which having been usefully employed, has given a form to some substance which has rendered it useful, ornamental, or in short, fit for man, mediately or immediately.’ (p. 361, 362, Vol. I loc. cit.) (The real use value is the form given to the substance. But this form itself is only static labour.) ‘When we suppose a common standard on the price of any thing, we must suppose the alienation of it to be frequent and familiar. In countries where simplicity reigns, … it is hardly possible to determine any standard for the price of articles of first necessity … in such states of society the articles of food and necessaries are hardly found in commerce: no person purchases them; because the principal occupation of everybody is to procure them for himself … Sale alone can determine prices, and frequent sale can only fix a standard. Now the frequent sale of articles of the first necessity marks a distribution of inhabitants in labourers and free hands’ etc. (Vol. I, p. 395 seq. loc. cit.) (The doctrine of the determination of prices by the mass of the circulating medium first advanced by Locke, repeated in the Spectator, 19 October 1711, developed and elegantly formulated by Hume and Montesquieu, its basis raised to its formal peak by Ricardo, and with all its absurdities in practical application to the banking system, by Loyd, Colonel Torrens etc.). Steuart polemicizes against it, and his development materially anticipates more or less everything later advanced by Bosanquet, Tooke, Wilson. (Notebook, p. 26.) (He says among other things as historic illustration: ‘It is a fact that at the time when Greece and Rome abounded in wealth, when every rarity and the work of choicest artists was carried to an excessive price, an ox was bought for a mere trifle and grain was cheaper perhaps than ever it was in Scotland … The demand is proportioned, not to the number of those who consume, but of those who buy; now those who consume are all the inhabitants, but those who buy are only the few industrious who are free … In Greece and Rome, slavery: Those who were fed by the labour of their own slaves, the slaves of the state, or by grain distributed free of charge among the people, had no occasion to go to the market: they did not enter into competition with the buyers … The few manufacturers then known made wants in general less extensive; consequently, the number of the industrious free was small, and they were the only persons who could have occasion to purchase food and necessaries: consequently, the competition of the buyers must have been small in proportion, and price low; further the markets were supplied partly from the surplus produced on the lands of the great men, laboured by slaves; who being fed from the lands, the surplus cost in a manner nothing to the proprietors; and since the number of those who had occasion to buy, very small, this surplus was sold cheap. Also, the grain distributed to the people free of charge must necessarily have held the market down, etc. By contrast, for a fine mullet or an artist, etc. great competition and hence prices rising extraordinarily. The luxury of those times, though excessive, was confined to a few, and as money, in general, circulated but slowly through the hands of the multitude, it was constantly stagnating in those of the rich who found no measure, but their own caprice, in regulating the prices of what they wished to possess.’) (26, 27, Notebook. Steuart.) ‘Money of account is nothing but an arbitrary scale of equal parts, invented for measuring the respective value of things vendible. Money of account quite different from money-coin, which is price, and could exist, even if there were no substance in the world which was the proportional equivalent for all commodities.’ (Vol. II, p. 102.) ‘Money of account does the same service for value as things like minutes, seconds etc. do for angles, or scales for geographical maps etc. In all these inventions some denomination is always taken for the unit.’ (loc. cit.) ‘The usefulness of all those inventions being solely confined to the marking of proportion. Just so, the unit in money can have no invariable determinate proportion to any part of value, i.e. it cannot be fixed to any particular quantity of gold, silver or any other commodity whatsoever. The unit once fixed, we can, by multiplying it, ascend to the greatest value’ etc. (p. 103.) ‘So money a scale for measuring value.’ (p. 102.) ‘The value of commodities, therefore, depending upon a general combination of circumstances relative to themselves and to the fancies of men, their value ought to be considered as changing only with respect to one another; consequently, any thing which troubles or perplexes the ascertaining those changes of proportion by the means of a general, determinate and invariable scale, must be hurtful to trade and a clog upon alienation.’ (loc. cit.) ‘It is absolutely necessary to distinguish between price (i.e. coin) considered as a measure and price considered as an equivalent for value. The metals do not perform both functions equally well … Money is an ideal scale of equal parts. If it be demanded what ought to be the standard of value of one part? I answer by putting another question: What is the standard length of a degree, a minute, a second? It has none – but so soon as one part becomes determined, by the nature of a scale, all the rest must follow in proportion.’ (p. 105.) ‘Examples of this ideal money are the bank money of Amsterdam and the Angola money on the African coast. – The bank money stands invariable like a rock in the sea. According to this ideal standard are the prices of all things regulated.’ (p. 106, 107 seq.)
In Custodi’s anthology of the Italian economists, Parte Antica, Tomo III: Montanari (Geminiano), Della moneta, written about 1683, says of the ‘invention’ of money: ‘Intercourse between nations spans the whole globe to such an extent that one may almost say all the world is but a single city in which a permanent fair comprising all commodities is held, so that by means of money all the things produced by the land, the animals and human industry can be acquired and enjoyed by any person in his own home. A wonderful invention!’ (p. 40.) ‘But, since it is another peculiarity of measures that they enter into such a relation with the things measured that in a certain manner the thing measured becomes the measure of the measuring unit, it follows that, just as motion is the measure of time, time may be the measure of the motion itself; hence it occurs that not only are the coins measures of our wants, but also our wants are, reciprocally, the measure of the coins themselves and of value.’ (p. 41, 42.) ‘It is quite clear that the greater the number of coins circulating in commerce within the confines of a given district, in proportion to the marketable goods there are in that place, the more expensive will they be. Can a thing be said to be expensive because it is worth a large quantity of gold in countries where gold is abundant? Should not the gold itself, which is estimated as of the same quantity as another thing which comes to be considered elsewhere as cheap, be rather described as cheap in that case?’ (p. 48.)
‘100 years earlier the chief feature in the commercial policy of nations was the amassing of gold and silver, as a kind of wealth par excellence.’ (p. 67.) (Gouge, Wm. A Short History of Paper Money and Banking in the United States. Philadelphia, 1833.) (Barter in United States (see Gouge Notebook VIII, p. 81 seq.): ‘In Pennsylvania as in the other colonies, significant traffic was carried on by barter … as late as 1723 in Maryland, an act was passed making tobacco a legal tender at one penny a pound, and Indian corn at 20d. a bushel.’ (p. 5.) (Part II.) Soon however, ‘their trade with the West-Indies and a clandestine commerce with the Spanish made silver so plentiful, that in 1652 a mint was established in New England for coining shillings, sixpences and threepenny pieces.’ (p. 5.) (loc. cit.) ‘Virginia in 1645 forbade dealings by barter, and established the Spanish piece of 8 to 6s. as the standard currency of the colony (the Spanish dollar) … The other colonies affixed different denominations to the dollar … The money in account was everywhere nominally the same as in England. The coin of the realm was especially Spanish and Portuguese’ etc. cf. p. 81 Notebook VIII). (p. 6. By an act of Queen Anne an attempt was made to put an end to this confusion.)
Wool industry in England since Elizabeth (Tuckett). – Silk-manufacture (Same). Ditto Iron. Cotton[edit source]
Tuckett: A History of the Past and Present State of the Labouring Population etc., 2 vols., London, 1846.
‘Wool manufactures: During Elizabeth’s time the clothier occupied the place of the mill-owner or manufacturer; he was the capitalist who brought the wool, and delivered it to the weaver, in portions of about 12 pounds, to be made into cloth. At the beginning, manufacture was confined to cities and corporate and market-towns, the inhabitants of the villages making little more than [sufficed] for the use of their families. Later, in non-corporate towns favoured by local advantages, and also in country places by farmers, graziers and husbandmen, who commenced making cloth for sale, as well as for domestic use.’ (The cruder sorts.) ‘In 1551 a statute was passed, restricting the number of looms and apprentices which might be held by clothiers and weavers residing out of cities; and that no country weaver should have a tucking mill, nor any tucker a loom. By a law of the same year, all weavers of broad cloth had to undergo an apprenticeship of 7 years. Nevertheless, village manufacture, as an object of mercantile profit, took firm root. 5 and 6 Edward VI, c. 22, a statute, prohibits the use of machinery … The Flemish and Dutch thus maintained superiority in this manufacture until the end of the seventeenth century … In 1668 the Dutch loom was introduced from Holland.’ (p. 138–41.) ‘Owing to the introduction of machinery, in 1800 one person could do as much work as 45 in the year 1785. In the year 1800 the capital invested in mills, machinery etc. appropriate for the woollen trade was not less than 6 million pounds sterling and the total number of persons of all ages occupied in England in this branch was 1,500,000.’ (p. 142–3.) Thus the productive power of labour grew 4,600%. But, firstly, this number only about 1/6 of the fixed capital alone; relative to the total capital (raw material etc.) perhaps only 1/20. ‘Hardly any manufacture had such an advantage from the improvements in science as the art of dyeing cloth through the application of the laws of chemistry.’ (loc. cit. p. 144.)
Silk manufacture. Until the beginning of the eighteenth century, ‘the art of silk throwing most successful in Italy, where machinery of a particular description adopted to this purpose. In 1715 John Lombe, one of three brothers who had a business as throwers and silk-merchants, travelled to Italy and was able to obtain a model in one of the mills … A silk mill, with the improved machinery, erected in 1719 in Derby by Lombe and his brothers. This mill contained 26,586 wheels, all turned by one water wheel … Parliament gave him £14,000 for throwing open the secret to the trade. This mill came nearer to the idea of a modern factory than any previous establishment of the kind. The machine had 97,746 wheels, movements, and individual parts working day and night, all of which were moved by one large water wheel and were governed by one regulator: and it employed 300 persons to attend and supply it with work.’ (133–4.) (No spirit of invention showed itself in the English silk trade; first introduced by the weavers of Antwerp, who fled after the sacking of the town by the Duke of Parma; then different branches by the French refugees 1685–92.)
In 1740, 1,700 tons of iron were produced by 59 high furnaces; 1827: 690,000 by 284. Furnaces thus increased = 1:4 48/49; less than quintupled; the tons = 1:405 15/17. (Comp. on the relation over a series of years loc. cit. Notebook p. 12.)
Glass manufacturing, among other things, best shows how dependent [is] the progress of science on manufactures. On the other side e.g. the invention of quadrants arose from the needs of navigation, parliament offered a prize for inventions.
8 cotton machines, which cost £5,000 in 1825, were sold in 1833 for £300. (On cotton spinning, see loc. cit. p. 13, Notebook.)
‘A first rate cotton spinning factory cannot be built, filled with machinery, and fitted with gas work and steam engine, under £100,000. A steam engine of one hundred horse power will turn 50,000 spindles, which will produce 62,500 miles of fine cotton-thread per day. In such a factory, 1,000 persons will spin as much thread as 250,000 persons could without machinery. McCulloch estimates the number in Britain at 130,000.’ (p. 218, loc. cit.)
