XVIII. Ricardo’s Miscellanea. John Barton

[A.] Gross and Net Income[edit source]

Net income, as opposed to gross income (which is equal to the total product or the value of the total product), is the form in which the Physiocrats originally conceived surplus-value. They consider rent to be its sole form, since they think of industrial profit as merely a kind of wage; later economists who blur the concept of profit by calling it wages for the superintendence of labour, ought to agree with them.

Net revenue is therefore in fact the excess of the product (or the excess of its value) over that part of it which replaces the capital outlay, comprising both constant and variable capital. It thus consists simply of profit and rent, the latter, in turn, is only a separate portion of the profit, a portion accruing to a class other than the capitalist class.

The direct purpose of capitalist production is not the production of commodities, but of surplus-value or profit (in its developed form), the aim is not the product, but the surplus-product. Labour itself, from this standpoint, is only productive in so far as it creates profit or surplus-product for capital. If the worker does not create profit, his labour is unproductive. The mass of productive labour employed is only of interest to capital in so far as through it—or in proportion to it—the mass of surplus-labour grows. Only to this extent is what we called necessary labour-time, necessary. In so far as it does not have this result, it is superfluous and to be supressed.

It is the constant aim of capitalist production to produce a maximum of surplus-value or surplus-product with the minimum capital outlay; and to the extent that this result is not achieved by overworking the workers, it is a tendency of capital to seek to produce a given product with the least possible expenditure—economy of power and expense. It is therefore the economic tendency of capital which teaches humanity to husband its strength and to achieve its productive aim with the least possible expenditure of means.

In this conception, the workers themselves appear as that which they are in capitalist production—mere means of production, not an end in themselves and not the aim of production.

Net income is not determined by the value of the total product, but by the excess of the value of the total product over the value of the capital outlay, or by the size of the surplus-product in relation to the total product. Provided this surplus grows the aim of capitalist production has been achieved even if the value decreases ||733| or, if along with the value, the total quantity of the product also decreases.

Ricardo expressed these tendencies consistently and ruthlessly. Hence much howling against him on the part of the philanthropic philistines.

In considering net income, Ricardo again commits the error of resolving the total product into revenue, wages, profits and rent, and disregarding the constant capital which has to be replaced. But we will leave this out of account here.

Chapter XXXII “Mr. Malthus’s Opinions on Rent”.

“It is of importance to distinguish clearly between gross revenue and net revenue, for it is from the net revenue of a society that all taxes must be paid. Suppose that all the commodities in the country, all the corn, raw produce, manufactured goods, etc, which could be brought to market in the course of the year, were of the value of 20 millions, and that in order to obtain this value, the labour of a certain number of men was necessary, and that the absolute necessaries of these labourers required an expenditure of 10 millions. I should say that the gross revenue of such society was 20 millions, and its net revenue 10 millions. It does not follow from this supposition, that the labourers should receive only 10 millions for their labour; they might receive 12, 14, or 15 millions, and in that case they would have 2, 4, or 5 millions of the net income. The rest would be divided between landlords and capitalists; but the whole net income would not exceed 10 millions. Suppose such a society paid 2 millions in taxes, its net income would be reduced to 8 millions” (l.c., pp. 512–13.)

[And in Chapter XXVI Ricardo says :]

“What would be the advantage resulting to a country from […] a great quantity of productive labour, if, whether it employed that quantity or a smaller, its net rent and profits together would be the same. The whole produce of the land and labour of every country is divided into three portions: of these, one portion is devoted to wages, another to profits, and the other to rent.”

⟨This is wrong because the portion devoted to replacing the capital (wages excluded) employed in production has been forgotten.⟩

“It is from the two last portions only, that any deductions can be made for taxes, or for saving; the former, if moderate, constituting always the necessary expenses of production” [l.c., p. 416].

⟨Ricardo himself makes the following comment on this passage in a note on page 416:

“Perhaps this is expressed too strongly, as more is generally allotted to the labourer under the name of wages, than the absolutely necessary expenses of production. In that case a part of the net produce of the country is received by the labourer, and may be saved or expended by him; or it may enable him to contribute to the defence of the country” [l.c., p. 416].⟩

“To an individual with a capital of £ 20,000, whose profits were £ 2,000 per annum, it would be a matter quite indifferent whether his capital would employ a hundred or a thousand men, whether the commodity produced, sold for £10,000, or for £ 20,000, provided, in all cases, his profits were not diminished below £ 2,000. Is not the real interest of the nation similar? Provided its net real income, its rent and profits be the same, it is of no importance whether the nation consists of ten or of twelve millions of inhabitants. Its power of supporting fleets and armies, and all species of unproductive labour, must be in proportion to its net, and not in proportion to its gross income. If five millions of men could produce as much food and clothing as was necessary for ten millions, food and c1othing for five millions would be the net revenue. Would it be of any advantage to the country, that to produce this same net revenue, seven millions of men should be required, that is to say, that seven millions should be employed to produce food and clothing sufficient for twelve millions? The food and clothing of five millions would be still the net revenue. The employing a greater number of men would enable us neither to add a man to our army and navy, nor to contribute one guinea more in taxes” (l.c., pp. 416–17).

To gain a better understanding of Ricardo’s views, the following passages must also be considered.

“There is this advantage always resulting from a relatively low price of corn,—that the division of the actual production is more likely to increase the fund for the maintenance of labour, inasmuch as more will be allotted, under the name of profit, to the productive class, a^[1] less under the name rent, to the unproductive class” (l.c., p. 317).

Productive class here refers only to the industrial capitalists.

“Rent is a creation of value … but not a creation of wealth. If the price of corn, from the difficulty of producing any portion of it, should rise from £4 to £5 per quarter, a million of quarters will be of the value of £ 5,000,000 instead of £ 4,000,000, … the society altogether will be possessed of greater value, and in that sense rent is a creation of value. But this value is so far nominal, that it adds nothing to the wealth, that is to say, the necessaries, conveniences, and enjoyments of the society. We should have precisely the same quantity, and no more of commodities, and the same million quarters of corn as before; but the effect of its being rated at £ 5 per quarter, instead of £ 4, would be to transfer a portion of the value of the corn and commodities from their former possessors to the landlords. Rent then is a creation of value, but not a creation of wealth; it adds nothing to the resources of a country” (l.c., pp. 485–86).

||734| Supposing that through the import of foreign corn the price of corn falls so that rent is decreased by 1 million. Ricardo says that as a result the money incomes of the capitalists will increase, and then continues:

“But it may be said, that the capitalist’s income will not he increased; that the million deducted from the landlord’s rent, will he paid in additional wages to labourers! Be it so; … the situation of the society will be improved, and they can^[2] bear the same money burthens with greater facility than before; it will only prove what is still more desirable, that the situation of another class, and by far the most important class in society, is the one which is chiefly benefited by the new distribution. All that they receive more than 9 millions, forms part of the net income of the country, and it cannot be expended without adding to its revenue, its happiness, or its power. Distribute then the net income as you please. Give a little more to one class, and a little less to another, yet you do not thereby diminish it; a greater amount of commodities will be still produced with the same labour, although the amount of the gross money value of such commodities will be diminished; but the net money income of the country, that fund from which taxes are paid and enjoyments procured, would be much more adequate, than before, to maintain the actual population, to afford it enjoyments and luxuries, and to support any given amount of taxation” (l.c., pp. 515–16).

[B.] Machinery [Ricardo and Barton on the Influence of Machines on the Conditions of the Working Class][edit source]

[1. Ricardo’s Views][edit source]

[a) Ricardo’s Original Surmise Regarding the Displacement of Sections of the Workers by Machines][edit source]

Chapter I (Section V) “On Value”.

“Suppose … a machine which could in any particular trade be employed to do the work of one hundred men for a year, and that it would last only for one year. Suppose too, the machine to cost £ 5,000, and the wages annually paid to one hundred men to be £ 5,000, it is evident that it would be a matter of indifference to the manufacturer whether he bought the machine or employed the men. But suppose labour to rise, and consequently the wages of one hundred men for a year to amount to £ 5,500, it is obvious that the manufacturer would now no longer hesitate, it would be for his interest to buy the machine and get his work done for £ 5,000. But will not the machine rise in price, will not that also be worth £ 5,500 in consequence of the rise of labour? It would rise in price if there were no stock employed on its construction, and no profits to be paid to the maker of it. If for example, the machine were the produce of the labour of one hundred men, working one year upon it with wages of £ 50 each, and its price were consequently £5,000; should those wages rise to £ 55, its price would be £ 5,500, but this cannot be the case; less than one hundred men are employed or it could not be sold for £5,000, for out of the £ 5,000 must be paid the profits of stock which employed the men. Suppose then that only eighty-five men were employed at an expense of £ 50 each, or £ 4,250 per annum, and that the £ 750 which the sale of the machine would produce over and above the wages advanced to the men, constituted the profits of the engineer’s stock. When wages rose 10 per cent he would be obliged to employ an additional capital of £ 425 and would therefore employ £ 4,675 instead of £ 4,250, on which capital be would only get a profit of £ 325 if he continued to sell his machine for £ 5,000; but this is precisely the case of all manufacturers and capitalists; the rise of wages affects them all. If therefore the maker of the machine should raise the price of it in consequence of a rise of wages, an unusual quantity of capital would be employed in the construction of such machines, till their price afforded only the common rate of profits. We see then that machines would not rise in price, in consequence of a rise of wages.

