Karl Marx - Simple Reproduction (Chap. 2.20.10) lyrics

Simple Reproduction (Chap. 2.20.10) X. Capital and Revenue: Variable Capital and Wages The entire annual reproduction, the entire product of a year is the product of the useful labour of that year. But the value of this total product is greater than that portion of the value in which the annual labour, the labour-power expended during the current year, is incorporated. The value-product of this year, the value newly created during this period in the form of commodities, is smaller than the value of the product, the aggregate value of the ma** of commodities fabricated during the entire year. The difference obtained by deducting from the total value of the annual product that value which was added to it by the labour of the current year, is not really reproduced value but only value re-appearing in a new form of existence. It is value transferred to the annual product from value existing prior to it, which may be of an earlier or later date, according to the durability of the components of the constant capital which have participated in that year's social labour-process, a value which may originate from the value of means of production which came into the world the previous year or in a number of years even previous to that. It is by all means a value transferred from means of production of former years to the product of the current year. Take our scheme. We have, after the exchange of the elements hitherto considered between I and II, and within II. 1) 4,000c + 1,000v + 1,000s (the latter 2,000 realised in articles of consumption of IIc) = 6,000. II) 2,000c (reproduced by exchange with I(v + s) + 500v + 500s = 3,000. Sum of values = 9,000. Value newly produced during the year is contained only in v and s. The sum of the value-product of this year is therefore equal to the sum of v + s, or 2,000 I(v + s) + 1,000 II(v + s) = 3,000. All remaining value-parts of the product of this year are merely value transferred from the value of earlier means of production consumed in the annual production. The current annual labour has not produced any value other than that of 3,000. That represents its entire annual value-product. Now, as we have seen, the 2,000 I(v + s) replace for cla** II its 2,000 IIc in the bodily form of means of production. Two-thirds of the annual labour, then, expended in category I, have newly produced constant capital II, both its entire value and its bodily form. From the standpoint of society, two-thirds of the labour expended during the year have created new constant capital-value realised in the bodily form appropriate for department II. Thus the greater portion of the annual labour of society has been spent in the production of new constant capital (capital-value existing in the form of means of production) in order to replace the value of the constant capital expended in the production of articles of consumption. What distinguishes capitalist society in this case from the savage is not, as Senior1 thinks, the privilege and peculiarity of the savage to expend his labour at times in a way that does not procure him any products resolvable (exchangeable) into revenue, i.e., into articles of consumption. No, the distinction consists in the following. a) Capitalist society employs more of its available annual labour in the production of means of production (ergo, of constant capital) which are not resolvable into revenue in the form of wages or surplus-value, but can function only as capital. b) When a savage makes bows, arrows, stone hammers, axes, baskets, etc., he knows very well that he did not spend the time so employed in the production of articles of consumption, but that he has thus stocked up the means of production he needs, and nothing else. Furthermore, a savage commits a grave economic sin by his utter indifference to waste of time, and, as Tylor 2 tells us, takes sometimes a whole month to make one arrow. The current conception whereby some political economists seek to extricate themselves from the theoretical difficulty, i.e., the understanding of the real interconnections — that what is capital to one is revenue to another, and vice versa — is only partially correct and becomes utterly wrong (harbours therefore a complete misunderstanding of the entire process of exchange taking place in annual reproduction, hence also a misunderstanding of the actual basis of the partially correct) as soon as the character of universality is attributed to it. We now summarise the actual relations on which the partial correctness of this conception rests, and in doing so the wrong conception of these relations will come to the surface. 1) The variable capital functions as capital in the hands of the capitalist and as revenue in the hands of the wage-worker. The variable capital exists at first in the hands of the capitalist as money-capital; and it performs the function of money-capital, by his buying labour-power with it. So long as it persists in his hands in the form of money, it is nothing but a given value existing in the form of money; hence a constant and not a variable magnitude. It is a variable capital only potentially, owing to its convertibility into labour-power. It becomes real variable capital only after divesting itself of its money-form, after being converted into labour-power functioning as a component part of productive capital in the capitalist process. Money, which first functioned as the money-form of the variable capital for the capitalist, now functions in the hands of the labourer as the money-form of his wages, which he exchanges for means of subsistence; i.e., as the money-form of revenue derived from the constantly repeated sale of his labour-power. We have here but the simple fact that the money of the buyer, in this case the capitalist, pa**es from his hands into those of the seller, in this case the seller of labour-power, the labourer. It is not a case of the variable capital functioning in a dual capacity, as capital for the capitalist and as revenue