Origin of free wage labour. Vagabondage. Tuckett[edit source]
‘Where there are no regular roads, there can hardly be said to be a community; the people could have nothing in common.’ (p. 270. Tuckett loc. cit.)
‘Of the produce of the earth, useful to men, 99/100 are the produce of men.’ (loc. cit. p. 348.)
‘When slavery or life-apprenticeship was abolished, the labourer became his own master and was left to his own resources. But if without sufficient employment etc., men will not starve whilst they can beg or steal; consequently the first character the poor assumed was that of thieves and mendicants.’ (p. 637 note, Vol. II, loc. cit.) ‘One remarkable distinction of the present state of society, since Elizabeth, is that her poor law was especially a law for the enforcement of industry, intended to meet the mass of vagrancy that grew out of the suppression of the monasteries and the transition from slavery to free labour. As example, the 5th act of Elizabeth, directing households using half a plough of land in tillage, to require any person they might find unemployed, to become their apprentice in husbandry, or in any art or mystery; and, if unwilling, to bring him before a justice, who was almost compelled to commit him to ward until he consented to be bound. Under Elizabeth, out of every 100 people, 85 were required for the production of food. At present, not a lack of industry, but a profitable employment … The great difficulty then was to overcome the propensity of idleness and vagabondage, not to procure them remunerative occupation. During this reign there were several acts of the legislature to enforce the idle to labour.’ (p. 643, 644. Vol. II, loc. cit.)
‘Fixed capital, when once formed, ceases to affect the demand for labour, but during its formation it gives employment to just as many hands as an equal amount would employ, either of circulating capital, or of revenue.’ (p. 56. John Barton, Observations on the Circumstances which Influence the Condition of the Labouring Classes of Society, London, 1817.)
Blake on accumulation and rate of profit. (Shows that prices etc. not indifferent because a class of mere consumers does not at the same time consume and reproduce.) – Dormant capital[edit source]
‘The community consists of two classes of persons, one, which consumes and reproduces, the other, which consumes without reproduction. If the entire society consisted of producers, then of little consequence at what price they exchanged their commodities among one another; but those who are only consumers form too numerous a class to be overlooked. Their power of demanding arises from seats, mortgages, annuities, professions and services of various descriptions rendered to the community. The higher the price at which the class of consumers can be made to buy, the greater will be the profit of the producers upon the mass of commodities which they sell to them. Among these purely consuming classes, the government takes up the most prominent station.’ (W. Blake, Observations on the Effects Produced by the Expenditure of Government during the Restriction of Cash Payments, London, 1823, p. 42, 43.) In order to show that the capital lent to the state is not necessarily such as was previously employed productively – and we are concerned here only with the admission that a part of capital is always dormant – Blake says: ‘The error lies in the supposition (1) that the whole capital of the country is fully employed; (2) that there is immediate employment for successive accumulations of capital as it accrues from saving. I believe there are at all times some portions of capital devoted to undertakings that yield very slow returns and slender profits, and some portions lying wholly dormant in the form of goods, for which there is no sufficient demand … Now, if these dormant portions and savings could be transferred into the hands of government in exchange for its annuities, they would become sources of new demand, without encroaching upon existing capital.’ (p. 54, 55 loc. cit.) ‘Whatever amount of produce is withdrawn from market by the demand of the saving capitalist, is poured back again, with addition, in the goods that he reproduces. The government, by contrast, takes it away from consumption without reproduction … Where savings are made from revenue, it is clear that the person entitled to enjoy the portion saved is satisfied without consuming it. It proves that the industry of the country is capable of raising more produce than the wants of the community require. If the quantity saved is employed as capital in reproducing a value equivalent to itself, together with a profit, this new creation, when added to the general fund, can be drawn out by that person alone who made the savings, i.e. by the very person who has already shown his disinclination to consume … If everyone consumes what he has a right to consume, there must of necessity be a market. Whoever saves from his revenues, foregoes this right, and his share remains undisposed of. Should this spirit of economy be general, the market is necessarily overstocked, and it must depend on the degree, to which this surplus accumulates, whether it can find new employments as capital.’ (56, 57.) (Cf. this work generally in the section on accumulation.) (Cf. Notebook p. 68 and p. 70, where it is shown that the rate of profits and wages rose owing to prices, caused by war demand, without any respect ‘to the quantity of land taken last into cultivation’.) ‘During the revolutionary war the market rate of interest rose to 7, 8, 9 and even 10%, although during the whole time lands of the lowest quality were cultivated.’ (loc. cit. p. 64–6.) ‘The rise of interest to 6, 8, 10 and even 12% proves the rise of profit. The depreciation of money, supposing it to exist, could not change the relation of capital and interest. If £200 are worth only £100; £10 interest worth only £5, whatever affected the value of the principal would equally affect the value of profits. It could not alter the relation between the two.’ (p. 73.) ‘Ricardo’s reasoning, that the price of wages cannot make the prices of commodities rise, does not apply to a society where a large class are not producers.’ (loc. cit.) ‘More than the just share is obtained by the producers at the expense of that portion, which of right belongs to the class who are only consumers.’ (74.) This of course important, since capital exchanges not only for capital, but also for revenue, and each capital can itself be eaten up as revenue. Still, this does not affect the determination of profit in general. Under the various forms of profit, interest, rent, pensions, taxes etc., it may be distributed (like a part of wages even) under different titles among different classes of the population. They can never divide up among them more than the total surplus value of the total surplus product. The ratio in which they distribute it is of course economically important; [but] does not affect the question before us.
‘If the circulation of commodities of 400 million required a currency of 40 million, and this proportion of 1/10 were the due level, then, if the value of the commodities to be circulated grows to 450 million, from natural causes, the currency, in order to continue at its level, would have to grow to 45 million, or the 40 million must be made to circulate with such increased rapidity, by banking or other improvements, as to perform the functions of 45 million … such an augmentation, or such rapidity, the consequence and not the cause of the increase of prices.’ (W. Blake. loc. cit., p. 80 seq. cf. Notebook p. 70.)
‘The upper and middle class of Rome gained great wealth by Asiatic conquest, but not being created by commerce or manufactures, it resembled that obtained by Spain from her American colonies.’ (p. 66 Vol. I, Mackinnon, History of Civilisation, London, 1846, Vol. I.)
Domestic agriculture at the beginning of the sixteenth century. Tuckett[edit source]
‘In the fifteenth century, Harrison asserts’ (see also Eden), ‘that the farmers are barely able to pay their rents without selling a cow, or a horse, or some of their produce, although they paid at the most £4 for a farm … The farmer in these times consumed the chief part of the produce to be raised, his servants taking their seats with him at his table … The principal materials for clothing were not bought, but were obtained by the industry of each family. The instruments of husbandry were so simple that many of them were made, or at least kept in repair, by the farmer himself. Every yeoman was expected to know how to make yokes or bows, and plough gear; such work employed their winter evenings.’ (p. 324, 325 loc. cit. Tuckett, Vol. II.)
Profit. Interest. Influence of machinery on the wage fund. Westminster Review[edit source]
Interest and Profit: ‘Where an individual employs his own savings productively, the remuneration of his time and skill – agency for superintendence (profit further includes the risk to which his capital may have been exposed in his particular business); and the remuneration for the productive employment of his savings, Interest. The whole of this remuneration, Gross Profit; where an individual employs the savings of another, he obtains the agency only. Where one individual lends his savings to another, only the interest or the net profit.’ (Westminster Review, January 1826, p. 107, 108.) Thus here interest = net profit = remuneration for the productive employments of savings; the actual profit the remuneration for the agency for superintendence during his productive employment. The same philistine says: ‘Every improvement in the arts of production, that does not disturb the proportion between the portions devoted to capital and not devoted to the payment for wages, is attended with an increase of employment to the labouring classes: every fresh application of machinery and horse labour is attended with an increase of produce and consequently of capital; to whatever extent it may diminish the ratio which that part of the national capital forming the fund for the payment of wages bears to that which is otherwise employed, its tendency is not to diminish but to increase the absolute amount of that fund and hence to increase the quantity of employment.’ (loc. cit. p. 123.)
[Money as measure of values and yardstick of prices. Critique of theories of the standard measure of money.][edit source]
The role of money as measure, as well as, secondly, the fundamental law that the mass of the circulating medium, at a definite velocity of circulation, is determined by the prices of the commodities and by the mass of commodities circulating at definite prices, or by the total price, the aggregate amount of commodities, which is itself in turn determined by two circumstances: (1) the level of the commodity price; (2) the mass of circulating commodities at definite prices; further, (3) the law that money as medium of circulation becomes coin, mere vanishing moment, mere symbol of the values it exchanges – all this leads to more particular aspects which we shall develop only when and in so far as they coincide with more complicated economic relations, credit circulation, exchange rate etc. It is necessary to avoid all detail, and where detail must be brought in, it is to be brought in only at the point where it loses the elementary character.
First of all, money circulation, as the most superficial (in the sense of: driven out onto the surface) and the most abstract form of the entire production process, is in itself quite without content, except in so far as its own formal distinctions, precisely the simple aspects developed in section II, make up its content. It is clear that simple money circulation, regarded in itself, is not bent back into itself, [but] consists of an infinite number of indifferent and accidentally adjacent movements. The coin, e.g., may be regarded as the point of departure of money circulation, but there is no law of any reflux back to the coin except for depreciation through wear and tear, which necessitates melting-down and new issue of coins. This concerns only the material side and does not at all form a moment of circulation itself. Within circulation itself, the point of return may be different from the point of departure; in so far as it bends back into itself, money circulation appears as the mere appearance of a circulation going on behind it and determining it, e.g. when we look at the money circulation between manufacturer, worker, shopkeeper and banker. Furthermore, the factors which affect the mass of commodities thrown into circulation, the rise and fall of prices, the velocity of circulation, the amount of simultaneous payments etc., are all circumstances which lie outside simple money circulation itself. They are relations which express themselves in it; it provides the names for them, as it were; but they are not to be explained by its own differentiation. Different metals serve as money, and they have a different and changing value relation to one another. Thus the question of the double standard etc. enters, which takes on world-historical forms. But it takes them on, and the double standard itself enters, only through external trade, hence, to be usefully examined, supposes the development of much higher relations than that of the simple money relation.
Money as the measure of value is not expressed in amounts of bullion, but rather in accounting money, arbitrary names for fractional parts of a specific amount of the money-substance. These names can be changed, the relation of the coin to its metallic substance can be changed, while the name remains the same. Hence counterfeiting, which plays a great role in the history of states. Further, the different kinds of money in various countries. This question [is of] interest only in exchange rate.