“The manufacturer, however, who in a general rise of wages, can have recourse to a machine which shall not increase the charge of production on his commodity, would enjoy peculiar advantages if he could continue to charge the same price for his goods; but he, as we have already seen, would be obliged to lower the price of his commodities, or capital would flow to his trade till his profits had sunk to the general level. Thus then is the public benefited by machinery: these mute agents are always the produce of much less labour than that which they displace, even when they are of the same money value” (l.c., pp. 38–40).

This point is quite right. At the same time it provides the answer to those who believe that the workers displaced by machines find employment in machine manufacture itself. This view, incidentally, belongs to an epoch in which the engineering workshop was still based entirely on the division of labour, and machines were not as yet employed on the production of machines.

Suppose the annual wage of one man to be £50, then that of 100 is £5,000. If these 100 men are replaced by a machine which costs, similarly, £5,000, then this machine must be the product of the labour of less than 100 men. For besides paid labour it contains unpaid labour which forms the profit of the machine manufacturer. If it were the product of 100 men, then it would contain only paid labour. If the rate of profit were 10 per cent then approximately £4,545 of the £5,000 would represent the capital advanced and approximately £ 455 the profit. At [a wage of] £ 50, £ 4,545 would only represent 90 9/10 men. ||735| But the capital of £4,545 by no means represents only variable capital (capital laid out directly in wages). It represents also raw materials and the wear and tear of the fixed capital employed by the machine manufacturer. The machine costing £5,000, which replaces 100 men whose wages come to £5,000, thus represents the product of far fewer than 90 men. Moreover, the machine can only be employed profitably, if it ⟨at least that portion of it which enters annually with interest into the product, i.e., into its value%rang; is the (annual) product of far fewer men than it replaces.

Every rise in wages increases the variable capital that has to be laid out, although the value of the product—since this is equal to the variable capital plus the surplus-labour—remains the same, for the number of workers which the variable capital sets in motion remains the same.

[b) Ricardo on the Influence of Improvements in Production on the Value of Commodities. False Theory of the Availability of the Wages Fund for the Workers Who Have Been Dismissed][edit source]

Chapter XX “Value and Riches, their Distinctive^[3] Properties.

Natural agents add nothing to the value of commodities, on the contrary, [they reduce it]. But by doing so they add to the surplus-value, which alone interests the capitalists.

“In contradiction to the opinion of Adam Smith, M. Say, in the fourth chapter, speaks of the value which is given to commodities by natural agents, such as the sun, the air, the pressure of the atmosphere, etc., which are sometimes substituted for the labour of man, and sometimes concur with him in producing. But these natural agents, though they add greatly to value in use, never add exchangeable value, of which M. Say is speaking, to a commodity: as soon as by the aid of machinery, or by the knowledge of natural philosophy, you oblige natural agents to do the work which was before done by man, the exchangeable value of such work falls accordingly” (l.c., pp. 335–36).

The machine costs [labour]. Natural agents as such cost nothing. They cannot, therefore, add any value to the product; rather they diminish its value in so far as they replace capital or labour, immediate or accumulated labour. In as much as natural philosophy teaches how to replace human labour by natural agents, without the aid of machinery or only with the same machinery as before (perhaps even more cheaply, as with the steam boiler, many chemical processes etc.), it costs the capitalist, and society as well, nothing and cheapens commodities absolutely. Ricardo continues the above-quoted passage thus:

“If ten men turned a corn mill, and it be discovered that by the assistance of wind, or of water, the labour of these ten men may be spared, the flour which is the produce partly of the work performed by the mill, would immediately fall in value, in proportion to the quantity of labour saved; and the society would be richer by the commodities which the labour of the ten men could produce, the funds destined for their maintenance being in no degree impaired” (l.c., p. 336).

Society would in the first place be richer by the diminished price of flour. It would either consume more flour or spend the money formerly destined for flour upon some other commodity, either existing, or called into life, because a new fund for consumption had become available.

Of this part of the revenue, formerly spent on flour and now, consequent upon the diminished price of flour, set free for some other application, it may be said that it was “destined”—by virtue of the whole economy of the society—for a certain thing, and that it is now freed from that “destiny”. It is the same as if new capital had been accumulated. And in this way, the application of machinery and natural agents frees capital and enables previously “latent needs” to be satisfied.

On the other hand, it is wrong to speak of “the funds destined for the maintenance” of the ten men thrown out of employment by the new discovery. For the first fund which is saved or created through the discovery is that part of the revenue which society previously paid for flour and which it now saves as a result of the diminished price of flour. The second fund which is saved, however, is that which the miller previously paid for the ten men now displaced. This “fund” indeed, as Ricardo notes, is in no degree impaired by the discovery and the displacement of the ten men. But the fund has no natural connection with the ten men. They may become paupers, starve etc. One thing only is certain, that ten men of the new generation who should take the place of these ten men in order to turn the mill, must now be absorbed in other employment; and so the relative population has increased (independently of the average increase of population) in that the mill is now driven [by a natural agent] and the ten men who would otherwise have had to turn it are employed in producing some other commodity. The invention of machinery and the employment of natural agents thus set free capital and men (workers) and create together with freed capital freed hands (free hands, as Steuart calls them), whether ||736| [for] newly created spheres of production or [for] the old ones which are expanded and operated on a larger scale.

The miller with his freed capital will build new mills or will lend out his capital if he cannot use it himself as a capitalist.

On no account, however, is there a fund “destined” for the ten men displaced. We shall return to this absurd assumption: namely that, if the introduction of machines (or natural agents) does not (as is partly the case in agriculture, when horses take the place of men or stock-raising takes the place of corn growing) reduce the quantity of means of subsistence which can be laid out in wages, the fund which has thus been set free must necessarily be laid out as variable capital (as if there was no possibility of exporting means of subsistence, or spending them on unproductive workers, or [as if] wages in certain spheres could not rise etc.) and must even be paid out to the displaced labourers. Machinery always creates a relative surplus population, a reserve army of workers, which greatly increases the power of capital.

In the note on page 335, Ricardo also makes the following observation directed against Say:

“Though Adam Smith, who defined riches to consist in the abundance of necessaries, convenience and enjoyments of human life, would have allowed that machines and natural agents might very greatly add to the riches of a country, he would not have allowed that they add any thing to the value of those riches” [l.c., p. 335, note].

Natural agents, indeed, add nothing to value, so long as there are no circumstances in which they give occasion for the creation of rent. But machines invariably add their own value to the already existing value and firstly, in so far as their existence facilitates the further transformation of circulating into fixed capital, and makes it possible to carry on this transformation on an ever growing scale, they increase not only wealth but also the value which is added by past labour to the product of the annual labour; secondly, since machines make possible the absolute growth of population and with it the growth of the mass of the annual labour, they increase the value of the annual product in this second way. |736||

[c) Ricardo’s Scientific Honesty, Which Led Him to Revise His Views on the Question of Machinery. Certain False Assumptions Are Retained in Ricardo’s New Formulation of the Question][edit source]

||736| Chapter XXXI “On Machinery”.

This section, which Ricardo added to his third edition, bears witness to his honesty which so essentially distinguishes him from the vulgar economists.

“It is more incumbent on me to declare my opinions on this question” ⟨viz. “the influence of machinery on the interests of the different classes of society”%rang;, “because they have, on further reflection, undergone a considerable change; and although I am not aware that I have ever published any thing respecting machinery which it is necessary for me to retract, yet I have in other ways” ⟨as a Member of Parliament%rang; “given my support to doctrines which I now think erroneous; it, therefore, becomes a duty in me to submit my present views to examination, with my reasons for entertaining them” (l.c., p. 466).

“Ever since I first turned my attention to questions of political economy, I have been of opinion, that such an application of machinery to any branch of production, as should have the effect of saving labour, was a general good, accompanied only with that portion of inconvenience which in most cases attends the removal of capital and labour from one employment to another.”

⟨This inconvenience is great enough for the worker, if, as in modern production, it is perpetual.%rang;

“It appeared to me, that provided the landlords had the same money rents, they would he benefited by the reduction in the prices of some of the commodities on which those rents were expended, and which reduction of price could not fail to be the consequence of the employment of machinery. The capitalist, I thought, was eventually benefited precisely in the same manner. He, indeed, who made the discovery of the machine, or who first usefully applied it, would enjoy an additional advantage, by making great profits for a time; but, in proportion as the machine came into general use, the price of the commodity produced, would, from the effects of competition, sink to its cost of production, when the capitalist would get the same money profits as before, and he would only participate in the general advantage, ||737| as a consumer, by being enabled, with the same money revenue, to command an additional quantity of comforts and enjoyments. The class of labourers also, I thought, was equally benefited by the use of machinery, as they would have the means of buying more commodities with the same money wages, and I thought that no reduction of wages would take place, because the capitalist would have the power of demanding and employing the same quantity of labour as before, although he might be under the necessity of employing it in the production of a new, or at any rate of a different commodity. If, by improved machinery, with the employment of the same quantity of labour, the quantity of stockings could be quadrupled, and the demand for stockings were only doubled, some labourers would necessarily be discharged from the stocking trade; but as the capital which employed them was still in being, and as it was the interest of those who had it to employ it productively, it appeared to me that it would be employed on the production of some other commodity, useful to the society, for which there could not fail to be a demand… As, then, it appeared to me that there would be the same demand for labour as before, and that wages would be no lower, I thought that the labouring class would, equally with the other classes, participate in the advantage, from the general cheapness of commodities arising from the use of machinery.

