III. Adam Smith

[1. Smith’s Two Different Definitions of Value; the Determination of Value by the Quantity of Labour Expended Which Is Contained in a Commodity, and Its Determination by the Quantity of Living Labour Which Can Be Bought in Exchange for This Commodity][edit source]

Adam Smith, like all economists worth speaking of, takes over from the Physiocrats the conception of the average wage, which he calls the natural price of wages.

“A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation.” ([Adam Smith, Wealth of Nations, Oxford University Press, London, 1928. Vol. I, p. 75, Garnier] t. 1, l. I, ch. VIII, p. 136.^[1])

Adam Smith expressly states that the development of the productive powers of labour does not benefit the labourer himself. He says (1. I, ch. VIII [An Inquiry into the Nature and Causes of the Wealth of Nations] edit. McCulloch, London, 1828):

“The produce of labour constitutes the natural recompense or wages of labour. In that Original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him. Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper.” ‹At any rate all those things requiring a smaller quantity of labour for their reproduction, but they “would” not only have become cheaper; they have, in point of fact, become cheaper.› “They would have been produced by a smaller quantity of labour; and as the commodities produced by equal quantities of 1abour would naturally in this state of things be exchanged for one another, they would have been purchased likewise with ||244| the produce of a smaller quantity […] But this original state of things, in which the labourer enjoyed the whole produce of his own labour, could not last beyond the first introduction of the appropriation of land and the accumulation of stock. It was at an end, therefore, long before the most considerable improvements were made in the productive powers of labour, and it would be to no purpose to trace further what might have been its effects upon the recompense or wages of labour” (Vol. I, pp. 107–09).

Here Adam Smith very acutely notes that the really great development of the productive power of labour starts only from the moment when it is transformed into wage-labour, and the conditions of labour confront it on the one hand as landed property and on the other as capital. The development of the productive power of labour thus begins only under conditions in which the labourer himself can no longer appropriate its result. It is therefore quite useless to investigate how this growth of productive powers might have influenced or would influence “wages”, taken here as equal to the product of labour, on the hypothesis that the product of labour (or the value of this product) belonged to the labourer himself.

Adam Smith is very copiously infected with the conceptions of the Physiocrats, and often whole strata run through his work which belong to the Physiocrats and are in complete contradiction with the views specifically advanced by him. This is so, for example, in the theory of rent, etc. For our present purpose we can completely disregard these passages in his writings, which are not characteristic of himself, but in which he is a mere Physiocrat.

In the first part of this work, when dealing with the analysis of the commodity, I have already pointed out Adam Smith’s inconsistency in his treatment of how exchange-value is determined. In particular, [I have shown] how he sometimes confuses, and at other times substitutes, the determination of the value of commodities by the quantity of labour required for their production, with its determination by the quantity of living labour with which commodities can be bought, or, what is the same thing, the quantity of commodities with which a definite quantity of living labour can be bought. Here he makes the exchange-value of labour the measure for the value of commodities. In fact, he makes wages the measure; for wages are equal to the quantity of commodities bought with a definite quantity of living labour, or to the quantity of labour that can be bought by a definite quantity of commodities. The value of labour, or rather of labour-power, changes, like that of any other commodity, and is in no way specifically different from the value of other commodities. Here value is made the measuring rod and the basis for the explanation of value—so we have a vicious circle.

From the exposition that follows, however, it will be seen that this vacillation and this jumbling up of completely heterogeneous determinations of value do not affect Smith’s investigations into the nature and origin of surplus-value, because in fact, without even being aware of it, whenever he examines this question, he keeps firmly to the correct determination of the exchange-value of commodities —that is, its determination by the quantity of labour or the labour-time expended on them. |244||

||VII-283a| <Many examples can be given to show how often in the course of his work, when he is explaining actual facts, Smith treats the quantity of labour contained in the product as value and determining value. Some of these are quoted by Ricardo. His whole doctrine of the influence of the division of labour and improved machinery on the price of commodities is based on it. Here one passage will be enough to cite. In ch. XI, l. I Adam Smith speaks of the cheapening of many manufactured goods in his time, as compared with earlier centuries, and he concludes with the words:

“It cost a greater quantity of labour ||283b| to bring the goods to market. When they were brought thither, therefore, they must have purchased, or exchanged for the price, of a greater quantity.” ([Wealth of Nations, O.U.P. edition, Vol. I, p. 284], [Garnier] t. II, p. 156).//|VII-283b||

||VI-245| Secondly, however, this contradiction in Adam Smith and his passing from one kind of explanation to another is based upon something deeper, which Ricardo, in exposing this contradiction, overlooked or did not rightly appreciate, and therefore also did not solve. Let us assume that all workers are producers of commodities, and not only produce their commodities but also sell them. The value of these commodities is determined by the necessary labour-time contained in them. If therefore the commodities are sold at their value, the labourer buys with one commodity, which is the product of twelve hours’ labour-time, another twelve hours’ labour-time in the form of another commodity, that is to say, twelve hours’ labour-time which is embodied in another use-value. The value of his labour is therefore equal to the value of his commodity; that is, it is equal to the product of twelve hours’ labour-time. The selling and buying again, in a word, the whole process of exchange, the metamorphosis of the commodity, alters nothing in this. It alters only the form of the use-value in which this twelve hours’ labour-time appears. The value of labour is therefore equal to the value of the product of labour. In the first place, equal quantities of materialised labour are exchanged in the commodities—in so far as they are exchanged at their value. Secondly, however, a certain quantity of living labour is exchanged for an equal quantity of materialised labour, because, firstly, the living labour is materialised in a product, a commodity, which belongs to the labourer, and secondly, this commodity is in turn exchanged for another commodity which contains an equally large quantity of labour. In fact, therefore, a certain quantity of living labour is exchanged for an equal amount of materialised labour. Thus it is not only commodity exchanging for commodity in the proportion in which they represent an equal quantity of materialised labour-time, but a quantity of living labour exchanging for a commodity which represents the same quantity of labour materialised.

On this assumption the value of labour (the quantity of commodities which can he bought with a given quantity of labour, or the quantity of labour which can be bought with a given quantity [of commodities]) could serve as the measure of the value of a commodity just as well as the quantity of labour contained in it, since the value of labour always represents the same quantity of materialised labour as the living labour requires for the production of this commodity; in other words, a definite quantity of living labour-time would always command a quantity of commodities which represents an equal amount of materialised labour-time. But in all modes of production—and particularly in the capitalist mode of production —in which the material conditions of labour belong to one or several classes, while on the other hand nothing but labour-power belongs to another class, the working class, what takes place is the opposite of this. The product or the value of the product of labour does not belong to the labourer. A definite quantity of living labour does not command the same quantity of materialised labour, or a definite quantity of labour materialised in a commodity commands a greater quantity of living labour than is contained in the commodity itself.

But as Adam Smith quite correctly takes as his starting-point the commodity and the exchange of commodities, and thus the producers initially confront each other only as possessors of commodities, sellers of commodities and buyers of commodities, he therefore discovers (so it seems to him) that in the exchange between capital and wage-labour, ||246| materialised labour and living labour, the general law at once ceases to apply, and commodities (for labour too is a commodity in so far as it is bought and sold) do not exchange in proportion to the quantities of labour which they represent. Hence he concludes that labour-time is no longer the immanent measure which regulates the exchange-value of commodities, from the moment when the conditions of labour confront the wage-labourer in the form of landed property and capital. He should on the contrary, as Ricardo rightly points out, have drawn the opposite conclusion, that the expressions “quantity of labour” and “value of labour” are now no longer identical, and that therefore the relative value of commodities, although determined by the labour-time contained in them, is not determined by the value of labour, since that was only correct so long as the latter expression remained identical with the former. Later on, when we deal with Malthus, we can show how wrong and absurd it would be, even when the labourer appropriated his own product, i.e., the value of his own product, to make this value or the value of labour the measure of value, in the same sense in which labour-time or labour itself is the measure of value and the value-creating element. For even in that case the labour which can be bought with a commodity cannot serve as a measure in the same sense as the labour contained in it. One would be merely an index to the other.

In any case Adam Smith feels the difficulty of deducing the exchange between capital and labour from the law that determines the exchange of commodities, since the former apparently rests on quite opposite and contradictory principles. And indeed the contradiction could not be solved so long as capital was set directly against labour instead of against labour-power. Adam Smith was well aware that the labour-time expended on the reproduction and maintenance of labour-power is very different from the labour which it [i.e., labour-power] itself can perform. Thus he himself quotes from Cantillon’s Essai sur la nature du commerce:

“The labour of an able-bodied slave, the same author adds, is computed to be worth double his maintenance; and that of the meanest labourer, he thinks, cannot be worth less than that of an able-bodied slave” ([Wealth of Nations, O.U.P. edition, Vol. I, p. 75], [Garnier] t. I, l. I, ch. VIII, p. 137).

On the other hand it is strange that Adam Smith did not grasp how little the objection he raises has to do with the law that determines the exchange of commodities for each other. That commodities A and B exchange in proportion to the labour-time contained in them is in no way upset by the proportions in which the producers A or B divide the products A and B, or rather their value, between themselves. If a part of A goes to the landowner, another to the capitalist, and a third part to the labourer, no matter what the share of each may be, this does not alter the fact that A itself exchanges with B according to its value. The relation between the labour-time contained in commodities A and B is in no way affected by how the labour-time contained in A and B is appropriated by various persons. “When the exchange of broadcloth for linen has been accomplished, the producers of broadcloth will share in the linen in a proportion equal to that in which they previously shared in the broadcloth” ([Karl Marx], Misére de la Philosophie, p. 29). It is this, too, that later the Ricardians rightly maintained against ||247| Adam Smith. Thus the Malthusian John Cazenove says:

“… Interchange and Distribution distinct from each other. …^[2] The circumstances which affect the one do not always affect the other. For instance, a reduction in the cost of producing any particular commodity will alter its relation to all others; but it will not necessarily alter its own distribution, nor will it in any way affect theirs. Again, a general reduction in the value of commodities affecting them all alike will not alter their relation to each other. It might or might not affect their distribution” (John Cazenove: Preface to his edition of Malthus’s Definitions in Political Economy, London, 1853, [p. VI]).

But since the “distribution” of the value of the product between capitalist and worker is itself based on an exchange between commodities —commodities and labour-power —Adam Smith is justifiably startled. The fact that he had also made the value of labour, or the extent to which a commodity (or money) can purchase labour, the measure of value, has a disturbing effect on Smith’s argument when he comes to the theory of prices, shows the influence of competition on the rate of profit, etc.; it deprives his work of all unity, and even excludes a number of essential questions from his inquiry. As we shall soon see, however, it did not affect his exposition of surplus-value in general, because here he keeps consistently to the correct determination of value by the labour-time expended in different commodities.

So now to his treatment of the question.

But first we must mention one other circumstance. Adam Smith mixes up different things. First he states in Book I, Ch. V:

“Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences and amusements of human life. But after the division of labour bas once thoroughly taken place, it is but a very small part of these with which a man’s own labour can supply him. The far greater part of them he must derive from the labour of other people, and he must he rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase. The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it, himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command. Labour, therefore, is the real measure of the exchangeable value of all commodities” ([Wealth of Nations, O.U.P. edition, Vol. I, pp. 32–33], [Garnier] t. I, pp. 59 to 60).

Further:“They” (the goods) “contain the value of a certain quantity of labour, which we exchange ||248| for what is supposed at the time to contain the value of an equal quantity… It was not by gold or by silver, but by labour, that all the wealth of the world was originally purchased; and its value, to those who possess it, and who want to exchange it for some new productions, is precisely equal to the quantity of labour which it can enable them to purchase or command” ([ibid., p. 33], [Garnier] l. I, ch. V, pp. 60–61).

Finally: “Wealth, as Mr. Hobbes says, is power. But the person who either acquires, or succeeds to a great fortune, does not necessarily acquire or succeed to any political power, either civil or military… The power which that possession immediately and directly conveys to him, is the power of purchasing a certain command over all the labour, or over all the produce of labour which is then in the market” ([Ibid.], [Garnier] i.e., p. 61).

It can be seen that in all these passages Adam Smith confuses the labour of other people with the produce of this labour. The exchange-value of the commodity which anyone possesses consists —after the division of labour—in the commodities belonging to someone else which he can buy, i.e., in the quantity of someone else’s labour which is contained in them, the quantity of someone else’s materialised labour. And this quantity of the labour of others is equal to the quantity of labour that is contained in his own commodity. As he expressly says:

“They” (the goods) “contain the value of a certain quantity of labour, which we exchange for what is supposed at the time to contain the value of an equal quantity.”

It emphasis here is on the change brought about by the division of labour: that is to say, that wealth no longer consists in the product of one’s own labour, but in the quantity of the labour of others which this product commands, the social labour which it can buy, the quantity of which is determined by the quantity of labour it itself contains. In fact, only the concept of exchange-value is here involved —that my labour now counts only as social labour, and consequently its product determines my wealth by its command over an equal quantity of social labour. My commodity, which contains a definite quantity of necessary labour-time, gives me command over all other commodities of equal value, and therefore over an equal quantity of the labour of others realised in other use-values. The emphasis here lies on the equalisation, brought about through the division of labour and exchange-value, of my labour with the labour of others, in other words, with social labour (the fact that my labour too, or the labour contained in my commodities, is already socially determined, and has fundamentally changed its character, escapes Adam), and not at all on the difference between materialised labour and living labour, and the specific laws of their exchange. In fact, Adam Smith is here saying nothing more than that the value of commodities is determined by the labour-time contained in them, and that the wealth of the owner of commodities consists in the quantity of social labour at his disposal.

However, the equating here of labour and product of labour ||249| in fact provides the first occasion for the confusion between the determination of the value of commodities by the quantity of labour contained in them, and the determination of their value by the quantity of living labour that they can buy, in other words, their determination by the value of labour. When Adam Smith says:

“His fortune is greater or less, precisely in proportion to the extent of this power, or to the quantity of either of other men’s labour, or, what is the same thing” (here is the false identification) “of the produce of other men’s labour, which it enables him to purchase”. ( [Wealth of Nations, O.U.P. edition, Vol. I, p. 33], [Garnier] l.c., p. 61.)

He might just as well have said: it is in proportion to the quantity of social labour contained in his own commodity or fortune; as indeed he also says:

“They” (the goods) “contain the value of a certain quantity of labour, which we exchange for what is supposed at the time [to contain] the value of an equal quantity.”

(The word value is here superfluous and meaningless.) The false conclusion emerges already in this Chapter V, when for example he says:

“Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can at all times and places he estimated and compared” ([ibid., p. 36], [Garnier] l.c., p. 66).

What is true of labour itself and consequently of its measure, labour-time —that the value of commodities is always proportionate to the labour-time realised in them, no matter how the value of labour may change —is here claimed for this changing value of labour itself.

Here Adam Smith is examining only commodity exchange in general: the nature of exchange-value, of the division of labour and of money. The parties to the exchange still confront each other only as owners of commodities. They buy the labour of others in the form of a commodity, just as their own labour appears in the form of a commodity. The quantity of social labour which they command is therefore equal to the quantity of labour contained in the commodity with which they themselves make the purchase. But when in the following chapters he comes to the exchange between materialised labour and living labour, between capitalist and worker, and then stresses that the value of the commodity is now no longer determined by the quantity of labour it itself contains, but by the quantity —which is different from this —of living labour of others which it can command, i.e., buy, he is not in fact saying by this that commodities themselves no longer exchange in proportion to the labour-time they contain; but that the increase of wealth, the increase of the value contained in the commodity, and the extent of this increase, depends upon the greater or less quantity of living labour which the materialised labour sets in motion. And put in this way it is correct. Smith, however, remains unclear on this point.

[2. Smith’s General Conception of Surplus-Value. The Notion of Profit, Rent and Interest as Deductions from the Product of the Worker’s Labour][edit source]

||250| In Chapter VI of Book I Adam Smith passes on from those relations in which it is assumed that the producers confront one another only as sellers and possessors of commodities to the relations of exchange between those who possess the conditions of labour and those who possess labour-power alone.

“In that early and rude state of society which precedes both the accumulation of stock and the appropriation of land, the proportion between the quantities of labour necessary for acquiring different objects, seems to be the only circumstance which can afford any rule for exchanging them for one another… It is natural that what is usually the produce of two days’ or two hours’ labour, should be worth double of what is usually the produce of one day’s or one hour’s labour” ([ibid., p. 52] t. I, ch. VI. pp. 94–95, Garnier).

That is to say, the labour-time necessary to produce different commodities determines the proportion in which they exchange for one another, or their exchange-value.

“In this state of things, the whole produce of labour belongs to the labourer; and the quantity of labour commonly employed in acquiring or producing any commodity, is the only circumstance which can regulate the quantity of labour which it ought commonly to purchase, command, or exchange for” ([ibid., p. 53], [Garnier] l.c., p. 96).

Consequently, on this assumption the labourer is a mere seller of commodities, and one commands the labour of another only in so far as he buys the other’s commodity with his commodity. He thus commands with his commodity only so much of the other’s labour as is contained in his own commodity, since both exchange only commodities against each other, and the exchange-value of the commodities is determined by the labour-time or quantity of labour they contain.

But, Adam continues:

“As soon as stock has accumulated in the hands of particular persons, some of them will naturally employ it in setting to work industrious people, whom they will supply with materials and subsistence, in order to make a profit by the sale of their work, or by what their labour adds to the value of the materials” ([ibid., p. 53], [Garnier] l.c., p. 96).

Stop, before we follow the passage further. In the first place, whence come the “industrious people” who possess neither means of subsistence nor materials of labour—people who are hanging in mid air? If we strip Smith’s statement of its naïve phrasing, it means nothing more than: capitalist production begins from the moment when the conditions of labour belong to one class, and another class has at its disposal only labour-power. This separation of labour from the conditions of labour is the precondition of capitalist production.

Secondly, however, what does Adam Smith mean when he says that the employers of labour set labourers to work “in order to make a profit by the sale of their work, or by what their labour ||251| adds to the value of the materials”?

Does he mean by this that the profit comes from the sale, that the commodity is sold above its value —that is, what Steuart calls profit upon alienation, which is nothing but a vibration of wealth between parties?^[3] Let him answer for himself.

“In exchanging the complete manufacture either for money, for labour,” (here again is a source of new error) “or for other goods, over and above what may he sufficient to pay the price of the materials, and the wages of the workmen, something must be given for the profits of the undertaker of the work, who hazards his stock in this adventure” ([ibid., p. 53], [Garnier], l.c.).

We shall return to this “hazarding” later (see notebook VII, p. 173) in the chapter on the apologetic accounts of profit.²⁹ This something given for the profits of the undertaker, when the complete work is exchanged, does it come from the sale of the commodity above its value, is it Steuart’s profit upon alienation?

“The value,” Adam continues immediately, “which the workmen add to the materials, therefore, resolves itself in this case” (when capitalist production has begun) “into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock oaf materials and wages which he advanced” ([ibid., p. 53], [Garnier] l.c., pp. 96–97).

Here therefore Adam Smith explicitly states: the profit which is made on the sale of the complete manufacture originates not from the sale itself, not from the sale of the commodity above its value, is not profit upon alienation. The value, that is, the quantity of labour which the workmen add to the material, falls rather into two parts. One pays their wages or is paid for through their wages. By this transaction the workmen give in return only as much labour as they have received in the form of wages. The other part forms the profit of the capitalist, that is, it is a quantity of labour which he sells without having paid for it. If therefore he sells the commodity at its value, that is, for the labour-time contained in it, in other words if he exchanges it for other commodities in accordance with the law of value, then his profit originates from the fact that he has not paid for a part of the labour contained in the commodity, but has nevertheless sold it. Adam Smith has thereby himself refuted the idea that the circumstance that the whole product of his labour no longer belongs to the labourer, that he is obliged to share it or its value with the owner of capital, invalidates the law that the proportion in which commodities exchange for each other, or their exchange-value, is determined by the quantity of labour-time materialised in them. Indeed, on the contrary, he traces the profit of the capitalist precisely to the fact that he has not paid for a part of the labour added to the commodity, and it is from this that his profit on the sale of the commodity arises. We shall see how further on Adam Smith even more explicitly derives profit from the labour performed by the workman over and above the quantity of labour with which he pays for his wages, that is to say, replaces it by an equivalent. Thereby he has recognised the true origin of surplus-value. At the same time he has expressly stated that it does not arise from the ||252| advanced funds, whose value —however useful they may he in the real labour-process —merely reappears in the product; but that it arises exclusively from the new labour which the workmen add to the materials in the new process of production, in which those funds figure as means of labour or instruments of labour.