for the labourer. It is the same money which exists first in the hands of the capitalist as the money-form of his variable capital, hence as potential variable capital, and which serves in the hands of the labourer as an equivalent for sold labour-power as soon as the capitalist converts it into labour-power. But the fact that the same money serves another useful purpose in the hands of the seller than in those of the buyer is a phenomenon peculiar to the purchase and sale of all commodities. Apologetic economists present the matter in a wrong light, as is best seen if we keep our eyes fixed exclusively, without taking for the time being any notice of what follows, on the act of circulation M — L (equal to M — C), the conversion of money into labour-power on the part of the capitalist buyer, which is L — M (equal to C — M), the conversion of the commodity labour-power into money on the part of the seller, the labourer. They say: Here the same money realises two capitals; the buyer — the capitalist — converts his money-capital into living labour-power, which he incorporates in his productive capital; on the other hand the seller, the labourer, converts his commodity, labour-power, into money, which he spends as revenue, and this enables him to keep on reselling his labour-power and thereby to maintain it. His labour-power, then, represents his capital in commodity-form, which yields him a continuous revenue. Labour-power is indeed his property (ever self-renewing, reproductive), not his capital. It is the only commodity which he can and must sell continually in order to live, and which acts as capital (variable) only in the hands of the buyer, the capitalist. The fact that a man is continually compelled to sell his labour-power, i.e., himself, to another man proves, according to those economists, that he is a capitalist, because he constantly has “commodities” (himself) for sale. In that sense a slave is also a capitalist, although he is sold by another once and for all as a commodity; for it is in the nature of this commodity, a labouring slave, that its buyer does not only make it work anew every day, but also provides it with the means of subsistence that enable it to work ever anew. (Compare on this point Sismondi and Say in the letters to Malthus. 3 ) 2) And so, in the exchange of 1,000 Iv + 1,000 Is for 2,000 IIc, what is constant capital for some (2,000 IIc) becomes variable capital and surplus-value, hence generally revenue, for the others; and what is variable capital and surplus-value (2,000 I(v + s)), hence generally revenue for some becomes constant capital for the others. Let us first look at the exchange of Iv for IIc, beginning with the point of view of the labourer. The collective labourer of I has sold his labour-power to the collective capitalist of I for 1,000; he receives this value in money, paid in the form of wages. With this money he buys from II articles of consumption for the same amount of value. Capitalist II confronts him only as a seller of commodities, and nothing else, even if the labourer buys from his own capitalist, as he does for instance in the exchange of 500 IIv, as we have seen above (Part IV, present chapter). The form of circulation through which his commodity, labour-power, pa**es, is that of the simple circulation of commodities for the mere satisfaction of needs, for the purpose of consumption: C (labour-power) — M — C (articles of consumption, commodities II). The result of this act of circulation is that the labourer maintains himself as labour-power for capitalist I, and in order to continue maintaining himself as such he must continually renew the process L(C) — M — C. His wages are realised in articles of consumption, they are spent as revenue, and, taking the working-cla** as a whole, are spent again and again as revenue. Now let us look at the same exchange of Iv for IIc, from the point of view of the capitalist. The entire commodity-product of II consists of articles of consumption, hence of things intended to enter into annual consumption, hence to serve in the realisation of revenue for someone, in the present case for the collective labourer I. But for the collective capitalist II one portion of his commodity-product, equal to 2,000, is now the form of the constant capital-value of his productive capital converted into commodities. This productive capital must be reconverted from this commodity-form into its bodily form, in which it may act again as the constant portion of a productive capital. What capitalist II has accomplished so far is that he has reconverted by means of sales to labourers I one half (equal to 1,000) of his constant capital-value, which had been reproduced in the shape of commodities (articles of consumption), into the form of money. Hence it is not the variable capital Iv, which has been converted into this first half of the constant capital-value IIc, but simply the money which functioned for I as money-capital in the exchange for labour-power and thus came into the possession of the seller of labour-power, to whom it does not represent capital but revenue in the form of money, i.e., it is spent as a means of purchase of articles of consumption. Meanwhile, the money amounting to 1,000, which has come into the hands of the II capitalists from labourers of I, cannot function as the constant element of productive capital II. It is only as yet the money-form of his commodity-capital to be commuted into fixed or circulating constituents of constant capital. So II buys with the money received from the labourers of I, the buyers of its commodities, means of production from I to the amount of 1,000. In this way the constant capital-value II is renewed to the extent of one half of its total amount in its bodily form, in which it can function once more as an element of productive capital II. The circulation in this instance took the course C — M — C: articles of consumption worth 1,000 — money to the amount of 1,000 — means of production worth 1,000. But C — M — C represents here the