“These were my opinions, and they continue unaltered, as far as regards the landlord and the capitalist; but I am convinced, that the substitution of machinery for human labour, is often very injurious to … the class of labourers” (l.c., pp. 466–68).

In the first place, Ricardo starts from the false assumption that machinery is always introduced into spheres of production in which the capitalist mode of production already exists. But the mechanised loom originally replaced the hand-loom weaver, the spinning jenny the hand spinner, the mowing, threshing and sowing machines often the small peasant who himself cultivated his plot of land, etc. In this case, not only is the labourer displaced, but his instrument of production too ceases to be capital (in the Ricardian sense). This entire or complete devaluation of the old capital also takes place when machinery revolutionises manufacture previously based on the simple division of labour. It is ridiculous to say in this case that the “old capital” continues to make the same demand for labour as before.

The “capital” which was employed by the hand-loom weaver, hand spinner etc. has ceased to exist.

But suppose, for the sake of simplicity, that the machinery is introduced ⟨there is, of course, no question here of the employment of machinery in new branches of industry%rang; only into spheres where capitalist production (manufacture) is already [dominant] or it may be introduced into the workshop already based on machinery, thus increasing the mechanisation of the labour processes or bringing into use improved machinery, which makes it possible either to dismiss a section of the workers previously employed or to produce a greater product while employing the same number of workers as before. The latter is of course the most favourable case.

In order to reduce confusion, we must distinguish here between 1. the funds of the capitalist who employs machinery and dismisses workers; 2. the funds of society, that is, of the consumers of the commodities produced by this capitalist.

ad 1. So far as the capitalist who introduces the machinery is concerned, it is wrong and absurd to say that he can lay out the same amount of capital in wages as before. (Even if he borrows, it is still equally wrong, not for him, but for society.) One part of his capital he will convert into machinery and other forms of fixed capital, another part into auxiliary materials which he did not need before, and a larger part into raw materials, if we assume that he produces more commodities with fewer workers, thus requiring more raw material. The proportion of variable capital—that is to say, of capital laid out in wages—to constant capital has decreased in his branch of business. And this reduction in the proportion will be permanent (indeed, the decrease in variable capital relatively to constant will even continue at a faster rate as a result of the productive power of labour developing along with accumulation), even if his business on the new scale of production expands to such an extent that he can re-employ the total number of dismissed workers, and employ even more workers than before. ⟨The demand for labour in his business will grow with the accumulation of his capital, but to a much smaller degree than his capital accumulates, and his capital will in absolute terms never again require the same amount of labour as before. The immediate result, however, will be that a section of the workers is thrown on to the street.%rang;

But it may be said that indirectly the demand for workers will remain the same, for more workers will be required for the construction of machines. But Ricardo himself has already shown that machinery never costs as much labour as the labour which it displaces. It is possible for the hours of labour in the machine workshops to be lengthened for some time ||738| and that, in the first instance, not a man more may be employed in them. Raw material—cotton for example—can come from America and China and it makes no difference whatsoever to the Englishmen who have been thrown out of work, whether the demand for Negroes or coolies grows. But even assuming that the raw materials are supplied within the country, more women and children will be employed in agriculture, more horses etc., and perhaps more of one product and less of another will be produced. But there will be no demand for the dismissed workers, for in agriculture, too, the same process which creates a constant relative surplus population is taking place.

Prima facie it is not likely that the introduction of machinery will set free any of the capital of the manufacturer when he makes his first investment. It merely provides a new type of investment for his capital, its immediate result, according to the assumption, is the dismissal of workers and the conversion of part of the variable capital into constant capital.

ad 2. So far as the general public is concerned, in the first place, revenue is set free as a result of the lowering in price of the commodity produced by means of the machine; capital—directly—only in so far as the manufactured article enters into constant capital as an element of production. ⟨If it entered into the average consumption of the worker, it would, according to Ricardo, bring in its wake a reduction in real wages also in the other branches of industry.%rang; A part of the revenue thus set free, will be consumed in the same article, either because the reduction in price makes it accessible to new classes of consumers (in this case, incidentally, it is not displaced revenue that is expended on the article), or because the old consumers consume more of the cheaper article, for instance four pairs of cotton stockings instead of one pair. Another part of the revenue thus set free may serve to expand the industry into which the machinery has been introduced, or it may be used in the formation of a new industry producing a different commodity, or it may serve to expand a sphere of production which already existed before. For whatever purpose the revenue thus set free and reconverted into capital is used, it will in the first place hardly be sufficient to absorb that part of the increased population which each year streams into each branch of production, and which is now debarred from entering the old industry. It is, however, also possible for a portion of the freed revenue to be exchanged against foreign products or to be consumed by unproductive workers. But by no means does a necessary connection exist between the revenue that has been set free and the workers that have been set free of revenue.

The absurd fundamental notion, however, which underlies Ricardo’s view, is the following:

The capital of the manufacturer who introduces machinery is not set free. It is merely utilised in a different manner, namely, in such a manner that it is not, as before, transformed into wages for the workers who are discharged. A part of the variable capital is converted into constant capital. Even if some of it were set free, it would be absorbed by spheres in which the discharged labourers could not work and where, at the most, those who replace them could find refuge.

By expanding old spheres of production or opening up new ones the revenue set free—in so far as it is not offset by greater consumption of the cheaper article or is not exchanged against foreign means of subsistence—only gives the necessary opening (if it does so!) for that part of the annual population increase that is for the time being debarred from the old trade into which the machinery has been introduced.

But the absurdity which lies concealed at the root of Ricardo’s notions, is this:

The means of subsistence which were previously consumed by the workers now discharged, remain after all in existence and are still on the market. The workers, on the other hand, are also available on the market. Thus there are, on the one hand, means of subsistence (and therefore means of payment) for workers, i.e., potential variable capital, and on the other, unemployed workers. Hence the fund is there to set them in motion. Consequently they will find employment.

Is it possible that even such an economist as Ricardo can babble such hair-raising nonsense?

According to this, no human being who is capable of work and willing, could ever starve in bourgeois society, when there are means of subsistence on the market, at the disposal of the society, to pay him for any work whatever. These means of subsistence, in the first place, do not by any means confront those workers as capital.

Assume that 100,000 workers have suddenly been thrown out on the streets by machinery. Then in the first place there is no doubt whatsoever ||739| that the agricultural products on the market, which on the average suffice for the whole year and which were previously consumed by these workers, are still on the market as before. If there were no demand for them—and if, at the same time, they were not exportable— what would happen? As the supply relative to the demand would have grown, they would fall in price, and as a result of this fall in price, their consumption would rise, even if the 100,000 workers were starving to death. The price need not even fall. Perhaps less of these means of subsistence is imported or more of them exported.

Ricardo imagines quixotically that the entire bourgeois social mechanism is arranged so nicely that if, for instance, ten men are discharged from their work, the means of subsistence of these workers—now set free—must definitely be consumed in one way or another by the identical ten men and that otherwise they could not be sold; as if a mass of semi-employed or completely unemployed were not for ever crawling around at the bottom of this society—and as if the capital existing in the form of means of subsistence were a fixed amount.

If the market-price of corn fell due to the decreasing demand, then the capital available in the shape of corn would be diminished (in terms of money) and would exchange for a smaller portion of the society’s money revenue, in so far as it is not exportable. And this applies even more to manufactures. During the many years in which the hand-loom weavers were slowly dying of hunger, the production and export of English cotton cloth increased enormously. At the same time (1838–1841) the prices of provisions rose. And the weavers had only rags in which to clothe themselves and not enough food to keep body and soul together. The constant artificial production of a surplus population, which disappears only in times of feverish prosperity, is one of the necessary conditions of production of modern industry. There is nothing to prevent a part of the money capital lying idle and without employment and the prices of the means of subsistence falling because of relative surplus production while at the same time workers who have been displaced by machinery, are starving.

It is true that in the long run the labour that has been released together with the portion of revenue or capital that has been released, will find an opening in a new sphere of production or in the expansion of the old one, but this is of more benefit to those who succeed the displaced men than to the displaced men themselves. New ramifications of more or less unproductive branches of labour are continually being formed and in these revenue is directly expended. Then there is the formation of fixed capital (railways etc.) and the labour connected with superintendence which this opens up; the manufacture of luxuries etc., foreign trade, which increasingly diversifies the articles on which revenue is spent.

From his absurd standpoint, Ricardo therefore assumes that the introduction of machinery harms the workers only when it diminishes the gross product (and therefore gross revenue), a case which may occur, it is true, in large-scale agriculture, with the introduction of horses which consume corn in place of the workers, with the transition from corn-growing to sheep-raising etc.; but it is quite preposterous [to extend this case] to industry proper, whose ability to sell its gross product is by no means restricted by the internal market. (Incidentally, while one section of the workers starves, another section may be better fed and clothed, as may also the unproductive workers and the middle strata between worker and capitalist.)

It is wrong, in itself, to say that the increase (or the quantity) of articles entering into revenue as such, forms a fund for the workers or forms capital for them. A portion of these articles is consumed by unproductive workers or non-workers, another portion may be transformed by means of foreign trade, from its coarse form, the form in which it serves as wages, into a form in which it enters into the revenue of the wealthy, or in which it serves as an element of production of constant capital. Finally, a portion will be consumed by the discharged workers themselves in the workhouse, or in prison, or as alms, or as stolen goods, or as payment for the prostitution of their daughters.