On the other hand, the phrase “in exchanging the complete manufacture either for money, for labour, or for other goods—“ is wrong (and arises from the confusion mentioned earlier).

If he exchanges the commodity for money or for a commodity, his profit arises from his selling more labour than he has paid for, from the fact that he does not exchange an equal quantity of materialised labour for an equal quantity of living labour. Adam Smith therefore must not put the exchange either for money or for other goods on the same footing as the exchange of the complete manufacture for labour. For in the first exchange the surplus-value originates from the fact that the commodities are exchanged at their value, for the labour-time contained in them, which however is in part unpaid for. Here it is assumed that the capitalist does not exchange an equal quantity of past labour for an equal quantity of living labour; that the quantity of living labour appropriated by him is greater than the quantity of living labour he has paid for. Otherwise the workman’s wage would be equal to the value of his product. The profit on the exchange of the complete manufacture for money or commodities, if they are exchanged at their value, arises therefore from the fact that the exchange between the complete manufacture and the living labour is subject to other laws; that no equivalents are exchanged here. These cases, therefore, must not be lumped together.

Profit is consequently nothing but a deduction from the value which the workmen have added to the material of labour. They add to the material, however, nothing but a new quantity of labour. The workman’s labour-time therefore resolves itself into two parts: one for which he has received an equivalent, his wages, from the capitalist; the other which he gives to him gratis and which constitutes the profit. Adam Smith rightly points out that only the part of the labour (value) which the workman newly adds to the material resolves itself into wages and profit, that is to say, the newly-created surplus-value in itself has nothing to do with the part of the capital which has been advanced (as materials and instruments).

Adam Smith, who has thus reduced profit to the appropriation of the unpaid labour of others, at once goes on to say:

“The profits of stock, it may perhaps he thought, are only a different name for the wages of a particular sort of labour, the labour of inspection and direction” ([ibid., p. 53], [Garnier] p. 97).

And he refutes this false view of the labour of superintendence. We shall return to this later, in another chapter. Here it is only important to stress that Adam Smith very clearly recognises, brings out and expressly emphasises the contradistinction between his view of the origin of profit and this apologist view. After pointing out this contradistinction he proceeds: ||253| “In this state of things the whole produce of labour does not always belong to the labourer. He must in most cases share it with the owner of the stock which employs him. Neither is the quantity of labour commonly employed in acquiring or producing any commodity, the only circumstance which can regulate the quantity which it ought commonly to purchase, command or exchange for. An additional quantity, it is evident, must he due for the profits of the stock which advanced the wages and furnished the materials of that labour” ([ibid., pp. 54–55], [Garnier] l.c., p. 99).

This is quite correct. Given capitalist production, materialised Labour—in the form of money or commodity—always purchases, besides the quantity of labour which it itself contains, an “additional quantity” of living labour “for the profits of the stock”; which however in other words means nothing but that it appropriates for nothing, appropriates without paying for it, a part of the living labour. Adam Smith is superior to Ricardo in that he so strongly emphasises how this change begins with capitalist production. On the other hand, he is inferior to Ricardo in that he is never able to free himself from the viewpoint —though it is one he himself refuted by his own analysis —that through this changed relation between materialised labour and living labour a change takes place in the determination of the relative value of commodities, which in relation to each other represent nothing but materialised labour, given quantities of realised labour.

After thus presenting surplus-value in the one form, the form of profit, as part of the labour which the worker performs over and above the part of the labour which pays his wages, he does the same with the other form of surplus-value, rent of land. One of the objective conditions of labour alienated from labour, and therefore confronting it as other men’s property, is capital; the other is the land itself, the land as landed property. Therefore after dealing with the owner of capital, Adam Smith continues:

“As soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce… He” (the labourer) “must give up to the landlord a portion of what his labour either collects or produces. This portion, or, what comes to the same thing, the price of this portion, constitutes the rent of land” ([ibid., p. 55], [Garnier], l.c., pp. 99–100).

Like industrial profit proper, rent of land is only a part of the labour which is added by the labourer to the materials and which he gives up, hands over to the owner of the land without being paid for it; hence, only a part of the surplus-labour performed by him over and above the part of the labour-time which he works to pay his wages or to return an equivalent for the labour-time contained in his wages.

Thus Adam Smith conceives surplus-value—that is, surplus-labour, the excess of labour performed and realised in the commodity over and above the paid labour, the labour which has received its equivalent in the wages —as the general category, ||254| of which profit in the strict sense and rent of land are merely branches. Nevertheless, he does not distinguish surplus-value as such as a category on its own, distinct from the specific forms it assumes in profit and rent. This is the source of much error and inadequacy in his inquiry, and of even more in the work of Ricardo.

Another form in which surplus-value appears is interest on capital, interest on money. But this “interest on money is always”, Adam Smith says in the same chapter, “a derivative revenue, which, if it is not paid from the profit which is made by the use of the money, must he paid from some other source of revenue” (therefore either rent or wages. In the latter case, assuming the average wage, it does not originate from surplus-value but is a deduction from the wage itself or—and in this form, as we shall later have occasion to see, it appears in undeveloped capitalist production —it is only another form of profit) “unless perhaps the borrower is a spendthrift, who contracts a second debt in order to pay the interest of the first” ([ibid., p. 581, [Garnier], l. c., pp. 105–06). Interest is therefore either a part of the profit made with the capital lent; in this case it is only a secondary form of profit itself, a branch of profit, and thus only a further division between different persons of the surplus-value appropriated in the form of profit. Or it is paid out of rent. In which case the same holds good. Or the borrower pays the interest out of his own or someone else’s capital. In which case it in no way constitutes surplus-value, but is merely a different distribution of existing wealth, vibration of the balance of wealth between parties, as in profit upon alienation. Excluding the latter case, when interest is not in any way a form of surplus-value (and excluding the case where it is a deduction from the wage or itself a form of profit; Adam Smith does not mention this latter case), interest is therefore only a secondary form of surplus-value, a mere part of profit or of rent (affecting merely their distribution), and therefore also is nothing but a part of unpaid surplus-Labour.

“The stock which is lent at interest is always considered as a capital by the lender. He expects that in due time it is to be restored to him, and that in the meantime the borrower is to pay him a certain annual rent for the use of it. The borrower may use it either as a capital, or as a stock reserved for immediate consumption. If he uses it as a capital, he employs it in the maintenance of productive labourers, who reproduce the value with a profit. He can, in this case, both restore the capital and pay the interest without alienating or encroaching upon any other source of revenue. If he uses it as a stock reserved for immediate consumption, he acts the part of a prodigal, and dissipates in the maintenance of the idle, what was destined for the support of the industrious. He can, in this case, neither restore the capital nor pay the interest, without either alienating or encroaching upon some other source of revenue, such as the property or […] rent of land” (Vol. II, b. II, ch. IV, p. 127 edit. McCulloch).

|255| Thus whoever borrows money, which here means capital, either uses it himself as capital, and makes a profit with it. In this case the interest which he pays to the lender is nothing but a part of the profit under a special name. Or he consumes the borrowed money. Then he increases the wealth of the lender by reducing his own. What takes place is only a different distribution of the wealth that passes from the hand of the spendthrift into that of the lender, but there is no generation of surplus-value. In so far therefore as interest in any way represents surplus-value, it is nothing but a part of profit, which itself is nothing but a definite form of surplus-value, that is, unpaid labour.

Finally, Adam Smith observes that in the same way all incomes of persons who live on the proceeds of taxes are paid either from wages, and are therefore a deduction from wages themselves; or have their source in profit and rent, thus representing only claims whereby various social strata share in the consumption of profit and rent, which themselves are nothing but different forms of surplus-value.

“All taxes, and all the revenue which is founded upon them, all salaries, pensions, and annuities of every kind, are ultimately derived from some one or other of those three original sources of revenue, and are paid either immediately or mediately from the wages of labour, the profits of stock, or the rent of land ([Wealth of Nations, O.U.P. edition, p. 53], [Garnier] I, ch. VI, p. 106).

Thus interest on money, along with taxes or revenues derived from taxes—in so far as they are not deductions from wages themselves —are merely shares in profit and rent, which are themselves in turn reducible to surplus-value, that is, unpaid labour-time.

This is Adam Smith’s general theory of surplus-value.

In yet another passage Adam Smith sums up his views on the whole question, making it all the more clear how far he is from even attempting in any way to prove that the value added by the labourer to the product (after deducting the costs of production, the value of raw materials and of the instruments of labour) is no longer determined by the labour-time contained in the product, because the labourer does not himself appropriate this value in full, but has to share it—the value or the product—with the capitalist and the landowner. The way in which the value of a commodity is distributed among the producers of this commodity naturally alters nothing in the nature of this value or in the relative value of commodities to one another.

“As soon as land becomes private property, the landlord demands a share of almost all the produce which the labourer can either raise, or collect from it. His rent makes the first deduction from the produce of the labour which is employed upon land. It seldom happens that the person who tills the ground has wherewithal to maintain himself till he reaps the harvest. His maintenance is generally advanced to him from the stock of a master, the farmer who employs him, and who would have no interest to employ him, unless he was to share in the produce of his labour, or unless his stock was to be replaced to him with a profit. This profit makes a second deduction ||256| from the […] labour which is employed upon land, The produce of almost all other labour is liable to the like deduction of profit. la all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials of their work, and their wages and maintenance till it he completed. He shares in the produce of their labour, or in the value which it adds to the materials upon which it is bestowed; and in this share consists his profit” ( [McCulloch edition ] Vol. I, b. I, ch. VIII, pp. 109–10).

Here therefore Adam Smith in plain terms describes rent and profit on capital as mere deductions from the workman’s product or the value of his product, which is equal to the quantity of labour added by him to the material. This deduction however, as Adam Smith has himself previously explained, can only consist of that part of the labour which the workman adds to the materials, over and above the quantity of labour which only pays his wages, or which only provides an equivalent for his wages; that is, the surplus-labour, the unpaid part of his labour. (Therefore, incidentally, profit and rent or capital and landed property can never be a source of value.)

[3. Adam Smith’s Extension of the Idea of Surplus-Value to All Spheres of Social Labour][edit source]

We see the great advance made by Adam Smith beyond the Physiocrats in the analysis of surplus-value and hence of capital. In their view, it is only one definite kind of concrete labour—agricultural labour —that creates surplus-value. Therefore what they examine is the use-value of labour, not labour-time, general social labour, which is the sole source of value. In this special kind of labour, however, it is nature, the land, which in fact creates the surplus-value, consisting in an increase of (organic) matter—the excess of the matter produced over the matter consumed. They see it, however, still in quite a restricted form and therefore distorted by fantastic ideas. But to Adam Smith, it is general social labour—no matter in what use-values it manifests itself—the mere quantity of necessary labour, which creates value. Surplus-value, whether it takes the form of profit, rent, or the secondary form of interest, is nothing but a part of this labour, appropriated by the owners of the material conditions of labour in the exchange with living labour. For the Physiocrats, therefore, surplus-value appears only in the form of rent of land. For Adam Smith, rent, profit and interest are only different forms of surplus-value.

When I speak of surplus-value, in relation to the total sum of capital advanced, as profit on capital, this is because the capitalist directly engaged in production directly appropriates the surplus-labour, no matter under what categories he has subsequently to share this surplus-value with the landowner or with the lender of capital. Thus the farmer pays the landowner directly. And the manufacturer, out of the surplus-value he has appropriated, pays rent to the owner of the land on which the factory stands, and interest to the capitalist who has advanced capital to him. ||257| <There are now still to be examined: 1. Adam Smith’s confusion of surplus-value with profit; 2. his views on productive labour; 3. how he makes rent and profit sources of value, and his false analysis of the “natural price” of commodities, in which the value of raw materials and instruments is not supposed to have a separate existence, and therefore not to be considered, apart from the price of the three sources of revenue.//

[4. Smith’s Failure to Grasp the Specific Way in Which the Law of Value Operates in the Exchange between Capital and Wage-Labour][edit source]

Wages or the equivalent with which the capitalist buys the temporary disposal of labour-power are not a commodity in its immediate form, but the commodity metamorphosed, money, the commodity in its independent form as exchange-value, as the direct materialisation of social labour, of labour-time in general. With this money the labourer naturally buys commodities at the same price as any other possessor of money <disregarding here such details as, for example, that he buys on less favourable conditions and in worse circumstances, etc.> He faces the seller of commodities as does every other possessor of money—as a buyer. He enters commodity circulation itself not as a labourer, but as pole Money facing pole Commodity, as possessor of commodity in its general, always exchangeable form. His money is once more transformed into commodities, which are to serve him as use-values, and in this process he buys commodities at the current market-price—generally speaking, at their value, In this transaction he carries through only the act M—C, which indicates a change of form, but, as a general rule, by no means a change in magnitude of value. Since however, by his labour materialised in the product, he has added not only as much labour-time as was contained in the money he received, he has paid not only an equivalent but has given surplus-labour gratis—which is precisely the source of the profit—he has thus in fact (the mediating process, the sale of his labour-power, is not relevant when we are dealing with the result) given a higher value than the value of the sum of money which forms his wages. In return, he has bought with more labour-time the quantity of labour realised in the money which comes to him as wages. It can therefore be said that in the same way he has indirectly bought all the commodities into which the money (which is only the independent expression of a definite quantity of social labour-time) he received is converted with more labour-time than they contain, although he buys them at the same price as any other buyer or possessor of a commodity in its first transformation. Conversely, the money with which the capitalist buys labour contains a smaller quantity of labour, less labour-time, than the quantity of labour or labour-time of the workman contained in the commodity produced by him. Besides the quantity of labour contained in this sum of money which forms the wage, the capitalist buys an additional quantity of labour for which he does not pay, an excess over the quantity of labour contained in the money he pays out. And it is precisely this additional quantity of labour which constitutes the surplus-value created by capital.

But as the money ||258| with which the capitalist buys labour (in the actual result, even though mediated through exchange not with labour directly, but with labour-power) is nothing other than the transmuted form of all other commodities, their independent existence as exchange-value, it can equally well be said that all commodities in exchange with living labour buy more labour than they contain, It is precisely this more that constitutes surplus-value.

It is Adam Smith’s great merit that it is just in the chapters of Book I (chapters VI, VII, VIII) where he passes from simple commodity exchange and its law of value to exchange between materialised and living labour, to exchange between capital and wage-labour, to the consideration of profit and rent in general—in short, to the origin of surplus-value—that he feels some flaw has emerged. He senses that somehow—whatever the cause may be, and he does not grasp what it is—in the actual result the law is suspended: more labour is exchanged for less labour (from the labourer’s standpoint), less labour is exchanged for more labour (from the capitalist’s standpoint). His merit is that he emphasises—and it obviously perplexes him—that with the accumulation of capital and the appearance of property in land—that is, when the conditions of labour assume an independent existence over against labour itself—something new occurs, apparently (and actually, in the result) the law of value changes into its opposite. It is his theoretical strength that he feels and stresses this contradiction, just as it is his theoretical weakness that the contradiction shakes his confidence in the general law, even for simple commodity exchange; that he does not perceive how this contradiction arises, through labour-power itself becoming a commodity, and that in the case of this specific commodity its use-value—which therefore has nothing to do with its exchange-value—is precisely the energy which creates exchange-value. Ricardo is ahead of Adam Smith in that these apparent contradictions—in their result real contradictions—do not confuse him. But he is behind Adam Smith in that he does not even suspect that this presents a problem, and therefore the specific development which the law of value undergoes with the formation of capital does not for a moment puzzle him or even attract his attention. We shall see later how what was a stroke of genius with Adam Smith becomes reactionary with Malthus as against Ricardo’s standpoint.

Naturally, however, it is at the same time this deep insight of Adam Smith’s that makes him irresolute and uncertain, cuts the firm ground from under his feet, and prevents him—in contrast to Ricardo—from reaching a consistent and comprehensive theoretical view of the abstract, general foundations of the bourgeois system. ||259| The above-quoted statement by Adam Smith that the commodity buys more labour than it contains, or that labour pays a higher value for the commodity than the latter contains, is thus formulated by Hodgskin:

“Natural or necessary price^[4] means […] the whole quantity of labour nature requires from man, that he may produce any commodity… Labour was the original, is now and ever will he the only purchase money in dealing with nature… .Whatever quantity of labour may he requisite to produce any commodity, the labourer must always, in the present state of society, give a great deal more labour to acquire and possess it than is requisite to buy it from nature. Natural price thus^[5] increased to the labourer is social price … we must always attend to the difference between natural and social price^[6]” (Thomas Hodgskin, Popular Political Economy, etc., London, 1827, pp. 219–20).

In this presentation Hodgskin reproduces both what is correct and what is confused and confusing in Adam Smith’s view.

[5. Smith’s Identification of Surplus-Value with Profit. The Vulgar Element in Smith’s Theory][edit source]

We have seen how Adam Smith explains surplus-value in general, of which the rent of land and profit are only different forms and component parts. As he presents it, the part of capital which consists of raw material and means of production has nothing directly to do with the creation of surplus-value. The latter arises exclusively from the additional quantity of labour which the labourer gives over and above the part of his labour which forms only the equivalent for his wages. Therefore it is only that part of the capital advanced which consists in wages from which surplus-value directly arises, since it is the only part of capital which not only reproduces itself but produces an overplus. In profit, on the other hand, the surplus-value is calculated on the total amount of capital advanced, and besides this modification other new complications arise through the equalisation of profits in the various spheres of production of capital.

Because Adam makes what is in substance an analysis of surplus-value, but does not present it explicitly in the form of a definite category, distinct from its special forms; he subsequently mixes it up directly with the further developed form, profit. This error persists with Ricardo and all his disciples. Hence arise (particularly with Ricardo, all the more strikingly because he works out the fundamental law of value in more systematic unity and consistency, so that the inconsistencies and contradictions stand out more strikingly) a series of inconsistencies, unresolved contradictions and fatuities, which the Ricardians (as we shall see later in the section on profit) attempt to solve with phrases in a scholastic way. Crass empiricism turns into false metaphysics, scholasticism, which toils painfully to deduce undeniable empirical phenomena by simple formal abstraction directly from the general law, or to show by cunning argument that they are in accordance with that law. At this point where we discuss Adam Smith we will give an example, because the confusion creeps in immediately not when he is dealing specifically with profit or rent—those particular forms of surplus-value—but where he is thinking of them only as forms of surplus-value in general, as deductions from the labour bestowed by the labourers upon the materials. ||260| After Adam Smith has said, in Book I, Chapter VI, “The value which the workmen add to the materials, therefore, resolves itself in this case into two parts, of which the one pays their wages, the other the profits of their employer upon the whole stock of materials and wages which he advanced”, he continues: “He” (the entrepreneur) “could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him; and he could have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of his stock” [ibid., p. 53].

We note first: surplus-value, the overplus which the entrepreneur makes over and above the amount of value required to replace his stock, is reduced by Adam Smith to that part of the labour which the workmen add to the materials over and above the quantity that pays their wages—thus making this overplus arise purely from the part of the capital which is laid out in wages. Then, however, he immediately conceives this overplus in the form of profit—that is, he thinks of it not in relation to the part of the capital from which it arises, but as an overplus over the total value of the capital advanced, “upon the whole stock of materials and wages which he advanced”. (It is oversight that the means of production are here left out of account). He therefore conceives surplus-value directly in the form of profit. Hence the difficulties that soon appear.

The capitalist, Adam Smith says, “could have no interest to employ them, unless he expected from the sale of their work something more than what was sufficient to replace his stock to him”.