Money is a measure only because it is labour time materialized in a specific substance, hence itself value, and, more particularly, because this specific materiality counts as its general objective one [allgemeingegenständliche], as the materiality of labour time as such, as distinct from its merely particular incarnations; hence because it is an equivalent. But since, in its function as measure, money is only an imagined point of comparison, only needs to exist ideally – only the ideal transposition of commodities into their general value-presence takes place –; since, further, in this quality as measure it figures first as accounting coin, and I say a commodity is worth so many shillings, francs etc., when I transpose it into money; this has given rise to the confused notion of an ideal measure, developed by Steuart and refurbished at various periods, even recently, in England, as a profound discovery. Namely in this sense, that the names, pound, shillings, guinea, dollar etc., which count as accounting units are not specific names for specific quantities of gold, silver etc., but merely arbitrary points of comparison which do not themselves express value, no definite quantity of objectified labour time. Hence the whole nonsense about fixing the price of gold and silver – price understood here as the name by which fractional parts are called. An ounce of gold now divided into £3 17s. 10d. This is called fixing the price; it is, as Locke correctly remarks, only fixing the name of fractional parts of gold and silver etc. Expressed in itself, gold, silver is naturally equal to itself. An ounce is an ounce, whether I call it £3 or £20. In short, this ideal measure in Steuart’s sense means this: if I say commodity A is worth £12, commodity B 6, commodity C 3, then their relation to one another = 12:6:3. Prices express only the relations in which they are exchanged for one another. 2B are exchanged for 1A and 1 1/2B for 3C. Now, instead of expressing the relation of A, B, C in real money, money which itself has value, is value, could I not, instead of the £ which expresses a specific mass of gold, just as well take any name you like, without content (this means, here, ideally), e.g. mackerels? A = 12 mackerels; B = 6M, C = 3M. This word M is here only a name, without any relation to a content belonging to itself. Steuart’s example with a degree, line, second, proves nothing; for although degree, line, second have changing magnitudes, they are not merely names, but rather always express the fractional part of a specific magnitude of space or of time. They thus have in fact a substance. The fact that money in the role of measure functions only as something imagined is here transformed into it supposedly being any imagined thing you like, a mere name, namely a name for the numerical value-relation. In that case, however, it would be correct to express no names at all, but merely a numerical relation, for the whole affair comes down to this: I obtain 6B for 12A, 3C for 6B; this relation can also be expressed in this way, A = 12x, B = 6x, C = 3x, where the x is itself only a name for the relation of A:B and B:C. The mere, unnamed numerical relation would not do. For A:B = 12:6 = 2:1, and B:C = 6:3 = 2:1. Hence C = 1/2. Hence B = 1/2, hence B = C. Hence A = 2 and B = 2; hence A = B.
Let me take any price list, e.g. potash, 35s. the ton; cocoa, lb., 60s.; iron (bars) (p. ton) 145s. etc. In order to have the relation of these commodities to one another, not only can I forget the silver in the shilling; the numbers alone, 35, 60, 145 suffice to define the reciprocal value relations of potash, cocoa, iron bars. Undenominated numbers now suffice; and not only can I give their unit, 1, any name, regardless of any value; I need not give it any name at all. Steuart insists that I must give it one or another name, but that this name then, as mere arbitrary name of the unit, as mere marking of proportion itself, cannot be fixed to any portion of the quantity of gold, silver or any other commodity.
With every measure, as soon as it serves as point of comparison, i.e. as soon as the different entities to be compared are put into a numerical relation to the measure as unit, and are now related to one another, the nature of the measure becomes irrelevant and vanishes in the act of comparison itself; the unit of measure has become a mere unit of numbers; the quality of this unit has vanished, e.g. that it is itself a specific magnitude of length or of time or of an angle. But is it only when the different entities are already presupposed as measured that the unit of measure marks only proportion between them, thus e.g. in our case the proportion of their values. The accounting unit not only has different names in different countries; but is the name for different fractional parts of an ounce of gold, e.g. But the exchange rate reduces all of them to the same unit of weight of gold or silver. Thus if I presuppose the various magnitudes of commodities, e.g. as above, = 35s., 60s., 145s., then, to compare them, since the 1 is presupposed as equal in all of them, since they have been made commensurable, it is wholly superfluous to bring in the observation that s. is a specific quantity of silver, the name for a specific amount of silver. But, as mere numerical magnitudes, as amounts of any unit of the same name, they only become comparable to one another, and only express proportions towards one another, when each individual commodity is measured with the one which serves as unit, as measure. But I can only measure them against one another, only make them commensurable, if they have a unit – the latter is the labour time contained in both. The measuring unit must therefore [be] a certain quantity of a commodity in which a quantity of labour is objectified. Since the same quantity of labour is not always expressed in the same quantity of e.g. gold, it follows that the value of this measuring unit itself variable. But, in so far as money is regarded only as measure, this variability is no obstacle. Even in barter, to the extent that it is somewhat developed as barter, i.e. is a repeated, normal operation, not merely an isolated act of exchange, some other commodity appears as measuring unit, e.g. cattle with Homer. Among the savage Papuans of the coast, who, in order ‘to obtain a foreign article, barter 1 or 2 of their children, and if they are not to hand, borrow those of their neighbours, promising to give their own in exchange, when they come to hand, this request being rarely refused’, there exists no measure for exchange. The only side of exchange which exists for the Papuan is that he can obtain the alien thing only by dispossessing himself of something he possesses. This dispossession [Entäusserung] itself is regulated for him by nothing but his fancy on one side, and the scope of his movable possessions on the other. In the Economist of 13 March 1858, we read, in a letter addressed to the editor: ‘As the substitution in France of gold for silver in the coinage (which has been the principal means hitherto of absorbing the new discoveries of gold) must be approaching its completion, particularly as less coinage will be wanted for a stagnant trade and reduced prices, we may expect ere long that our fixed price of £3 17s. 10 1/2d. an ounce will attract the gold here.’ Now what does this, our ‘fixed price of an ounce’ of gold, mean? Nothing other than that a certain aliquot part of an ounce is called pence, a certain multiple of this penny-weight of gold a shilling, and a certain multiple of this shilling-weight of gold a pound? Does the gentleman imagine that in other countries the golden Guilder, the Louis d’or etc. do not likewise signify a specific quantity of gold, i.e. that a specific quantity has a fixed name? and that this is an English privilege? or a speciality? That, in England, a monetary coin expressed in gold is more than a monetary coin, and in other countries, less? It would be interesting to know what this noble spirit imagines the exchange rate to be.
What leads Steuart astray is this: the prices of commodities express nothing but the relations in which they are exchangeable for one another, the proportions in which they exchange for one another. These proportions given, I can call the unit any name whatever, because the undenominated abstract number would suffice, and instead of saying that this commodity = 6 stivers, the other = 3 etc., I could say this one = 6 ones, the other = 3; I would not have to give the unit any name at all. Since the numerical relation is all that matters at that point, I can give it any name whatever. But it is already presupposed here that these proportions are given, that the commodities have previously become commensurable magnitudes. As soon as magnitudes have once been posited as commensurable, their relations become simple numerical relations. Money appears as measure, and a specific quantity of the commodity in which it represents itself appears as measuring unit, precisely in order to find the proportions, and to articulate and to handle commodities as commensurable ones. This real unit is the labour time relatively objectified in them. However, it is labour time itself posited as general. The process by which values within the money system are determined by labour time does not belong in the examination of money itself, and falls outside circulation; proceeds behind it as its effective base and presupposition. The question here could only be this: instead of saying this commodity is = to one ounce of gold, why does one not say directly it is = to x labour time, objectified in the ounce of gold? Why is labour time, the substance and measure of value, not at the same time the measure of prices, or, in other words, why are price and value different at all? Proudhon’s school believe it a great deed to demand that this identity be posited and that the price of commodities be expressed in labour time. The coincidence of price and value presupposes the equality of demand and supply, exchange solely of equivalents (hence not of capital for labour) etc.; in short, formulated economically, it reveals at once that this demand is the negation of the entire foundation of the relations of production based on exchange value. But if we suppose this basis suspended, then on the other side the problem disappears again, which exists only of it and with it. That the commodity in its unmediated presence as use value is not value, is not the adequate form of value = that it is [the adequate form of value] as an objective other, or that it is this as equated to another object; or, that value possesses its adequate form in a specific object as distinct from another. Commodities, as values, are objectified labour; the adequate value must therefore itself appear in the form of a specific thing, as a specific form of objectified labour.
Steuart illustrates this drivel about an ideal standard with two historic examples, of which the first, the bank money of Amsterdam, shows just the opposite, since it is nothing but the reduction of circulating coins to their bullion content (metal content); the second one has been repeated after him by all the moderns who follow the same tendency. For example, Urquhart cites the example of the Barbary Coast, where an ideal bar, an iron bar, a merely imaginary iron bar, counts as standard which neither rises nor falls. If e.g. the real iron bar falls, say by 100%, then the bar is worth 2 iron bars; if it rises again by 100%, then only one. Mr Urquhart claims to have observed at the same time that the Barbary Coast knows neither commercial nor industrial crises, but least of all monetary crises, and ascribes this to the magical effects of this ideal standard of value. This ‘ideal’ imaginary standard is nothing but an imagined real value; an imagined notion, however, which, because the monetary system has not developed its further determinants – a development depending on quite different relations – achieves no objective reality. It is the same as if, in mythology, one were to consider as the higher religions those whose god-figures are not worked out in visible form but remain stuck in the imagination, i.e. where they obtain at most an oral, but not a graphic presence; The bar rests on a real iron bar, which was later transformed into a fantasy-creature and fixated as such. An ounce of gold, expressed in English accounting money, = £3 17s. 10 1/2d. Well. Well. Say a pound of silk had had exactly this price; but that it had later fallen to where Milanese raw silk stood on 12 March ’58 in London, the lb. at £1 8s. It is the imaginary conception of an amount of iron, an iron bar, which keeps the same value (1) relative to all other commodities, (2) relative to the labour contained in it. This iron bar is of course purely imaginary, but it is not so fixed and ‘standing like a rock in the sea’ as Steuart, and nearly a 100 years later Urquhart, believes. The only thing fixed in the iron bar is the name; in one case the real iron bar contains 2 ideal ones, in the other, only 1. This is expressed in such a way that the same, unchangeable ideal one is first = 2, then = 1 real bar. Thus, this posited, only the relation of the real iron bar has changed, not the ideal one. But in fact the ideal iron bar is twice as long in one case as in the other, and only its name is unchanged. In one case 100 lb. of iron are called e.g. a bar, in the other, 200 a bar. Suppose money were issued which represented labour time, e.g. time-chits; this time-chit itself could be baptized any name one wished, e.g. one pound, a twentieth of an hour 1s., 1/240th of an hour 1d. Gold and silver, like all other commodities, depending on the production time they cost, would express different multiples or fractional parts of pounds, shillings, pence etc., and an ounce of gold could just as well be = £8 6s. 3d. as £3 17s. 10 1/2d. These numbers would always be the expression of the proportion in which a specific quantity of labour is contained in the ounce. Instead of saying that £3 17s. 10 1/2d. = one ounce of gold, now cost only 1/2 lb. of silk, one can imagine that the ounce is now = £7 15s. 9d. or that £3 17s. 10 1/2d. are now only equal to half an ounce, because they are now only half the value. If we compare prices in England in e.g. the fifteenth century with those of the eighteenth, then we may find that two commodities had e.g. entirely the same nominal money value, e.g. 1 pound sterling. In this case the pound sterling is the standard, but expresses four or five times as much value in the first case as in the second, and we could say that, if the value of this commodity is = 1 ounce in the fifteenth century, then it was = 1/4 ounce of gold in the eighteenth; because in the eighteenth, 1 ounce of gold expresses the same labour time as 1/4 ounce in the fifteenth century. It could be said, therefore, that the measure, the pound, had remained the same, but in one case = four times as much gold as in the other. This is the ideal standard. The comparison we make here could have been made by the people of the fifteenth century themselves, if they had lived on into the eighteenth; they would say that 1 ounce of gold, which is now worth £1, was only worth 1/4 before. 4 pounds of gold now worth no more than 1 in the fifteenth century. If this pound previously had the name of livre, then I can imagine that one livre had been = 4 pounds at that time, and is now = to only 1; the value of gold had changed but that the standard, the livre, had remained the same. In fact, one livre in France and England originally meant 1 pound of silver, and now only 1/x. It can be said, therefore, that the name, livre, the standard, had remained nominally the same always, but that silver had changed its value in comparison to it. A Frenchman who had lived from the time of Charlemagne until today could say that the livre of silver had always remained the standard of value, unchanged; it had once been worth 1 pound of silver, but, owing to a variety of misfortunes, had finished up being worth only 1/x of a pennyweight. The ell is the same; only its length is different in different countries. It is in fact the same as if the product of one working day, the gold brought to light in one day of work, were given the name livre; this livre would always remain the same, although it would express very different amounts of gold in different periods.