In the following pages I shall briefly compare the passages in which Ricardo develops this nonsense. As he says himself, he received the impetus for it from Barton’s work, which must therefore be examined, after citing those passages. ||740| It is self-evident, that in order to employ a certain number of workers each year, a certain quantity of food and other necessary means of subsistence must be produced annually. In large-scale agriculture, stock-raising etc, it is possible for the net income (profit and rent) to be increased while the gross income is reduced, that is to say, while the quantity of necessaries intended for the maintenance of the workers is reduced. But that is not the question here. The quantity of articles entering into consumption or, to use Ricardo’s expression, the quantity of articles of which the gross revenue consists, can be increased, without a consequent increase in that portion of this quantity which is transformed into variable capital. This may even decrease. In this case more is consumed as revenue by capitalists, landlords and their retainers, the unproductive classes, the state, the middle strata (merchants) etc.

What lies behind the view taken by Ricardo (and Barton) is that he originally set out from the assumption that every accumulation of capital is equivalent to an increase in variable capital, that the demand for labour therefore increases directly, in the same proportion, as capital is accumulated. But this is wrong, since with the accumulation of capital a change takes place in its organic composition and the constant part of the capital grows at a faster rate than the variable. This does not, however, prevent revenue from constantly growing, in value and in quantity. But it does not result in a proportionately larger part of the total product being laid out in wages. Those classes and sub-classes who do not live directly from their labour become more numerous and live better than before, and the number of unproductive workers increases as well.

Since, in the first place, it has nothing to do with the question, we will not concern ourselves with the revenue of the capitalist who transforms a part of his variable capital into machinery (and who therefore also puts more into raw material relatively to the amount of labour employed in all those spheres of production where raw material is an element of the process of creating value). His revenue and that part of his capital which has actually gone into the production process exist, at first, in the form of products or rather commodities which he produces himself, for example yarn if he is a spinner. After the introduction of machinery he transforms one part of these commodities—or the money for which he sells them—into machinery, auxiliary materials and raw materials whereas, previously, he paid it out as wages to the workers, thus transforming it indirectly into means of subsistence for the workers. With some exceptions in agriculture, he will produce more of these commodities than before, although his discharged workers have ceased to consume, and therefore to buy his own articles, though they did so before. More of these commodities will now be present on the market, although for the workers thrown on the street, they have ceased to exist [as objects of consumption] or have ceased to exist in their previous quantity. Thus, so far as his own product is concerned, in the first place, even if it enters into the consumption of the workers, its increased production in no way contradicts the fact that a part of it has ceased to exist as capital for the workers. A larger part of it (of the total product) on the other hand must now replace that portion of the constant capital which resolves into machinery, auxiliary materials and raw materials, that is to say, it must be exchanged against more of these ingredients of reproduction than formerly. If the increase in commodities through machinery and the decrease in a previously existing demand (namely in the demand of the workers that have been discharged) for the commodities produced by this machinery were contradictory, then in most cases, no machinery could in fact be introduced. The mass of commodities produced and the portion of these commodities which is reconverted into wages, therefore, have no definite relationship or necessary connection, when we consider the capital of which a part is transformed into machinery instead of into wage labour.

So far as society in general is concerned, the replacement of its revenue or rather the extension of the limits of its revenue takes place first of all on account of the articles whose price has been lowered by the introduction of machinery. This revenue may continue to be spent as revenue, and if a considerable part of it is transformed into capital, the increased population—apart from the artificially created surplus population—is already there to absorb that part of the revenue which is transformed into variable capital.

Prima facie, therefore, what this comes to is only: the production of all other articles, particularly in the spheres which produce articles entering into the consumption of the workers—despite the discharging of the hundred men etc.—continues on the same scale as before; quite certainly at the moment when the workers are discharged. In so far, therefore, as the dismissed workers represented a demand for these articles, the demand has decreased, although the supply has remained the same. If the reduced demand is not made good, the price will fall (or instead of a fall in price a larger stock may remain on the market for the following year). If the article is not produced for export, too, and if the decrease in demand were to persist, then reproduction would decrease, but it does not follow that the capital employed in this sphere ||741| must necessarily decrease. Perhaps more meat or commercial crops or luxury foods are produced [and] less wheat or more oats for horses etc. or fewer fustian jackets and more bourgeois frock-coats. But none of these consequences need necessarily materialise, if, for instance, as a result of the cheapening of cotton goods, the employed workers are able to spend more on food etc. The same quantity of commodities and even more of them—including those consumed by the workers—can be produced, although less capital, a smaller portion of the total product, is transformed into variable capital, that is laid out in wages.

Neither is it the case that part of the capital of the producers of these articles has been set free. At worst the demand for their commodities would have decreased, and the reproduction of their capital impeded by the reduced price of their commodities. Hence their own revenue would immediately decrease, as it would with any fall in the prices of commodities. But it cannot be said that any particular part of their commodities had previously confronted the discharged workers as capital and was now “set free” along with the workers. What confronted the workers as capital, was a part of the commodity now being produced with machinery; this part came to them in the form of money and was exchanged by them for other commodities (means of subsistence), which did not face them as capital, but confronted their money as commodities. This is therefore an entirely different relationship. The farmer and any other producer whose commodity they bought with their wages, did not confront them as capitalist and did not employ them as workers.

They have only ceased to be buyers for him, which may possibly—if not counterbalanced by other circumstances—bring about a temporary depreciation in his capital, but does not set free any capital for the discharged workers. The capital that employed them “is still in being”, but no longer in a form in which it resolves into wages, or only indirectly and to a smaller extent.

Otherwise anyone who through some bad luck ceased to have money, would inevitably set free sufficient capital for his own employment.

[d) Ricardo’s Correct Determination of Some of the Consequences of the Introduction of Machines for the Working Class. Apologetic Notions in the Ricardian Explanation of the Problem][edit source]

By gross revenue Ricardo means that part of the product which replaces wages and surplus-value (profits and rent); by net revenue he means the surplus-product, [which] equals the surplus-value. He forgets here, as throughout his work, that a portion of the gross product must replace the value of the machinery and raw material, in short, the value of the constant capital.

* * *

Ricardo’s subsequent treatment is of interest, partly because of some of the observations he makes in passing, partly because, mutatis mutandis, it is of practical importance for large-scale agriculture, particularly sheep-rearing, and shows the limitations of capitalist production. Not only is its determining purpose not production for the producers (workmen), but its exclusive aim is net revenue (profit and rent), even if this is achieved at the cost of the volume of production—at the cost of the volume of commodities produced.

“My mistake arose from the supposition, that whenever the net income of a society increased, its gross income would also increase; I now, however, see reason to be satisfied that the one fund, from which landlords and capitalists derive their revenue, may increase, while the other, that upon which the labouring class mainly depend, may diminish, and therefore it follows, if I am right, that the same cause which may increase the net revenue of the country, may at the same time render the population redundant, and deteriorate the condition of the labourer” (l.c., p. 469).

First it is noteworthy that Ricardo here admits that causes which further the wealth of the capitalists and landlords “may…render the population redundant…” so that redundant population or over-population is presented here as the result of the process of enrichment itself, and of the development of productive forces which conditions this process.

So far as the fund is concerned, out of which the capitalists and landlords draw their revenue and on the other hand the fund from which the workers draw theirs, to begin with, it is the total product which forms this common fund. A large part of the products which enter into the consumption of the capitalists and landlords, does not enter into the consumption of the workers. On the other hand, almost all, in fact more or less all, products which enter into the consumption of the workers also enter into that of the landlords and capitalists, their retainers and hangers-on, including dogs and cats. One cannot suppose that there are two essentially distinct fixed funds in existence. The important point is, what relative portion each of these groups draws from the common fund. The aim of capitalist production is to obtain as large an amount of surplus-product or surplus-value as possible with a given amount of wealth. This aim is achieved by constant capital growing more rapidly in proportion to variable capital or by setting in motion the greatest possible ||742| constant capital with the least possible variable capital. In much more general terms than Ricardo conceives here, the same cause effects an increase in the fund out of which capitalists and landlords draw their revenue, by a decrease in the fund out of which the workers draw theirs.

It does not follow from this that the fund from which the workers draw their revenue is diminished absolutely; only that it is diminished relatively, in proportion to their total output. And that is the only important factor in the determination of the portion which they appropriate out of the wealth they themselves created.

“A capitalist we will suppose employs a capital of the value of £ 20,000 and that he carries on the joint business of a farmer, and a manufacturer of necessaries. We will further suppose, that £ 7,000 of this capital is invested in fixed capital, viz. in buildings, implements, etc., etc., and that the remaining £ 13,000 is employed as circulating capital in the support of labour. Let us suppose, too, that profits are 10 per cent, and consequently that the capitalist’s capital is every year put into its original state of efficiency, and yields a profit of £ 2,000.

“Each year the capitalist begins his operations, by having food and necessaries in his possession of the value of £ 13,000, all of which he sells in the course of the year to his own workmen for that sum of money, and, during the same period, he pays them the like amount of money for wages: at the end of the year they replace in his possession food and necessaries of the value of £ 15,000, £ 2,000 of which he consumes himself, or disposes of as may best suit his pleasure and gratification.”

⟨The nature of surplus-value is very palpably expressed here. The passage is on pp. 469–70.%rang; “As far as these products are concerned, the gross produce for that year is £ 15,000, and the net produce £ 2,000. Suppose now, that the following year the capitalist employs half his men in constructing a machine, and the other half in producing food and necessaries as usual. During that year he would pay the sum of £ 13,000 in wages as usual, and would sell food and necessaries to the same amount to his workmen; but what would be the case the following year?