Once capitalist relations are assumed, this is quite correct. The capitalist does not produce in order to satisfy his needs with the product; he produces with absolutely no direct regard for consumption. He produces in order to produce surplus-value. But this premise—which amounts to no more than that, capitalist production being assumed, the capitalist produces for the sake of surplus-value—is not made use of by Adam Smith to explain surplus-value, as some of his silly disciples subsequently did; that is to say, he does not explain the existence of surplus-value by the interests of the capitalist, by his desire for surplus-value. On the contrary, he has already derived surplus-value from the value which the workmen add to the materials over and above the value which they add in exchange for the wages they have received. But then he goes on at once: the capitalist would have no interest to employ a great stock rather than a small one, unless his profits were to bear some proportion to the extent of the stock advanced. Here profit is no longer explained by the nature of surplus-value, but by the “interest” of the capitalist. Which is downright silly.

Adam Smith does not sense that, by thus directly confusing surplus-value with profit and profit with surplus-value, he is upsetting the law of the origin of surplus-value which he has just established. ||261| If surplus-value is only the part of the value (or of the quantity of labour) added by the workman in excess of the part that he adds to the materials to replace the wages, why should that second part grow as the direct result of the value of the capital advanced being in one case greater than in the other? The contradiction becomes even clearer in the example which Adam Smith himself gives immediately following on this, in order to refute the view that profit is wages for the so-called labour of superintendence.

For he says:

“They” (the profits of stock) “are, however, altogether different” (from wages), “are regulated by quite different principles, and bear no proportion to the quantity, the hardship, or the ingenuity of this supposed labour of inspection and direction. They are regulated altogether by the value of the stock employed, and are greater or smaller in proportion to the extent of this stock. Let us suppose, for example, that in some particular place, where the common annual profits of manufacturing stock are ten per cent there are two different manufactures, in each of which twenty workmen are employed, at the rate of fifteen pounds a year each, or at the expense of three hundred a year in each manufactory. Let us suppose, too, that the coarse materials annually wrought up in the one cost only seven hundred pounds, while the finer materials in the other cost seven thousand. The capital annually employed in the one will, in this case, amount only to one thousand pounds; whereas that employed in the other will amount to seven thousand three hundred pounds. At the rate of ten per cent, therefore, the undertaker of the one will expect a yearly profit of about one hundred pounds only; while that of the other will expect about seven hundred and thirty pounds. But though their profits are so very different, their labour of inspection and direction may be either altogether or very nearly the same” ([ibid., pp. 53–54], [Garnier] l.c.).

From surplus-value in its general form we come straight to a general rate of profit, which has nothing directly to do with it. But let us pass on! In both manufactories twenty workmen are employed; in both their wages are the same, £300. Proof therefore that it is not perhaps a case of a higher kind of labour being employed in one as compared with the other, so that one hour’s labour and therefore also one hour’s surplus-labour would in one be equal to several hours’ surplus-labour in the other. On the contrary, the same average labour is assumed in both, as the equality of their wages shows. How then can the surplus-labour which the workers add, beyond the price of their wages, be worth seven times as much in one factory as in the other? Or why should the workers in one factory, because the materials they work up in it are seven times as costly as in the other, provide seven times as much surplus-labour as in the other, although in both factories they receive the same wages, and therefore work the same time to reproduce ||262| their wages?

The seven times greater profit in the one manufactory as compared with the other—or in general the law of profit, that it is in proportion to the magnitude of the capital advanced—thus prima facie contradicts the law of surplus-value or of profit (since Adam Smith treats the two as identical) that it consists purely of the unpaid surplus-labour of the workmen. Adam Smith puts this down with quite naïve thoughtlessness, without the faintest suspicion of the contradiction it presents. All his disciples— since none of them considers surplus-value in general, as distinct from its determinate forms—followed him faithfully in this. With Ricardo, as already noted, it merely comes out even more strikingly.

As Adam Smith resolves surplus-value not only into profit but also into the rent of land—two particular kinds of surplus-value, whose movement is determined by quite different laws—he should certainly have seen from this that he ought not to treat general abstract form as directly identical with any of its particular forms. With all later bourgeois economists, as with Adam Smith, lack of theoretical understanding needed to distinguish the different forms of the economic relations remains the rule in their coarse grabbing at and interest in the empirically available material. Hence also their inability to form a correct conception of money, in which what is in question is only various changes in the form of exchange-value, while the magnitude of value remains unchanged.

[6. Smith’s Erroneous View of Profit, Rent of Land and Wages as Sources of Value][edit source]

Lauderdale, in Recherches sur la nature et l’origine de la richesse publique (traduit par Lagentie de Lavaïsse, Paris, 1808), raises the objection to Adam Smith’s exposition of surplus-value—which he says corresponds with the views already advanced by Locke—that according to it capital is not an original source of wealth, as Smith makes out, but only a derivative source. The relevant passages run:

“‘Above a century ago, Mr. Locke stated pretty nearly the same opinion” (as Adam Smith)… ‘“‘Money’, he said, ‘is a barren thing and produces nothing; but by compact transfers that profit that was the reward of one man’s labour into another man’s pocket’” (Lauderdale, p. 116).

“If this, however, was a just and accurate idea of the profit of capital, it would follow that the profit of stock must he a derivative, and not an original source of revenue; and capital could not therefore he considered as a source of wealth, its profit being only a transfer from the pocket of the labourer into that of the proprietor of stock” (pp. 157–58). (l.c., p. 116–17)^[7] [Lauderdale, James Maitland, An Inquiry into the Nature and Origin of Public Wealth…, Edinburgh and London, 1804, pp. 157–58].

In so far as the value of the capital reappears in the product, it cannot he called a “source of wealth”. Here it is only as accumulated labour, as a definite quantity of materialised labour, that it adds its own value to the product.

Capital is productive of value only as a relation, in so far as it is a coercive force on wage-labour, compelling it to perform surplus-labour, or spurring on the productive power of labour to produce relative surplus-value. In both cases it only produces value as ||263| the power of labour’s own material conditions over labour when these are alienated from labour; only as one of the forms of wage—labour itself, as a condition of wage—labour. But in the sense commonly used by economists, as stored up labour existing in money or commodities, capital—like all conditions of labour, even the unpaid natural forces—functions productively in the labour-process, in the production of use-values, but it is never a source of value. It creates no new value, and only adds exchange-value to the product at all in so far as it has exchange-value, that is to say, only in so far as it itself consists in materialised labour-time, so that labour is the source of its value.

Lauderdale is right in this respect—that Adam Smith, after explaining the nature of surplus-value and of value, wrongly presents capital and land as independent sources of exchange-value. They are sources of revenue for their owners in so far as they are titles to a certain quantity of surplus-labour, which the labourer must perform over and above the labour-time required to replace his wages. Thus Adam Smith says for example:

“Wages, profit, and rent, are the three original sources of all revenue, as well as of all exchangeable value” ([Wealth of Nations, O.U.P. edition, p. 57], [Garnier], l. I, ch. VI).

Just as it is true that they are the three original sources of all revenue, so it is false that they also are the three original sources of all exchangeable value, since the value of a commodity is exclusively determined by the labour-time contained in it. After just presenting rent and profit as mere deductions from the value or from the labour added by the workman to the raw material, how can Adam Smith call them original sources of exchangeable value? (They can only be that in the sense that they set in motion the original source, that is to say, that they compel the workman to perform surplus-labour.) In so far as they are titles (conditions) for the appropriation of a part of the value, that is, of the labour materialised in the commodity, they are sources of income for their owners. But the distribution or appropriation of value is certainly not the source of the value that is appropriated. If this appropriation did not take place, and the workman received the whole product of his labour as his wage, the value of the commodities produced would be just the same as before, although it would not be shared with the landowner and the capitalist.

The fact that landed property and capital are sources of income for their owners, that is, give them the power to appropriate a part of the values created by labour, does not make them sources of the value which they appropriate. But it is equally wrong to say that wages are an original source of exchangeable value, although wages, or rather the continuous sale of labour-power, is a source of income for the labourer. It is the labour and not the wages of the labourer that creates value. Wages are only already existing value, or if we consider the whole of production, the part of the value created by the labourer which he himself appropriates; but this appropriation does not create value. His wages can therefore rise or fall without this affecting the value of the commodity produced by him. |263|| ||265| <The following quotation should be added to what has been said above in regard to Adam Smith making the categories in which the value of the commodity is appropriated into sources of this value: After he has refuted the view that profit is only another name for the wages of the capitalist, or wages of labour of superintendence, he concludes:

“In the price of commodities, therefore, the profits of stock constitute a component part altogether different from the wages [of labour], and regulated by quite different principles” ([ibid., p. 54], [Garnier ] b. I, ch. VI, p. 99).

Adam Smith has just shown that the value added by the workmen to the materials is divided between them and the capitalists in the form of wages and profit; labour is therefore the only source of value, and the price of wages and the price of profits arise out of this source of value. But these prices themselves are not a source of value.// |265||

[7. Smith’s Dual View of the Relationship between Value and Revenue. The Vicious Circle of Smith’s Conception of “‘Natural Price” as the Sum of Wages, Profit and Rent][edit source]

||263| Here we will leave entirely out of account how far Adam Smith regards rent as a constituent element of the price of commodities. For our present inquiry this question is all the more unimportant because he treats rent just as he treats profit, as a mere part of surplus-value, a deduction from the labour added by the labourer to the raw material, and consequently ||264| in fact also as a deduction from profit, inasmuch as the total unpaid surplus-labour is directly appropriated by the capitalist in his relations with labour; it does not matter under what categories he may later have to share this surplus-value with owners of the conditions of production—the landowner or the lender of capital. For the sake of simplicity we shall therefore speak only of wages and profit as the two categories into which newly-created value is divided.

Let us assume that twelve hours of labour-time are materialised in a commodity (leaving out of account the value of the raw material and instruments of labour consumed in it.) We can express its value as such only in money. Let us therefore assume that twelve hours of labour-time are likewise materialised in five shillings. Thus the value of the commodity is five shillings. By the natural price of commodities Adam Smith understands nothing but their value expressed in money. (The market-price of the commodity, of course, stands either above or below its value. Indeed, as I shall show later, even the average price of commodities is always different from their value. Adam Smith, however, does not deal with this in his discussion of natural price. Moreover, neither the market-price nor still less the fluctuations in the average price of commodities can be comprehended except on the basis of an understanding of the nature of value.)

If the surplus-value contained in the commodity is twenty per cent of its total value, or what amounts to the same thing, twenty-five per cent of the necessary labour contained in it, then this value of five shillings, the natural price of the commodity, can be resolved into four shillings wages and one shilling surplus-value (which here we will call profit, following Adam Smith). It would be correct to say that the magnitude of value of the commodity determined independently of wages and profit, or its natural price, can be resolved into four shillings wages (the price of the labour) and one shilling profit (the price of the profit). But it would he wrong to say that the value of the commodity arises from adding together or combining the price of the wages and the price of the profit which are regulated independently of the value of the commodity. If this were the case there would be absolutely no reason why the total value of the commodity should not be 8 shillings, 10 shillings, etc., according to whether one assumes the wages to be 5 shillings and the profit 3 shillings, and so on.

When Adam Smith is examining the “natural rate” of wages or the “natural price” of wages, what guides his investigation? The natural price of the means of subsistence required for the reproduction of labour-power. But by what does he determine the natural price of these means of subsistence? In so far as he determines it at all, he comes back to the correct determination of value, namely, the labour-time required for the production of these means of subsistence. But when he abandons this correct course, he falls into a vicious circle. By what is the natural price of the means of subsistence determined, which determine the natural price of wages? By the natural price of “wages”, of “profit”, of “rent”, which constitute the natural price of those means of subsistence as of all commodities. And so in infinitum. The twaddle about the law of demand and supply of course does not help us out of this vicious circle. For the “natural price” or the price corresponding to the value of the commodity is supposed to exist just when demand meets supply, that is, when the price of the commodity does not stand above or below its value as a result of fluctuations in demand and supply; when, in other words, the cost-price of the commodity (or the value of the commodity supplied by the seller) is also the price which the demand pays. ||265| But as we have said: In investigating the natural price of wages Adam Smith in fact falls back—at least in certain passages—on the correct determination of the value of the commodity. On the other hand, in the chapter dealing with the natural rate or the natural price of profit he gets bogged down, so far as the real problem is concerned, in meaningless commonplaces and tautologies. In fact, at first it was the value of the commodity which he saw as regulating wages and profit and rent. Then however he sets to work the other way round (which was closer to what empirical observation showed and to everyday ideas), and now the natural price of commodities is supposed to be calculated and discovered by adding together the natural prices of wages, profit and rent. It is one of Ricardo’s chief merits that he put an end to this confusion. We shall return to this point briefly when we are dealing with him.

Here there is only this further point to be noted: the given magnitude of value of the commodity, serving as a fund for the payment of wages and profit, appears empirically to the industrialist in the form that a definite market-price for the commodity holds good for a shorter or longer time, in spite of all fluctuations in wages.

It is necessary therefore to call attention to this peculiar train of thought in Adam Smith’s book: first the value of the commodity is examined, and in some passages correctly determined—so correctly determined that he traces out in general form the origin of surplus-value and of its specific forms, hence deriving wages and profit from this value. But then he takes the opposite course, and seeks on the contrary to deduce the value of commodities (from which he has deduced wages and profit) by adding together the natural prices of wages, profit and rent. It is this latter circumstance that is responsible for the fact that he nowhere correctly explains the influence of oscillations of wages, profit, etc., on the price of commodities—since he lacks the basis [for such an explanation]. |VI-265||

***

|VIII-364|| <Adam Smith, Value and Its Component Parts. Smith’s erroneous conception, see above, which he [develops] in spite of his originally correct view, is shown also in the following passage:

“Rent … enters into the composition of the price of commodities in a different way from wages and profit. High or low wages and profit are the causes of high or low price; high or low rent is the effect of it” ( Wealth of Notions, b. I, ch. XI, [O.U.P. edition, p. 165]).// |VIII-364||

[8. Smith’s Error in Resolving the Total Value of the Social Product into Revenue. Contradictions in His Views on Gross and Net Revenue][edit source]

||VI-265| We come to another point, which is linked with the analysis of the price or value of the commodity (since the two are here still assumed to be identical). Let us assume that Adam Smith has calculated correctly—that is to say, the value of the commodity being given, he has correctly resolved it into the constituent parts in which this value is distributed among the various agents of production—but has not on the contrary tried to deduce value from the price of these constituent parts. Thus we shall leave this aside and also the one-sided way in which wages and profit are presented only as forms of distribution, and hence both as revenues in the same sense that their owners can consume. Apart from all this, Adam Smith himself raises a question, and this again shows his superiority over Ricardo—not that he finds the right solution to the question he raises, but that he raises it at all. ||266| What Adam Smith says is:

“These three parts” (wages, profit and rent) “seem either immediately or ultimately to make up the whole price of corn.”

(Of all commodities, Adam Smith here takes corn, because in some commodities rent does not enter into the price as a constituent part.)

“A fourth part, it may he thought, is necessary for replacing the stock of the farmer, or for compensating the wear and tear of his labouring cattle, and other instruments of husbandry. But it must be considered, that the price of an instrument of husbandry, such as a labouring horse, is itself made u p of the same three p arts; the rent of the land upon which he is reared, the labour of tending and rearing him, and the profits of the farmer, who advances both the rent of this land, and the wages of this labour.”

<Here profit appears as the primary form, which also includes rent.//

“Though the price of the corn, therefore, may pay the price as well as the maintenance of the horse, the whole price still resolves itself, either immediately or ultimately, into the same three parts of rent, labour and profit” ([Wealth of Nations, O.U.P. edition, p. 56], [Garnier] b. I, ch.VI).

(Here it is perfectly preposterous that all of a sudden he says labour instead of wages, while he does not put landed property or capital for rent and profit.)

But was it not equally obviously necessary to consider that just as the farmer included the price of the horse and the plough in the price of the corn, the horse breeder or the plough maker from whom the farmer bought the horse and the plough, would include in the price of the horse and the plough the price of the instruments of production (in the case of the former, perhaps another horse) and of raw materials such as feeding stuffs and iron, whereas the fund from which the horse breeder and plough maker paid wages and profit (and rent) consisted only in the new labour which they added in their sphere of production to the amount of value present in their constant capital? Since therefore Adam Smith admits, in relation to the farmer, that the price of his corn includes, besides the wages, profit and rent paid by him to himself and others, also a fourth constituent part which is different from these—the value of the constant capital he has used up, such as horses, agricultural implements, etc.—this must also hold good for the horse breeder and the manufacturer of agricultural implements; and it is of no avail for Adam Smith to send us from pillar to post. Incidentally, the example of the farmer is peculiarly unhappily chosen for sending us from pillar to post, for in this case the items of constant capital include one that does not at all need to be bought from somebody else, namely the seed; and does this constituent part of the value resolve itself into wages, profit or rent for anybody?

But for the present let us proceed, and see whether Smith sticks to his view that the value of every commodity is resolvable into one or all of the sources of revenue: wages, profit, rent; and can therefore, being destined for consumption, be devoured or at any rate used up in one way or another for personal use (not industrial consumption). First ||267| another preliminary point. In the case for example of gathering berries and such like it can be assumed that their value consists entirely of wages, although here also as a rule some appliances, such as baskets and so on, are required as means of labour. But examples of this kind are quite irrelevant here, where we are dealing with capitalist production.

To start with, once more the repetition of the view expressed in Book I, Chapter VI; Book II, Chapter II, (b. II, Garnier pp. 212–13) states:

“It has been shown … that the price of the greater part of commodities resolves itself into three parts, of which one pays the wages of the labour, another the profits of the stock, and a third the rent of the land” [Wealth of Nations, O.U.P. edition, p. 313].

According to this, the whole value of any commodity resolves itself into revenue, and therefore falls to the share of one or another of the classes which live on this revenue, as a fund for consumption. Now since the total production of a country, each year for example, consists solely of the total of the values of the commodities produced, and since the value of each single one of these commodities is resolved into revenues, so also must their sum, the annual product of labour, the gross revenue, be consumable annually in this form. And so immediately after this passage Smith himself raises the point:

“Since this is the case, it has been observed, with regard to every particular ‘commodity, taken separately, it must he so with regard to all the commodities which compose the whole annual produce of the land and labour of every country, taken complexly. The whole price or exchangeable value of the annual produce, must resolve itself into the same three parts, and he parcelled out among the different inhabitants of the country, either as the wages of their labour, the profits of their stock, or the rent of their land” ([ibid., p. 313], [Garnier] l.c., p. 243).

This is in fact the necessary consequence. What is true of the individual commodity is necessarily true of the total sum of commodities. But quod non,^[8] says Adam. He goes on:

“But though the whole value of the annual produce of the land and labour of every country is thus divided among, and constitutes a revenue to, ‘its different inhabitants; yet, as in the rent of a private estate, we distinguish between the gross rent and the neat rent, so may we likewise in the revenue of oil the inhabitants of a great country” ([ibid., p. 313], [Garnier] l.c., p. 213).

(But stop! Above he told us the direct opposite: in the case of the individual farmer we can distinguish a fourth part into which the value of his wheat for example resolves itself, namely the part which merely replaces the constant capital used up. This is directly true for the individual farmer. But when we go further into it, what is constant capital for him resolves itself at an earlier point, in another person’s hand before it became capital in his, into wages, profit, etc., in a word, into revenue. Therefore if it is true that commodities, considered in the hands of an individual producer, contain one part of the value which does not form revenue, then it is untrue for “all the inhabitants of a great country”, because what in one person’s hand is constant capital derives its value from the fact that it came from another person’s hand as the aggregate price of wages, profit and rent. Now he says the direct opposite.)

Adam Smith continues: ||268| “The gross rent of a private estate comprehends whatever is paid by the farmer; the neat rent, what remains free to the landlord, after deducting the expense of management, of repairs, and all other necessary charges; or what, without hurting his estate, he can afford to place in his stock reserved for immediate consumption, or to spend upon his table,” etc. … “His real wealth is in proportion, not to his gross, but to his neat rent” [ibid., pp. 313–14].