movement of capital. C, when sold to the labourers, is converted into M, and this M is converted into means of production. It is the reconversion of commodities into the material elements of which this commodity is made. On the other hand just as capitalist II acts vis-à-vis I only as a buyer of commodities, so capitalist I acts only as a seller of commodities vis-à-vis II. I originally bought labour-power worth 1,000 with 1,000 in money intended to function as variable capital. It has therefore received an equivalent for the 1,000v which it expended in money-form. This money now belongs to the labourer who spends it in purchases from II. I cannot get back this money, which thus found its way into the II treasury unless it fishes its way out of it again by the sale of commodities of the same value. I first had a definite sum of money amounting to 1,000 destined to function as variable capital. The money functions as such by its conversion into labour-power of the same value. But the labourer supplied it as a result of the process of production with a quantity of commodities (means of production) worth 6,000, of which one-sixth, or 1,000, are equivalent to the variable portion of capital advanced in money. The variable capital-value functions no more as variable capital now in its commodity-form than it did before in its form of money. It can do so only after its conversion into living labour-power, and only so long as this labour-power functions in the process of production. As money the variable capital-value was only potential variable capital. But it had a form in which it was directly convertible into labour-power. As a commodity the same variable capital-value is still potential money-value, it is restored to its original money-form only by the sale of the commodities, and therefore by II buying for 1,000 commodities from I. The movement of the circulation is here as follows: 1,000v (money) — labour-power worth 1,000 — 1,000 in commodities (equivalent of the variable capital) — 1,000v (money); hence M — C... C — M (equal to M — L ... C — M). The process of production intervening between C ... C does not itself belong in the sphere of circulation. It does not figure in the mutual exchange of the various elements of the annual reproduction, although this exchange includes the reproduction of all the elements of productive capital, the constant elements as well as the variable element (labour-power). All the participants in this exchange appear either as buyers or sellers or both. The labourers appear only as buyers of commodities, the capitalists alternately as buyers and sellers, and within certain limits either only as buyers of commodities or only as sellers of commodities. Result: I possesses once more the variable value-constituent of its capital in the form of money, from which alone it is directly convertible into labour-power, i.e., it once more possesses the variable capital-value in the sole form in which it can really be advanced as a variable element of its productive capital. On the other hand the labourer must again act as a seller of commodities, of his labour-power, before he can act again as a buyer of commodities. So far as the variable capital of category II (500 IIv) is concerned, the process of circulation between the capitalists and labourers of the same cla** of production takes place directly, since we look upon it as taking place between the collective capitalist II and the collective labourer II. The collective capitalist II advances 500v for the purchase of labour-power of the same value. In this case the collective capitalist is a buyer, the collective labourer a seller. Thereupon the labourer appears with the proceeds of the sale of his labour-power to act as a buyer of a part of the commodities produced by himself. Here the capitalist is therefore a seller. The labourer has replaced to the capitalist the money paid in the purchase of his labour-power by means of a portion of commodity-capital II produced, namely 500v in commodities. The capitalist now holds in the form of commodities the same v which he had in the form of money before its conversion into labour-power, while the labourer on the other hand has realised the value of his labour-power in money and now, in his turn, realises this money by spending it as his revenue to defray his consumption in the purchase of part of the articles of consumption produced by himself. It is an exchange of the revenue of the labourer in money for a portion of commodities he has himself reproduced, namely 500v of the capitalist. In this way this money returns to capitalist II as the money-form of his variable capital. An equivalent value of revenue in the form of money here replaces variable capital-value in the form of commodities. The capitalist does not increase his wealth by taking away again the money paid by him to the labourer in the purchase of labour-power when he sells him an equivalent quantity of commodities. He would indeed be paying the labourer twice if he were to pay him first 500 in the purchase of his labour-power, and then in addition give him gratis a quantity of commodities worth 500, which the labourers produced for him. Vice versa, if the labourer were to produce for him nothing but an equivalent in commodities worth 500 for the price of his labour-power of 500, the capitalist would be no better off after the transaction than before. But the labourer has reproduced a product of 3,000. He has preserved the constant portion of the value of the product, i.e., the value of the means of production used up in it to the amount of 2,000 by converting them into a new product. He has furthermore added to this given value a value of 1,000(v + s). (The idea that the capitalist grows richer in the sense that he wins a surplus-value by the reflux of the 500 in money is developed by Destutt de Tracy, as shown in detail in section XIII of this chapter.) Through the purchase of 500 worth of articles of consumption by labourer II, capitalist II recovers the value of 500 