“While the machine was being made, only one-half of the usual quantity of food and necessaries would be obtained, and they would be only one-half the value of the quantity which was produced before. The machine would be worth £ 7,500, and the food and necessaries £ 7,500, and, therefore, the capital of the capitalist would be as great as before for he would have besides these two values, his fixed capital worth £ 7,000, making in the whole £ 20,000 capital, and £ 2,000 profit. After deducting this latter sum for his own expenses, he would have a no greater circulating capital than £ 5,500 with which to carry on his subsequent operations; and, therefore, his means of employing labour, would be reduced in the proportion of £ 13,000 to £ 5,500, and, consequently, all the labour which was before employed by £ 7,500, would become redundant” [l.c., pp. 469–71].

{This would, however, also be the case if by means of the machine which costs £7,500, exactly the same quantity of products were produced as previously with a variable capital of £13,000. Suppose the wear and tear of the machine were equal to one-tenth in one year, that is to £750, then the value of the product—previously £15,000—would now be £8,250. (Apart from the wear and tear of the original fixed capital of £7,000, whose replacement Ricardo does not mention at all.) Of these £8,250, £2,000 would be profit, as previously out of the £15,000. The lower price would be advantageous to the farmer in so far as he himself consumes food and necessaries as revenue. It would also be advantageous to him in so far as it enables him to reduce the wages of the workers he employs thus releasing a portion of his variable capital. It is this portion, which to a certain degree could employ new labour, but only because the real wage of the workers who have been retained had fallen. A small number of those who have been discharged could thus—at the cost of those who had been retained—be re-employed. The fact however that the product would be just as great as before, would not help the dismissed workers. If the wage remained the same, no part of the variable capital would be released. The fact that the product of £8,250 represents the same amount of necessaries and food as previously £15,000 does not cause its value to rise. The farmer would have to sell it for £8,250, partly in order to replace the wear and tear of his machinery and partly in order to replace his variable capital. In so far as this lowering of the price of food and necessaries did not bring about a fall in wages in general, or a fall in the ingredients entering into the reproduction of the constant capital, the revenue of society would have expanded only in so far as it is expended on food and necessaries. A section of the unproductive and productive workers etc. would live better. That is all. (They could also save, but that is always action in the future). The discharged workers would remain on the street, although the physical possibility of their maintenance existed just as much as before. Moreover, the same capital would be employed in the reproduction process as before. But a part of the product (whose value had fallen), which previously existed as capital has now become revenue.}

“The reduced quantity of labour which the capitalist can employ, must, indeed, with the assistance of the machine, and after deductions for its repairs, produce a value equal to £ 7,500, it must replace the circulating capital with a profit of £ 2,000 on the whole capital; but if this be done, ||743| if the net income be not diminished, of what importance is it to the capitalist, whether the gross income be of the value of £ 3,000, of £ 10,000, or of £ 15,000?”

⟨This is perfectly correct. The gross income is of absolutely no importance to the capitalist. The only thing which is of interest to him is the net income.%rang;

“In this case, then, although the net produce will not be diminished in value, although its power of purchasing commodities may be greatly increased, the gross produce will have fallen from a value of £ 15,000 to a value of £ 7,500, and as the power of supporting a population, and employing labour, depends always on the gross produce of a nation, and not on its net produce” [l.c., p. 471]

⟨Hence Adam Smith’s partiality for gross produce, a partiality to which Ricardo objects. See Chapter XXVI “On Gross and Net Revenue”, which Ricardo opens with the words:

“Adam Smith constantly magnifies the advantages which a country derives from a large gross, rather than a large net income” (l.c., p. 415)%rang;

“…there will necessarily be a diminution in the demand for labour, population will become redundant, and the situation of the labouring classes will be that of distress and poverty” [l.c., p. 471].

⟨Labour therefore becomes redundant, because the demand for labour diminishes, and that demand diminishes in consequence of the development in the productive powers of labour.%rang;

“As, however, the power of saving from revenue to add to capital, must depend on the efficiency of the net revenue, to satisfy the wants of the capitalist, it could not fail to follow from the reduction in the price of commodities consequent on the introduction of machinery, that with the same wants” (but his wants grow larger) “he would have increased means of saving,—increased facility of transferring revenue into capital” (l.c., pp. 471–72).

⟨According to this, first one part of capital is transformed into revenue, transferred to revenue—not in terms of value, but as regards the use-value, the material elements of which the capital consists—in order later, to transfer a part of the revenue back into capital. For example, when £13,000 was laid out in variable capital a part of the product amounting to £7,500, entered into the consumption of the workers whom the farmer employed, and this part of the product formed part of his capital. Following upon the introduction of machinery, for example, according to our supposition, the same amount of product is produced as previously, but its value does not amount to £15,000, as previously, but only to £8,250; and a larger part of this cheaper product enters into the revenue of the farmer or the revenue of the buyers of food and necessaries. They now consume a part of the product as revenue which was previously consumed industrially, as capital, by the farmer, although his labourers (since dismissed) consumed it as revenue as well. As a result of this growth in revenue—which has come about because a part of the product which was previously consumed as capital is now consumed as revenue—new capital is formed and revenue is reconverted into capital.%rang;

“But with every increase of capital he would employ more labourers;”

⟨this in any case not in proportion to the increased capital, not to the whole extent of that increase. Perhaps he would buy more horses, or guano, or new implements%rang;

“and, therefore, a portion of the people thrown out of work in the first instance, would be subsequently employed; and if the increased production, in consequence of the employment of the machine, was so great as to afford, in the shape of net produce, as great a quantity of food and necessaries as existed before in the form of gross produce, there would be the same ability to employ the whole population, and, therefore, there would not necessarily” ⟨but possibly and probably!%rang; “be any redundancy of people” (l.c., pp. 469–72).

In the last lines, Ricardo thus says what I observed above. In order that revenue is transformed in this way into capital, capital is first transformed into revenue. Or, as Ricardo puts it: First the net produce is increased at the expense of the gross produce in order then to reconvert a part of the net produce into gross produce. Produce is produce. Net or gross makes no difference (although this antithesis may also mean that the excess over and above the outlay increases, that therefore the net produce grows although the total product, i.e., the gross produce, diminishes). The produce only becomes net or gross, according to the determinate form which it assumes in the process of production.

“All I wish to prove, is, that the discovery and use of machinery may be attended with a diminution of gross produce; and whenever that is the case, it will be injurious to the labouring class, as some of their number will be thrown out of employment, and population will become redundant, compared with the funds which are to employ it” (l.c., p. 472).

But the same may, and in most instances ||744| will, be the case, even if the gross produce remains the same or increases; but that part of it which was formerly used as variable capital, is now consumed as revenue. It is superfluous for us to go into Ricardo’s absurd example of the clothier who reduces his production because of the introduction of machinery (pp. 472–74).

“If these views be correct, it follows,

“1st. That the discovery, and useful application of machinery, always leads to the increase of the net produce of the country, although it may not, and will not, after an inconsiderable interval, increase the value of that net produce” (l.c., p. 474).

It will always increase that value whenever it diminishes the value of labour.

“2dly. That an increase of the net produce of a country is compatible with a diminution of the gross produce, and that the motives for employing machinery are always sufficient to insure its employment, if it will increase the net produce, although it may, and frequently must, diminish both the quantity of the gross produce, and its value.

“3dly, That the opinion entertained by the labouring class, that the employment of machinery is frequently detrimental to their interests, is not founded on prejudice and error, but is conformable to the correct principles of political economy.

“4thly. That if the improved means of production, in consequence of the use of machinery, should increase the net produce of a country in a degree so great as not to diminish the gross produce, (I mean always quantity of commodities and not value,) then the situation of all classes will be improved. The landlord and capitalist will benefit, not by an increase of rent and profit, but by the advantages resulting from the expenditure of the same rent, and profit, on commodities, very considerably reduced in value”

⟨this sentence contradicts the whole of Ricardo’s doctrine, according to which the lowering in the price of necessaries, and therefore of wages, raises profits, whereas machinery, which permits more to be extracted from the same land with less labour, must lower rent%rang;,

“while the situation of the labouring classes will also be considerably improved; 1st, from the increased demand for menial servants;”

⟨this is indeed a fine result of machinery, that a considerable section of the female and male labouring class is turned into servants;%rang;

“2dly, from the stimulus to savings from revenue, which such an abundant net produce will afford; and 3dly, from the low price of all articles of consumption on which their wages will be expended” ⟨and in consequence of this low price their wages will be reduced%rang; (l.c., pp. 474–75).

The entire apologetic bourgeois presentation of machinery does not deny,

1. That machinery—sometimes here, sometimes there, but continually—makes a part of the population redundant, throws a section of the labouring population on the street. It creates a surplus population, thus leading to lower wages in certain spheres of production, here or there, not because the population grows more rapidly than the means of subsistence, but because the rapid growth in the means of subsistence, due to machinery, enables more machinery to be introduced and therefore reduces the immediate demand for labour. This comes about not because the social fund diminishes, but because of the growth of this fund, the part of it which is spent in wages falls relatively.

2. Even less do these apologetics deny the subjugation of the workers who operate the machines and the wretchedness of the manual workers or craftsmen who are displaced by machinery and perish.