(In the first place, Smith brings in here something improper. What the farmer pays as rent to the landowner, just as what he pays as wages to the labourers, is like his own profit, part of the value or price of the commodity, which resolves itself into revenue. The question is however whether the commodity contains yet another constituent part of its value. He admits this here, As he should admit it in the case of the farmer, but that should not pre-vent the latter’s corn (i.e., the price or exchange-value of his corn) from being resolvable merely into revenue. Secondly, .a note in passing. The real wealth of which an individual farmer, considered as a farmer, can dispose, depends on his profit. But on the other hand, as owner of commodities he can sell the whole farm, or if the laud does not belong to him, he can sell all constant capital there is on it such as draught cattle, agricultural implements, etc. The value which he can realise in this way, therefore the wealth at his disposal, is conditioned by the value, that is the size of the constant capital belonging to him. However, he can only sell this again to another farmer, in whose hands it is not disposable wealth but constant capital. So we are still just where we were.)

“The gross revenue of all the inhabitants of a great country comprehends the whole annual produce of their land and labour” (previously we were told that this total—that is its value—resolves itself into wages, profits and rents, nothing but different forms of net revenue); “the neat revenue, what remains free to them, after deducting the expense of maintaining, first, their fixed, and, secondly, their circulating capital”; (so he now deducts instruments of labour and raw materials); “or what, without encroaching upon their capital, they can place in their stock reserved for immediate consumption.” (So now we learn that the price ox exchangeable value of the total stock of commodities, just as in the case of the individual capitalist, so also for the whole country, is resolvable into a fourth part which does not form a revenue fox anyone and cannot be resolved into wages, profit or rent.)

“The whole expense of maintaining the fixed capitol must evidently be excluded from the neat revenue of the society. Neither the materials necessary for supporting their useful machines and instruments of trade, their profitable buildings, etc., nor the produce of the labour necessary for fashioning those materials into the proper form, can ever make any pant of it. The price of that labour may indeed make a part of it; as the workmen so employed may place the whole value ||269| of their wages in their stock reserved for immediate consumption. But in other sorts of labour, both the price and the produce go to this stock; the price to that of the workmen, the produce to that of other people, whose subsistence, conveniences, and amusements, are augmented by the labour of those workmen” ([Wealth of Nations, O.U.P. edition, p. 314], [Garnier] l.c., pp. 214–15).^[9]

Here Adam Smith once more shies away from the question which he has to answer—the question concerning the fourth part of the total price of the commodity, which is not resolved into either wages, profit or rent. First something that is quite wrong: with makers of machinery, as with all other industrial capitalists, the labour which fashions the raw materials of the machine, etc., into the proper form in fact consists of necessary and surplus-labour, and therefore resolves itself not only into the wages of the workmen, but also into the profit of the capitalist. But the value of the materials and the value of the instruments with which they are fashioned by the workmen into the proper form, is resolvable into neither the one nor the other. That products which are destined by their nature not for individual consumption but for industrial consumption do not enter into the stock reserved for immediate consumption, has nothing at all to do with it. Seed, for example (that portion of the corn which serves for sowing), by its nature could also enter into the stock for consumption; but by its economic function it must enter into the stock for production. But furthermore it is quite wrong to say with regard to the products destined for individual consumption that both the full price and the product enter into the stock for consumption. Linen, for example, when not used for sail-cloth or other productive purposes, all goes as a product into consumption. But not its price, for one part of this price replaces the Linen yarn, another part looms and so on, and only a part of the price of the linen is converted into revenue of any kind.

Just now Adam told us that the materials necessary for machines, profitable buildings, etc. “can never make any part of this neat revenue”, any more than the machines and so on fashioned from them can; presumably, therefore, they form a part of the gross revenue. Shortly afterwards, [Garnier] l. c., Chapter II of Book II, p. 220, he says on the contrary:

“The machines and instruments of trade, etc., which compose the fixed capital either of an individual or of a society, make no part either of the gross or of the neat revenue of either: so money…” [ibid., p. 317].

Adam’s twistings and turnings, his contradictions and wanderings from the point, prove that, once he had made wages, profit and rent the constituent component parts of exchangeable value or of the total price of the product, he had got himself stuck in the mud and had to get stuck.

[9. Say as Vulgariser of Smith’s Theory. Say’s Identification of the Social Gross Product with the Social Revenue. Attempts to Draw a Distinction between Them by Storch and Ramsay][edit source]

Say, who tries to hide his dull superficiality by repeating in absolute general phrases Smith’s inconsistencies and blunders, says:

“If we consider a nation as a whole, it has no net product; for since the products have only a value equal to the costs of their production, when these costs are deducted, the whole value of the products is deducted… The annual revenue is the gross revenue” [Jean-Baptiste Say]. (Traité d’économie politique…, Troisième édition, Paris, 4811, t. II, p. 469.)

The value of the total annual products is equal to the quantity of labour-time materialised in them. ||270| If this aggregate value is deducted from the annual product, then in fact, so far as value is concerned, there remains no value, and by this deduction both the net revenue and the gross revenue have come to a final end But Say thinks that the annually produced values are annually consumed. Hence for the whole nation there is no net product but only a gross product. In the first place, it is not true that the annually produced values are annually consumed. This is not the case for a large part of the fixed capital. A large part of the annually produced values enters into the labour-process without entering into the process of the formation of value, that is to say without their total value being annually consumed. But in the second place: a part of the annual consumption of values consists of values that are used not as the stock for consumption, but as means of production, and which are returned to production (either in the same form or in the form of an equivalent), just as they originated in production. The second part consists of the va1ues which can enter into individual consumption over and above the first part. These form the net product.

Storch says of this trash of Say’s:

“It is […] evident that the value of the annual product is divided partly into capital and partly into profits, and that each of these parts of the value of the annual product goes regularly to purchase the product needed by the nation, as much for the purpose of preserving its capital as for renewing its consumable stock” (Storch, Cours d’économie politique, t. V: Considérations sur la nature du revenu national, Paris, 1824, pp. 134–35). “Let us then imagine a family which through its own labour is self-sufficing in all its needs, such as there are so many examples of in Russia .., is the revenue of such a family equal to the gross product coming from its land, its capital and its industry? Can it live in its barns or its stables, eat its seed and forage, clothe itself with its labouring cattle, amuse itself with its agricultural implements? According to Mr. Say’s thesis, all these questions would have to be answered in the affirmative” (l.c., pp. 135–36). “Mr. Say […] regards the gross product as the revenue of society; and from this he concludes that society can consume a value equal to this product” (l.c., p. 145). “The (net) revenue of a nation is not the excess of values produced over the totality of values consumed (as Say, the author, imagines it to be), but only [the excess of values produced] over the values consumed in order to produce.” Therefore, “if a nation consumes all this excess in the year it is produced, it consumes all its (net) revenue “ (l.c., p. 146). “If it is admitted that the revenue of a nation is equal to its gross product, so that no capital is to he deducted, then it must also he admitted that this nation may consume unproductively the entire value of its annual product, without in the least reducing its future revenue” (l.c., p. 147). “… the products which represent the [constant] capital of a nation are not consumable” (l.c., p. 150).

Ramsay (George)—An Essay on the Distribution of Wealth (Edinburgh, 1836)—remarks on the same subject, namely, Adam Smith’s fourth part of the total price, or what I call constant capital as distinct from the capital laid out in wages:

||271| “Mr. Ricardo,” he says, “[…seems to…] consider the whole produce as divided between wages and profits, forgetting the part necessary for replacing fixed capital” (p. 174, note).

By “fixed capital” Ramsay in fact means not only instruments of production, etc., but also the raw material—in short, what I call constant capital within each sphere of production. When Ricardo speaks of the division of the product into profit and wages, he always assumes that the capital advanced to production itself and consumed in it has been deducted. Nevertheless, on the main issue Ramsay is right. Because Ricardo does not make any further examination at all of the constant part of capital, and pays no attention to it, he makes gross errors and in particular confuses profit with surplus-value, besides errors in investigating oscillations in the rate of profit and so on.

Let us hear now what Ramsay himself says:

“In what manner is a comparison to be instituted between the product and^[10] the stock expended upon it?…^[11]. With regard to a whole nation … it is evident that all the various elements of the stock expended must he reproduced in some employment or another, otherwise the industry of the country could not go on as formerly. The raw material of manufactures, the implements used in them, as also in agriculture, the extensive machinery engaged in the former, the buildings necessary for fabricating or storing the produce, must all he parts of the total return of a country, as well as of the advances of^[12] […] its master-capitalists. Therefore, the quantity of the former may he compared with that of the latter, each article being supposed placed as it were beside that of a similar kind” (l.c., pp. 137–39). Now as regards the individual capitalist, since he does net replace his outgoings in kind, “by far the greater number must be obtained by exchange, a certain portion of the product being necessary for this purpose. Hence each individual master-capitalist comes to look much more to the exchangeable value of his^[13] product than to its quantity” (l.c., pp. 145–46). “The more the value of the product exceeds the value of the capital advanced, the greater will be his^[14] profit. Thus, then, will he estimate it, by comparing value with value, not quantity with quantity… Profit […] must rise or fall exactly as the proportion of the gross produce, or of its value, required to replace necessary advances, falls or rises […] the rate of profit must depend immediately upon two circumstances^[15]; first, the proportion of the whole produce which’ goes to the labourers; secondly, the proportion which must he set apart for replacing, either in kind or by exchange, the fixed capital” (l.c., pp. 146–48, passim).

<What Ramsay here says on the rate of profit has to be considered in Chapter III, on profit. It is important that he rightly lays stress on this element. On the one hand what Ricardo says is correct—that the cheapening of commodities which form constant capital (which Ramsay calls fixed capital) always depreciates a part of the existing capital. This is especially true of fixed capital proper—machinery, etc. It is of no advantage to the individual capitalist that the surplus-value rises in relation to the total capital, if the rise in this rate has been due to a fall in the total value of his constant capital (which he already had before the depreciation). But this is true only to a very small extent for that part of the capital which consists of raw materials or completed commodities (which do not form part of the fixed capital). The existing amount of these that can be depreciated in this way is always only an insignificant magnitude compared with the total production. It holds good for each capitalist only to a slight extent for that part of his capital expended as circulating capital. On the other hand—since the profit is equal to the proportion of the surplus-value to the total advanced capital, and since the quantity of labour that can be absorbed depends not on the value but on the quantity of raw materials and on the efficiency of the means of production—not on their exchange-value but on their use-value—it is clear that the greater the productivity of industry in the branches whose ||272| product enters into the formation of constant capital, the smaller the outlay of constant capital required to produce a given quantity of surplus-value; consequently the greater the proportion of this surplus-value to the whole advanced capital, and therefore the higher the rate of profit for a given amount of surplus-value.//

(What Ramsay considers doubly—replacement of product by product in the process of reproduction for the whole country, and replacement of value by value for the individual capitalist —are two aspects, both of which, in relation to the individual capital, must be taken into account in the circulation process of capital, which is at the same time its reproduction process.)

Ramsay did not solve the real difficulty which occupied Adam Smith’s attention and entangled him in all kinds of contradictions. Put plainly, it is this: The whole capital (as value) resolves itself into labour, is nothing but a certain quantity of materialised labour. The paid labour, however, is equal to the wages of the labourers, the unpaid labour is equal to the capitalists’ profit. So the whole capital must be resolvable, directly or indirectly, into wages and profit. Or is labour somewhere performed which consists neither of wages nor profit, and merely has the purpose of replacing the values used up in production which are, however, the conditions of reproduction? But who performs this labour, since all labour performed by the labourer is resolved into two quantities, one which maintains his own power to produce, and the other which forms the profit of capital?

[10. Inquiry into How It Is Possible for the Annual Profit and Wages to Buy the Annual Commodities, Which Besides Profit and Wages Also Contain Constant Capital][edit source]

[(a) Impossibility of the Replacement of the Constant Capital of the Producers of Consumption Goods through Exchange between These Producers][edit source]

To rid the problem of any spurious admixture, there is one more point to mention at the outset. When the capitalist transforms a part of his profit, of his revenue, into capital—into means of labour and materials of labour—both are paid for by that part of the labour which the labourer has performed gratis for the capitalist. Here we have a new quantity of labour forming the equivalent for a new quantity of commodities, commodities which as use-values consist of means of labour and materials of labour. This therefore enters into the accumulation of capital and presents no difficulty; we have here the growth of the constant capital beyond its previous limits, or the formation of new constant capital in excess of the amount of constant capital that already exists and must be replaced. The difficulty is the reproduction of the existing constant capital, not the formation of new constant capital in excess of what has to be reproduced. The new constant capital obviously originates in profit, and has existed for a moment in the form of revenue which is later transformed into capital. This part of the profit consists of the surplus labour-time, which, even without the existence of capital, must constantly be performed by society, in order to have at its disposal, so to speak, a fund for development, which the very increase of population makes necessary.

<There is a good explanation of constant capital, but only in so far as concerns its use-value, in Ramsay’s work, p. 166, which runs:

“… be the amount^[16] of the gross return” (of the farmer, for example) “small or great, the quantity of it required for replacing what has been consumed in these different forms, can undergo no alteration whatsoever.^[17] This quantity must he considered as constant, so long as production is carried on the same scale.”//

So we must first start from the fact: new formation of constant capital—as distinct from the reproduction of the existing constant capital—flows from profit as its source; that is, assuming on the one hand that the wages only suffice for the reproduction of labour-power, and on the other that the whole surplus-value is embraced under the category “profit”, since it is the industrial capitalist who directly appropriates the whole surplus-value, [irrespective of] to whom and where he has to surrender some of it later.

<“… the master^[18] […] is the general distributor of the national revenue^[19] […] who undertakes to pay […] to the labourers, the wages […]—to the” (moneyed) “capitalist, the interest […]—to the proprietor, the rent of his land” (Ramsay, [l.c. I, pp. 218–19).

In calling the whole surplus-value profit, we regard the capitalist: 1. as the person who immediately appropriates the whole surplus-value created; 2. as the distributor of that surplus-value between himself, the moneyed capitalist, and the proprietor of the soil.// ||VII-273| That this new constant capital arises from profit however means nothing but that it is due to a part of the surplus-labour of the labourers. Just as the savage, in addition to the time he needs for hunting, must necessarily use some time for making his bow; or just as in patriarchal agriculture, the peasant, in addition to the time spent in tilling the soil, must use a certain quantity of labour-time in producing most of his implements.

But the question here is: Who is it that labours in order to replace the equivalent of the constant capital already expended in production? The part of the labour which the labourer performs for himself replaces his wages, or, considered in relation to the whole of production, creates his wages. On the other hand, his surplus-labour which forms the profit is in part a consumption fund for the capitalist, and in part is transformed into additional capital. But the capitalist does not replace the capital already used up in his own production out of this surplus-labour or profit. <Were this the case, the surplus-value would not be a fund for new capital formation, but for the maintenance of the old capital.// But the necessary labour which forms the wages and the surplus-labour which forms the profit make up the whole working-day, and no other labour is performed in addition to these. (The contingency of the capitalist’s labour of superintendence is included in wages. In this aspect he is the wage-worker, even though not of another capitalist, yet of his own capital.) What then is the source, the labour, that replaces the constant capital?

The part of the capital expended in wages is replaced (leaving surplus-labour out of account) by new production. The labourer consumes the wages, but he adds as much new labour as he has destroyed of old labour; and if we consider the whole working class, without allowing the division of labour to confuse us, he reproduces not only the same value but the same use-values, so that, according to the productivity of his labour, the same value, the same quantity of labour, is reproduced in a greater or smaller quantity of these same use-values.

If we take society at any one moment, there exists simultaneously in all spheres of production, even though in very different proportions, a definite constant capital—presupposed as a necessary condition of production—that once for all belongs to production and must be given back to it, as seed must be given back to the land, It is true that the value of this constant part can fall or rise, depending on whether the commodities of which it is composed have to be reproduced at less or greater cost. This change in value, however, never alters the fact that in the process of production, into which it enters as a condition of production, it is a postulated value which must reappear in the value of the product. Therefore this change of value of the constant capital can here be ignored. In all circumstances it is a definite quantity of past, materialised labour, which passes into the value of the product as a determining factor. In order to bring out more clearly the nature of the problem, let us therefore assume that the production costs or the value of the constant part of the capital similarly remain unchanged, remain constant. It also makes no difference that for example the whole value of the constant capital may not pass into the products in a single year, but, as is the case with fixed capital, only passes into the aggregate products of a series of years. For the question here centres on that part of the constant capital which is actually consumed within the year, and therefore also must be replaced within the year.

The question of the reproduction of the constant capital clearly belongs to the section on the reproduction process or circulation process of capital—which however is no reason why the kernel of the matter should not be examined here. ||274| Let us first take the labourer’s wages. He receives, then, a certain sum of money in which say ten hours’ labour are materialised, if he works 12 hours for the capitalist. These wages are converted into means of subsistence. These means of subsistence are all commodities. Assume that the price of these commodities is equal to their value, But in the value of these commodities there is one component part which covers the value of the raw materials they contain and the means of production used up in them. All the component parts of the value of these commodities taken together, contain, however, like the wages spent by the labourer, only ten hours’ labour. Let us assume that two-thirds of the value of these commodities consists of the value of the constant capital they contain, and one-third, on the other hand, of the labour which has finally made the product into a finished article for consumption. Thus the labourer, with his ten hours of living labour, replaces two-thirds of constant capital and one-third of living labour (added to the article in the course of the year). If there were no constant capital in the means of subsistence, the commodities, which he buys, the raw material in them would have cost nothing, and no instrument of labour would have been required to make them. In that case there are two possibilities. Either the commodities, as before, would contain ten hours’ labour; then the labourer replaces ten hours’ living labour by ten hours’ living labour. Or the same quantity of use-values into which his wages are converted and which he needed for the reproduction of his. labour-power would have cost only 3 ¹/₃ hours’ labour (with no instrument of labour and no raw material which is itself a product of labour). In this case the labourer has only to perform 3 ¹/₃ hours’ necessary labour, and his wages would in fact fall to 3 ¹/₃ [hours’] materialised labour-time.

Let us assume that the commodity is linen: 12 yards (the actual price does not matter here)=36 shillings or £1.16.0. Of this, let one-third be labour added, two-thirds for raw material (yarn) and wear and tear of machinery, Let the necessary labour-time= 0 hours; the surplus-labour therefore=2. Let one hour’s labour, expressed in money,= 1 shilling. In this case the 12 hours’ labour =12 shillings, wages=10 shillings, profit=2 shillings. Let us assume that labourer and capitalist spent the whole of their wages and profit, that is 12 shillings (the total value that has been added to the raw material and machinery, the whole quantity of new labour-time materialised in the transformation of yarn into linen), on linen itself as a consumption article. (And it is possible that subsequently more than one labour day will be spent on their own product.) A yard of linen costs 3 shillings. With the 12 shillings labourer and capitalist together—adding wages and profit together—can only buy four yards of linen. These four yards of linen contain 12 hours’ labour, of which however only 4 are newly-added labour, 8 representing the labour realised in the constant capital. With the 12 hours’ labour wages and profit together buy only one-third of their total product, because two-thirds of this total product consist of constant capital. The 12 hours’ labour are divisible into 4+8, of which 4 replace themselves, while 8—independently of the labour added in the weaving process—replace such labour as entered into the weaving process in already materialised form, as yarn and machinery.