IIv — which he just possessed in commodities — in money, the form in which he advanced it originally. The immediate result of this transaction, as of any other sale of commodities, is the conversion of a given value from the form of commodities into that of money. Nor is there anything special in the reflux thus effected of the money to its point of departure. If capitalist II had bought, with 500 in money, commodities from capitalist I, and then in turn sold to capitalist I commodities to the amount of 500, 500 would have likewise returned to him in money. This sum of 500 in money would merely have served for the circulation of a quantity of commodities (1,000), and according to the general law previously expounded, the money would have returned to the one who put it into circulation for the purpose of exchanging this quantity of commodities. But the 500 in money which flowed back to capitalist II are at one and the same time renewed potential variable capital in money-form. Why is this so? Money, and therefore money-capital, is potential variable capital only because and to the extent that it is convertible into labour-power. The return of £500 in money to capitalist II is accompanied by the return of labour-power II to the market. The return of both of these at opposite poles — hence also the re-appearance of 500 in money not only as money but also as variable capital in the form of money — is conditional on one and the same process. The money equal to 500 returns to capitalist II because he sold to labourers II articles of consumption amounting to 500, i.e., because the labourer spends his wages to maintain himself and his family and thus his labour-power. In order to be able to live on and act again as a buyer of commodities he must again sell his labour-power. The return of 500 in money to capitalist II is therefore at the same time a return, or an abiding, of the labour-power in the capacity of a commodity purchasable with 500 in money, and thereby a return of 500 in money as potential variable capital. As for category IIb, which produces articles of luxury, the case with v — (IIb)v — is the same as with Iv. The money, which renews for capitalists IIb their variable capital in the form of money, flows back to them in a round-about way through capitalists IIa. But it nevertheless makes a difference whether the labourers buy their means of subsistence directly from the capitalist producers to whom they sell their labour-power or whether they buy them from capitalists of another category, through whose agency the money returns to the former only by a circuitous route. Since the working-cla** lives from hand to mouth, it buys as long as it has the means to buy. It is different with the capitalists, as for instance in the exchange of 1,000 IIc for 1,000 Iv. The capitalist does not live from hand to mouth. His compelling motive is the utmost self-expansion of his capital. Now, if circumstances of any description seem to promise greater advantages to capitalist II in case he holds on to his money, or to part of it at least, for a while, instead of immediately renewing his constant capital, then the return of 1,000 IIc (in money) to I is delayed; and so is the restoration of 1,000v to the form of money, and capitalist I can continue his business on the same scale only if he disposes of reserve money; and, generally speaking, reserve capital in the form of money is necessary to be able to work without interruption, regardless of the rapid or slow reflux of the variable capital-value in money. If the exchange of the various elements of the current annual reproduction is to be investigated, so are the results of the labour of the preceding year, of the labour of the year that has already come to a close. The process of production which resulted in this yearly product lies behind us; it is a thing of the past, incorporated in its product, and so much the more is this the case with the process of circulation, which precedes the process of production or runs parallel with it, the conversion of potential into real variable capital, i.e., the sale and purchase of labour-power. The labour-market is no longer a part of the commodity-market, such as we have here before us. The labourer has here not only already sold his labour-power, but besides the surplus-value also supplied an equivalent of the price of his labour-power in the shape of commodities. He has furthermore pocketed his wages and figures during the exchange only as a buyer of commodities (articles of consumption). On the other hand the annual product must contain all the elements of reproduction, restore all the elements of productive capital, above all its most important element, the variable capital. And we have seen indeed that the result of the exchange in regard to the variable capital is this: By spending his wages and consuming the purchased commodities, the labourer as a buyer of commodities maintains and reproduces his labour-power, this being the only commodity which he has to sell. Just as the money advanced by the capitalist in the purchase of his labour-power returns to him, so labour-power returns to the labour-market in its capacity of a commodity exchangeable for money. The result in the special case of 1,000 Iv is that the capitalists of I hold 1,000v in money and the labourers of I offer them 1,000 in labour-power, so that the entire process of reproduction of I can be renewed. This is one result of the process of exchange. On the other hand the expenditure of the wages of the labourers of I relieved II of articles of consumption to the amount of 1,000c, thus transforming them from the commodity-form into the money-form. Department II reconverted them into the bodily form of its constant capital by purchasing from I commodities equal to 1,000v and thus restoring to I in money-form the value of its variable capital. The variable capital of I pa**es through three metamorphoses, which do not appear at all in the exchange of the annual product or do so only suggestively. 