What do we do in fact when we compare £1 of the fifteenth century with £1 of the eighteenth? Both are the same mass of metal (each = 20s.), but of a different value; since the metal was then worth 4 times as much as now. We say therefore that, compared with today, the livre was = 4 times the mass of metal it contains today. And one could imagine that the livre had remained unchanged, but had been = 4 real livres of gold then, only = 1 today. The matter would be correctly comparable not in regard to the quantity of metal contained in a livre, but rather in regard to its value; this value, however, in turn expresses itself quantitatively in such a way that 1/4 livre gold, then, = 1 livre gold today. Well; the livre identical, but at that time = 4 real livres of gold (by today’s value) and now only = 1. If gold falls in value, and its relative fall or rise as regards other articles is expressed in their price, then, instead of saying that an object which cost £1 of gold before now costs 2, it could be said that it still costs 1 pound, but 1 pound is now worth 2 real livres of gold etc.; i.e. 1 livre of 2 real gold livres etc. Instead of saying: I sold this commodity yesterday at £1, today I sell it at £4, I might say that I sell it at £1, but yesterday at 1 pound of 1 real pound, today at 1 pound of 4 real pounds. The remaining prices all follow by themselves as soon as the relation of the real bar to the imaginary one is established; but this simply the comparison between the past value of the bar and its present one. The same as if we calculated everything in the £ of the fifteenth century for instance. This Berber or Negro does the same thing that every historian must do who pursues one kind of coin, one accounting name for a coin of the same metallic content, from one century to the next; if he computes it in contemporary money, he must equate it to more or less gold depending on its changing value in different centuries. It is semi-civilized man’s effort to establish an unchanging value for the unit of money, for the mass of metal which counts as measure; to fix this value, also, as a constant measure. But at the same time, the cleverness to know that the bar has changed its real value. With the small number of commodities which this Berber has to measure, and with the vigour of tradition among the uncivilized, this complicated method of calculating is not as difficult as it looks.
1 ounce is = £3 17s. 10 1/2d., i.e. not quite = £4. But for convenience’s sake let us assume it to be exactly = £4. Then 1/4 of an ounce of gold therefore obtains the name pound, and serves under this name as accounting coin. But this pound changes its value, partly relative to the value of other commodities which change their value, partly in so far as it is itself the product of more or less labour time. The only firm thing about it is the name, and the quantity, the fractional part of the ounce, of the weight-unit of gold, whose baptismal name it is; which is contained, thus, in one piece of money, called one pound.
The savage wants to hold it constant as unchangeable value, and thus the quantity of metal it contains changes for him. If the value of gold falls by 100%, then the pound is the measure of value for him as before; but a pound of 2/4 ounces of gold etc. The pound for him always equals a mass of gold (iron) which has the same value. But since this value changes, it sometimes equals a greater, sometimes a smaller quantity of real gold or iron, depending on whether more or less of them must be given in exchange for other commodities. He compares the contemporary value with the past value, which latter counts as standard for him, and survives only in his imagination. Thus, instead of calculating in 1/4 ounce of gold, whose value changes, he calculates in the value which 1/4 ounce of gold previously had, hence in an imaginary unchanged 1/4 ounce-value, which expresses itself, however, in varying quantities. On one side the effort to establish a fixed value for the value-standard; on the other side, the cleverness of nevertheless avoiding trouble by making a detour. But it is altogether absurd to take this accidental displacement, this way in which semi-savages have assimilated the measurement of values in money, forced on them from the outside, by first displacing it and then getting themselves straight again in the displacement, and to regard this as an organic historical form, or even to erect it as a higher form compared to more developed relations. These savages also take a quantity, the iron bar, as point of departure; but they hold fast to the value which this traditionally had, as accounting unit etc.
This question achieved significance in the modern economy chiefly owing to two circumstances: (1) It has been experienced at various times, e.g. in England during the Revolutionary War that the price of raw gold rose above the price of minted gold. This historic phenomenon thus seemed irrefutably to prove that the names which are given to certain fractional weight-parts of gold (precious metal), pound, shilling, pence etc., by some inexplicable process act in an independent way towards the substance of which they are the name. How else could an ounce of gold be worth more than the same ounce of gold minted in £3 17s. 10 1/2d.? Or how could an ounce of gold be worth more than 4 livres of gold, if livre is merely the name for 1/4 ounce? On closer inspection it was found, however, that the coins which circulated under the name pound in fact no longer contained the normal metallic content, so that, for instance, 5 circulating pounds in fact weighed only 1 ounce of gold (of the same refinement). Since a coin which allegedly represented 1/4 ounce of gold (thereabouts) in fact represented only 1/5, it was very simple that the ounce = 5 of this kind of circulating £; hence that the value of the bullion price rose above the mint price, in that in fact no longer 1/4 but merely 1/5 of an ounce of gold was called pound, represented money, had that name; was merely the name, now, for 1/5 of an ounce. The same phenomenon took place when, although the metal content of the circulating coins had not fallen below their normal measure, they circulated at the same time as depreciated paper money, while to melt them down and to export them was prohibited. In that case, the 1/4 ounce of gold circulating in the form of £ shared in the depreciation of the notes; a fate from which gold in bars was exempt. The fact was again the same; the accounting name, pound, had ceased to be the name for 1/4 ounce, became the name for a lesser amount. Thus the ounce equalled e.g. 5 of such pounds. This means, then, that the bullion price rose above the mint price. These or analogous historical phenomena, all capable of equally simple solution and all belonging to the same series, led therefore to the notion of the ideal measure, or, that money as measure was only a point of comparison, not a specific quantity. Hundreds of volumes have been written about this case in England in the past 150 years.
That a specific sort of coin should rise above its bullion content is not in itself something strange, since new labour (to give it form) is added to the coin. But regardless of that, it happens that the value of a specific sort of coin rises above its bullion content. This is of no economic interest whatever, and has as yet led to no economic studies. It means nothing more than that, for certain purposes, gold and silver was requisite in precisely this form, say of British pounds or of Spanish dollars. The directors of the Bank had, of course, a particular interest in proving that the value of notes had not fallen, but rather that of gold had risen. As to the last question, this can be treated only later.