In regard to that part of the product, of the commodity, which exchanges against or is bought by wages and profit as an article of consumption (or for any other purpose, even reproduction, for the purpose for which the commodity is bought makes no difference to the transaction), it is therefore clear that the part of the value of the product which is formed by the constant capital is paid for from the fund of newly-added labour, which is resolved into wages and profit. How much or how little of constant capital and how much or how little of the labour added in the last production process is bought by wages and profit combined, in what proportions the labour last added and in what proportions the labour realised in constant capital is paid for, depends on the original proportions in which they entered as component parts of value into the finished commodity. To simplify matters we assume the proportion of two-thirds labour realised in constant capital to one-third newly-added labour. ||275| Now two things are clear:

First. The proportion we have assumed in the case of the linen—that is, in the case where labourer and capitalist realise wages and profit in the commodities they have themselves produced, when they buy back a part of their product—this proportion remains the same when they expend the same quantity of value on other products. On the assumption that every commodity contains two-thirds of constant capital and one-third newly-added labour, wages and profit together could always only purchase one-third of the product. The 12 hours’ labour=four yards of linen. If these four yards of linen are transformed into money, then they exist as 12 shillings. If these 12 shillings are retransformed into some commodity other than linen, they buy a commodity of the value of 12 hours’ labour, of which 4 are newly-added labour, 8 labour realised in constant capital. Consequently, this proportion holds good generally provided the other commodities contain the same original proportion of labour last added and of labour realised in constant capital as linen.

Secondly. If the daily newly-added labour= 12 hours, of these 12 hours only 4 replace themselves—that is, the living, newly-added labour; while 8 pay for the labour realised in the constant capital. But who pays for the 8 hours of living labour which are not replaced by living labour? It is precisely the 8 hours of realised labour contained in the constant capital that are exchanged for the 8 hours of living labour.

There is not the slightest doubt, therefore, that the part of the finished commodity which is bought by wages and profit combined—which together however are nothing but the total quantity of labour newly added to the constant capital—is replaced in all its elements: the newly-added labour contained in this part as well as the quantity of labour contained in the constant capital. Further, there is not the slightest doubt that the labour contained in the constant capital has here received its equivalent from the fund of living labour newly added to it.

But now comes the difficulty. The total product of the 12 hours of weaving labour—and this product is absolutely different from what this weaving labour has itself produced—is 12 yards of linen, of the value of 36 hours’ labour or 36s. But wages and profit together, or the total labour-time of 12 hours can buy back only 12 of these 36 hours’ labour, or of the total product only 4 yards, not a piece more. What happens to the other 8 yards? (Forcade, Proudhon.)

First we note that the 8 yards represent nothing but the constant capital advanced. It has however been given a changed form of use-value. It exists as a new product, no longer as yarn, loom, etc., but as linen. These 8 yards of linen, just like the 4 others which have been bought by wages and profit, contain—considered as value—one-third labour added in the weaving process, and two-thirds pre-existing labour materialised in the constant capital. In the case of the 4 yards previously discussed one-third of the newly-added labour covered the weaving labour contained in these 4 yards, that is, covered itself; two-thirds of the weaving labour on the other hand covered the constant capital the 4 yards contained. But now we have it the other way round: in the 8 yards of linen, two-thirds of the constant capital covers the constant capital they contain, and one-third of the constant capital covers the newly-added labour.

What then happens to the 8 yards of linen, which have absorbed the value of the whole constant capital which has been maintained during the 12 hours’ weaving labour, or which went into the production process, but is now in the form of a product destined for direct, individual (not industrial) consumption?

The 8 yards belong to the capitalist. Were he to consume them himself, besides the two-thirds of a yard representing his profit, ||276| then he could not reproduce the constant capital contained in the 12 hours’ weaving process; in general—with regard to the capital contained in this 12 hours’ process—he is no longer able to function as a capitalist. He therefore sells the 8 yards of linen, transforming them into money to the amount of 24 shillings, or 24 hours’ labour. But here we come to the difficulty. To whom does he sell them? Into whose money does he transform them? But we shall return to this in a moment. Let us first have a look at the further process.

When he has transformed into money, sold, converted into the form of exchange-value, the 8 yards of linen—that is to say, the part of the value of his product which is equal to the constant capital he advanced—he buys again with it commodities of the same kind (with regard to their use-value) as those which originally composed his constant capital. He buys yarn and looms and so on. He divides the 24 shillings between raw materials and means of production, in the proportions in which these are required for the manufacture of new linen.

His constant capital is therefore, as a use-value, replaced by new products of the same labour as that of which it originally consisted. The capitalist has reproduced the constant capital. This new yarn, looms, etc., however (on the assumption with which we began) likewise consist of two-thirds of constant capital and one-third of newly-added labour. While the first 4 yards of linen (newly-added labour and constant capital) have thus been paid for exclusively by newly-added labour, these 8 yards of linen are replaced by their own newly-produced elements of production, which consist partly of newly-added labour and partly of constant capital. Hence it seems that at least a part of the constant capital exchanges for constant capital in another form. The replacement of the products is real, because at the same time as the yarn is being worked up into linen, flax is being worked up into yarn and flax seed into flax; in the same way, while the loom is wearing out, a new loom is being made; and similarly, while the latter is being manufactured, new wood and iron is being produced. The elements are produced in one sphere of production at the same time as they are being worked up in the others. But in all these simultaneous processes of production, although each of them represents a higher stage of the product, constant capital is simultaneously being used up in varying proportions.

The value of the finished product, the linen, therefore resolves itself into two parts, of which one repurchases the simultaneously produced elements of constant capital, while the other is expended on articles of consumption. For the sake of simplification no account is here taken of the retransformation of part of the profit into capital; that is, as throughout this inquiry, it is assumed that wages plus profit, or the total of the labour added to the constant capital, are consumed as revenue.

The only question left is: Who buys the part of the total product with whose value the elements of constant capital that have meanwhile been newly produced are again bought? Who buys the 8 yards of linen? We assume, in order to leave no loopholes, that it is a type of linen specially intended for individual consumption, and is not, like perhaps sail-cloth, for industrial consumption. Here also the purely intermediary operations of commerce—so far as they are only mediatory—must be left completely out of account. For example, if the 8 yards of linen were sold to a merchant, and even if they pass through the hands of not one but twenty merchants and are twenty times bought and resold, then at the twentieth time they must at last be sold by the merchant to the actual consumer, who therefore actually pays the producer or the last, the twentieth merchant, who as far as the consumer is concerned represents the first merchant, that is to say, the actual producer. These intermediary transactions postpone or, if you like, mediate the final transaction, but they do not explain it. The question remains exactly the same whether it is: who buys the 8 yards of linen from the linen manufacturer, or: ||277| who buys them from the twentieth merchant into whose hand they have come through a series of exchanges?

The 8 yards of linen, just as the first 4 yards, must pass into the fund for consumption. That is to say, they can only be paid for out of wages and profit, for these are the only sources of revenue for the producers, who figure here as the only consumers. The 8 yards of linen contain 24 hours’ labour. Let us now assume (taking 12 hours as the generally valid normal working-day) that labourer and capitalist in two other branches spend their whole wages and profit on linen, as labourer and capitalist in the weaving industry have done with their whole day’s labour (the labourer his 10 hours, the capitalist the 2 hours’ surplus-value made on his labourer, that is, on 10 hours). Then the linen weaver would have sold the 8 yards, the value of his constant capital for 12 yards would be replaced, and this value could again be spent on the particular commodities of which the constant capital consists, because these commodities, yarn, loom, etc., available on the market, have been produced at the same time as yarn and loom were being worked up into linen. The simultaneous production of yarn and loom as products alongside the production process into which they enter as products but from which they do not emerge as products, explains how it is that the part of the value of the linen equal to the value of the material worked up into it—[such as yarn], loom, etc.—can be again transformed into yarn, loom, etc. If this production of the elements of linen did not proceed simultaneously with the production of the linen itself, the 8 yards of linen, even when they have been sold and transformed into money, could not be retransformed once more from money into the constant elements of linen.^[20]

On the other hand, however, although there may be new yarn, new looms, etc., on the market, and therefore production of new yarn and looms had taken place while finished yarn and finished loom were being transformed into linen—in spite of the simultaneous production of yarn and loom alongside the production of the linen—the 8 yards of linen cannot be retransformed into these material elements of constant capital for the weaving industry before they are sold, before they are converted into money. The continuous real production of the elements of linen, running side by side with the production of linen itself, therefore does not yet explain to us the reproduction of the constant capital, before we know whence comes the fund to buy the 8 yards of linen, to give them back the form of money, of independent exchange-value.

In order to solve this last difficulty we have assumed that B and C—which can stand for shoemaker and butcher—have spent their total wages and profit, that is, the 24 hours’ labour-time which they have at their disposal, entirely on linen, And this gets us over our difficulty with A, the linen weaver. His whole product, the 12 yards of linen in which 36 hours’ labour is materialised, has been replaced by wages and profit alone—that is, by the whole of the labour-time newly added to the constant capital in the spheres of production A, B and C. All the labour-time contained in the linen, both that already existing in its constant capital and that newly added in the weaving process, has been exchanged against labour-time which did not previously exist as constant capital in any sphere of production, but which was added simultaneously to the constant capital in the three production spheres A, B and C, in the last stage of production.

Though therefore it is still wrong to say that the original value of the linen was composed of wages and profit alone—since however it was made up of the value equal to the total of wages and profit, 12 hours’ weaving, and the 24 hours’ labour which, independently of the weaving process, was contained in the yarn, loom, in a word, the constant capital—it would on the other hand be correct to say that the equivalent of the 12 yards of linen, the 36s, for which they have been sold, is composed of wages and profit alone; that is, not only the weaving labour but also the labour contained in yarn and loom are replaced entirely by newly-added labour, namely 12 hours’ labour in A, 12 hours in B and 12 hours in C.

The value of the commodity sold is itself divided ||278| into newly-added labour (wages and profit) and pre-existing labour (value of the constant capital); that is the value for the seller (in fact [the value] of the commodity). On the other hand, the purchasing value, the equivalent given by the buyer to the seller, is made up entirely of newly-added labour, wages and profit. But as every commodity, before it is sold, is a commodity for sale and becomes money through a mere change of form, so every commodity, after it has been sold, would be made up of other component parts of value than it is composed of as a buying commodity (as money), which is absurd. Further: the labour performed by society for example in one year would not only cover itself—so that if the total quantity of commodities is divided into two equal parts, one half of the year’s labour would form an equivalent for the other half—but the one-third of the labour, which forms the current year’s labour in the total labour contained in the annual product, would cover three-thirds of the labour, would be equal to a magnitude three times greater than itself. This is still more absurd.

In the above example we have shifted the difficulty, pushed it on from A to B and C. But this has only increased the difficulty, not made it simpler. In the first place, in dealing with A we had the way out that 4 yards, containing as much labour-time as had been added to the yarn, that is, the total wages and profit in A, were consumed in linen itself, in the product of A’s own labour. With B and G this is not the case, since they consume the total labour-time added by them, their total wages and profit, in the product of sphere A, in linen, and so not in the product of B or C. They have therefore to sell not only the part of their product representing the 24 hours’ labour of constant capital, but also the part of their product which represents the 12 hours’ labour newly added to the constant capital. B must sell 36 hours’ labour, not only 24 like A. C is in same position as B. Secondly, in order to see A’s constant capital, to get it off his hands and transform it into money, we need the whole newly-added labour not only of B but also of C. Thirdly, B and C cannot sell any part of their product to A, since the whole part of A which constitutes revenue has already been expended in A itself by the producers of A. Nor can they replace the constant part of A by any part of their own product, since on the assumption we have made their products are not production elements for A but commodities which enter into individual consumption. The difficulty increases at each further step.

In order to exchange the 36 hours contained in A’s product (that is, two-thirds or 24 hours in constant capital, one-third or 12 hours in newly-added labour) entirely for labour added to constant capital, A’s wages and profit—the 12 hours’ labour added in A—one-third of the product had to be consumed by A itself. The other two-thirds of the total product=24 hours, represented the value contained in the constant capital. This value was exchanged for the total quantity of wages and profit or newly-added labour in B and C. But in order that B and C should be able, with the 24 hours in their products that make up their wages [and profit], to buy linen, they must sell these 24 hours in the form of their own products—and in addition to replace the constant capital they must sell 48 hours of their own products. They have therefore to sell products of B and C to the amount of 72 hours, in exchange for the total quantity of profit and wages in the other spheres D, E, etc.; and this means (with a normal 12-hour day) that 12’6 hours (=72) or the labour added in six other spheres of production must be realised in the products B and C; ||279| that is, the profit and wages or the total labour added to their respective constant capital in D, E, F, G, H, I.

In these circumstances the value of the total product of B+C would be paid for entirely in newly-added labour, that is, the aggregate wages and profit, in production spheres D, E, F, G, H, I. But in these six spheres the total product would then have to be sold (since no part of these products would be consumed by their producers themselves, as they have already put their whole revenue into products B and C), and no part of it could be accounted for within their own spheres; that is, the product of 6×36 hours’ labour=216, of which 144 represent constant capital and 72 (6×12) newly-added labour. Now in order in turn to transform the products of D, etc., similarly into wages and profit, that is, into newly-added labour, all the newly-added labour in the 18 spheres K¹—K¹⁸, that is to say, the total sum of wages and profit in these 18 spheres, must be entirely expended on the products of spheres D, E, F, G, H, I. These 18 spheres K¹—K¹⁸ would have to sell—since they consumed none of their products themselves, but had already spent their entire revenue in the 6 spheres D—I—18×36 hours’ labour or 648 hours’ labour, of which 18×12 or 216 are in newly-added labour, and 432 in labour contained in the constant capital. In order therefore to transform this total product of K¹—K¹⁸ into the labour added or total wages and profit in other spheres, the labour added in the spheres L¹—L5⁴ would be required; that is to say, 12×54=648 hours’ labour. Spheres L¹—L⁵⁴, in order to exchange their total product which is equal to 1,944 hours (of which 648=12×54 is the newly-added labour and 1,296 hours’ labour is the labour contained in the constant capital) for newly-added labour, would have to absorb the newly-added labour of spheres M¹ —M¹⁶², for 162×12=1,944; these in their turn must absorb the newly-added labour of spheres N¹ —N⁴⁸⁶ and so on.

This is the beautiful progression in infinitum which we arrive at if all products are resolved into wages and profit, newly-added labour—if not only the labour added in the commodity but also its constant capital have to be paid for by newly-added labour in another sphere of production.

In order to convert the labour-time contained in product A, 36 hours (one-third newly-added labour, two-thirds constant capital), into newly-added labour, that is, to have it paid for by wages and profit, we at first assumed that one-third of the product (whose value is equal to the total of wages and profit) was consumed or bought—which is the same thing—by the producers of A themselves. This was the progress.

1. Production sphere A. Product=36 hours’ labour. 24 hours’ labour, constant capital. 12 hours’ labour, newly added. One-third of the product consumed by the shareholders of the 12 hours, wages and profit, labourer and capitalist. There remain to be sold two-thirds of the product of A, equivalent to the 24 hours’ labour contained in the constant capital.

2. Production spheres B¹–B². Product=72 hours’ labour; of which 24, labour added, 48, constant capital. They buy with it the two-thirds of A’s product, replacing the value of A’s constant capital. But they have now to sell the 72 hours’ labour, of which the value of their total product consists.

3. Production spheres C¹–C⁶. Product=216 hours’ labour; of which 72 added labour (wages and profit). They buy with it the entire product of B¹—B², But they have now to sell 216, of which 144 are constant capital. ||280| 4. Production spheres D¹–D¹⁸ Product=648 hours’ labour, 216 labour added, and 432 constant capital. With the labour added they buy the total product of production spheres C¹–C⁶=216. But they have to sell 648.

5. Production spheres E¹–E⁵⁴. Product=1,944 hours’ labour; 648 labour added and 1,296 constant capital. They buy the total product of production spheres D¹–D¹⁸. But they have to sell 1,944.

6. Production spheres F¹–F¹⁶². Product=5,832, of which 1,944 added labour and 3,888 constant capital. With the 1,944 they buy the product of E¹–E⁵⁴. They have to sell 5,832.

7. Production spheres G¹–G⁴⁸⁶.

In order to simplify the problem, only one working-day of 12 hours is assumed throughout, in every production sphere, divided between capitalist and labourer. It does not solve the problem to increase the number of working-days, but complicates it needlessly.

So, to get a clearer picture of the law of this series:

1. A. Product=36 hours. Constant capital=24 hours. Total of wages and profit or newly-added labour=12 hours. The latter is consumed by capital and labour in the form of the product of A itself. A’s product to be sold, equal to its constant capital,=24 hours.

2. B¹–B². We need here two days’ labour, that is, 2 production spheres, to pay for A’s 24 hours.

Product=2×36, or 72 hours, of which 24 hours labour and 48 constant capital.

Product of B¹ and B² to be sold=72 hours’ labour, no part of it consumed in their own spheres.

6. C¹–C⁶. We need here 6 days’ labour, because 72=12×6, and the total product of B¹—B² has to be consumed by the labour added in C1–C⁶. Product=6×36=216 hours’ labour, of which 72 newly added, 144 constant capital.

18. D¹–D¹⁸. We need here 18 days’ labour because 216=12×18 so, since there is two-thirds constant capital per day’s labour, 18×36 is the total product=648 (432 constant capital).

And so on.

The figures 1, 2, [etc.] placed at the beginning of paragraphs signify the working-days or the different kinds of labour in different production spheres, as we assumed one working-day in each sphere.

Therefore: 1. A. Product=36 hours. Added labour 12 hours. Product to be sold (constant capital)=24 hours.

Or:

1. A. Product to be sold or constant capital=24 hours. Total product 36 hours. Labour added 12 hours. Consumed in A itself.

2. B¹–B². Buys with added labour=24 hours A. Constant capital 48 hours. Total product 72 hours.

6. C¹–C⁶. Buys with added labour 72 hours B¹–B² (=12×6). Constant capital 144, total product=216. Etc. ||281| Therefore:

1. A. Product=3 working-days (36 hours). 12 hours added labour. 24 hours constant capital.

2. B^1–2. Product=2×3=6 working-days (72 hours). Added labour=12×2=24 hours. Constant capital=48=2×24 hours.

6. C^1–6. Product=3×6 working-days=3×72 hours=216 hours’ labour. Added labour=6×12 hours (=72). Constant capital=2×72=144.

18. D^1–18 Product=3×3×6 working-days= 3×18 working-days (=54 working-days)=648 hours’ labour. Added labour=12×18=216. Constant capital=432 hours’ labour.

54. E^1–54 Product=3×54 working-days=162 working-days=1,944 hours’ labour. Added labour=54 working-days=648 hours’ labour; 1,296 constant capital.

162. F^1–162. Product=3×162 working-days (=486)=5,832 hours’ labour, of which 162 working-days or 1,944 hours’ labour are added labour, and 3,888 constant capital.

486. G^1–486. Product=3×486 working-days, of which 486 working-days or 5,832 hours’ labour are labour added, and 11,664 constant capital.

Etc.

Here we would already have the goodly total of 1+2+6+18+54+162+486 different working-days in different production spheres= 729 different production spheres, which already implies a considerably ramified society.

In order to sell the total product of A (where only 12 hours’ labour=1 working-day is added to the constant capital of 2 working-days, and wages and profit consume their own product), that is, only the 24 hours’ constant capital—and moreover to sell it again entirely for newly-added labour, for wages and profit—we need 2 working-days in B¹ and B² which however require a constant capital of 4 working-days, so that the total product of B^1–2=6 working-days. These must be all sold, because from here on it is assumed that each subsequent sphere does not consume any of its own product, but spends its profit and wages only on the product of the preceding spheres. In order to replace these 6 working-days of the product of B^1–2, 6 working-days are necessary, which however presuppose a constant capital of 12 working-days. The total product of C^1–6 therefore=18 working-days. In order to replace these by labour, 18 working-days D^1–18 are necessary, which however presuppose a constant capital of 36 working-days; so that the product=54 working-days. To replace these, 54 working-days are needed, E^1–54, which presuppose a constant capital of 108. Product= 162 working-days. Finally, to replace these, 162 working-days are needed, which however presuppose a constant capital of 324 working-days; that is, total product 486 working-days. This is F^1–162. Finally, to replace this product of F^1–162, we need 486 working-days (G^1–486), which however presuppose a constant capital of 972 working-days. So the total product of G^1–486=972+486=1,458 working-days.