What they assert—and partly rightly—is [firstly] that due to machinery and the development of the productivity of labour in general the net revenue (profit and rent) grows to such an extent, that the bourgeois needs more menial servants than before; whereas previously he had to lay out more of his product in productive labour, he can now lay out more in unproductive labour, [so that] servants and other workers living on the unproductive class increase in number. This progressive transformation of a section of the workers into servants is a fine prospect. For the worker it is equally consoling that because of the growth in the net product, more spheres are opened up for unproductive workers, who live on his product and whose interest in his exploitation coincides more or less with that of the directly exploiting classes.

Secondly, that because of the spur given to accumulation, on the new basis requiring less living labour in proportion to past labour, the workers who were dismissed and pauperised, or at least that part of the population increase ||745| which replaces them, are either absorbed in the expanding engineering-works themselves, or in branches of production which machinery has made necessary and brought into being, or in new fields of employment opened by the new capital, and satisfying new wants. This then is another wonderful prospect: the labouring class has to bear all the “temporary inconveniences”—unemployment, displacement of labour and capital—but wage-labour is nevertheless not to be abolished, on the contrary it will be reproduced on an ever growing scale, growing absolutely, even though decreasing relatively to the growing total capital which employs it.

Thirdly: that consumption becomes more refined due to machinery. The reduced price of the immediate necessities of life allows the scope of luxury production to be extended. Thus the third fine prospect opens before the workers : in order to win their means of subsistence, the same amount of them as before, the same number of labourers will enable the higher classes to extend, refine, and diversify the circle of their enjoyments, and thus to widen the economic, social, and political gulf separating them from their betters. Fine prospects, these, for the labourer, and very desirable results of the development of the productive powers of his labour.

Furthermore, Ricardo then shows that it [is in] the interest of the labouring classes,

“that as much of the revenue as possible should be diverted from expenditure on luxuries, to be expended in the support of^[4] menial servants” (l.c., p. 476). For whether I [purchase] furniture or keep menial servants, I thereby present a demand for a definite amount of commodities and set in motion approximately the same amount of productive labour in one case as in the other; but in the latter case, I add [a new demand] “to the former demand for labourers, and this addition would take place only because I chose this mode of expending my revenue’ (l.c., p. 476).

The same applies to the maintenance of large fleets and armies. “Whether it” (the revenue) “was expended in the one way or in the other, there would be the same quantity of labour employed in production; for the food and clothing of the soldier and sailor would require the same amount of industry to produce it as the more luxurious commodities; but in the case of the war, there would be the additional demand for men as soldiers and sailors; and, consequently, a war which is supported out of the revenue, and not from the capital of a country, is favourable to the increase of population” (l.c., p. 477).

“There is one other case that should be noticed of the possibility of an increase in the amount of the net revenue of a country, and even of its gross revenue, with a diminution of demand for labour, and that is, when the labour of horses is substituted for that of man. If I employed one hundred men on my farm, and if I found that the food bestowed on fifty of those men, could be diverted to the support of horses, and afford me a greater return of raw produce, after allowing for the interest of the capital which the purchase of the horses would absorb, it would be advantageous to me to substitute the horses for the men, and I should accordingly do so; but this would not be for the interest of the men, and unless the income I obtained, was so much increased as to enable me to employ the men as well as the horses, it is evident that the population would become redundant, and the labourer’s condition would sink in the general scale. It is evident he could not, under any circumstances, he employed in agriculture;” (why not? if the field of agriculture were enlarged?) “but if the produce of the land were increased by the substitution of horses for men, be might be employed in manufactures, or as a menial servant” (l.c., pp. 477–78).

There are two tendencies which constantly cut across one another; [firstly,] to employ as little labour as possible, in order to produce the same or a greater quantity of commodities, in order to produce the same or a greater net produce, surplus-value, net revenue; secondly, to employ the largest possible number of workers (although as few as possible in proportion to the quantity of commodities produced by them) , because— at a given level of productivity—the mass of surplus-value and of surplus-product grows with the amount of labour employed. The one tendency throws the labourers on to the streets and makes a part of the population redundant, the other absorbs them again and extends wage-slavery absolutely, so that the lot of the worker is always fluctuating but he never escapes from it. The worker, therefore, justifiably regards the development of the productive power of his own labour as hostile to himself; the capitalist, on the other hand, always treats him as an element to be eliminated from production. These are the contradictions with which Ricardo struggles in this chapter. What he forgets to emphasise ||746| is the constantly growing number of the middle classes, those who stand between the workman on the one hand and the capitalist and landlord on the other. The middle classes maintain themselves to an ever increasing extent directly out of revenue, they are a burden weighing heavily on the working base and increase the social security and power of the upper ten thousand. According to the bourgeoisie the perpetuation of wage-slavery through the application of machinery is a “vindication” of the latter.

“I have before observed, too, that the increase of net incomes, estimated in commodities, which is always the consequence of improved machinery, will lead to new savings and accumulations. These savings, it must be remembered, are annual, and must soon create a fund, much greater than the gross revenue, originally lost by the discovery of the machine, when the demand for labour will be as great as before, and the situation of the people will be still further improved by the increased savings which the increased net revenue will still enable them to make” (l.c., p. 480).

First gross revenue declines and net revenue increases. Then a portion of the increased net revenue is transformed into capital again and hence into gross revenue. Thus the workman must constantly enlarge the power of capital, and then, after very serious disturbances, obtain permission to repeat the process on a larger scale.

“With every increase of capital and population, food will generally rise, on account of its being more difficult to produce” (l.c., pp. 478–79).

It then goes straight on:

“The consequence of a rise of food will be a rise of wages, and every rise of wages will have a tendency to determine the saved capital in a greater proportion than before to the employment of machinery. Machinery and labour are in constant competition, and the former can frequently not be employed until labour^[5] rises” (l.c., p. 479).

The machine is thus a means to prevent a rise of labour.

“To elucidate the principle, I have been supposing, that improved machinery is suddenly discovered, and extensively used; but the truth is, that these discoveries are gradual, and rather operate in determining the employment of the capital which is saved and accumulated, than in diverting capital from its actual employment” (l.c., p. 478).

The truth is, that it is not so much the displaced labour as, rather, the new supply of labour—the part of the growing population which was to replace it—for which, as a result of new accumulation, new fields of employment are opened.

“In America and many other countries, where the food of man is easily provided, there is not nearly such great temptation to employ machinery” ⟨nowhere is it used on such a massive scale and also, so to speak, for domestic needs as in America%rang; “as in England, where food is high, and costs much labour for its production” [l.c., p. 479].

{How little the employment of machinery is dependent on the price of food is shown precisely by America, which employs relatively much more machinery than England, where there is always a redundant population. The use of machinery may, however, depend on the relative scarcity of labour as, for instance, in America, where a comparatively small population is spread over immense tracts of land. Thus we read in the Standard of September 19, 1862, in an article on the Exhibition:

“‘Man is a machine-making animal’… if we consider the American as a representative man, the definition is … perfect. It is one of the cardinal points of an American’s system to do nothing with his bands that he can do by a machine. From rocking a cradle to making a coffin, from milking a cow to clearing a forest, from sewing on a button to voting for President, almost, he had a machine for everything. He has invented a machine for saving the trouble of masticating food… The exceeding scarcity of labour and its consequent high value” ⟨despite the low value of food%rang;, “as well as a certain innate ‘cuteness’ have stimulated this inventive spirit… The machines produced in America are, generally speaking, inferior in value to those made in England … they are rather, as a whole, makeshifts to save labour than inventions to accomplish former impossibilities”, ⟨And the steam ships?%rang; … [at the Exhibition] “in the United States department […] is Emery’s cotton gin. For many a year after the introduction of cotton to America the crop was very small; because not only was the demand rather limited, but the difficulty of cleaning the crop by manual labour rendered it anything but remunerative. When Eli Whitney, however, invented the saw cotton-gin ||747| there was an immediate increase in the breadth planted, and that increase has up to the present time gone on almost in an arithmetical^[6] progression. In fact, it is not too much to say that Whitney made the cotton trade. With modifications more or less important and useful his gin has remained in use ever since; and until the invention of the present improvement and addition Whitney’s original gin was quite as good as the most of its would-he supplanters. By the present machine, which bears the name of Messrs. Emery of […] Albany, N.Y., we have no doubt that Whitney’s gin, on which it is based, will be almost entirely supplanted. It is simple and more efficacious; it delivers the cotton not only cleaner, but in sheets like wadding, and thus the layers as they leave the machine are at once fit for the cotton press and the bale … In [the] American Court proper there is little else than machinery […] The cow-milker … a belt-shifter … a hemp carding and spinning machine, which at one operation reels the cliver direct from the bale … machines^[7] […] for the manufacture of paper-bags, which it cuts from the sheet, pastes, folds, and perfects at the rate of 300 a minute … Hawes’s clothes-wringer, which by two indiarubber rollers presses from clothes the water, leaving them almost dry, […] saves time, but does not injure the texture … bookbinder’s machinery … machines for making shoes. It is well known that the uppers have been for a long time made up by machinery in this country, but here are machines for putting on the sole, others for cutting the sole to shape, and others again for trimming the heels… A stone-breaking machine is very powerful and ingenious, and no doubt will come extensively into use for ballasting roads and crushing ores… A system of marine signals by Mr. W. H. Ward of Auburn, New York… Reaping and mowing machines are an American invention coming into very general favour in England. […] McCormick’s” [machine is] “the best … Hansbrow’s California Prize Medal Force Pump, is in simplicity and efficiency the best […] in the Exhibition … it will throw more water with the same power than any pump in the world… Sewing machines…”}

“The same cause that raises labour, does not raise the value of machines, and, therefore, with every augmentation of capital, a greater proportion of it is employed on machinery. The demand for labour will continue to increase with on increase of capital, but not in proportion to its increase; the ratio will necessarily be a diminishing ratio” ([David Ricardo, On the Principles of Political Economy, and Taxation, third edition, London, 1821,] p. 479).