(2) But the theory of the ideal measure was first brought up at the beginning of the eighteenth century and again in the second decade of the nineteenth, where questions were at issue in which money figures not as measure, nor as medium of exchange, but rather as constantly self-identical equivalent, as value for-itself (in the third aspect) and hence as the universal material of contracts. The issue both times was whether or not debts of state, and other debts, contracted in a depreciated money, should be acknowledged and paid back in full-valued money. It was a question simply between the creditors of the state and the mass of the nation. This question itself does not concern us here. Those who demanded a readjustment of claims on the one side, and of payments (obligations) on the other, chose the wrong battlefield in asking whether or not the standard of money ought to be changed. On this occasion, then, crude theories of this type were brought forward about the standard of money, fixing of the price of money, etc. (‘Altering the standard like altering the national measures or weights.’ Steuart. It is clear at the first glance that the mass of grain in a nation does not change by the unit measure of e.g. the bushel being doubled or halved. But the change would be very important for e.g. farmers who had to pay grain rent in a specific number of bushels, if, were the measure doubled, they then had to supply the same number of bushels as before.) In this case, it was the creditors of the state who clung to the name ‘pound’, regardless of the fractional weight-unit of gold which it expressed, i.e. to the ‘ideal standard’ – for the latter is in fact only the accounting name for the weight-unit of metal which serves as measure. Strangely enough, however, it was precisely their opponents who advanced this theory of the ‘ideal standard’, and they themselves who combated it. Instead of simply demanding a readjustment, or that the creditors of the state ought to be paid back only the amount, in gold, which they had in fact advanced, they demanded that the standard be reduced in accordance with depreciation; thus e.g. if the pound sterling had fallen to 1/5 of an ounce of gold, that this 1/5 ounce should henceforth carry the name pound, or that the pound ought perhaps to be minted in 21 shillings instead of in 20. This reduction of the standard was called raising the value of money; in that the ounce now = £5 instead of = 4 as previously. Thus, they did not say that those who had advanced e.g. 1 ounce of gold in 5 depreciated pounds now ought to get 4 full-valued pounds back; they said, rather, that they should be repaid 5 pounds, but that the pound ought henceforth to express 1/20 of an ounce less than before. When they raised this demand in England after the resumption of cash-payment, the accounting coin had regained its old metal value. On this occasion yet further crude theories about money as the measure of value were constructed, and, on the pretense of refuting these theories, whose falsity was simple to prove, the interests of the creditors of the state were smuggled through. The first battle of this sort between Locke and Lowndes. From 1688 to 1695 the state contracted debts in depreciated money – depreciated owing to all full-weighted money having been melted down, and only the light-weight being in circulation. The guinea had risen to 30s. Lowndes (mintmaster?) (secretary to the treasury) wanted to have the £ reduced by 20%; Locke stood by the old standard of Elizabeth. In 1695 the general recoinage. Locke won the day. Debts contracted at 10 and 14s. the guinea, paid back at the rate of 20s. This equally advantageous for the state and for the landed proprietors. ‘Lowndes posed the question on the wrong basis. First he asserted that his scheme was not a debasement of the old standard. Then he ascribed the rise of the bullion price to the inherent value of silver and not to the lightness of the coin with which it was bought. He always supposed that it was the stamp and not the substance which made the currency … For his part, Locke only asked himself whether or not Lowndes’s scheme included a debasement, but never inquired into the interests of those who are engaged by permanent contracts. Mr Lowndes’s great argument for reducing the standard was that silver bullion was risen to 6s. 5d. per ounce (i.e. that it might have been bought with 77 pence of shillings of 1/77 part of a pound troy) and was therefore of the opinion that the pound troy should be coined into 77s., which was a diminution of the value of the £ by 20% or 1/5. Locke replied to him that the 77s. were paid in clipped money and that they were not more than 62 pence standard coin, by weight … But ought a man who had borrowed £1,000 in this clipped money to be obliged to pay back £1,000 in standard weight? Both Lowndes and Locke developed only quite superficially the influence of a change of standard on the relation of debtors and creditors, … the credit system then still little developed in England … the landed interest and the interest of the crown, were only attended to. Trade at that time was almost at a stop, and had been raised at a piratical war … Restoring the standard was the most favourable, both for the landed interest and the exchequer; and so it was gone in for.’ (Steuart loc. cit. Vol. II. p. 178, 179.) Steuart ironically remarks on the whole transaction: ‘By this raising of the standard the government gained significantly as regards taxes, and creditors on their capital and interest; and the nation, which was the principal loser, was satisfied (pleased) (quite joyful) because its standard’ (i.e. the measure of its own value) ‘was not debased; so were all the three parties satisfied.’ (loc. cit. Vol. II, p. 156.) Compare John Locke. Works. 4 vols. 7th ed., London, 1768; as well as the essay ‘Some Considerations on the Lowering of Interest and Raising the Value of Money’ (1691); and also: ‘Further Considerations Concerning Raising the Value of Money, wherein Mr Lowndes’s arguments for it, in his late Report concerning “An Essay for the amendment of the silver coins”, are particularly examined’, both in Vol. II. In the first monograph it says, among other things:
‘The raising of money, about which so much nonsense is now being uttered, is either raising value of our money, and that you cannot do; or raising the denomination of our coin.’ (p. 53.) ‘For example, term a crown what previously was called 1/2 a crown. The value remains determined by the metal content. If the abating 1/20 of the quantity of the silver of any coin, does not lessen its value, the abating 19/20 of the quantity of the silver of any coin, will not abate its value. Thus, according to this theory, a single three pence or a single farthing, being called a crown, will buy as much spice or silk, or any other commodity, as a crown-piece which contains 20 or 60 times as much silver.’ (p. 54.) ‘The raising of money is thus nothing but giving a less quantity of silver the stamp and denomination of a greater.’ (loc. cit.) ‘The stamp of the coin a guarantee to the public; it must contain so much silver under such a denomination.’ (57.) ‘It is silver, and not names, that pays debts and purchases commodities.’ (p. 58.) ‘The mint stamp suffices as guarantee for the weight and the fineness of the piece of money, but lets the thus-coined gold money, find its own rate, like other commodities.’ (p. 66.) In general one can do nothing with the raising of money but make ‘more money in tale’, but not more ‘money in weight and worth’. (p. 73.) ‘Silver is altogether a different standard from the others. The ell or the quart with which people measure may remain in the hands of the seller, of the buyer or of a third person: it matters not whose it is. But silver is not only the measure of bargains, it is the thing bargained for, and passes in trade from the buyer to the seller, as being in such a quantity equivalent to the thing sold: and so it not only reassumes the value of the commodity it is applied to, but is given in exchange for it, as of equal value. But this it does only by its quantity, and nothing else.’ (p. 92.) ‘The raising being but giving of names at pleasure to aliquot parts of any piece, viz. that now the sixtieth part of an ounce still be called a penny, may be done with what increase you please.’ (118.) ‘The privilege that bullion has, to be exported freely, will give it a little advance above our coin, let the denomination of that be raised, or fall as you please, whilst there is need of its exportation, and the exportation of our coin is prohibited by law.’ (p. 119, 120.)
The same position adopted by Lowndes against Locke, in that the former believed the rise of the bullion price to be due to a rise in the value of bullion, as a result of which the value of the accounting coin had declined (i.e. because the value of bullion rose, the value of a fractional part of it, called £, fell), was adopted by the little-shilling-men – Attwood and the others of the Birmingham school 1819 seq. (Cobbett had posed the question on the correct ground: non-adjustments of national debts, rents etc.; but spoiled it all by his false theory which condemned paper money as such. (Strangely enough, he came to this conclusion by beginning, like Ricardo, who comes to the opposite conclusion, from the same false premise, the determination of price by the quantity of the medium of circulation).) Their entire wisdom in the following phrases: ‘In his dispute with the Birmingham Chamber of Commerce, Sir R. Peel asks: “What will your pound note represent”’ (p. 266. ‘The Currency Question’, The Gemini Letters, London, 1844) (namely, the pound note if not paid in gold). ‘Now what is meant by the present standard of value? … £3 17s. 10 1/2d., do they signify one ounce of gold or its value? If the ounce itself, why not call things by their names and say, instead of pound, shilling, pence, ounces, pennyweights and grains? Then we go back to a direct system of barter.’ (p. 269. Not quite. But what would Mr Attwood have gained if people said ounce instead of £3 17s. 10 1/2d., and so many pennyweight instead of shillings? That, for convenience in calculating, the fractional parts are given names – which apart from that, also indicates that the metal is here given a social quality alien to itself – what witness does it bear either for or against Attwood’s doctrine?) ‘Or the value? If an ounce = £3 17s. 10 1/2d., why at different periods money £5 4s., and then again 3,17, 9? … the expression pound has reference to value, but not a fixed standard value … Labour is the parent of cost, and gives the relative value to gold or iron.’ (And that is in fact why the value of one ounce and of £3 17s. 10 1/2d. changes.) ‘Whatever denomination or words are used to express the daily or weekly labour of a man, such words express the cost of commodity produced.’ (p. 270.) The word ‘one pound is the ideal unit’. (p. 272.) The last sentence important because it shows how this doctrine of the ‘ideal unit’ dissolves into the demand for a money which is supposed directly to represent labour. Pound then e.g. the expression for 12 days’ work. The demand is this, that the determination of value should not lead to that of money as a distinct quantity, or that labour as the measure of values should not compel the labour objectified in a specific commodity to be made the measure of the other values. The important thing is that this demand is here made from the standpoint of the bourgeois economy (thus also by Gray, who actually works out this matter to perfection, and of whom we will speak in a moment), not from the standpoint of the negation of the bourgeois economy, as e.g. with Bray. The Proudhonists (see e.g. Mr Darimon) have indeed succeeded in raising this demand both as one corresponding to the present relations of production and also as a demand which totally revolutionizes them, and a great innovation, since, as crapauds, they are of course not required to know anything of what has been written or thought on the other side of the Channel. At all events, already the simple fact that this demand was raised more than 50 years ago in England by a fraction of bourgeois economists shows to what extent the socialists who pretend thereby to advance something new and anti-bourgeois are on the wrong track. About the demand itself, see above. (Only a few things from Gray can be added here. As to the rest, the matter can be gone into in detail only in the banking system.)
[More on the critique of theories about medium of circulation and money. – Transformation of the medium of circulation into money. – Formation of treasures. – Means of payment. – Prices of commodities and quantity of circulating money. – Value of money][edit source]
As regards money as constantly self-identical equivalent, i.e. as value as such, and thus as the material of all contracts, it is clear that the changes in the value of the material in which it represents itself (directly, as in gold, silver, or indirectly, as claims, in notes, on specific quantity of gold, silver etc.) must bring about great revolutions between the different classes of a state. This not to be examined here, since these relations presuppose knowledge of the various economic relations. Only something by way of illustration. In the sixteenth and seventeenth centuries, it is well known that the depreciation of gold and silver, due to the discovery of America, depreciated the labouring class and that of the landed proprietors; raised that of the capitalists (specially of the industrial capitalists). In the Roman republic, the appreciation of copper turned the plebeians into the slaves of the patricians. ‘Since one was forced to pay the largest sums in copper, one had to hold this money in masses or in stamped fragments which were tendered and received by weight. Copper in this state was aes grave. Metal money weighed. <Originally copper without stamp among the Romans; then stamping of external coins. Servius rex ovium boumque effigie primus aes signavit. (Pliny, Historia naturalis I. 18, c. 3.)> After the patricians had stockpiled a mass of this dark and ugly metal … they tried to free themselves from it, either by buying from the plebeians all the land which the latter would sell, or by lending at long term. This value had cost them nothing to acquire, and was a hindrance to them, so they were forced to rid themselves of it unsparingly. The competition of all who had the same desire of getting rid of it necessarily brought about, in a short time, a considerable reduction of the price of copper in Rome. At the beginning of the fourth century after the foundation of Rome, as one may see from the Lex Menenia (302 A.U.C.), the relation of copper to silver = 1:960 … This metal, so depreciated in Rome, at the same time one of the most sought-after articles of trade (since the Greeks made their works of art out of bronze etc.) … The precious metals came to be exchanged in Rome for copper, with enormous profits, and so lucrative a commerce stimulated new imports each day … Little by little the patricians exchanged their treasure for ingots of gold and of silver, aurum infectum, argentum infectum, in place of these piles of old copper, so troublesome to dispose of and so disagreeable to look at. After the defeat of Pyrrhus and particularly after the conquests in Asia … the aes grave had already quite vanished, and the requirements of circulation had necessitated the introduction of the Greek victoria, and the name victoriatus … of a weight of 1 1/2 scruples of silver, like the Attic coin, the drachma; in the seventh century A.U.C. the lex Clodia made Roman coin of it. It was usually exchanged for the pound of copper or the as of 12 ounces. Thus between silver and copper the relation of 192:1, i.e. a 5 times weaker relation than during the time of the greatest depreciation of copper due to export; still, copper cheaper in Rome than in Greece and Asia. This great revolution in the exchange value of the monetary substance, to the measure it proceeded, most cruelly worsened the lot of the unfortunate plebeians, who had obtained the depreciated copper as a loan, and, having spent or used it at the rate it then had, now owed, by the letter of their contracts, a five times greater sum than they had borrowed in reality. They had no means to buy their way out of servitude … Whoever had borrowed 3,000 as during the time when this sum = 300 oxen or 900 scruples of silver, could then obtain these only for 4,500 scruples of silver, when the as was represented by 1 1/2 scruples of this metal … If the plebeian gave back 1/5 of the copper he had obtained, then he had in reality paid off his debt, for 1/5 now the same value as 1 at the time the contract was made. Copper had risen 5 times in value compared to silver … The plebeians demanded a revision of the debt, a new appraisal of the sum due, and a change in the title of their original obligation … While the creditors did not demand the restitution of the capital, the payment of interest was itself unbearable, because the interest, originally stipulated as 12%, had, owing to the excessive rise in cost of the specie, become as onerous as if it had been fixed at 60% of the principal. By way of concession, the debtors obtained a law that deducted the accumulated interest from the capital … The senators resisted letting go of the means by which they held the people in the most abject dependence. The masters of nearly all landed property, armed with legal titles which authorized them to throw their debtors into irons and to sentence them to corporal punishment, suppressed the uprisings and persecuted the most mutinous. Every patrician’s home was a prison. Finally wars were got up which gave the debtor some payment, with a suspension of obligations, and which opened to the creditor new sources of wealth and of power. This the internal situation in Rome at the time of the defeat of Pyrrhus, the capture of Taranto and important victories over the Samnians, Lucanians and other South-Italian peoples etc. … 483 or 485 the first Roman silver coin, the libella; … was called libella because of small weight = libra of 12 ounces of copper.’ (Garnier, Germain, Histoire de la Monnaie etc., 2 vols., Paris, 1819. Vol. II. p. 14–24.)