But now let us assume that with sphere G we reach an end to the shifting; and ||282| our progression would soon bring us to an end in any society. How would the matter stand then? We have a product comprising 1,458 working-days of which 486 newly-added labour and 972 labour realised in constant capital. The 486 working-days can then be spent in the previous sphere F^1–162. But what is to buy the 972 working-days contained in the constant capital? Beyond G⁴⁸⁶ there is no new sphere of production and therefore no new sphere of exchange. In the spheres that lie behind it, except for F^1–162, there is nothing to be ex-changed. Moreover, G^1–486 has expended all its wages and profit up to the last centime in F^1–162. Therefore the 972 working-days realised in the total product of G^1–486, which are the equivalent of the constant capital it contains, remain unsaleable. It has thus not helped us at all to shift through nearly 800 branches of production the difficulty of the 8 yards of linen of sphere A, or the 24 hours’ labour, the 2 working-days, representing in its product the value of the constant capital.

It is no use imagining that the reckoning would have a different result if perhaps A did not spend its whole wages and profits in linen, but spent a part of it on the product of B and C. The limit of the outlays, the hours of labour added which are contained in A, B, C, can always only command a labour-time equal to themselves. If they buy more of one product, then they buy less of the other. It would only confuse the reckoning, but in no way alter result.

What then is to be done? In the above calculation we find:

	Working days	Labour added	constant capital
A Product=	3	1	2
B " =	6	2	4
C " =	18	6	12
D " =	54	18	36
E " =	162	54	108
F " =	486	162	324
Total:	729	243	486

(one-third of A’s product consumed by A itself)

If the last 324 working-days ([F’s] constant capital) in this account were equal to the constant capital which the farmer replaces for himself, subtracts from his product and returns to the land—and so has not to be paid for by new labour—then the account would balance. The riddle, however, would only he solved because a part of the constant capital replaces itself.

In fact therefore we have had consumed 243 working-days, corresponding to the newly-added labour, The value of the final product, 486 working-days, is equal to the value of the total constant capital contained in A—F, which is also 486 working-days. In order to account for this, we assume 486 days of new labour in G, from which however the only satisfaction we get is that instead of having to account for a constant capital of 486 days, ||283| we have to account for a constant capital of 972 working-days in G’s product, which is equal to 1,458 working-days (972 constant capital+486 labour). If now we want to get out of our difficulty by supposing that G works without constant capital, so that the product is only equal to the 486 days of newly added labour, the account would of course be cleared; but we would have solved the problem of who pays for the part of the value contained in the product which forms the constant capital, by assuming a case in which the constant capital equals nil and hence forms no part of the value of the product.

In order to sell A’s total product entirely for newly-added labour, in order to resolve it into profit and wages, the whole of the labour added in A, B and C must be spent on the labour realised in product A. Likewise to sell the total product of B+C, all labour newly added in D¹—D¹⁸ is needed. Similarly, to buy the total product of D¹—D¹⁸, all labour added in E^1–54. To buy the total product of E^1–54, all labour added in F¹-¹⁶². And finally, Ito buy] the total product of F^1–162, the total labour-time added in G^1–486. At the end, in these 486 production spheres represented by G^1–486, the total labour-time added is equal to the total product of the 162 spheres F, and this total product which is replaced by labour is as large as the constant capital in A, B^1–2, C^1–6, D^1–18, E^1–54, F^1–162, But the constant capital of sphere G, twice the size of the constant capital used in A —F¹⁶², is not replaced and cannot be replaced.

In fact we have found, on our assumption that in all production spheres the proportion of the newly-added to the pre-existing labour is 1:2, that always twice [as many] new production spheres [as all preceding ones taken together] must use all their new labour to buy the product of the preceding spheres —the labour added of A and B^1–2, to buy A’s total product; the labour added of 18 D or D^1–18 (2×9), to buy the product of C^1–6, and so on. In short, that twice as much newly-added labour as the product itself contains is always needed, so that there must be twice as much newly-added labour in the last production sphere G as there actually is, in order to buy the total product. In a word, we find in the result of G what was already there in our starting-point A, that the newly-added labour cannot buy any greater quantity of its own product than it itself amounts to and that it cannot buy the labour pre-existing in the constant capital.

It is therefore impossible for the value of the revenue to cover the value of the total product. But since, apart from the revenue, no fund exists from which this product sold by producers to (individual) consumers can be paid for, it is impossible for the value of the total product, minus the value of the revenue, ever to be sold, paid for or (individually) consumed. On the other hand it is necessary for every product to be sold and paid for at its price (on the assumption that price is here equal to value).

For that matter, it might have been foreseen from the outset that introducing the acts of exchange, sales and purchases between different commodities or the products of different production spheres, would not bring us a step forward. In A, the first commodity, the linen, we had one-third or ||283a| 12 hours of newly-added labour and 2×12 or 24 hours of pre-existing labour in the [constant] capital. Wages and profit could only repurchase that part of the product of commodity A—and therefore also of any equivalent of commodity A in any other product—which is equal to 12 hours’ labour. They could not buy back their own constant capital of 24 hours, hence they could not repurchase the equivalent of this constant capital in any other commodity either.

It is possible for the relation of added labour to constant capital to be different in commodity B. But however different the proportion may be of constant capital to newly-added labour in the various spheres of production, we can calculate the average, and so say that in the product of the whole society or of the whole capitalist class, in the total product of capital, the newly-added labour is equal to a, the labour pre-existing as constant capital is equal to b. In other words, the proportion of 1 : 2 which we assumed in A, the linen, is only a symbolical expression of a : b and is not intended to imply anything more than that a definite and definable relation of some kind or other exists between these two elements—the living labour added in the current year or in any other period selected, and the past labour preexisting as constant capital. If the 12 hours added to the yarn buy not only linen, but for example linen only to the amount of 4 hours, then they could buy some other product to the amount of 8 hours, but they could never buy more than 12 hours altogether; and if they buy another product to the value of 8 hours, then 32 hours’ linen in all must be sold by A. The example A therefore holds good for the total capital of the entire society, and though the problem can be complicated by introducing the exchange of different commodities, the problem itself remains unchanged.

Let us assume that A is the total product of society: then one-third of this total product can be bought by the producers for their own consumption, bought and paid for with the total of their wages and their profits, equal to the total newly-added labour, the amount of their aggregate revenue. They have no fund with which to pay for, to buy and consume, the other two-thirds. Just as the newly-added labour, the one-third which consists of profit and wages, is itself covered by its own product, or withdraws only that part of the value of the product which contains one-third of the total labour, newly-added labour or its equivalent, so must the two-thirds of pre-existing labour be covered by its own product. That is to say, the constant capital remains equal to itself and replaces itself out of that part of the value which represents the constant capital in the total product. The exchange between various commodities, the series of purchases and sales between different spheres of production, brings about a change in form only in the sense that the constant capitals in the various production spheres mutually replace each other in the proportion in which they were originally contained in them.

We must now examine this more closely. |283a||

[(b) Impossibility of Replacing the Whole Constant Capital of society by Means of Exchange between the Producers of Articles of Consumption and the Producers of Means of Production][edit source]

||283b| This view—that the annual product of the country is divided into wages and profits (rents, interest, etc., included in the latter)—is expressed by Adam Smith, Book II, Chapter II, in examining the circulation of money and the credit system (on this, compare later Tooke), where he says:

“The circulation of every country may be considered as divided into two different branches; the circulation of the dealers with one another, and the circulation between the dealers and the consumers.” (Garnier explains that by dealers Adam Smith here means “all traders, manufacturers, artisans, and so on; in a word, the agents of the trade and industry of a country”). “Though the same pieces of money, whether paper or metal, may be employed sometimes in the one circulation and sometimes in the other; yet as both are constantly going on at the same time, each requires a certain stock of money, of one kind or another, to carry it on, The value of the goods circulated between the different dealers never can exceed the value of those circulated between the dealers and the consumers; whatever is bought by the dealers being ultimately destined to be sold to the consumers” ( [Wealth of Nations, O.U.P. edition, Vol. I, pp. 358–59], [Garnier] t. II, b. II, ch. II, pp. 292–93).

To this, as well as Tooke, we must come back later.

Let us return to our example. The day’s product of A, a linen weaving factory, was equal to 12 yards=36s.=36 hours’ labour, of which 12 are newly-added labour divisible into wages and profit, and 24 hours or 2 days equal to the value of the constant capital, which now however, instead of the old form of yarn and loom, exists in the form of linen, but in a quantity of linen equal to 24 hours=24s, In this there is the same quantity of labour as in the yarn and loom which it replaces, and with it therefore the same quantity of yarn and loom can be bought again (on the assumption that the value of yarn and loom has remained the same, that the productivity of labour in these branches of industry has not altered). The spinner and the loom maker must sell the whole of their year’s or their day’s product (which for our purpose here is the same thing) to the weaver, for he is the only person for whom their commodity has use-value, He is their only consumer.

But if the weaver’s constant capital is equal to 2 working-days (his daily consumed constant capital), then for one working-day of the weaver there are two working-days of spinner and machine maker—2 working-days which may themselves be divided in very different proportions into labour added and constant capital. But the total daily product of spinner and machine maker together (assuming that the machine maker makes only looms)—constant capital and added labour together— cannot amount to more than 2 days’ labour while that of the weaver, because of the 12 hours’ labour newly added by him, amounts to 3 working-days. It is possible that spinner and machine maker consume as much living labour-time as the weaver. Then the labour-time contained in their constant capital must be smaller. However that may be, they can in no case use the same quantity of labour (summa summarum) materialised and living, as the weaver. It would be possible for the weaver to use proportionately less living labour-time than the spinner (the latter for example would certainly use less than the flax-grower); in that case the excess of his constant capital over the variable part of his capital must be so much greater. ||284| The weaver’s constant capital thus replaces the entire capital of the spinner and the loom maker, not only their own constant capital but the labour newly added in the spinning process and in the manufacture of machines. The new constant capital therefore here replaces other constant capitals completely and, besides that, the total amount of the labour newly added to them. By the sale of their commodities to the weaver, spinner and loom maker have not only replaced their constant capital, but have received payment for their newly-added labour. His constant capital replaces for them their own constant capital and realises their revenue (wages and profit together). In so far as the weaver’s constant capital replaces for them only their own constant capital, which they have handed over to him in the forms of yarn and loom, constant capital in one form has only been exchanged for constant capital in another form. There has in fact been no change of value in the constant capital.

Let us now go further back. The spinner’s product is divided into two parts, flax, spindles, coal, etc., in a word his constant capital, and the newly-added labour; similarly for the machine maker’s total product. When the spinner replaces his constant capital, he pays not only for the total capital of the spindle manufacturer, etc., but also for that of the flax-grower. His constant capital pays for the one part of their constant capital plus the labour added. Then as for the flax-grower, his constant capital—after deducting agricultural implements, etc.—consists of seed, manure, etc. We will assume—as in agriculture must always be the case, more or less directly—that this part of the farmer’s constant capital is an annual deduction from his own product, which he must return each year, out of his own product, to the land —that is, to production itself. Here we find a part of the constant capital which replaces itself and is never sold, and therefore also is never paid for, and is never consumed, never enters into individual consumption. Seed, etc., are the equivalent of so much labour-time. The value of the seed, etc., enters into the value of the total product; but the same value, because it is the same amount of products (on the assumption that the productivity of labour has remained the same), is also deducted again from the total product and returned to production, not entering into circulation.

Here we have at least one part of the constant capital—that which can be regarded as the raw material of agriculture—which replaces itself. Here therefore is an important [branch I—the most important branch in size and in the amount of capital it contains—of the annual production in which an important part of the constant capital, the part which consists of raw materials (apart from artificial fertilisers, etc.), replaces itself and does not enter into circulation, and is therefore not replaced by any form of revenue. Therefore the spinner has not got to repay to the flax-grower this part of the constant capital (the part of the constant capital which is replaced and paid for by the flax-grower himself); nor has the weaver to pay for this to the spinner, nor the buyer of the linen to the weaver.

Let us assume that all those who directly or indirectly participated in the production of the 12 yards of linen (=36 shillings=3 working-days or 36 hours’ labour) were paid in linen itself, It is clear in the first place that the producers of the elements of the linen, of the constant capital of the linen, could not consume their own product, since these products are produced for production and do not enter into immediate ||285| consumption. They must therefore spend their wages and profits on linen—on the product which finally enters into individual consumption. What they do not consume in linen, they must consume in some other consumable product exchanged for linen. As much (in value) linen is therefore consumed by others as they consume in other consumable products instead of linen, It is the same as if they had themselves consumed it in linen, since as much as they consume in another product is consumed in linen by the producers of other products. The whole problem must therefore be cleared up, without any reference to exchange, by considering how the 12 yards of linen are divided up between all the producers who have taken part in its production or in the production of its elements.

Spinner and loom maker, who we assume also makes spinning machinery, have added one-third in labour, their constant capital amounting to two-thirds of yarn and loom, Of the 8 yards of linen (or 24 hours) or 24s., which replace their total product, they can consequently consume ⁸/₃ [yards], that is, 2²/₃ [yards] of linen or 8 hours’ labour or 8s. Therefore 5¹/₃yards or 16 hours’ labour remain to be accounted for.

5¹/₃ yards or 16 hours’ labour represent the constant capital of the spinner and of the loom maker. Let us assume that of the spinner’s constant capital two-thirds is raw material and is spent on flax; then the flax-grower can consume these two-thirds entirely in linen, since his constant capital <but here we take the wear and tear of his implements of labour, etc., as equal to nil// is not put into circulation at all; he has already deducted it and reserved it for reproduction. He can therefore buy two-thirds of the 5¹/₃ yards of linen or 16 hours’ labour, which is equal to 3 ⁵/₉ yards, or ¹⁰²/₃ hours’ labour. So there remains to be accounted for only 5¹/₃ minus 3⁵/₉ yards, or 16 –10²/₃ hours’ labour, that is, 1⁷/₉ yards or 5¹/₃ hours’ labour. These 1⁷/₉ yards or 5¹/₃ hours’ labour resolve themselves into the constant capital of the loom maker and the total product of the spinning machinery maker, who are assumed to be one person. ||286| Therefore once again:

Weaver	Total product	constant capital	Weaving labour added	consumption
Weaver	12 yards linen (36s.) (36 hours’ labour)	8 yards (24 hours) (24s.)	12 hours	12 hours 12s.=4 yards

Of the weaver’s constant capital let ³/4=yarn and ¹/₄=loom (means of production in general). The weaver thus pays 6 yards or 18 hours to the spinner and 2 yards or 6 hours to the machine maker, etc.

Spinner				Machine maker
Total Product	Constant capital	Spinning labour added	Consumption	Total Product	Constant capital	labour added	Consumption
6 yards	4 yards	2 yards	2 yards	2 yards	⁴/₃ yards	²/₃ yard	²/₃ yard
18s.	12s.	6s.	6s.	6s.
18 hours	12 hours	6 hours		6 hours

Of the 8 which replace the weaver’s constant capital, therefore, 2 yards(=6s.=6 hours) are consumed by the spinner ²/₃ of a yard (2s.=2 hour’s labour) by the maker of looms, etc.

What remains for us to account for is thus 8–2²/₃yards=5¹/₃ yards (=16s.=16 hours’ labour). These remaining 5¹/₃ yards (=16s.=16 hours’ labour) are resolved as follows: We assume that in the 4 yards which represent the spinner’s constant capital, that is, the elements of his yarn, ³/₄ is the equivalent of the flax, and ¹/₄ of the spinning machine. The elements of the ||287| spinning machine will be reckoned in further on with the constant capital of the loom maker. The two are assumed to be the same person.

Of the 4 yards which replace the spinner’s constant capital, ³/₄=3 yards are therefore resolved into flax. A considerable part of the constant capital in the flax, used in its production, has not however to be replaced; for the flax-grower has already returned it to the land in the form of seed, manure, fodder, cattle, etc. Therefore in the part of his product that he sells, only the wear and tear of his instruments of labour, etc., has to be included as constant capital. Here we must rate the labour added at two-thirds at least and the constant capital to be replaced at one-third at the most.

Thus:

	Total product	Constant capital	Farm labour	Consumable
Flax	3 yards	1 yard	2 yards	2 yards
	9s.	3s.	6s.	6s.
	9 hours’ labour	3 hours’ labour	6 hours’ labour	6 hours’ labour

Thus what we have still to account for is:

1 yard (3s., 3 hours’ labour), equal to the flax-grower’s constant capital;

1¹/₃ yards (4s., 4 hours’ labour), equal to the constant capital for the loom;

finally 1 yard (3s., 3 hours’ labour) for the total product contained in the spinning machine.

First what the machine maker can consume for the spinning machine has to be deducted:

	Total product	Constant capital	Engineering labour added	Consumable
Spinning machine	1 yard 3s. 3 hours’ labour	²/₃ yard 2s. 2 hours’ labour	¹/₃ yard 1s. 1 hour’s labour	¹/₃ yard 1s. 1hour’s labour

Moreover, the agricultural machinery, the flax-grower’s constant capital, has to be divided into its consumable and other parts:

	Total product	Constant capital	Engineering labour	Consumable
Agricultural machine	1 yard 3s. 3 hours’ labour	²/₃ yard 2s. 2 hours’ labour	¹/₃ yard 1s. 1 hour’s labour	¹/₃ yard 1s. 1hour’s labour

If therefore we put together that part of the total product which represents machinery, it amounts to 2 yards for the loom, I yard for the spinning machine, 1yard for the agricultural machine, 4 yards in all (12s., 12 hours’ labour or ¹/₃ of the total product, 12 yards of linen), Of these 4 yards, the machine maker can consume ²/₃ of a yard for the loom, ¹/₃ for the spinning machine, ditto ¹/₃ for the agricultural machinery, in all 1¹/₃ yards. 2²/₃ yards are left, that is, ⁴/₃ constant capital for the loom, ²/₃ for the spinning machine, and ²/₃ for the agricultural machine= ⁸/₃=2²/₃ yards (=8s.=8 hours’ labour). This therefore forms the machine builder’s constant capital which has to be replaced. Of what now does this constant capital consist? On the one hand, of its raw material, iron, wood, leather belting; and so on. But on the other hand, of that part of the machine he works with (which he may have built himself) which he uses in building machines and which gets worn out. Let us assume that the raw material amounts to two-thirds of the constant capital, and the machine-building machine to one-third. This latter one-third is to be examined later. The two-thirds for wood and iron ||288| amount to two-thirds of the 2²/₃ yards (or 2²/₃ yards=⁸/₃ yards=²⁴/₉ yards), ¹/₃ of this=⁸/₉; therefore ²/₃=¹⁶/₉ yards.

Let us then assume that here [in the production of wood and iron] machinery is one-third and added labour two-thirds (since there is nothing for raw material); then two-thirds of the ¹⁶/₉ yards replace labour added, and one-third machinery. Thus what is left again for machinery is ¹⁶/₂₇ yard. The constant capital of the producers of iron and wood, in short, of the extractive industry, consists only of instruments of production—which we here call machinery in general — and not of raw material.

Therefore ⁸/₉ yard for the machine-building machine, ¹⁶/₂₇ yard for the machinery used by the producers of iron and wood. So ²⁴/₂₇ + ¹⁶/₂₇ = ⁴⁰/₂₇ = 1¹³/₂₇ yards. This therefore, has in turn to be put down to the machine builder’s account.

Machinery. ²⁴/₂₇ of a yard forms the replacement for the machine building machine. But this in turn is divided into raw material (iron, wood, etc.), the part of, the machinery used up in building the machine-building machine, and labour added. So, if each of the elements is one-third of the total, ⁸/₂₇ of a yard would go for the labour added, and ¹⁶/₂₇ of a yard would be left for the constant capital to be replaced in the machine-building machine, that is, ⁸/₂₇ of a yard for raw material and ⁸/₂₇ of a yard to replace the part of the value representing the machinery used up in working up this raw material (together ¹⁶/₂₇ of a yard).