In the last sentence Ricardo expresses the correct law of growth of capital, although his reasoning is very one-sided. He adds a note to this, from which it is evident that he follows Barton here, whose work we will therefore examine briefly. But first one more comment. When Ricardo discussed revenue expended either on menial servants or luxuries, he wrote:

“In both cases the net revenue would he the same, and so would be the gross revenue, but the former would be realised in different commodities” (l.c., p. 476).

Similarly the gross produce, in terms of value, may be the same, but it may “be realised”—and this would strongly affect the workmen—” in different commodities” according to whether it had to replace more variable or constant capital.

[2. Barton’s Views][edit source]

[a) Barton’s Thesis that Accumulation of Capital Causes a Relative Decrease in the Demand for Labour. Barton’s and Ricardo’s Lack of Understanding of the Inner Connection Between This Phenomenon and the Domination of Capital over Labour][edit source]

Barton’s work is called:

John Barton. Observations on the Circumstances which Influence the Condition of the Labouring Classes of Society, London, 1817.

Let us first gather together the small number of theoretical propositions to be found in Barton’s work.

“The demand for labour depends on the increasing of circulating, and not of fixed capital. Were it true that the proportion between these two sorts of capital is the same at all times, and in all countries, then, indeed, it follows that the number of labourers employed is in proportion to the wealth of the State. But such a position has not the semblance of probability. As arts are cultivated, and civilization is extended, fixed capital bears a larger and larger proportion to circulating capital. The amount of fixed capital employed in the production of a piece of British muslin is at least a hundred, probably a thousand times greater than that employed in the production of a similar piece of Indian muslin. And the ||748| proportion of circulating capital employed is a hundred or a thousand times less. It is easy to conceive that, under certain circumstances, the whole of the annual savings of an industrious people might he added to fixed capital, in which case they would have no effect in increasing the demand for labour” (l.c., pp. 16–17).

⟨Ricardo comments on this passage in a note on page 480 of his work:

“It is not easy, I think, to conceive that under any circumstances, an increase of capital should not he followed by an increased demand for labour; the most that can he said is, that the demand will be in a diminishing ratio. Mr. Barton, in the above publication, has, I think, taken a correct view of some of the effects of an increasing amount of fixed capital on the condition of the labouring classes. His Essay contains much valuable information.”%rang;

To Barton’s above proposition we must add the following one:

“Fixed capital […] when once formed, ceases to affect the demand for labour,” (incorrect, since it necessitates reproduction, even if only at intervals and gradually) “but during its formation it gives employment to just as many hands as an equal amount would employ, either of circulating capital, or of revenue” (l.c., p. 56).

And:

“The demand for labour […] depends absolutely on the joint amount of revenue and circulating capital” (l.c., pp. 34–35).

Indisputably, Barton has very great merit.

Adam Smith believes that the demand for labour grows in direct proportion to capital accumulation. Malthus derives surplus population from capital not being accumulated (that is, reproduced on a growing scale) as rapidly as the population. Barton was the first to point out that the different organic component parts of capital do not grow evenly with accumulation and development of the productive forces, that on the contrary in the process of this growth, that part of capital which resolves into wages decreases in proportion to that part (he calls it fixed capital) which in relation to its size, alters the demand for labour only to a very small degree. He is therefore the first to put forward the important proposition “that the number of labourers employed is” not “in proportion to the wealth of the state”, that relatively more workers are employed in an industrially undeveloped country than in one which is industrially developed.

In the third edition of his Principles, Chapter XXXI “On Machinery”, Ricardo—having followed exactly in Smith’s footsteps in his earlier editions—now takes up Barton’s correction on this point, and moreover, in the same one-sided formulation in which Barton gives it. The only point in which he makes an advance—and this is important—is that, unlike Barton, he not only says that the demand for labour does not grow proportionally with the development of machinery, but that the machines themselves “render the population redundant” [l.c., p. 469], i.e., create surplus population. But he wrongly limits this effect to the case in which the net produce is increased at the cost of the gross produce. This only occurs in agriculture, but he also transfers it into industry. Essentially’ however, the whole of the absurd theory of population was thus overthrown, in particular also the claptrap of the vulgar economists, that the workers must strive to keep their multiplication below the standard of the accumulation of capital. The opposite follows from Barton’s and Ricardo’s presentation, namely that to keep down the labouring population, thus diminishing the supply of labour, and, consequently, raising its price, would only accelerate the application of machinery, the conversion of circulating into fixed capital, and, hence, make the population artificially “redundant”; redundancy exists, generally, not in regard to the quantity of the means of subsistence, but the means of employment, the actual demand for labour. ||749| Barton’s error or deficiency lies in his conceiving the organic differentiation or composition of capital only in the form in which it appears in the circulation process—as fixed and circulating capital—a difference which the Physiocrats had already discovered, which Adam Smith had developed further and which became a prepossession among the economists who succeeded him; a prepossession in so far as they see only this difference—which was handed ‘down to them—in the organic composition of capital. This difference, which arises out of the process of circulation, has a considerable effect on the reproduction of wealth in general, and therefore also on that part of it which forms the wages fund. But that is not decisive here. The difference between fixed capital such as machinery, buildings, breeding cattle etc. and circulating capital, does not directly lie in their relation to wages, but in their mode of circulation and reproduction.

The direct relation of the different component parts of capital to living labour is not connected with the phenomena of the circulation process. It does not arise from the latter, but from the immediate process of production, and its [expression] is the relation of constant to variable capital, whose difference is based only on their relationship to living labour.

Thus Barton says for example: The demand for labour does not depend on fixed capital, but only on circulating capital. But a part of circulating capital, raw material and auxiliary materials, is not exchanged against living labour, any more than is machinery. In all branches of industry in which raw material enters as an element into the process of the creation of value— in so far as we consider only that portion of the fixed capital which enters into the commodity—it forms the most important part of that portion of capital which is not laid out in wages. Another part of the circulating capital, namely of the commodity capital, consists of articles of consumption which enter into the revenue of the non-productive class (i.e., [not of] the working class). The growth of these two parts of circulating capital therefore does not influence the demand for labour any more than does that of fixed capital. Furthermore, the part of the circulating capital which resolves into raw materials and auxiliary materials increases in the same or even greater proportion as that part of capital which is fixed in machinery etc.

On the basis of the distinction made by Barton, Ramsay goes further. He improves on Barton but retains his method of approach. Indeed he reduces the distinction to constant and variable capital, but continues to call constant capital fixed capital, although he includes raw materials etc., and [calls] variable capital circulating capital, although he excludes from it all circulating capital which is not directly laid out in wages. More on this later, when we come to Ramsay. It does, however, show the intrinsic necessity of the progress.

Once the distinction between constant capital and variable capital has been grasped, a distinction which arises simply out of the immediate process of production, out of the relationship of the different component parts of capital to living labour, it also becomes evident that in itself it has nothing to do with the absolute amount of the consumption goods produced, although plenty with the way in which these are realised. The way, however, of realising the gross revenue in different commodities is not, as Ricardo has it, and Barton intimates it, the cause, but the effect of the immanent laws of capitalistic production, leading to a diminishing proportion, compared with the total amount of produce, of that part of it which forms the fund for the reproduction of the labouring class. If a large part of the capital consists of machinery, raw materials, auxiliary materials etc., then a smaller portion of the working class as a whole will be employed in the reproduction of the means of subsistence ||750| which enter into the consumption of the workers. This relative diminution in the reproduction of variable capital, however, is not the reason for the relative decrease in the demand for labour, but on the contrary, its effect. Similarly: A larger section of the workers employed in the production of articles of consumption which enter into revenue in general, will produce articles of consumption that are consumed by— are exchanged against the revenue of—capitalists, landlords and their retainers (state, church etc.), [and a smaller) section [will produce] articles destined for the revenue of the workers. But this again is effect, not cause. A change in the social relation of workers and capitalists, a revolution in the conditions governing capitalist production, would change this at once. The revenue would be “realised in different commodities”, to use an expression of Ricardo’s.

There is nothing in the, so-to-speak, physical conditions of production which forces the above to take place. The workmen, if they were dominant, if they were allowed to produce for themselves, would very soon, and without great exertion, bring the capital (to use a phrase of the vulgar economists) up to the standard of their needs. The very great difference is whether the available means of production confront the workers as capital and can therefore be employed by them only in so far as it is necessary for the increased production of surplus-value and surplus-produce for their employers, in other words whether the means of production employ the workers, or whether the workers, as subjects, employ the means of production—in the accusative case—in order to produce wealth for themselves. It is of course assumed here that capitalist production has already developed the productive forces of labour in general to a sufficiently high level for this revolution to take place.

⟨Take for example 1862 (the present autumn). The plight ‘of the Lancashire unemployed labourers; on the other hand, “the difficulty of finding employment for money” on the London money market, this has almost made necessary the formation of fraudulent companies, since it [is] difficult to obtain two per cent for money. According to Ricardo’s theory “some new field of employment ought to have been opened up,” for on the one hand there is capital in London, and on the other, unemployed workers in Manchester.%rang;

[b) Barton’s Views on the Movement of Wages and the Growth of Population][edit source]

Barton explains further, that the accumulation of capital increases the demand for labour only very slowly, unless the population has grown to such an extent previously, that the rate of wages is low.