<Assignats. ‘National Property. Assignat of 100 frs.’ legal tender … They are distinguished from all other notes in not even professing to represent any specified thing. The words ‘national property’ meant that their value could be obtained by buying confiscated properties with them at the continuous auctions of the latter. But no reason why this value called 100 fr. It depended on the comparative quality of the property so purchasable and the number of assignats issued.’ (78, 79, Nassau W. Senior, ‘Three Lectures on the Cost of Obtaining Money’ etc., London, 1830.)
‘The livre de compte, introduced by Charlemagne, almost never represented by a real equivalent coin, retained its name, as well as its divisions into sous and deniers, until the end of the eighteenth century, while real coins have varied infinitely in form, size, value, not only with every change of government, but even under the same reign. The value of the livre de compte nevertheless underwent enormous diminutions … but this always an act of force.’ (p. 76, Vol. I. Garnier, loc. cit.) All coins in antiquity originally weights. (loc. cit. p. 125.)
‘Money is in the first place the universally marketable commodity, or that in which every one deals for the purpose of procuring other commodities.’ (Bailey: ‘Money and its Vicissitudes’ etc., London, 1837, p. 1.) ‘It is the great medial commodity.’ (loc. cit. p. 2.) It is the general commodity of contracts, or that in which the majority of bargains about property, to be completed at a future time, are made. (p. 3.) Finally, it is the ‘measure of value … Now, as all articles are exchanged for money, the mutual values of A and B are necessarily shown by their values in money or their prices … as the comparative weight of substances are seen by their weight in relation to water, or their specific gravities.’ (p. 4.) ‘The first essential requisite is that money should be uniform in its physical qualities, so that equal quantities should be so far identical as to present no ground for preferring one to the other … For example, grain and cattle already for this reason not useful, because an equal quantity of grain and equal numbers of cattle are not always alike in the qualities for which they are preferred.’ (p. 5, 6.) ‘The steadiness of value is so desirable in money as medial commodity and a commodity of contract; it is quite unessential to it in its capacity of the measure of value.’ (p. 9.) ‘Money may continually vary in value, and yet be as good a measure of value as if it remained perfectly stationary. Suppose e.g., it is reduced in value and the reduction in value implies a reduction of value in relation to some one or more commodities, suppose it is reduced in value in relation to corn and labour. Before the reduction, a guinea would purchase three bushels of wheat, or six days’ labour; subsequently, it would purchase only two bushels of wheat or four days’ labour. In both cases, the relations of wheat and labour to money being given, their mutual relations can be inferred; in other words, we can ascertain that a bushel of wheat is worth two days’ labour. This, which is all that measuring value implies, is as readily done after the reduction as before. The excellence of any thing as a measure of value is altogether independent of its own variableness in value … One confuses invariableness of value with invariableness in fineness and weight … The command of quantity being that which constitutes value, a definite quantity of a substance of some uniform commodity must be used as a unit to measure value; and it is this definite quantity of a substance of uniform quality which must be invariable.’ (p. 11.) In all money contracts the issue at stake is the quantity of the gold and silver to be lent, not its value. (p. 103.) ‘If someone were to insist that it be a contract for a specified value, he is bound to show in relation to what commodity: thus, he would be maintaining that a pecuniary contract does not relate to a quantity of money as expressed on the face of it, but to a quantity of some commodity of which no mention is made.’ (p. 104.) ‘It is not necessary to restrict this to contracts where actual money is lent. It holds for all obligations for the future payment of money, whether for articles of any kind sold on credit, or for services, or as rent of land or houses; they are precisely in the same condition as pure loans of the medial commodity. If A sells a ton of iron to B for ten pounds, at twelve months’ credit, it is just the same in effect as lending the ten pounds for a year and the intents of both contracting parties will in the same way be affected by changes in currency.’ (p. 110, 111.)
The confusion of giving names to specified and unchangeable fractional parts of the money substance which is to serve as unit of measure – confusing the denomination of it with fixing the price of money – is also displayed, among others, by the high-flown romanticist of political economy, Mr Adam Müller. He says, among other things: ‘Every one can see how much depends on the true determination of the mint price, above all in a country like England, where the government, with generous liberality’ (i.e. at the country’s expense and the profit of the Bank of England bullion dealers) ‘mints without charge, collects no mintage etc., and thus, if it set the mint price significantly higher than the market price, if, instead of paying an ounce of gold at £3 17s. 10 1/2d., as now, it set £3 19s. as the mint price of one ounce of gold, then all gold would flow towards the mint, all the silver there would be changed into the cheap gold here, and thus be brought to the mint anew, and the currency system would become disordered.’ (p. 280, 281, Vol. II. Die Elemente der Staatskunst, Berlin, 1809.) Herr Müller does not know, then, that pence and shillings here are only names for fractional parts of a gold ounce. Because silver and copper coins – which, notabene, are not minted according to the proportion of silver and copper to gold, but are issued as markers for the equivalent parts of gold, and hence need be accepted in payment only in very small amounts – circulate under the names of shillings and pence, he imagines that an ounce of gold is divided into pieces of gold, of silver, and of copper (thus triple standard of value). A couple of steps later he suddenly remembers again that there is no double standard in England, hence even less a triple one. Herr Müller’s lack of clarity about the ‘common’ economic relations is the real foundation of his ‘higher’ conception.
From the general law that the total price of commodities in circulation determines the mass of the circulating medium at a given stage of the velocity of circulation, it follows that at a given stage of growth of the values thrown into circulation, the more precious metal – the metal of greater specific value, i.e. which contains more labour time in a smaller amount – takes the place of the less precious as the predominant medium of circulation; hence, copper, silver, gold, each one replacing the previous one as the predominant medium of circulation. The same aggregate sum of prices can be circulated e.g. with 14 times as few gold coins as silver coins. Copper or even iron coin as predominant medium of circulation supposes weak circulation. Just as the more powerful but more valuable means of transport and means of circulation takes the place of the less valuable to the degree that the mass of circulating commodities, and circulation generally, grows.
On the other side it is clear that the small retail traffic of everyday life requires exchange on a very diminutive scale – the smaller, the poorer the country and the weaker is circulation as such. It is in this retail traffic, where very small amounts of commodities on the one side, hence also very small values circulate, that money appears in the most proper sense of the word merely as vanishing medium of circulation, and does not congeal as realized price. Consequently, a subsidiary medium of circulation enters for this traffic, which is merely the symbol of the fractional parts of the predominant media of circulation. These are silver and copper markers, which are therefore not minted in the relation of the value of their substance to the value of e.g. gold. Here money appears still only as symbol, even if itself still in a relatively valuable substance. Gold e.g. would have to be divided into excessively small fractions to serve as equivalent of the division of commodities required by this retail traffic.
This is why these subsidiary media of circulation need be accepted in payment, by law, in only very small amounts, so that they can never solidify as realization of price. For example, in England, copper in the amount of 6d., silver in the amount of 20s. The more developed circulation is generally, the greater the mass of prices of the commodities entering into circulation, the more does their wholesale exchange separate off from their retail exchange, and they require different sorts of coin for their circulation. The velocity of the circulation of these markers is inversely related to the magnitude of their value.
‘In the early stage of society, when nations are poor, and their payments trifling, copper has frequently been known to answer all the purposes of currency and it is coined into pieces of very low denominations in order to facilitate the inconsiderable exchanges which then take place. So in the early age of the Roman Republic and of Scotland.’ (p. 3.) (David Buchanan, ‘Observations on the Subjects, treated of in Dr Smith’s Inquiry’ etc., Edinburgh, 1814.) ‘The general wealth of a country is very accurately measured by the nature of its payments and the state of its coin; and the decided prevalence of a coarse metal in its currency, joined to the use of coins of very low denomination, marks a rude state of society.’ (p. 4.) Later ‘the business of currency becomes divided into two distinct departments; the duty of effecting the main payments … for the more precious metals; the inferior metals by contrast retained for some trivial exchanges, and thus purely subservient to the main currency. Between the first introduction of a precious metal into the currency of a country, and its exclusive use in the main payments, a wide interval; and the payments of the retail trade must in the interval have become so considerable, owing to the increase of wealth, that at least in part they could be conveniently managed by the new and more valuable coin; since no coin can be used for the main payments’ (this is false, as the notes show) ‘which is not suited, at the same time, to the transactions of the retail trade, since every trade ultimately obtains from the consumer … the return of its capital … Silver has maintained itself everywhere on the continent in the main payments … In Britain the quantity of silver in circulation does not exceed what is necessary for the smaller payments … in fact few payments to the amount of 20s. made in silver … Before the reign of William III silver was brought in large bags to the treasury in payment of the national revenue. At this period the great change took place … The exclusive introduction of gold in the main payments of England was a clear proof that the returns of the retail trade at this time were made mainly in gold; this possible without a single payment ever exceeding or even equalling any of the gold coins; because, in the general abundance of gold, and scarcity of silver, gold coins naturally offered for small sums and a balance of silver demanded in return; so that gold, by thus assisting in the retail trade and in economizing the use of silver, even for the small payments, would prevent its accumulation by the retail trader … At the same time, as in England gold was substituted for silver’ (1695) ‘for the main payments, silver for copper in Sweden … Clear, that the coin used for the larger payments can only pass current at its intrinsic worth … But intrinsic worth not necessary for a subsidiary currency … In Rome, so long as copper the prevailing coin, current only for its intrinsic value … 5 years before the beginning of the first Punic war, silver introduced, little by little displaced copper in the main payments … 62 years after the silver, gold, but it never seems to have excluded silver from the main payments … In India, copper not a subsidiary currency; passes therefore for its intrinsic worth. The rupee, a silver coin of 2s. 3d., is the money of account; in relation to which the mohour, a gold coin, and the pice, a copper coin, are allowed to find their value in the market; the number of pice currently exchanged for a rupee constantly varies with the weight and value of the coin, while here 24 halfpence always = 1s. without reference to their weight. In India the retail dealer must still take considerable quantities of copper for his goods, and he cannot afford to take it therefore but for its intrinsic value … In the currencies of Europe, copper passes for whatever value is fixed upon it, without examination of its weight and fineness.’ (p. 4–18.) In England ‘an excess of copper spent 1798 by private traders; and although copper only legal payment for 6d., found its way (the surplus) to the retail traders; they sought to put it in circulation again; but ultimately returned to them. When this currency was stopped, copper accumulated with the retail traders in sums of £20, £30, even £50, which they finally had to sell at their intrinsic value.’ (p. 31.)