On the other hand the ¹⁶/₂₇ of a yard, which replace the iron and wood producers’ machinery, likewise consist of raw material, machinery and labour added. This last is equal to one-third, that is, equal to ¹⁶/_27×3 = ¹⁶/₈₁ of a yard, and the constant capital in this part of the machinery consists of ³²/₈₁ of a yard, of which ¹⁶/₈₁ is for the raw material, ¹⁶/₈₁ to make good the wear and tear of the machinery.

Thus there remains in the machine builder’s hands, as constant capital to make good the wear and tear of his machinery, ⁸/₂₇ of a yard, with which he replaces the wear and tear of his machine-building machine, and ¹⁶/₈₁ of a yard for the wear and tear of the iron and wood producers’ machinery that has to be replaced.

Apart from this he had, for the replacement of his constant capital, ⁸/₂₇ of a yard for the raw material (contained in the machine-building machine) and ¹⁶/₈₁ for the raw material contained in the iron and wood producers’ machines. Of this, however, another two-thirds consist of labour added and one-third of machinery used up. Therefore two-thirds of the ²⁴/₈₁+¹⁶/₈₁=⁴⁹/₈₁ is paid for labour, that is, (26²/₃)/₈₁. Of this raw material, ||289| ^(13¹/₃)/₈₁ is again left to replace machinery. This ^(13¹/₃)/₈₁ of a yard therefore comes back to the machinery manufacturer.

Now there would again be in the hands of the latter: ⁸/₂₇ of a yard for the replacement of the wear and tear of the machine-building machine, ¹⁶/₈₁ to replace the wear and tear of the iron, etc., producers’ machinery, and (13¹/₃)/₈₁ for the part of the value to replace the machinery in the raw material, iron, etc.

And so we might go on calculating to infinity, with ever smaller fractions, but never able to divide the 12 yards of linen without a remainder.

Let us briefly resume the course of our inquiry up to this point.

We said at the start that in the different spheres of production there are different proportions as between the newly-added labour (which partly replaces the variable capital laid out in wages, and partly forms the profit, the unpaid surplus-labour) and the constant capital to which this labour is added. We could however assume an average proportion, for example, a—labour added, b—constant capital; or we could assume that the proportion of the latter to the former is 2 : 1 = ²/₃ : ¹/₃. If this holds good in each production sphere of capital, we went on, then the labour added (wages and profit together) in one particular sphere of production can always only buy one-third of its own product, since wages and profit together form only one-third of the total labour-time realised in the product. But the other two-thirds of the product, which replace his constant capital, also belong to the capitalist. If he wishes to continue production, however, he must replace his constant capital, that is, retransform two-thirds of his product into constant capital. To do this, he must sell the two-thirds.

But to whom? We have already deducted the one-third of the product that can be bought with the total of wages and profit. If this total represents 1 day’s labour or 12 hours, then the part of the product whose value is equal to the constant capital represents 2 days’ labour or 24 hours. So we assume that [the second] one-third of the product is bought by profit and wages in another branch of production, and the last one-third is bought in turn by profit and wages in a third branch of production. But then we have exchanged the constant capital of Product I for wages and profit exclusively, that is, for newly-added labour, by making the whole labour added to Products II and III be consumed in the form of Product I. Of the six working-days contained in Products II and III, in both newly-added and pre-existing labour, none has been replaced or bought by the labour contained in either Product I or in Products II and III. So we had in turn to make the producers of other products spend all their labour added on Products II and III, and so on. Finally we had to come to a halt at a Product X, in which the labour added was as much as the constant capital of all the earlier products; but its own constant capital two-thirds larger, would be unsaleable. Thus we have not come one step forward with the problem. In the case of Product X, as in the case of Product I, the question remains: to whom is the part of the product sold which replaces the constant capital? Or is the one-third new labour added to the product to replace the one-third new labour plus the two-thirds pre-existing labour contained in the product? Is one-third to be equal to three-thirds?

So from this it became clear that the shifting of the difficulty from Product I to Product II, etc., in a word, merely bringing in to the problem the exchange of commodities, was of no avail. ||290| So we had to pose the question in a different way.

We assumed that the twelve yards of linen (=36s.=36 hours’ labour) were a product containing 12 hours’ labour or 1 working-day of the weaver (necessary labour and surplus-labour together, that is, the equivalent of the total of profit and wages), while two-thirds represented the value of the constant capital, yarn and machinery, etc., contained in the linen. We further assumed, in order to eliminate any recourse to quibbles and intermediate transactions, that the linen was of a kind destined only for individual consumption, and therefore could not serve in turn as raw material for some new product. By this we assumed that it was a product that had to be paid for from wages and pro fit, that it must be exchanged for revenue. And finally to simplify things we assume that no part of the profit is reconverted into capital, but that the whole profit is spent as revenue.

As for the first 4 yards, the first one-third of the product, equal to the 12 hours’ labour added by the weaver, we soon settled that. They are resolved into wages and profit; their value is the same as the value of the weaver’s total profit and wages. They are therefore consumed by him and his workmen themselves. This solution for the four yards is unconditionally valid. For if profit fit and wages are consumed not in linen but in some other product, this can only happen because the producers of some other product consume the part of it which is consumable by them in linen and not in their own product. If of the 4 yards of linen, for example, only 1 is consumed by the linen weaver himself, and 3 yards in meat, bread, and cloth, then just the same as before, the value of the 4 yards of linen is consumed by the linen weavers themselves; only they have consumed ³/₄ of this value in the form of other commodities, while the producers of these other commodities have consumed in the form of linen the meat, bread and cloth consumable by them as wages and profit. <Here, as throughout this inquiry, it is of course always assumed that the commodity is sold and sold at its value.//

But now comes the real problem. The weaver’s constant capital exists now in the form of 8 yards of linen (=24 hours’ labour=24s.); if he wants to continue production, he must transform these 8 yards of linen into money, 24s., and with this 24s. he must buy newly-produced commodities, to be found on the market, of which his constant capital consists, To simplify the problem, let it be assumed that he does not replace his machinery within a period of years, but that every day, out of the proceeds of his product, he has to replace in kind the part of the machinery that is equal to the part of the value of the machinery worn out each day. He must replace the part of the product that is equal to the value of the constant capital it contains with the elements of this constant capital, or the material conditions of production for his labour. On the other hand, his prod-not, the linen, does not enter any other sphere of production as a condition of production, but passes into individual consumption. He can therefore replace the part of his product which represents his constant capital only by exchanging it for revenue or for the part of the value of the product of other producers which consists of wages and profit, consequently of newly-added labour. The problem is thus posed in its correct form. The question is only: in what conditions can it be solved?

A difficulty that arose in our first presentation of it has now been partly overcome. Although in each sphere of production the labour added is equal to one-third, the constant capital— on the assumption made—to two-thirds, this one-third labour added—or the total value of the revenue (of wages and profit; as already noted earlier, no account is here taken of the part of the profit which is again transformed into capital) —is only consumable in the products of the branches of industry which work directly for individual consumption. The products of all other branches of industry can only be consumed as capital, can only enter into industrial consumption. ||291| The constant capital represented by the 8 yards (=24 hours=24s.) consists of yarn (raw material) and machinery. Let us say ³/₄ raw material and ¹/₄ machinery. (Under raw material we can here also reckon all auxiliary materials such as oil, coal, etc. But for the sake of simplicity it is better to disregard these.) The yarn would cost 18s. or 18 hours’ labour=6 yards; the machinery 6s.=6 hours’ labour=2 yards.

If therefore the weaver uses his 8 yards to buy yarn for 6 yards and machinery for 2 yards, with his constant capital of 8 yards he has covered not only the constant capital of the spinner and the loom manufacturer, but also the labour newly added by them. A part of what appears as the weaver’s constant capital therefore represents newly-added labour on the part of the spinner and the machinery manufacturer, and consequently is for them not capital but revenue.

Of the 6 yards of linen, the spinner can himself consume one-third=2 yards (equal to the labour newly added, profit and wages). But 4 yards replace for him only flax and machinery. Say 3 yards for flax, 1 yard for machinery. He must pass on the payment for these. Of the 2 yards the machinery manufacturer can himself consume two-thirds of a yard; but ⁴/₃ only replace for him iron and wood, in a word, raw material, and the machinery used for building the machine. Say, of the ⁴/₃ yards, 1 yard for raw material and ¹/₃ of a yard for machinery.

Of the 12 yards of linen, we have consumed up to this point:

first, 4 for the weaver, second, 2 for the spinner, and third, ²/₃ for the machine builder; together 6²/₃, So 5¹/₃ remain to be accounted for. And these 5¹/₃ are distributed as follows:

The spinner has to replace, out of the value of 4 yards, 3 for flax, 1 for machinery.

The machinery manufacturer has to replace, out of the value of ⁴/₃ yards, 1 for iron, etc., ¹/₃ for machinery (what he has himself used up in building the machines).

The 3 yards for flax are therefore paid by the spinner to the flax-grower. In the case of the latter, however, there is the special feature that a part of his constant capital (namely, seed, manure, etc., in short all products of the land which he returns to the land) does not enter at all into circulation, and consequently does not need to be deducted from the product that he sells; this product on the contrary expresses only added labour, and consequently consists entirely of wages and profit (except for the part which replaces machinery, artificial fertilisers, etc.). So let us assume as before that one-third of the total product is labour added; then 1 yard of the 3 would come under this category. Taking as before for the 2 other yards that one-quarter is for machinery, that would be ²/₄ yard. The other ⁶/₄, on the other hand, would also be for labour added, since in this part of the flax-grower’s product there is no constant capital, which he has already deducted earlier. So 2 ²/₄ yards would go for the flax-grower’s wages and profit. What remains is ²/₄ yard for replacement of machinery. <Thus of the 5 ¹/₃ yards which we had to consume, ²²/₄ have gone (5 ⁴/₁₂ – 2 ⁶/₁₂ =2 ¹⁰/₁₂ = 2 ⁵/₆ yards).// This last ²/₄ of a yard would therefore be used by the flax-grower to buy machinery.

The machinery manufacturer’s account would now stand like this: of the constant capital for the loom he had laid out 1 yard for iron, etc.; ¹/₃ of a yard for the wear and tear of the machine-building machine in producing the loom.

In addition, however, the spinner buys from the machinery manufacturer spinning machinery for I yard, and the flax-grower buys from him agricultural implements for ²/₄ of a yard. Of these ⁶/₄ yards, the machinery manufacturer has to consume ¹/₃ for labour added, and to expend ²/₃ for the constant capital laid out in the spinning machine and the agricultural implements. ⁶/₄ however=¹⁸/₁₂ So the machine builder would have ⁶/₁₂ of a yard ||292| again for consumption, ¹²/₁₂ or 1 yard to convert into constant capital. (Of the 2 ⁵/₆ yards not yet consumed, ¹/₂ yard therefore has gone. ¹⁴/₆ yards are left, or 2 ²/₆, or 2 ¹/₃ yards.)

Of this yard the machinery manufacturer would have to expend ³/₄ on raw material, iron and wood, etc., ¹/₄ to pay to himself for the replacement of the machine-building machine.

So the total account would now stand like this:

Machinery manufacturer’s constant capital	For the loom: 1 yard for raw material, ¹/₂ of a yard for wear and tear of his own machinery.
	For spinning machine and agricultural implements: ³/₄ of a yard for raw material, ¹/₄ of a yard for wear and tear of his own machinery.
	Hence equal to 1 ³/₄ yards for raw material, ¹/₃+¹/₄ for wear and tear of his own machinery.

The 1³/₄ yards or ⁷/₄ yards therefore buy from the iron and wood manufacturers iron and wood to this value. ⁷/₄=²¹/₁₂. But here a new question arises, In the case of the flax-grower, the raw material which is part of the constant capital did not enter into the product he sold, because it had already been deducted. In this case we must resolve the total product into labour added and machinery. If we even assumed that here the added labour was equal to two-thirds of the product, the machinery one-third, ¹⁴/₁₂ would be consumable. And ⁷/₁₂ would remain as constant capital for machinery. This ⁷/₁₂ would come back to the machinery manufacturer.

What was left of the 12 yards would then amount to ¹/₃+¹/₄ yard, which the machinery manufacturer would have to pay to himself for the wear and tear of his own machinery, and ⁷/₁₂ of a yard, which the iron and wood manufacturers return to him for machinery. Hence ¹/₃+¹/₄ = ⁴/₁₂+³/₁₂ = ⁷/₁₂. In addition, the ⁷/₁₂ returned by the iron and wood manufacturers. (Together ¹⁴/₁₂ =1 ²/₁₂ =1 ¹/₆.)

The iron and wood manufacturers’ machinery and instruments of labour must be bought from the machinery manufacturer, just as those of the weaver, the spinner and the flax-grower. Thus of the ⁷/₁₂ of a yard, let one-third, equal to ²/₁₂, be labour added. This ²/₁₂ of a yard can therefore also be consumed. The remaining ⁵/₁₂ (actually ⁴/₁₂ and (²/₃)/12, but there’s no need to be so exact) represents the constant capital contained in the woodcutter’s axe and the iron manufacturer’s machinery, ³/₄ pig-iron, wood, etc., and ¹/₄ machinery used up. (Of the ¹⁴/₁₂ yards ¹²/₁₂ is left, or 1 yard=3 hours’ labour=3s.) Therefore of the 1 yard, ¹/₄ of a yard for replacement of the machine-building machine and ³/₄ of a yard for wood, iron, etc.

Hence for the wear and tear of the machine-building machine ⁷/₁₂ of a yard +¹/₄ of a yard = ⁷/₁₂ + ³/₁₂ = ¹⁰/₁₂ of a yard. On the other hand it would now be quite pointless again to resolve the ³/₄ of a yard for wood and iron into their component parts and to return a part of it once more to the machinery manufacturer, who would return a part of it again to the iron ||293| and wood manufacturers. Something would always be left over and a progression to infinity.

[(c) Exchange of Capital for Capital between the Producers of Means of Production. Annual Product of Labour and the Product of Labour Newly Added Annually][edit source]

Let us then take the problem as it now stands.

¹⁰/₁₂ or ⁵/₆ of a yard in value has to be replaced by the machinery manufacturer himself in the worn-out machine. ³/₄ or ⁹/₁₂ of a yard represents an equal amount of value in wood and iron. The machinery manufacturer has given it to the iron and wood manufacturers, in order to replace his raw material. We have in hand the residuum of ¹⁹/₁₂ or 1 ⁷/₁₂ yards.

The balance of ⁵/₆ of a yard which the machinery manufacturer keeps for making good his wear and tear = ¹⁵/₆, shillings=¹⁵/₆ hours’ labour, that is, 2 ³/₆, or 2 ¹/₂s., or 2 ¹/₂ hours’ labour. The machinery manufacturer cannot accept any linen for this value; he would himself have to sell it again, in order with the 2s. 6d. to make good the wear and tear of his machinery, in a word, to make new machine-building machines. But to whom is he to sell it? To producers of other products (other than iron and wood)? But these producers have consumed in linen all that they were able to consume in this form. Only the 4 yards which constitute the weaver’s wages and profit are exchangeable for other products (apart from those contained in the constant capital or the labour of which this capital consists). And we have already accounted for these 4 yards. Or is he to pay workers with it? But we have already deducted from his products all that labour has added to them, and we have taken it as all consumed in linen,

To put the matter in another way:

The weaver has to replace for machinery	2 yards	= 6s.	= 6 hours’ labour
The spinner	1 "	= 3 "	= 3 "
The flax-grower	²/₄ "	= 1 ¹/₂ "	= 1 ¹/₂ "
The iron and wood producers	⁷/₁₂ "	= 1 ³/₄ "	= 1 ³/₄ "
Total yards expended on machinery or the part of the value of the linen which consists of machinery	4 ¹/₁₂yards	= 12 ¹/₄ s.	= 12 ¹/₄ hours’ labour

To simplify the calculation, say 4 yards=12s.=12 hours’ labour. Of this, for labour (profit and wages) one-third = ⁴/₃ yards = 1 ¹/3 yards.

2 ²/₃ remain for constant capital. Of this, ³/₄ for raw material, ¹/₄ for wear and tear of machinery. 2 ²/₃ = ⁸/₃ = ³²/₁₂. A quarter of this= ⁸/12.

This ⁸/₁₂ of a yard for wear and tear of machinery is all that the machinery manufacturer is still burdened with. For he pays ²⁴/₁₂ or 2 yards to the iron and wood manufacturers for raw material. ||294| It is wrong, then, to charge the iron and wood manufacturers again for machinery, since all that they have to replace its machinery, namely ⁷/₁₂ of a yard, has already been brought into the machinery manufacturer’s account. In the latter’s item, the whole of the machinery that they need for the production of iron and wood has already been included, and it therefore cannot come a second time into the reckoning. The last two yards for iron and wood (the residuum of 2 ⁸/₁₂) consist therefore entirely of labour, since there is no raw material used, and can therefore be consumed in linen.

Thus the whole residuum is ⁸/₁₂ of a yard or ²/₃ of a yard for wear and tear of the machinery used by the machinery manufacturer.

The whole problem was partly solved by the fact that the part of the farmer’s constant capital, which does not itself consist of labour newly added or in machinery, does not circulate at all, but is already deducted, replaces itself in his own production, and therefore also—apart from the machinery—his whole circulating product consists of wages and profit and consequently can be consumed in linen. This was one part of the solution.

The other part was that what appears in one sphere of production as constant capital, in other spheres of production appears as new labour added during the same year. What in the weaver’s hand appears as constant capital consists in large part of the revenue of the spinner, machinery manufacturer, flax-grower and iron and wood producers (also of the collier, etc.; but for the sake of simplification this is not brought into it). (This is so clear that, for example, when the same manufacturer both spins and weaves, his constant capital seems to be smaller than that of the weaver and the labour added by him greater, that is to say, the part of his product which consists of labour added, revenue, profit and wages. Thus in the case of the weaver revenue was equal to 4 yards=12s.; constant capital 8 yards=24s. If he both spins and weaves, his revenue is equal to 6 yards. His constant capital also equals 6 yards; that is, 2 yards for loom, 3 yards flax, and I yard spinning machinery.)

Thirdly, however, the solution so far found is that all producers who supply only raw material or means of production for the product which finally enters into individual consumption, cannot consume their revenue—profit and wages, the [labour] newly added—in their own product, but they can consume the part of the value of this product which represents revenue only in the consumable product, or, what is the same thing, [they have to exchange it] for a consumable product of other producers containing the same amount of value. Their newly-added labour enters into the final product as a component part of the value, but is only consumed in the form of the final product, while as a use-value it is contained in the final product as raw material or machinery used up.

Hence the part of the problem which now remains to be solved is reduced to this: What happens to the ²/₃ of a yard for the wear and tear [of the machine-building machine]—not of the machines used in production, for these represent new labour, that is, new labour which gives the raw material (which has itself no raw material that costs anything) the form of new machinery but— [what happens] to the depreciation of the machinery manufacturer’s machine-building machine? Or to put it another way: Under what conditions can the machinery manufacturer consume the ²/₃ of a yard=2s.=2 hours’ labour in linen, and at the same time replace his machinery? That is the real question. This takes place in fact. It necessarily takes place. Hence the problem: how is this phenomenon to be explained? ||295| Here we leave entirely out of account the part of the profit which is transformed into new capital (both circulating and fixed, variable and constant capital). It has nothing to do with our problem, for here new variable capital as well as the new constant capital are created and replaced by new labour (a part of the surplus-labour).

So putting this case on one side, the total of labour newly added, in a year for example, is equal to the total of profit and wages, i.e., equal to the total of the annual revenue spent on products which enter into individual consumption, such as food, clothing, heating, dwelling-house, furniture, etc.

The total of these products going into consumption is equal in value to the total labour added annually (to the total value of the revenue), This quantity of labour must be equal to the total labour contained in these products, both the added and the pre-existing labour. In these products not only the labour newly added, but also the constant capital they contain, must be paid for. Their value is therefore equal to the total of profit and wages. If we take linen as the example, then the linen represents for us the aggregate of the products entering into individual consumption annually. This linen must not only be equal to the value of all its elements of value, but its whole use-value must be consumable by the various producers who take their share of it. Its whole value must be resolvable into profit and wages, that is, labour newly added each year, although it consists of labour added and constant capital.