1) The first form is 1,000 Iv in money, which is converted into labour-power of the same value. This conversion does not itself appear in the exchange of commodities between I and II, but its result is seen in the fact that working-cla** I confronts commodity seller II with 1,000 in money, just as working-cla** II with 500 in money confronts commodity seller of 500 IIv in commodity-form. 2) The second form, the only one in which variable capital actually varies, functions as variable capital, where value-creating force appears in the place of given value exchanged for it; it belongs exclusively to the process of production which is behind us. 3) The third form, in which the variable capital has justified itself as such in the result of the process of production, is the annual value-product, which in the case of I is equal to 1,000v plus l,000s, or 2,000 I(v + s). In the place of its original value of 1,000 in money we have a value of double this amount, or 2,000, in commodities. The variable capital-value of 1,000 in commodities is therefore only one half of the value produced by the variable capital as an element of the productive capital. The 1,000 Iv in commodities are an exact equivalent of the 1,000 in money originally advanced by I and intended to be the variable part of the aggregate capital. But in the form of commodities they are money only potentially (they do not become so actually until they are sold), and still less directly are they variable money-capital. They eventually become variable money-capital by the sale of the commodity 1,000 Iv to IIc, and by the early re-appearance of labour-power as a purchasable commodity, as a material for which 1,000 in money may be exchanged. During all these transformations capitalist I continually holds the variable capital in his hands; 1) to start with as money-capital; 2) then as an element of his productive capital; 3) still later as a portion of the value of his commodity-capital, hence in the form of commodity-value; 4) finally once more in money which is again confronted by the labour-power for which it can be exchanged. During the labour-process the capitalist is in possession of the variable capital as active value-creating labour-power, but not as a value of a given magnitude. But since he never pays the labourer until his power has acted for a certain length of time, he already has in hand the value created by that power to replace itself plus the surplus-value before he pays him. As the variable capital always stays in the hands of the capitalist in some form or other, it cannot be claimed in any way that it converts itself into revenue for anyone. On the contrary, 1,000 Iv in commodities converts itself into money by its sale to II half of whose constant capital it replaces in kind. What resolves itself into revenue is not variable capital I, or 1,000v in money. This money has ceased to function as the money-form of variable capital I as soon as it is converted into labour-power, just as the money of any other buyer of commodities has ceased to represent anything belonging to him as soon as he has exchanged it for commodities of still other sellers. The conversions which the money received in wages goes through in the hands of the working-cla** are not conversions of variable capital, but of the value of their labour-power converted into money; just as the conversion of the value (2,000 I(v + s)) created by the labourer is only the conversion of a commodity belonging to the capitalist, which does not concern the labourer. However, the capitalist, and still more his theoretical interpreter, the political economist, can rid himself only with the greatest difficulty of the idea that the money paid to the labourer is still his, the capitalist's. If the capitalist is a producer of gold, then the variable portion of value — i.e., the equivalent in commodities which replaces for him the purchasing price of the labour — appears itself directly in the form of money and can therefore function anew as variable money-capital without the circuitous route of a reflux. But so far as labourer II is concerned — aside from the labourer who produces articles of luxury — 500 v exists in commodities intended for the consumption of the labourer which he, considered as the collective labourer, buys directly again from the same collective capitalist to whom he sold his labour-power. The variable portion of capital-value II, so far as its bodily form is concerned, consists of articles of consumption intended mostly for consumption by the working-cla**. But it is not the variable capital which is spent in this form by the labourer, it is the wages, the money of the labourer, which precisely by its realisation in these articles of consumption restores to the capitalist the variable capital 500 IIv in its money-form. The variable capital IIv is reproduced in articles of consumption, the same as the constant capital 2,000 IIc. The one resolves itself no more into revenue than the other does. In either case it is the wages which resolve themselves into revenue. However it is a momentous fact in the exchange of the annual product that by the expenditure of the wages as revenue there is restored to the form of money-capital in the one case 1,000 IIc, likewise, by this circuitous route, 1,000 Iv and ditto 500 IIv, hence constant and variable capital. (In the case of the variable capital partly by means of a direct and partly by means of an indirect reflux.) FOOT NOTES 1. “When the savage makes bows, he exercises an industry, but he does not practise abstinence.” (Senior, Principes fondamentaux de l'Économie Politique, trad. Arrivabene, Paris, 1836, pp. 342-43.) “The more society progresses, the more abstinence is demanded.” (Ibid., p. 312). (Cf. Capital, Ch. XXIV, 3.] 2. E.B. Tylor, Researches into the Early History of Mankind, etc., London, 1865, pp. 198-99. 3. Marx has in mind J. B. Say's Lettres à M. Malthus sur différents sujets d'économie politique, notamment sur les causes de la stagnation générale du commerce, Paris, 1820. — Ed.