In the subsidiary currency, the medium of circulation takes on a particular form as such, as a merely vanishing medium, alongside the medium of circulation which is at the same time equivalent, which realizes prices, and accumulates as independent value. Thus, here, pure symbol. Thus it may be issued only in the quantity absolutely required for the small retail trade, so that it can never thereby accumulate. The quantity must be determined by the mass of prices which it circulates, divided by its velocity. Because the mass of the circulating medium, of a certain value, is determined by prices, it follows automatically that if a greater quantity than required by circulation itself were artificially thrown into it and could not run off (which is not the case here, because, as medium of circulation, it is above its intrinsic worth), then it would be depreciated; not because the quantity determines prices, but because prices determine the quantity, and hence only a specific amount can remain in circulation at a specific value. Thus, if there are no openings by which circulation can throw out the superfluous quantity, if the circulating medium cannot change from that form into the form of value for itself, then the value of the medium of circulation must fall. But this can only take place, apart from artificial hindrances, prohibition of melting-down, of export etc., if the circulating medium is merely a symbol, and does not itself possess a real value corresponding to its nominal value, hence cannot make the transition from the form of circulating medium into that of the commodity in general, and shed its stamp; if it is imprisoned in its existence as coin. It follows on the other side that the symbol, the money marker, can circulate at the nominal value of the gold it represents – without possessing any value whatever of its own – in so far as it represents the medium of circulation only in that quantity in which it would itself circulate. But then [it becomes] at the same time a condition either that it is itself then on hand only in such a small quantity that it circulates only in the subsidiary form, hence does not cease for an instant to be a medium of circulation (where it constantly serves partly in the exchange with small amounts of commodities, partly merely to make exchange for the real medium of circulation), hence can never accumulate; or it must possess no value whatever, so that its nominal value can never be compared with its intrinsic value. In the latter case it is posited as mere symbol, which, by means of itself, points to value as something existing outside itself. In the other case it never comes to a comparison between its intrinsic value and its nominal value.
Which is why counterfeits of money show an effect immediately; while total destruction of its value does not damage it. It might otherwise appear paradoxical that money can be replaced by worthless paper; but that the slightest alloying of its metallic content depreciates it.
The double function of money in circulation contradicts itself as such; to serve as mere medium of circulation, where it is a vanishing mediation; and at the same time as realization of prices, in which form it accumulates and turns into its third character as money. As medium of circulation it is worn out; thus does not contain the metal content which makes it into objectified labour in a fixed amount. Its correspondence to its value hence always more or less illusory. One example to be presented. It is important to bring in the determination of quantity already at this point in the chapter on money, but deduced in just the opposite way to the usual doctrine. Money can be replaced because its quantity is determined by the prices it circulates. In so far as it, itself, has value – as in the subsidiary medium of circulation – its quantity must be so determined that it can never accumulate as an equivalent, and in fact always figures as an auxiliary cog of the medium of circulation proper. In so far, however, as it is to replace the latter, it must have no value whatsoever, i.e. its value must exist apart from itself. The variations in circulation determined by the amount and number of transactions. (Economist.) Circulation may rise, prices remaining equal, by increase in the amount of commodities; if the amount remains constant, by increase of their prices; by both together.
With the proposition that prices regulate the quantity of currency and not the quantity of currency prices, or in other words that trade regulates currency (the quantity of the medium of circulation), and currency does not regulate trade, [it] is, of course, as our deduction has shown, supposed that price is only value translated into another language. Value, and value determined by labour time, is the presupposition. It is clear, therefore, that this law is not equally applicable to the fluctuations of prices in all epochs; e.g. in antiquity, e.g. in Rome, where the circulating medium does not itself arise from circulation, from exchange, but from pillage, plunder etc.
‘No country may consequently have more than one standard; more than one standard for the measure of value; for this standard must be uniform and unchanging. No article has a uniform and unchanging value relative to others: it only has such with itself. A piece of gold is constantly of the same value as the other, of exactly the same fineness, the same weight and in the same place; but this cannot be said of gold and any other article, e.g. silver.’ (Econ. Vol. I p. 771.) ‘Pound is nothing but a denomination in account, which has reference to a given and fixed quantity of gold of standard quality.’ (loc. cit.) ‘To speak of making one ounce of gold worth £5 instead of £3 17s. 10 1/2d. is to say only that it ought henceforth to be minted in 5 sovereigns instead of in 3 420/480 sovereigns. We would not thereby alter the value of the gold, but only the weight and hence the value of the pound or sovereign. An ounce of gold would have the same value relative to wheat and all other commodities as before, but since a pound, although bearing the same name as before, would represent a smaller part of an ounce of gold, it would represent a correspondingly smaller quantity of wheat and other commodities. Just as if we had said that a quarter of wheat should no longer be divided into 8, but rather into 12 bushels; we could not thereby change the value of wheat, but merely diminish the quantity contained in a bushel, and hence the latter’s value.’ (p. 772 loc. cit.) ‘Whatever temporary or permanent change might take place, its price is always expressed in the same amount of money; an ounce of gold will remain £3 17s. 10 1/2d. of our money. The change in its value indicated by the greater or lesser quantity of the commodities it can purchase.’ (loc. cit. p. 890.)
The ideal bar to be compared e.g. with the ideal milrea in Buenos Aires (likewise the pound in England during the depreciation of notes etc.). What is fixed here is the name milrea; what fluctuates is the quantity of gold or silver it expresses. In Buenos Aires the currency is inconvertible paper money (paper dollars); these dollars originally = 4s. 6d. each; now approximately 3 3/4d. and has been as low as 1 1/2d. An ell of cloth formerly worth 2 dollars, now nominally 28 dollars in consequence of the depreciated paper.
‘In Scotland, the medium of exchange, not to be confused with the standard of value, in the amount of £1 and upwards may be said to be exclusively paper, and gold does not circulate at all; yet gold is as much the standard of value as if nothing else circulated, because the paper is convertible into the same fixed quantity of that metal; and it circulates only on the faith of being so convertible.’ (p. 1275.)
‘Guineas are hoarded in times of distrust.’ (Thornton, p. 48.) The hoarding principle, in which money functions as independent value, is, apart from the striking forms in which it appears, necessary as one moment of exchange resting on money circulation; since everyone, as A. Smith says, needs, beside his own commodity, the medial quantity, a certain proportion of the ‘general commodity’. ‘The man in trade has property in trade.’ (loc. cit. p. 21.)>
Capital, not labour, determines the value of the commodity. Torrens[edit source]
‘Equal capitals or in other words equal quantities of accumulated labour will often put in motion different quantities of immediate labour, but that does not alter the matter.’ (p. 31. Torrens, ‘An Essay on the Production of Wealth’, London, 1821.) ‘In the early period of society … it is the total quantity of labour, accumulated and immediate, expended on production … which determines the relative value of commodities. But as soon as stock is accumulated and a class of capitalists distinguishes itself from another class, of workers, when the person who undertakes any branch of industry does not perform his own work, but advances subsistence and materials to others, then it is the amount of capital, or the quantity of accumulated labour expended in production, which determines the exchangeable power of commodities.’ (p. 33, 34.) ‘So long as two capitals are equal … their products are of equal value, however we may vary the quantity of immediate labour which they put in motion, or which their products may require. If they are unequal, … their products are of unequal value, though the total quantity of labour expended upon each should be precisely equal.’ (p. 39.) Thus ‘after this separation of capitalists and labourers, it is the amount of capital, the quantity of accumulated labour, and not, as before this separation, the sum of accumulated and immediate labour, expended on production, which determines the exchange value.’ (loc. cit.) Mr Torrens’s confusion correct compared to the abstract way of the Ricardians. In itself, fundamentally wrong. Firstly, the determination of value by pure labour time takes place only on the foundation of the production of capital, hence the separation of the two classes. The positing of prices as equal, in consequence of the same average rate of profit – and even this with a grain of salt – has nothing to do with the determination of value, rather supposes the latter. This point important so as to show the Ricardians’ confusion.
The minimum of wages[edit source]
The rate of surplus value as profit is determined (1) by the magnitude of the surplus value itself; (2) by the relation of living labour to accumulated (the ratio of the capital expended as wages to the capital employed as such). Both the causes which determine (1) and (2), to be examined separately. The law of rent, e.g., belongs to (1). For the time being, necessary labour supposed as such; i.e. that the worker always obtains only the minimum of wages. This supposition is necessary, of course, so as to establish the laws of profit in so far as they are not determined by the rise and fall of wages or by the influence of landed property. All of these fixed suppositions themselves become fluid in the further course of development. But only by holding them fast at the beginning is their development possible without confounding everything. Besides it is practically sure that, for instance, however the standard of necessary labour may differ at various epochs and in various countries, or how much, in consequence of the demand and supply of labour, its amount and ratio may change, at any given epoch the standard is to be considered and acted upon as a fixed one by capital. To consider those changes themselves belongs altogether to the chapter treating of wage labour.
‘Exchangeable value is determined not by the absolute, but by the relative cost of production. If the cost of producing gold remained the same, while the cost of producing all other things doubled, then would gold have a less power of purchasing all other things than before; and its exchangeable value would fall one half; and this diminution in its exchange value precisely the same in effect as if the cost of producing all other things remained unaltered, while that of producing gold had been reduced one half.’ (p. 56, 57. Torrens, loc. cit.) This important for prices. For determination of value, absolutely not; mere tautology. The value of a commodity is determined by the amount of labour it contains; this means that it exchanges for the same quantity of labour in every other form of use value. It is therefore clear that, if the labour time necessary for the production of object A doubles, then now only 1/2 of it = its earlier equivalent, B. Since equivalence is determined by the equality of labour time or of the amount of labour, the difference of value is of course determined by the inequality of labour time, or, labour time is the measure of value.
1826 cotton machinery and workmen. Hodgskin[edit source]
‘In 1826, the various machinery used in manufacturing cotton employed 1 man to perform the work of 150. Now suppose that only 280,000 men are employed in it at present; then, half a century earlier, 42,000,000 would have had to be in it.’ (p. 72.) (Hodgskin.) ‘The relative value of the precious metals to other commodities determines how much of them must be given for other things; and the number of sales to be made, within a given period, determines, as far as money is the instrument for effecting sales, the quantity of money required.’ (loc. cit. p. 188.)