This is partly explained, as we have said, by:

First. A part of the constant capital required for the production of the linen does not enter into it, either as use-value or as exchange-value, This is the part of the flax which consists of seed, etc.; the part of the constant capital of the agricultural product which does not enter into circulation, but is directly or indirectly returned to production, to the land. This part replaces itself, so it does not need to be repaid out of the linen. <A peasant may sell his whole harvest, say 120 quarters. But then he must buy from another peasant for example 12 quarters of seed, and the latter has then to use as seed, out of his 120 quarters, 24 quarters instead of 12 quarters, ¹/₅ instead of ¹/₁₀ of his product. In both cases 24 quarters of the 240 quarters are given back to the land as seed. Of course, this makes a difference in the circulation. In the first case, where each deducts one-tenth, 216 quarters enter circulation. In the second case 120 quarters of the first and 108 quarters of the second enter circulation, that is, 228 quarters. As in the previous case, 216 quarters reach the actual consumers. Here therefore we have an example of the fact that the total of values as between dealers and dealers is greater than the total of values as between dealers and consumers.// (Moreover there is the same difference in all cases in which a part of the profit is transformed into new capital; moreover, transaction between dealers and dealers extend over many years, etc.)

This part [of the raw material required] for the production of the linen, that is, the consumable products, therefore does not have to replace a considerable part of the constant capital required for its production.

Secondly. A large part of the constant capital required for the linen, that is, for the annual consumable product, appears at one level as constant capital, at another level as labour newly added, and consequently in fact consists of profit and wages, revenue, for one, while the same sum of value appears as capital for another. Thus a part of [the weaver’s] constant capital is reducible to the labour of the spinner, etc. ||296| Thirdly. In all the intermediate processes that are necessary to produce the consumable product, a large part of the products, apart from the raw material and certain auxiliary materials, never passes into the use-value, but only enters into the consumable product as a component part of its value—such as machinery, coal, oil, tallow, leather belting, etc. In each of these processes which in fact always only produce the constant capital for the next stage—in so far as, through the division of social labour, they take the form of separate branches of business—the product of each stage is divided into one part representing the newly-added labour (consisting of profit and wages, and, with the proviso made above, forms revenue), and another part which represents the value of the constant capital consumed. It is therefore clear that in each of these spheres of production only that part of the product can be consumed by its own producers which represents wages and profit—only that part which remains over after deducting the quantity of products equal to the value of the constant capital they contain. But none of these producers consumes any part whatever of the products of the previous stage, or of the products, of all the stages, which in fact produce nothing but constant capital for a further stage.

Thus although the final product—the linen, which represents all consumable products—consists of newly-added labour and constant capital, and so the final producers of this consumable product can only consume that part of it which consists of the labour last added, of their total wages and profits, their revenue—nevertheless all the producers of constant capital consume or realise their newly-added labour only in the consumable product. Thus although this consists of labour added and constant capital, its purchase price consists—in addition to that part of the product which is equal to the quantity of labour last added—of the total quantity of all the labour added in the production of its constant capital. They realise all added labour in the consumable product instead of in their own product—so that in this respect it is the same as if the consumable product consisted entirely of wages and profit, of labour added.

From the consumable product, the linen (the exchange of consumable products for each other and the previous transformation of the commodities into money makes no difference), the producers from whose sphere of production it emerges as a finished product themselves deduct the part of the product equal to their revenue—equal to the labour last added by them, equal to the total wages and profit. With the other part of the consumable product they pay the component part of the value due to the producers who have directly supplied them with their constant capital. All of this part of their consumable product therefore covers the value of the revenue and constant capital of the producers of this constant capital in its nearest stage. The latter however keep only the part of the consumable product whose value is equal to their revenue. With the other part they pay in turn the producers of their constant capital, equal to revenue plus constant capital. The account, however, can only be settled if it is only revenue, newly-added labour, not constant capital, that has to be replaced by the last part of the linen, the consumable product. For on the assumption we have made the linen enters only into consumption and does not in turn form the constant capital of another phase of production.

This has already been shown to be the case for a part of the product of agriculture.

In general, it is only products that enter as raw materials into the final product of which it can be said that they are consumed as products. Other products enter into the consumable product only as component parts of value. The consumable product is bought by revenue, that is, by wages and profit. Its total value must therefore be resolvable into wages and profit, that is, into the labour added in all its stages. The question now arises: in addition to the part of the product of agriculture which is returned to ||297| production by its producers themselves—seed, cattle, manure, etc.—is there yet another part of the constant capital which does not enter into the consumable product as a component part of value, but is replaced in kind in the process of production itself?

Fixed capital in all its forms can of course only be considered here to the extent that its value enters into production and is consumed.

Apart from agriculture (including cattle-raising and fish farming, and forestry, in which reproduction is artificially organised)—and so apart from all raw materials for clothing, actual means of sustenance and a large part of the products entering into fixed capital in industry, such as sails, rope, belting, etc.— in mining there is the partial replacement of constant capital in kind out of the product, so that the part which enters into circulation does not have to replace this part of the constant capital. For example, in coal production some of the coal is used to work the steam-engine which pumps out water or raises coal.

The value of the annual product is therefore partly equal to the part of the labour pre-existing in coal and consumed in producing the coal, and partly equal to the quantity of labour added (leaving out of account wear and tear of machinery, etc.). Of the total product, however, the part of the constant capital which consists in coal itself is directly deducted and returned to production. No one has to replace this part for the producer, because he replaces it himself. If the productivity of labour has neither fallen nor risen, then too the part of the value which this part of the product represents remains unchanged, and is equal to a definite aliquot part of the quantity of labour existing in the product—partly pre-existing labour, partly labour added during the year. In the other mining industries too there is a partial replacement of the constant capital in kind.

Waste products—as for example cotton waste and so on—are fed to the fields as fertiliser or become raw material for other branches of industry, as for example linen rags [in the production] of paper. In such cases, as in the former case, part of an industry’s constant capital may be directly exchanged for the constant capital of another industry. For example, cotton for cotton waste used as fertiliser.

In general, however, there is a cardinal difference between the production of machines and primary production (of raw materials: iron, wood, coal) and the other phases of production: in the latter, there is no interaction between them. Linen cannot be a part of the spinner’s constant capital, nor can yarn (as such) be part of the constant capital of the flax-grower or machinery manufacturer. But the raw material of machinery— apart from such agricultural products as leather belting, rope, etc. —is wood, iron and coal, while on the other hand machinery in its turn enters as a means of production into the constant capital of the producers of wood, iron, coal, etc. In fact, therefore, both replace each other a part of their constant capital in kind, Here there is exchange of constant capital for constant capital.

Here it is not merely a question of accounting. The producer of iron debits the machinery manufacturer for the wear and tear of the machinery used up in producing the iron and the machinery manufacturer debits [the producer of iron] for the wear and tear of his machinery in constructing the machines. Let the producers of iron and coal be the same person. First, he himself replaces the coal, as we have seen. Secondly, the value of his total product of iron and coal is equal to the value of the labour added plus the labour pre-existing in the worn-out machinery. After deducting from this total product the quantity of iron that replaces the value of the machinery, the quantity of iron which is left represents the labour added. The latter part forms the raw material of manufacturers of machinery, instruments, etc. The machinery manufacturer pays the iron manufacturer for this latter part in linen. In exchange for the first part, he supplies him with machinery to replace the old.

On the other hand, the part of the machinery manufacturer’s constant capital which represents the wear and tear of his machine-building machines, instruments, etc.—and therefore consists neither of raw material (leaving out of account here the machinery used [in coal and iron production] ||298| and the part of the coal which replaces itself) nor of labour added, and so neither of wages or profit—this wear and tear is in fact made good by the machinery manufacturer appropriating for himself one or two of his own machines to serve as machine-building machines, This part of his product merely comes to an excess consumption of raw material. For it does not represent labour newly added, since in the total product of the labour so many machines are equal to the value of the added, so many machines are equal to the value of the raw material, and so many machines are equal to the part of the value that was contained in machine-building machines, It is true that this last part does contain labour added. But in value this is equal to zero, since the labour contained in the raw material and in the machinery used up is not reckoned in the group of machines that represents labour added; and the part which replaces the new labour and machinery is not reckoned in the second group, which replaces the raw material; and consequently in the third part—considered as value—neither labour added nor raw material is contained, but this group of machines represents only the wear and tear of the machinery.

The machinery of the machinery manufacturer himself is not sold. It is replaced in kind, deducted from the total product. Consequently the machines which he sells represent only raw material (which consists only of labour, if he has already been charged for the wear and tear of the raw material producer’s machinery) and labour added, and therefore are resolvable into linen for himself and for the raw material producer. As for what specially concerns the relations between the machinery manufacturer and the producer of raw materials, the latter has deducted, in respect of the part of his machinery that has been wasted, a quantity of iron equal to its value. He exchanges this with the machinery manufacturer, so that each of them pays the other in kind, and this process has nothing to do with the division of revenue between them.

So much for this question, to which we shall return in connection with the circulation of capital.

In reality, the constant capital is replaced by being constantly produced anew and in part by reproducing itself. The part of the constant capital which enters into the consumable product is however paid for out of the living labour which enters into the non-consumable products. Because the latter labour is not paid for in its own products, it can resolve the whole consumable product into income. A part of the constant capital, considered as part of the annual product, is only seemingly constant capital. Another part, although it enters into the total product, does not enter into the consumable product either as a component part of its value or as a use-value, but is replaced in kind, remaining always incorporated in production.

Here we have considered how the total consumable product is divided up and resolved into all the component parts of value and conditions of production that have entered into it.

But always there are, simultaneously and side by side, the consumable product (which, in so far as it consists of wages, is equal to the variable part of capital), the production of the consumable product, and the production of all parts of the constant capital required for its production, whether it enters into it or not. In the same way, each capital is always simultaneously divided into constant and variable capital, and although the constant capital, like the variable, is continuously replaced by new products, it is always in existence in the same form, so long as production of the same kind goes on. ||299| The relation between the machinery manufacturer and the primary producers—of iron, wood, etc.—is that they in fact exchange with each other a part of their constant capital (which has nothing in common with the transformation of a part of the constant capital of one into revenue for the other), because their products—although one is a previous stage for the other— on both sides enter as means of production into the constant capital of the other. In return for the machinery which the producer of iron, wood, etc., needs, he gives the machine builder iron, wood, etc., to the value of the machine to be replaced. This part of the machine builder’s constant capital is for him just the same as seed is for the peasant. It is part of his annual product which he replaces in kind for himself and which is not resolved into revenue for him. On the other hand, what is thus replaced for the machine builder in the form of raw material is not only the raw material contained in the iron producer’s machine, but also the part of the value of this machine which consists of labour added and wear and tear of his own machinery. Thus it replaces for him not only the wear and tear of his own machinery, but can be regarded as accounting for (replacing) a part of the wear and tear contained in the other machines.

It is true that this [machine sold] to the producer of iron also contains component parts of value equal to the raw material and the labour added. But on the other hand there is correspondingly less wear and tear to be accounted for in the other machines. This part of their constant capital—that is, of the product of their annual labour which replaces only the part of the value of the constant capital representing wear and tear—therefore does not enter into the machines which the machine builder sells to other industrialists, But as regards the wear and tear in these other machines, it is in fact replaced for the machine builder by the above-mentioned two-thirds of a yard of linen, the equivalent of 2 hours’ labour. With that, he buys pig-iron, wood, etc., to the same value, and replaces the wear and tear in another form of his constant capital— [in the form] of iron. Thus a part of his raw material replaces for him the value of his wear and tear, in addition to the value of the raw material. This raw material, however, as far as the producer of iron, etc., is concerned, consists only of the labour-time added, as the machinery of these producers of raw materials (iron, wood, coal, etc.) has already been accounted for.

Thus all the elements of the linen are resolved into a sum of quantities of labour equal to the amount of labour newly added, but not equal to the amount of the total labour contained in the constant capital and perpetuated by reproduction.

That the quantity of labour consisting partly of living labour, partly of pre-existing labour, which forms the total of commodities which enter each year into individual consumption, and thus are consumed as revenue, cannot be greater than the labour added annually, is for that matter a tautology, For the revenue is equal to the total of profit and wages, which is equal to the total labour newly added, and is equal to the total of the commodities which contain an equal quantity of labour.

The case of iron producer and machine builder is only one example. Between different spheres of production, where the products of each enter into the other as means of production, an exchange in kind takes place too (even though concealed by a series of money transactions) between the constant capital of the one and that of the other. In so far as this is the case, the consumers of the final product which enters into consumption have not got to replace this constant capital, since it has already been replaced. |299|| ||304| <For example: in the manufacture of locomotives, every day the waste amounts to whole wagon-loads of iron filings. These are collected and resold (or charged in account) to the same iron manufacturer who supplied the locomotive manufacturer with his principal raw material. The iron manufacturer again gives them solid form, adding new labour to them. However in the form in which he sends them back to the locomotive manufacturer, these filings represent the part of the value of the product which replaces raw material, In this way not the same filings but constantly a certain quantity of filings, move hither and thither between the two factories, This part forms in turn the raw material for each of the two branches of industry and, considered as value, only wanders from one shop to the other. Consequently it does not enter into the final product, but is a replacement in kind of the constant capital.

In fact, every machine supplied by the machinery manufacturer, from the standpoint of value, is divided into raw material, labour added, and wear and tear of machinery, But the whole total that enters into the production of other spheres can only be equal in value to the total value of the machinery minus the part of the constant capital which is continually passing backwards and forwards between the machinery manufacturer and the iron manufacturer.

One quarter of wheat sold by a peasant is as dear as another, and a quarter of wheat that is sold is no cheaper than one that is returned to the land in the form of seed. Still, if the product equals 6 quarters, and the quarter equals £3—each quarter containing component parts of value for labour added, raw material and machinery—and if he has to use 1 quarter as seeds, he would only sell to consumers 5 quarters, equal to £15. They would therefore not pay for the part of the value contained in the 1 quarter of seed. And this is the point: how can the value of the product sold be equal to all the elements of value contained in it—labour added and constant capital—and how in spite of this does the consumer buy the product and yet not pay for the constant capital?// |304|| ||300| <In addition to the foregoing:

The following quotation shows how little the insipid Say even understood what the question was:

“In order fully to understand this subject of revenues, it is necessary to take into account that the entire value of a product is divided into revenues for various persons; for the total value of each product is composed of the profits of the landowners, of the capitalists and of the craftsmen who have contributed to bring it into existence. This is why the revenue of society is equal to the gross value which has been produced, and not, as the sect of Economists imagines, to the net product of the land… If the only revenues in a nation were the excess of the values produced over the va1ues consumed, this would lead to a truly absurd result: that a nation which had consumed in the year values as great as it had produced would have no […] revenue.” ([Jean-Baptiste Say, Traité d’économie politique…, troisième edition], t. II, [Paris, 1817], pp. 63–64.)

In fact, in the year that was past it would have had a revenue, but it would have none the next year. It is not true that the annual product of labour, of which the product of the annual labour forms only one part, consists of revenue. On the other hand, it is correct that this is the case with the part of the product which each year enters into individual consumption. The revenue, which consists only of added labour, is able to pay for this product, which consists partly of added and partly of preexisting labour; that is to say, the labour added in these products can pay not only for itself but also for the pre-existing labour, because another part of the product—which also consists of labour added and pre-existing labour—replaces only preexisting labour, only constant capital.//

[11. Additional Points: Smith’s Confusion on the Question of the Measure of Value. General Character of the Contradictions in Smith][edit source]

<To the points in Adam Smith’s theory just discussed must be added that in his vacillations on the determination of value —in addition to the apparent contradiction in regard to wages —there is also confusion [of ideal: in so far as he confuses the measure of value as the immanent measure which at the same time forms the substance of value, with the measure of value in the sense that money is called a measure of value. With regard to the latter the attempt is then made to square the circle —to find a commodity whose value does not change to serve as a constant measure for others. On the question of the relation of the measure of value as money to the determination of value by labour-time, see the first part of my work. This confusion is also to be found in Ricardo in certain passages.// |300||

***

||299| Adam Smith’s contradictions are of significance because they contain problems which it is true he does not solve, but which he reveals by contradicting himself. His correct instinct in this connection is best shown by the fact that his successors take opposing stands based on one aspect of his teaching or the other.

↑ Marx refers to Garnier’s French translation of Adam Smith’s work from which he takes the quotation. All excerpts from Smith’s Wealth of Nations quoted by Marx in French in the manuscript are printed in this edition in English as given in Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford University Press (O.U.P.) (The World’s Classics), London 1928. In two volumes. Those passages which Marx has taken from Garnier’s French translation are marked in the text ”Garnier”. The French extracts used by Marx are printed in the Appendix.—Ed.
↑ The manuscript reads: “Interchange of commodities and distribution must he kept distinct each other.”—Ed.
↑ See pp. 41–42 of the present volume.—Ed.
↑ In the manuscript: “The natural price (or necessary price)”.—Ed.
↑ In the manuscript: “so”.—Ed.
↑ In the manuscript: “Man muss immer zwischen den beiden unterscheiden.”—Ed.
↑ Marx refers to the French translation from which he takes these passages. See Appendix, p. 427.—Ed.
↑ Not so.—Ed.
↑ All the same, nearer the right view than the others. [This was added by Marx in pencil.]—Ed.
↑ The beginning of the sentence has been translated by Marx into German and shortened as follows: “Wie Vergleichen des Produkt und”.—Ed.
↑ In the manuscript: “In”.—Ed.
↑ In the manuscript: “all”.—Ed.
↑ In the manuscript: “the”.—Ed.
↑ In the manuscript: “the”.—Ed.
↑ In the manuscript: “Also upon two circumstances hängt die rate of profit ab”.—Ed.
↑ In the manuscript: “return”—Ed.
↑ In the manuscript: “whatever”.—Ed.
↑ In the manuscript: “master-capitalist”.—Ed.
↑ In the manuscript: “wealth”.—Ed.
↑ As for example is now the case with the yarn or cloth of the cotton manufacturers, as a result of the American Civil War. The mere sale of their product is no guarantee for them that it will be retransformed, since there is no cotton on the market.

[1] Marx refers to Garnier’s French translation of Adam Smith’s work from which he takes the quotation. All excerpts from Smith’s Wealth of Nations quoted by Marx in French in the manuscript are printed in this edition in English as given in Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Oxford University Press (O.U.P.) (The World’s Classics), London 1928. In two volumes. Those passages which Marx has taken from Garnier’s French translation are marked in the text ”Garnier”. The French extracts used by Marx are printed in the Appendix.—Ed.

[2] The manuscript reads: “Interchange of commodities and distribution must he kept distinct each other.”—Ed.

[3] See pp. 41–42 of the present volume.—Ed.

[4] In the manuscript: “The natural price (or necessary price)”.—Ed.

[5] In the manuscript: “so”.—Ed.

[6] In the manuscript: “Man muss immer zwischen den beiden unterscheiden.”—Ed.

[7] Marx refers to the French translation from which he takes these passages. See Appendix, p. 427.—Ed.

[8] Not so.—Ed.

[9] All the same, nearer the right view than the others. [This was added by Marx in pencil.]—Ed.

[10] The beginning of the sentence has been translated by Marx into German and shortened as follows: “Wie Vergleichen des Produkt und”.—Ed.

[11] In the manuscript: “In”.—Ed.

[12] In the manuscript: “all”.—Ed.

[13] In the manuscript: “the”.—Ed.

[14] In the manuscript: “the”.—Ed.

[15] In the manuscript: “Also upon two circumstances hängt die rate of profit ab”.—Ed.

[16] In the manuscript: “return”—Ed.

[17] In the manuscript: “whatever”.—Ed.

[18] In the manuscript: “master-capitalist”.—Ed.

[19] In the manuscript: “wealth”.—Ed.

[20] As for example is now the case with the yarn or cloth of the cotton manufacturers, as a result of the American Civil War. The mere sale of their product is no guarantee for them that it will be retransformed, since there is no cotton on the market.

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