“The proportion which the wages of labour at any particular^[8] time bear to the whole produce of […] labour […] determine the appropriation” of capital “in one way” (as fixed capital) “or the other” (circulating capital) ([John Barton, Observations on the Circumstances Which Influence the Condition of the Labouring Class of Society, London, 1817], p. 17).

“For if […] the rate of wages should decline, while the price of goods remained the same, or if goods should rise, while wages remained the same, the profit of the employer would increase, and he would be induced to hire more hands. If on the other hand, wages should rise in proportion to commodities” [the] “master^[9]’ […] would […] keep as few hands as possible.— He would aim at performing every thing by machinery” (l.c., pp. 17–18).

“We have good evidence that population advanced much more slowly under a gradual rise of wages during the earlier part of the last century, than during the latter part of the same century while the real price of labour fell rapidly” (l. c., p. 25).

“A rise of wages, of itself, then, never increases the labouring population;—a fall of wages may sometimes increase it very rapidly. Suppose that” the Englishman’s demands should sink to the level of the Irishman’s. Then the manufacturer would engage more [workers]^[10] “in proportion to the diminished expense of maintenance” (l.c., p. 26).

“It is the difficulty of finding employment, much more than the insufficiency of the rate of wages, which discourages marriage” (l.c., p. 27).

“It is admitted that every increase of wealth has a tendency to create a fresh demand for labour; but as labour, of all commodities, requires the greatest length of time for its production”

⟨for the same reason, the rate of wages can remain below the average for long periods, because of all commodities, labour is the most difficult to withdraw from the market and thus to bring down to the level of the actual demand%rang;

“so, of all commodities ||751| it is the most raised […] by a given increase of demand; and as every rise of wages produces a tenfold reduction of profits; it is evident that the accumulation of capital can operate only in an inconsiderable degree in adding to the effectual demand for labour, unless preceded by such an increase of population as shall have the effect of keeping down the rate of wages” (l. c., p. 28).

Barton puts forward various propositions here:

First: It is not the rise of wages in itself which increases the labouring population, but a fall in wages may very easily and rapidly make it rise. Proof: First half of the eighteenth century, gradual rise in wages, slow movement in population; in the second half of the eighteenth century, on the other hand, sharp fall in real wages, rapid increase in the labouring population. Reason: It is not the insufficient rate of wages which prevents marriages, but the difficulty of finding employment.

Secondly: The facility of finding employment stands, however, in inverse ratio to the rate of wages. For capital is transformed into circulating or fixed capital, that is to say, capital which employs labour or capital which does not employ it, in inverse proportion to the high or low level of wages. If wages are low, then the demand for labour is great because it is then profitable for the employer to use much labour, and he can employ more with the same circulating capital. If wages are high, then the manufacturer employs as few workers as possible and seeks to do everything with the aid of machines.

Thirdly: The accumulation of capital by itself raises the demand for labour only slowly, because each increase in this demand, if [labour is] scarce, causes [the wages] of labour to rise rapidly and brings about a fall of profit which is ten times greater than the rise in wages. Accumulation can have a rapid effect on the demand for labour only if accumulation was preceded by a large increase in the labouring population, and wages are therefore very low so that even a rise of wages still leaves them low because the demand mainly absorbs unemployed workers rather than competing for those fully employed.

This is all, cum grano salis, correct so far as fully developed capitalist production is concerned. But it does not explain this development itself.

And even Barton’s historical proof therefore contradicts that which it is supposed to prove.

During the first half of the eighteenth century, wages rose gradually, the population grew slowly and [there was] no machinery; moreover, compared with the following half of the century, little other fixed capital [was employed].

During the second half of the eighteenth century, however, wages fell continuously, population grew amazingly—and [so did] machinery. But it was precisely the machinery which on the one hand made the existing population superfluous, thus reducing wages, and on the other hand, as a result of the rapid development of the world market, absorbed the population again, made it redundant once more and then absorbed it again; while at the same time, it speeded up the accumulation of capital to an extraordinary extent, and increased the amount of variable capital, although variable capital fell relatively, both compared with the total value of the product and also compared with the number of workers it employed. In the first half of the eighteenth century, however, large-scale industry did not as vet exist, but only manufacture based on the division of labour. The principal component part of capital was still variable capital laid out in wages. The productivity of labour developed slowly, compared with the second half of the century. The demand for labour, and therefore also wages, rose almost proportionately to the accumulation of capital. England was as vet essentially an agricultural nation and a very extensive cottage industry—spinning and weaving—which was carried on by the agricultural population, continued to exist, and even to expand. A numerous proletariat could not as yet come into being, any more than there could exist industrial millionaires at the time. In the first half of the eighteenth century, variable capital was relatively dominant; in the second, fixed capital; but the latter requires a large mass of human material. Its introduction on a large scale must be preceded by an increase of population. The whole course of things, however, contradicts Barton’s presentation, in as much as it is evident that a general change in the method of production took place. The laws which correspond to large-scale industry are not identical with those corresponding to manufacture ||752|. The latter constitutes merely a phase of development leading to the former.

But in this context some of Barton’s historical data—comparing the development in England during the first half and the second half of the eighteenth century—are of interest, partly because they show the movement of wages, and partly because they show the movement in corn prices.

“… wages […] increased from the middle of the seventeenth, till near the middle of the eighteenth century, for the price of corn declined within that space of time not less than 35 per cent” [l.c., p. 25]. “The following statement will shew what proportion the wages of husbandry […] have borne^[11] to the price of corn […] during the last seventy years.

Periods	Weekly pay	Wheat per quarter	Wages in pints of wheat
1742 to 1752	6s. 0d.	30s. 0d.	102
1761 to 1770	7s. 6d.	42s. 6d.	90
1780 to 1790	8s. 0d.	51s. 2d.	80
1795 to 1799	9s. 0d.	70s. 8d.	65
1800 to 1808	11s. 0d.	86s. 8d.	60

(l.c., pp. 25–26) ‘From a table of the number of Bills for the inclosing of land passed in each session since the revolution, given in the Lord’s Report on the Poor Laws” (1816?), “it appears that in sixty-six years from 1688 to 1754, that number was 123; in the sixty-nine^[12] years from 1754 to 1813 it was 3,315.— The progress of cultivation was then about twenty-five times more rapid during the last period than the former. But during the first sixty-six years more and more corn was grown continually for exportation; whereas, during the greater part of the last sixty-nine years, we not only consumed all that we had formerly sent abroad, but likewise imported an increasing, and at last a very large quantity, for our own consumption … the increase of population in the former period, as compared with the latter, was still slower than the progress of cultivation might appear to indicate” (l. c., pp. 11–12).

“In the year 1688, the population of England and Wales was computed by Gregory King, from the number of houses, at five millions and a half.” The population in “1780 is put down by Mr. Malthus at 7,700,000. In ninety-two years then it had increased 2,200,000—in the succeeding thirty years it increased something more than 2,700,000. But of the first increase […] there is every probability, that the far greater part took place from 1750 to 1780” (l. c., p. 13).

Barton calculates from good sources that

“the number of inhabitants in 1750” [was] “5,946,000, making an increase since the revolution of 446,000, or 7,200 per annum” (l.c., p. 14).

“At the lowest estimate then […] the progress of population of late years has been ten times more rapid than a century ago. Yet it is impossible to believe, that the accumulation of capital has been ten times greater” (l. c., p. 14).

It is not a question of how great a quantity of means of subsistence is produced annually, but how large a portion of living labour enters into the annual production of fixed and circulating capital. This determines the size of the variable capital in relation to constant.

Barton explains the remarkable increase in population which took place almost all over Europe during the last 50 to 60 years, from the increased productivity of the American mines, since this abundance of precious metals raised commodity prices more than wages, thus in fact, lowering the latter and causing the rate of profit to rise (l.c., pp. 29–35). |XIII-752||

↑ In the manuscript: “and”.—Ed.
↑ In the manuscript: “they will be able” instead of “they can”.—Ed.
↑ In the manuscript: “different.”—Ed.
↑ In the manuscript: “on”, instead of: “in the support of ”.—Ed.
↑ He means “wages”.
↑ In the manuscript: “geometrical”.—Ed.
↑ In the manuscript: “A machine”.—Ed.
↑ In the manuscript: “given”.—Ed.
↑ In the manuscript: “manufacturers”.—Ed.
↑ Marx gives this part of the quotation in his own words, summarising the idea expressed by Barton.—Ed.
↑ In the manuscript: “been”.—Ed.
↑ Although Barton says 69 years in fact the period from 1754 to 1813 comprises only 59 years.—Ed.

[1] In the manuscript: “and”.—Ed.

[2] In the manuscript: “they will be able” instead of “they can”.—Ed.

[3] In the manuscript: “different.”—Ed.

[4] In the manuscript: “on”, instead of: “in the support of ”.—Ed.

[5] He means “wages”.

[6] In the manuscript: “geometrical”.—Ed.

[7] In the manuscript: “A machine”.—Ed.

[8] In the manuscript: “given”.—Ed.

[9] In the manuscript: “manufacturers”.—Ed.

[10] Marx gives this part of the quotation in his own words, summarising the idea expressed by Barton.—Ed.

[11] In the manuscript: “been”.—Ed.

[12] Although Barton says 69 years in fact the period from 1754 to 1813 comprises only 59 years.—Ed.

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