‘Abundant reason to believe that the practice of coining originated with individuals and carried on by them before it was seized on and monopolized by governments. Such long the case in Russia.’ (See Storch.) (loc. cit. p. 195 note.)
Hodgskin is of a different opinion from the romantic Müller: ‘The mint stamps only what individuals bring, most injudiciously charging them nothing for the labour of coining; and taxing the nation for the benefit of those who deal in money.’ (p. 194. Popular Polit. Econ. etc., London, 1827.)
How the machine creates raw material. Linen industry. Tow yarn. Economist[edit source]
After all these digressions about money – and we will occasionally have to take them up again, before ending this chapter – we return to the point of departure. As example of how, in manufacturing industry also, the improvement of machinery and the consequent increase of the force of production creates (relatively) raw material, instead of demanding an absolute increase of it: ‘The factory system in the linen trade is very recent. Before 1828 the great mass of linen yarn in Ireland and England spun by hand. About this time the flax spinning machine so much improved, especially through the persistence of Mr Peter Fairbairn in Leeds, that it came into very general use. From this time on, spinning mills erected very intensively at Belfast and other parts of Northern Ireland, as in different parts of Yorkshire, Lancashire and Scotland, for spinning fine yarns, and in a few years, spinning by hand given up … Fine tow yarn now manufactured from what, 20 years earlier, was thrown away as waste.’ (Economist, 31 Aug. 1850.)
Machinery and surplus labour[edit source]
With all application of machinery – let us initially look at the case such as it arises directly, that a capitalist puts a part of his capital into machinery rather than into immediate labour – a part of the capital is taken away from its variable and self-multiplying portion, i.e. that which exchanges for living labour, so as to add it to the constant part, whose value is merely reproduced or maintained in the product. But the purpose of this is to make the remaining portion more productive. First case: the value of the machinery equal to the value of the labour capacity it replaces. In this case the newly produced value would be diminished, not increased, if the surplus labour time of the remaining part of labour capacity did not grow at the same rate as its amount is diminished. If 50 out of 100 workers are let go and replaced by machinery, then the remaining 50 have to accomplish as much surplus labour time as the 100 did before. If the 100 worked 200 hours’ surplus labour time every day out of 1,200 hours’ work, then the 50 must now create the same quantity of surplus labour time; hence 4 hours per day, if the former only 2. In that case the surplus labour time remains 50 × 4 = 200, the same as before, 100 × 2 = 200, although the absolute labour time has decreased. In this case, the situation for capital is the same; it is concerned only with the production of surplus labour. In this case, the raw material worked up would remain the same; hence the outlay for it; that for instrument of labour would have increased; that for labour decreased. The value of the total product would be the same, because = to the same sum of objectified and surplus labour time. Such a case would be altogether no incentive for capital. What it would gain in surplus labour time on one side, it would lose on the part of capital which would enter production as objectified labour, i.e. as invariable value. It is also to be kept in mind that the machinery takes the place of more imperfect instruments of production, which possessed a specific value; i.e. had been exchanged for a definite sum of money. The part of the capital employed at a developed stage of the productive force is deducted from the cost of the machinery for the capitalist who sets up a new business, although not for the capitalist who is already in business.
Thus e.g. if, as soon as the machine is introduced for £1,200 (50 labour capacities), an earlier expenditure of, say, 240 pounds for instruments of production ceases to be necessary, then the additional expenditure of capital amounts to only £960; the price of 40 workers a year. In this case then, if the remaining 50 workers together produce exactly as much surplus labour as did the 100 previously, then now 200 hours of surplus labour are produced with a capital of £2,160; before, with a capital of £2,400. The number of workers has decreased by half, absolute surplus labour has remained the same, 200 hours of labour as before; the capital invested in material of labour is also the same; but the relation of surplus labour to the invariable part of the capital has increased absolutely. Altogether £9,240. The relationship is this:
Since the capital laid out in raw material has remained the same, and that laid out in machinery increased, but not in the same relation as that laid out in labour diminished; it follows that the total outlay of capital diminished; surplus labour remained the same, hence grown relative to the capital, not only at the rate at which surplus labour time must grow to remain the same with half as many workers, but by more than that; namely by the rate at which the [outlay] for the old means of production is deducted from the costs of the new.
The introduction of machinery or a general increase in the force of production has objectified labour as its substratum, hence costs something; therefore, if a part of the capital previously laid out for labour is laid out as a component part of the part of the capital which enters into the production process as constant value, then the introduction of machinery can take place only if the rate of surplus labour time does not merely remain the same, i.e. grow relative to the living labour employed, but if it grows at a greater rate than the relation between the value of the machinery and the value of the dismissed workers. This can happen either because the entire expenditure incurred for the previous instrument of production must be deducted. In this case the total sum of the capital laid out diminishes, and, although the relation of the total sum of employed labour relative to the constant part of the capital has diminished, the surplus labour time has remained the same, and has hence grown not only relative to the capital laid out for labour, for necessary labour time, but also relative to the total capital, to the total value of the capital, because the latter has diminished. Or, the value for machinery may be as great as that previously laid out for living labour, which has now become superfluous; but the rate of surplus labour of the remaining capital has increased so that the 50 workers supply not only as much surplus labour as the 100 did before, but a greater amount. Say, e.g. instead of 4 hours each, 4 1/4 hours. But in this case a greater part of the capital is required for raw materials etc., in short, a greater total capital is required. If a capitalist who previously employed 100 workers for £2,400 annually, lets 50 go, and puts a machine costing £1,200 in their place, then this machine – although it costs him as much as 50 workers did before – is the product of fewer workers, because he pays the capitalist from whom he buys the machine not only the necessary labour, but also the surplus labour. Or, if he had his own workers build the machine, he would have used a part of them for necessary labour only. In the case of machinery, thus, increase of surplus labour with absolute decrease of necessary labour time. It may be accompanied both by absolute diminution of the employed capital, and by its growth.
- See above, pp. 333–53.
- The sentence preceding this one was inserted by Marx, above the line, in English; thus the apparent virtual repetition. (The sentence following also appears in English in the original.)
- *The same law expresses itself simply – but this expression to be looked at later in the theory of population – as the relation of the growth of population – namely its labouring part – to the capital already presupposed.
- Adam Smith, Recherches sur la nature et les causes de la richesse des nations, Vol. I, p. 193.
- Ricardo, On the Principles of Political Economy, pp. 338–9.
- Ramsay, An Essay, pp. 179–80.
- Marx made extracts from these works on organic chemistry: J. von Liebig, Die organische Chemie, 4th edn, Brunswick, 1842; J. F. W. Johnston, Lectures on Agricultural Chemistry and Geology, 2nd edn, London, 1847; and J. F. W. Johnston, Catechism of Agricultural Chemistry and Geology, Edinburgh, 1849.
- *Some things from Notebook III about the antithesis of Carey and Bastiat can be included at this point. 
- In fact, see below pp. 889–90.
- Sismondi, Nouveaux Principes, Vol. I, p. 90.
- op. cit., Vol. I, p. 82.
- op. cit., Vol. I, p. 89.
- Torrens, An Essay on the Production of Wealth, p. 52.
- s/(c + v) < s/v is the correct expression; but the manuscript has: (c + v)/s < v/s, struck out but not replaced by anything else. [MELI note]
- *It is easy to form the notion that machinery as such posits value, because it acts as a productive power of labour. But if machinery required no labour, then it would be able to increase the use value; but the exchange value which it would create would never be greater than its own costs of production, its own value, the labour objectified in it. It creates value not because it replaces labour; rather, only in so far as it is a means to increase surplus labour, and only the latter itself is both the measure and the substance of the surplus value posited with the aid of the machine; hence of labour generally.
- Robert Owen, Six Lectures Delivered in Manchester, Manchester, 1837, p. 58; see above, pp. 712–14.
- Benjamin Thompson (1753–1814), American adventurer, who entered the service of George III, was created Count of Rumford in 1784, issued Essays, Political, Economical, and Philosophical, in London, 1796–1802, in which he recommended various inferior forms of food for labourers; discussed by Marx in Capital, Vol I, Moscow 1954, p. 601.
- The MELI edition gives aufgelöst (dissolved) rather than ausgelöst (triggered, released). This is in all probability a misreading of the handwritten manuscript. (The f and one form of the s are virtually indistinguishable in the old-style German script Marx used at that time.)
- Wakefield’s note on p. 64 of Vol. I of his edition of Adam Smith (London, 1835–9).
- Steuart, An Inquiry into the Principles of Political Economy, Vol. I, p. 399.
- ibid., pp. 403–5.
- Geminiano Montanari, Della moneta, trattato mercantile, in Custodi (ed.), Scrittori Classici Italiani di Economia Politica, Parte Antica, Tomo III, Milan, 1804.
- Tuckett, A History, Vol. I, p. 157 n.
- ibid., p. 204.
- Eden, The State of the Poor, Vol. I., pp. 119–20.
- Marx collected and annotated an immense amount of material on the various theories of the exchange rate: he included this in a draft of 1854–5 entitled ‘Money System, Credit System, and Crises’. This manuscript remains unpublished.
- The Economist, Vol. XVI, No. 759, 13 March 1858, p. 290, article entitled ‘Will the Low Rate of Interest Last?’.
- David Urquhart, Familiar Words as Affecting England and the English London, 1856, p. 112.
- See above, p. 782, quotation from Steuart.
- Marx’s English in the above sentence has been altered to conform to modern usage. His use, in these and other passages, of terms which today have an offensive ring (e.g. ‘semi-civilized’, ‘uncivilized’, ‘savage’, ‘semi-savage’, where what is meant is simply ‘pre-capitalist’) reflects the general blindness of European scholarship towards non-European civilizations, and indicates the relative weakness of anti-colonial political movements at the time. This did not prevent Marx from being an enemy of colonialism and of great-power chauvinism in every form.
- The wars of the Revolutionary and Napoleonic periods, 1793–1815.
- *The mint price can also be raised above the bullion price within a country by the mintage.
- Cobbett, Paper against Gold, London, 1828, p. 2.
- Literally, ‘toads’. A French term of abuse.
- Garnier, Histoire de la monnaie, Vol. II, p. 11.
- The Economist, Vol. I, No. 37, 11 May 1844, p. 771, article entitled ‘The First Step in the Currency Question – Sir Robert Peel’.
- The Economist, Vol. I, No. 42, 15 June 1844, p. 890, article entitled ‘The Action of Money on Prices’.
- The Economist, Vol. I, No. 58, 5 October 1844, p. 1,275.
- H. Thornton, An Enquiry into the Nature and Effects of the Paper Credit of Great Britain, London, 1802, p. 48.